Autoworkers Push for Big 3 Ownership

Retired Jeep Chrysler worker Michele Mauder knows hers is an uphill struggle, but it is one she is tackling with gusto. In quick visits to Washington, D.C., to lobby members of Congress, and in house meetings in Michigan and Ohio, Mauder is struggling to save the American autoworker.

“No one else is talking about saving jobs,” Mauder says. Pointing to Chrysler’s proposed deal with Fiat, “they’re talking about Fiat building small cars and shipping them here to sell through Chrysler’s dealer network. That doesn’t help taxpayers, workers or retirees,” she says.

While any number of corporate and government committees are discussing ways to save America’s “Big 3” auto companies — GM, Ford, and Chrysler — Mauder says the only way to do it that benefits workers, communities, and taxpayers, is to fundamentally restructure the way the companies do business and make the employees the owners. Together with about 200 active and retired autoworkers, including some former members of Chrysler’s senior management, she has formed the American Auto Workers Ownership Committee (AAWOC) to promote the idea of employee ownership. Mauder is president of the committee. Robert Mason, who says he formerly helped plan corporate strategy in the office of the CEO of Daimler/Chrysler, is the chairman of the group.

“I am hopeful, with a new administration, that they will look at some new alternatives,” Mauder says. The group’s efforts to meet with the administration’s auto task force have been unsuccessful so far.

Mauder’s basic idea is simple: the federal government should take over GM, Ford and Chrysler; finance retooling for smaller, greener cars, and sell companies to their workers. “Let’s cut out the big gas guzzlers that aren’t selling and replace them with fuel efficient cars,” she says. Instead of importing electric or fuel-efficient cars, “we want our people to build them,” she says.

Current plans being floated by GM and Chrysler call for the federal government and the United Auto Workers union (UAW) to own the majority of each company. The AAWOC opposes those plans. “We want all of the workers, from the lowest-paid line worker up through senior management, to own the companies, not the Union,” says Mauder, who was a union representative for four years while she worked at Jeep. “Right now, the International Union has negotiated nothing for the employees,” she says.

Mason points out that the federal government already controls GM and Chrysler and is restructuring their long-term debt. The question everyone is looking at is what happens after that. The AAWOC says: issue new equity and put it in a trust fund to distribute to employees under an employee stock ownership plan (ESOP). Employees then would buy the stock with the profits the companies make. Mauder and Mason recommend structuring concessions to assure a profit. They say base pay and benefit package should allow the companies to make “one dollar profit” at current sales levels.

“We all know employees have to give concessions, but we should get something in return so that when the companies become viable again we get something for our concessions,” Mauder says. And that “something” should be ownership. Mauder adds, however, that labor and labor-related costs account for only one-third of the auto companies’ fixed costs, and only 5 percent of their corporate budgets. Cutting management costs and trimming product lines also have to be part of the restructuring plan, she says.

According to the ESOP Association, approximately 11,500 U.S. companies have ESOPs, and they involve over 10 million employees. At 7,000 of those companies, the ESOPs are large enough to affect corporate strategy, and about 2,500 of those companies are 100 percent employee-owned through ESOPs.

Mauder argues that 100 percent employee ownership through an ESOP will reorient the corporate strategies of the domestic car companies away from short-term stock prices and towards their long-term viability. In part, that is because employees can’t cash out their stock until they leave the company or retire, at which time the company buys it back from them. As stockholders with limited cash out opportunities, employees would have an incentive to work for the company’s long-term health and to select directors, who do the same. She looks to employee ownership as model for growing auto and other manufacturing jobs in the U.S. and revitalizing communities that depend on them.

This is Mauder’s second ESOP proposal. When Daimler decided to sell Chrysler in 2007, Mauder put together a proposal for buying the company with a leveraged ESOP. She got help from experts at Kent State University and had the backing of her local union. The International Union, however, opposed the plan, she says, and supported the sale of the company to Cerebus, a private equity firm. “Jeep has had numerous owners. We made money for Chrysler, but we were just getting swallowed up in their mess,” she said in explaining her initial motivation for looking into employee ownership.

AAWOC is Mason’s second attempt to shop employee ownership, too. Independently of Mauder, he says he championed the idea of an ESOP in senior management when Daimler decided to sell the American automaker and even put together a model of how it could work. But, “the notion of 100 percent employee ownership wasn’t popular,” he says. Later, he learned about Mauder’s effort. In December 2008, he contacted her through work after the crisis at Chrysler had become public knowledge. “I told her this was the only thing that could work,” he says.

“This is the only solution with an upside potential for workers,” Mauder says, and by developing production and new technologies in the U.S., it is also the only solution with an “upside potential” for U.S. taxpayers and communities.

