Labor unions in old-line industrial sectors have watched for years as their well-paying jobs have been shipped off to low-wage countries. In the past year or so, the United Steelworkers union tried to counter the trend by devising new strategies for companies such as Goodyear Tire & Rubber Co. to become competitive. A key player has been Ron Bloom, who joined the United Steelworkers after helping the union from his perch as a Wall Street investment banker. After getting an MBA from Harvard Business School, Bloom, now 48, spent five years at Lazard Freres before decamping with a colleague in 1990 to set up an invstment advisory shop aimed at helping unions do buyouts and employee stock purchase plans. In 1994, their firm advised the Air Line Pilots Assn. as it led other airline unions to purchase 55% of UAL Corp.'s United Airlines Inc. (UAL). Two years later, after doing numerous smaller buyouts for the USW in the troubled steel industry, Bloom decided to join the union full-time. He shared his perspective with Detroit Correspondent David Welch:
Wall Street and Big Labor don't usually see eye to eye. Yet you're hiring investment bankers to help in the union's negotiations. Why?
In Wall Street parlance, workers are unsecured creditors in terms of their claims on a company. So in any major bargaining with a company that's in trouble, we try to get in and understand why the company isn't doing well.
The new Goodyear contract has terms that force the company to refinance its debt quickly and keep plants here. Are you trying to dictate management's policies?
We're trying to express a business model through collective bargaining. Other people take the low road, either by building everything someplace else or by beating up the workers to get concessions here. We think the company should be a patient, long-term builder of value for the employees and shareholders.
In addition to the stipulation about refinancing the debt, the new contract limits executive pay and the use of stock options. And you won a seat on the board. It sounds like you don't trust management.
We're not going to save this company and then go back to the old ways of doing things.
Despite all the job and wage cuts the union agreed to, Wall Street analysts are saying the contract may not go far enough. Does it?
Here's the problem: Wall Street wants simple, quick answers. All they wanted to know is how many plants would be shut down. But if all the manufacturing companies run away from North America, that's not a plan.