As Congress debates whether to provide General Motors and Chrysler with short-term emergency loans – Ford soon may join them – there is an ironic sideshow to all this. The United Auto Workers (UAW), long critical of management perks such as corporate jets and lavish bonuses, enjoys some perks of their own. And one of those perks has been costing a bundle in particular: the Walter and May Reuther Family Education Center, located in Onaway, Michigan, near the northern end of the state’s Lower Peninsula.
Anyone within a few feet of a newspaper during the last couple weeks knows that GM and Chrysler are facing a choice between bankruptcy and a strings-attached $17.4 billion federal government bailout. The bailout, the product of a negotiated settlement and now all but a done deal, would provide emergency short-term loans to the automakers. The terms of the agreement require, among other things, that car manufacturers pare down executive compensation and other expenses. Yet in the process of bringing up the issue, the union has invited greater scrutiny over its own operations. The UAW, with assets of at least $1.25 billion by the end of fiscal 2007, is hardly a poverty case. That’s evident from the appearance of its Reuther Education Center.
Fox News recently reported on the $33 million union-owned and operated retreat. The facility, open 11 months of the year for education, training and recreation, is little short of magnificent. Nestled among 1,000 heavily-forested acres on Michigan’s Black Lake, it includes a $6.4 million, 1,000-acre championship-caliber golf course, well-appointed hotel rooms, a fully-equipped campground, an Olympic-sized swimming pool, and a boat ramp. The problem is that the center has been losing money – $23 million, in fact, over the last five years. The situation isn’t good in itself. Worse yet, it calls into question the union’s ability to manage tens of billions of dollars in retirement assets scheduled for transfer from the Big Three automakers to UAW-managed Voluntary Employee Beneficiary Associations (VEBAs) negotiated and ratified a year ago. “It’s their members’ money that they’re spending on this thing,” said Justin Wilson, managing director of the Center for Union Facts, a Washington, D.C.-based nonprofit watchdog group. “The union has bigger issues at hand than managing a golf course.”
The center, in union hands since 1967, bears the name of the late UAW President Walter Reuther, who died in a 1970 private plane crash. The center, in fact, was the destination of that fatal trip – and his ashes are scattered at the site. So the union has some real emotion invested here. In the Nineties, under the guidance of then-President Steve Yokich, the UAW made extensive renovations. More than ever, the center is an attraction for union organizers, educators and vacation-seekers, attracting nearly 10,000 visitors annually. Full memberships are available for union members and retirees; limited memberships are available to the general public starting at $1,200. Yet the center for several years has operated at a loss. Much of the reason lies in the financing arrangement. The UAW covers the center’s operating costs out of interest earned on its strike fund. Unfortunately, the union has invested that fund’s assets in financial instruments that have lost much of their equity, prompting the union to keep the center afloat through loans.
Union members shouldn’t forgo good living. Surely, industry executives and white-collar employees don’t. All the same, there is something incongruous about the Auto Workers denouncing corporate irresponsibility, all the while losing millions operating prime real estate. Rank-and-file members might be wondering just how safe their union-managed pensions will be. (Foxnews.com, 12/26/08; Front Page Magazine, 12/23/08).