On Worker Ownership

First let me say I am a very old car buff. I owned my first car when I was about 15 years old and guess what it was, a 1926 Chrysler Roadster with the first hydraulic brake system that failed as often as it worked. It occurs to me that since then in my entire life I have never been without a car. They were my first and most endearing love affair. I also loved fixing them. For many years Chrysler was a favorite primarily because of its superior engineering.

With the UAW receiving a 55 percent stake in Chrysler, that makes it the majority stockholder. Technically it owns the company. God I wonder what Walter Reuther would say to this? He was a firm believer in Industrial Democracy. Well, this may or may not be a good way to demonstrate its effectiveness.

I am reminded of our efforts back in the seventies helping workers gain all or partial ownership of their places of employment. I was at the Ford Foundation at the time and we were in a position to assist in employee buyouts. One of my responsibilities was to keep track of the buyout activities so we could learn more about them.

I remember a quarry in Vermont like Chrysler it was also going broke and was finally saved by an employee buyout. What this usually meant was that each employee would put up X number of dollars to be a part or complete owners of the enterprise. We asked a local newspaper reporter to keep track of how things developed at the Quarry. His earliest reports indicated, “not much change.” The former management team remained in place and the employees continued beefing about them pretty much as they had done before they were the owners. As reported, employees complained that things were just about the same. The employees had real difficulty in understanding their new role as the owners. Old habits do not change with a shift of titles. Eventually the Quarry went belly up anyhow.

Part of the problem back then with employee ownership was it almost always happened in companies that were seriously failing.Very much like the Chrysler buyout today. ODay boats was a perfect example of the failing company syndrome. ODay was a famous sailboat name. (I owned three different ones back in my sailing days.) There was a real interest on the part of the ODay employees to buy it. By the time I learned that it was going broke it was simply to late for an employees buy out. It was already being sold off piece by piece by Lear the company who had bought it only to sell off the pieces.

There were some plans for employee ownership that still exist. A most popular one was the Scanllon Plan. That is basically a stock purchase system. Employees can put aside X number of dollars a month from their paycheck to purchase company stock. As stockholders they then could be represented on the company board. What I find in common with the present Chrysler plan is the employees anteing up to try to save the company. The scenario is not that complicated. Diamler Benz who owned a majority share of Chrysler could not make a go of it. Cerberus a private investment holding company couldn’t make a go of it. Now Fiat, whose track record I wouldn’t brag about is a 30 percent part of the save Chrysler prescription. So it’s probably a pretty sick cookie. Time to give it to the employees.

The employees who are now majority stockholders are going to have to make continuous sacrifices in order to try to keep the ship afloat. To stay afloat a number of variables have to change. 1.The market demand for automobiles has to start to grow again. Presently even the market for popular cars is at a standstill. 2. Chrysler has to come up with a product that people are going to want to buy. In the crowded highly competitive market that is a very big order. Toyota, Nissan, Honda and yes even GM, next candidate for bankruptcy has some potentially interesting cars out on the test track. So you can see this is quiet a big challenge for the UAW as the new Chrysler majority stockholder.

What I find so sad in the Chrysler scenario is a company in bankruptcy is taken over by the union of the employees. They are now expected to somehow or magically to pull it out of the dumps and make it once again a profitable enterprise. If they do it it will probably be at great cost to the UAW members who work there. If they don’t the wise asses out there will say, “see we told you worker can’t run a company that’s proof that socialism never works.”

Without going to into the socialism issue which is erelevant to the present discussion I could point out that there are a number of cooperative employee owned Plywood Mills in the Northwest that have been operating very successfully for many decades. They are profitable and pay handsome dividends to the employees who own them. By industry standards they are considered the most efficient plants operating in the US. Anyhow they are not comparable to the Chrysler problem. I wish they were.

Thank Kate N.H.W.Y.