Time for Another Reuther Plan

PETER O. ZIERLEIN*

The crisis in the American auto industry marks a decisive turning point for the nation's manufacturing economy. During the past three decades of global overcapacity, Detroit's Big Three, the backbone of US manufacturing, have stumbled through intense international competition by periodically shuttering factories; squeezing the pay and benefits of their workers; and every so often getting a quick fix from the sale of gas-guzzling SUVs, minivans and big pickups.

But time has run out. Once the dust clears it seems certain that Chrysler and General Motors will be radically downsized: at least a third smaller, with fewer workers and brands and a dealer network slashed by as much as 40 percent. Most remarkably, these two companies, once in first and fifth place on Fortune's list of the 500 largest, will have ceded a big slice of their ownership to the United Automobile Workers and the Treasury.

Under the latest iteration of the GM restructuring deal, the Treasury will own 50 percent of the company and the UAW will own another 39 percent through its healthcare trust. Chrysler will be merged into Fiat, but the government and the union will also take large stakes in the company as they swap debt or healthcare payments for equity.

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