AAWOC’s model is for national auto companies that “right-size production” to the market instead of “super-sizing demand” with incentives, as Mauder and Mason explained in a recent pitch to Congressional leaders. “We believe in competition, but we also believe the Big 3 should cooperate more,” she said. “Instead of competing so drastically, they should complement each other. Each one should do what they do best. So, if Chrysler makes a good minivan and Ford and GM don’t, Ford and GM should stop making minivans,” she says, “and then let’s cooperate on research and development.”

Pointing to the $7 million that the Obama administration has allocated for a study by the Boston Consulting Group of the future of the auto industry, Mason says, “They are going to come up with the traditional recommendation to cut your way to prosperity. All we’re saying is let’s at least look at another way. Carve out some of that money for a minority report. If it is not viable, we’ll go home.”

“We want our people to be a part of the process and for them to get something in return for what they give up,” Mauder says. – Peter Downs (

Peter Downs, a writer and editor based in St. Louis, is a former autoworker and former local UAW officer. In 1988, he authored a commentary, published by the St. Louis Post-Dispatch, that called on General Motors to start production of hybrid gas/electric cars.


Jan Baker Sunday, May 3, 2009 at 7:14:00 AM CDT  

This is so exciting! This is the real deal! Please follow up--how can we help? How can we help? I know I can promote through my blog. Who should I be writing letters to?

This is what they should do for green energy initiatives, too--coops. This is what they should do to solve the mortgage crisis--coops (owned by the homeowners, same limited cash out to prevent flipping--? There's a political party already calling for this, I should look it up again.) This is what they should do to finance all future space projects with commercial possibilities, at least.

I don't know enough about economics to speak with authority, but speaking just for myself, it seems that what is needed is a mixed economy, not socialist/capitalist but distributist/capitalist, with only non-essential items at play in the speculative financial world (the stock market). Health care, housing, education, and perhaps food, ought to be coops, with no speculative growth. The capitalist end ought to be structured so that big concentrations are encouraged to break up and sell off--over generations, or at least decades, not months!! It also seems to me that this is what all the encyclicals about the life of workers in modern times is about--not farm land ownership (I don't think a person could 'make it' on today's farm economy, with a small holding)but cooperative ownership of enterprises modeled on the larger scale. And coops work today! I just got two books from my public library on the organization of coops, there have been initiatives that were successful up into the nineties at least.

A party that put forward proposals such as this and stood for total respect for human life--that party could win! And work!

It's Sunday and I'm on my way to mass and I'm going to pour out my heart to Almighty God that He put His shoulder behind this effort. And then I'm coming home and read this article again and figure out what I can do to help. Bless you for putting this before us.

I'm so excited! Thank God, a voice of reason in a desert of chaos.

Janet Baker Sunday, May 3, 2009 at 7:18:00 AM CDT  

By the way, I'm a follower of this blog but I didn't learn of this post through a notice, but through my long-standing daily google on 'distributism.' Do you think that feature is working? Doesn't it work instantly, when a new post appears?

Mark Sunday, May 3, 2009 at 3:31:00 PM CDT  

One could find so much that is wrong with modern man in this article, not to mention the flawed understanding of the marketplace.

The initial comment that solutions should be found that benefit "taypayers, workers and retirees", as opposed to "shareholders and consumers" illuminates the issue perfectly; the desire to separate capital from those who have and it and eliminate the preferences of the consumers in favor of policies dictated by government workers.

Unless we permit the market to work through the inefficiencies which have found a home in these companies over the last 50 years we will only worsen any injustice born by "communities" and perpetuate it.

Don't hold your breath.

Janet Baker Sunday, May 3, 2009 at 6:56:00 PM CDT  

With all due charity, Mark, the Church predates capitalism and stockholders and is not to be identified with it, nor the economic programs she favors to be identified with it. Please cite a single encyclical that says that the most important consideration in choosing a just solution to economic problems is the solution that favors stockholders. Rather, the stated mission of the Church is to help people get to heaven, to reduce the temptation into which they are led, to promote for them the most peaceful life. They can have that as participants in cooperatives, which gives them inalienable private property (unlike income redistribution schemes) but also a much larger degree of security, and autonomy.

Please investigate Mondragon, in Spain, a large collection of cooperatives. Shoot, investigate my own bank, the Riverset Credit Union, in Pittsburgh, formerly the Pittsburgh Teachers' Credit Union. They had zero exposure in the recent sub-prime scandal, perhaps because their ownership structure lets in lots of sunshine. And they don't invest in real estate, they told me.

See if you can get a book at your local public library called Putting Democracy to Work, by Adams and Hansen. Don't be put off by the gratuitous use of 'democracy.' Cooperatives pre-date democracy. Altho in terms of the root meaning of the term, they are democratic. This book has a checklist for well-designed worker-buyouts. Not you, Mark, you won't have that book in your local library; you live in, where, Guatamala? Saw your site.

