What Merger Talks Could Mean for Autoworkers' Union

A recent Detroit Free Press article, GM, Chrysler deal could spur UAW concessions, underscored many of the issues we discussed today. Among others, consider this excerpt:

Peter Morici, a University of Maryland business professor and former chief economist at the U.S. International Trade Commission, said Chrysler should be allowed to file for bankruptcy.

"The simple fact is that the best solution for Chrysler is Chapter 11 to remove the burdens of the UAW contract and scale down the company to something one half to two thirds its current size," Morici wrote in an e-mail Monday. "That would serve GM's interests, too -- both Ford and GM would benefit from some capacity and cars going off the market."

Morici noted that if GM acquired Chrysler's Jeep brand and minivan program, "GM would still have to pay heavy severance bonuses to workers it laid off streamlining their operations, similar payments would be required to shutter much of Chrysler's unattractive truck and car operations, and GM would still have to fund the union health care fund for retired Chrysler employees.

"Those costs" are "simply more than the Jeep and minivan franchises are worth."

With both bankruptcy and merger talks looming, this should be an interesting process to watch.