Stress testing the UAW
Today’s special report from Detroit, “Crunch time for America’s richest union,” takes a close look at the finances of the historic United Auto Workers union.
Over its 76 years, the UAW has built up a more than $1 billion war chest that has proven to be its big stick at the negotiating table and on the political stage.
Most of the UAW’s wealth sits in its strike fund, which stood at $763 million at end 2010. That money can only be used to fund strikes unless UAW representatives approve a change to the constitution, a step possible every four years.
The sheer size of the strike fund hides the weakening of the UAW’s finances, particularly since 2007, a period when the U.S. auto industry nearly collapsed and membership fell by about a fifth.
At first glance, the UAW’s financial reports show that overall cash receipts and disbursements have fallen almost exactly in tandem. But a deeper look shows that since 2007, the UAW has relied more and more on selling its investments to offset the sharp drop in dues, its largest source of annual funding.
As shown in the graphic below, in 2007 dues represented more than half the UAW’s incoming revenue, while investment and assets sales were just over 6 percent, according to U.S. Labor Department filings. By 2010, dues composed 43 percent of the UAW’s income, while sales of investments and assets were 23 percent.
Union officials say the UAW can’t rely on selling off its investments indefinitely. Their response includes steps to cut costs and to recruit new members by organizing the “transplant” auto plants run by Japanese, Korean and German automakers.
The UAW also sees the period of 2007 to 2009 as a kind of anomaly that won’t be repeated because of the crisis in Detroit during those years.
Those were “horrible years for a lot of people, and it took more assets to operate as a union than it will in the future,” UAW Secretary-Treasurer Dennis Williams said in an interview at the union’s headquarters in July.
There’s also a sidebar on the UAW’s golf course, ”Trouble at Black Lake: the UAW’s property exposure.”
To read the story in multimedia PDF format, click here: http://link.reuters.com/tuj83s