Hey where are the distributists??

Tom Laney Tuesday, May 5, 2009 at 6:47:00 AM CDT  

Thanks Jan! Our interest in this should be to get the foot in the door Michele has opened, try to support her against the crush that is coming from the UAW and politicians and push common people in the direction of Mondragon.

The UAW has accepted what appears to be mounds of stock that should give it control of Chrysler. But the UAW settled for a single seat on the Chrysler Board, one more indication that the UAW Porkchoppers have no problem with Chrysler management.

The UAW has an opportunity here to revolutionize Chrysler production and ownership ala Mondragon.

Do you think there is any way to force the UAW to even consider Mondragon?

Mark- What is your position on Madison Avenue influencing the market?

Jan Baker Tuesday, May 5, 2009 at 7:52:00 AM CDT  

In 'flawed understanading of the marketplace' I think Mark might be referring to Michele Mauder's comment that they'd make green cars. And this has been contrary to the 'market place' insofar as apparently they don't sell here, the gas buzzlers do.

But when the marketplace doesn't serve mankind, then we're supposed to mess with it. We do so in many areas. It's not 'marketplace dependent' to save handicapped children, for example. It's early and I'm rambling but the market place sometimes needs a check. Sometimes. And cars might really not be the place to start (there's some rumble that electric cars, for example, are actually more polluting than gas using ones, due to the way we produce electricity, and it would take the ten or so years I have left in life for me to get to the bottom of that!!) The thing is, this idea, cooperative ownership, needs to get out into the world, because while it might not be a solution for cars, it sure might be for a. health care b. those new oil fields they want to develop c. the mortgage industry (houses ought to be out of the speculation game)

Tom Laney Tuesday, May 5, 2009 at 9:45:00 AM CDT  

As I understand the Catholic position on the marketplace, business, commerce and trade are supposed to serve the community at a fair profit.

That has not happened in the auto industry in a long, long time. Or any other industry aside from Credit Unions, Catholic Worker farms and Mondragon that I am aware of.

The unfree market is destroying us.

Greg Wednesday, May 6, 2009 at 2:46:00 PM CDT  

Great post!

Didn't Ford just announce they are going to convert an all-truck plant to an all-electric plant, making alternative energy cars?

Actually I can't remember if it was fuel efficient or fully alternative cars. Let me try to find an article and post it..

Greg Wednesday, May 6, 2009 at 2:49:00 PM CDT  
This comment has been removed by the author.
Greg Wednesday, May 6, 2009 at 2:51:00 PM CDT  

Here is one:

It doesn't address the idea of employee ownership, but at least it's keeping jobs in the U.S.

Aaron Thursday, May 7, 2009 at 1:52:00 PM CDT  

I pray that they succeed and put a stop to what could be the total breakdown of North American manufacturing. They should retool to build buses, Railcar, and other mass transit systems not just cars. We need to get away from cars. Cars are evil, even the green ones.

They should also build tractors, modular housing, and modular nuclear power plants for here and the developing world.

They should start figuring out how to mass produce plasma converters so we can stop dumping garbage in landfills, Rivers and Ocean and recycle everything in virtually closed production loop.
I can think of so many things that have to be done but the “market” just can’t seem to do anything but beg the government for handouts and placing bets on paper.

Quote: "Unless we permit the market to work through the inefficiencies which have found a home in these companies over the last 50 years we will only worsen any injustice born by "communities" and perpetuate it.

Don't hold your breath."

And I won't hold my breath believe that "the holy market" will work through the inefficiencies. Markets do not create efficiencies in most cases even with perfect competition. This idea that markets can autocorrect to produce come a bad understanding of dynamics and a belief in static equilibrium. Human being must think to exist in this world and not just place blind faith in some autocorrecting “market” as kind of all knowing being that will always find the right solution. For a rebuttal of the idea that firms in market competition will figure out how to maximize efficiencies, profits, or anything at all please check out this paper.

Tom Laney Friday, May 8, 2009 at 5:05:00 AM CDT  

Greg- Ford will build an electric Focus at the Michigan Truck plant in Wayne , MI, just outside Detroit.

JimB Saturday, May 16, 2009 at 11:25:00 AM CDT  

Thought this may be of interest to someone - I'm on their email list

Transferring Ownership to Employees in Business Transitions

About This Meeting
This day-and-a-half program brings together leading experts from around the country to provide a practical, step-by-step guide to determining the best way to provide for business transition through some form of employee ownership, including a tax-favored employee stock ownership plan (ESOP) and direct sales to employees. We will also briefly explore other ways to sell a business. The session is strictly educational; speakers focus on the issues, not on selling you on their services. You'll also have ample opportunity to talk with other attendees and to work through individual concerns one-on-one with experts.

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