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G.M.’s New Owners, U.S. and Labor, Adjust to Roles

For decades, the United Automobile Workers had a simple strategy for getting what it wanted from the carmakers — it would go on strike. The tactic proved so successful that the mere threat of a walkout often won better wages, benefits and job security.

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Now, with General Motors and Chrysler in bankruptcy and the union a major shareholder in both through its retiree health fund, life has become a lot more complicated for the U.A.W.

The union, which was born of labor strife, has pledged not to go on strike against the two companies before 2015, as part of the rescue plan hammered out by the Obama administration. Whether this brokered peace helps end the antagonistic relationship between union and management could determine the future not only of G.M. and Chrysler, but also of the U.A.W. itself.

With the union’s health fund set to own 17.5 percent of G.M.’s shares and 55 percent of Chrysler’s, the U.A.W. will both represent workers and be an owner, a novel dual role.

“We don’t run corporations. We represent people,” said Brian Fredline, president of the local representing 3,000 workers at a G.M. plant in Lansing, Mich.

Some industry experts predict that the union, far more than before, will help management increase profitability — with the goal of pushing up the automakers’ stock prices. A higher share price could mean billions more for the retirees’ health plan, helping to ensure ample funding for decades to come.

But other experts say the union will stick to its traditional truculence, focusing on preserving jobs rather than maximizing profits and share price. As evidence, these experts point to the union’s recent, successful campaign, directed at G.M. and the Obama administration, to prevent the automaker from importing small cars from China, a move that would have increased G.M.’s profits while very likely reducing the number of domestic automobile jobs.

“I don’t think the union is going to act that different,” said Harry C. Katz, dean of the Cornell University School of Industrial and Labor Relations. “I wish it would, but mostly things won’t look that different.”

In fact, over the years the U.A.W. has taken two different postures toward Detroit: by turns, hard-charging adversary and strategic partner. Sometimes the union has been an unyielding bargainer, leading to strikes that have lasted for months as well as to much-derided perks, like overtime pay for union members who work less than 40 hours a week. But other times the union has worked with management to assure labor peace, raise productivity and, over the last few years, push down labor costs.

One example: when G.M. was hurting in 2005, the union agreed to establish the retiree health plan, known as a voluntary employees beneficiary association, to save the automaker $1 billion a year in health costs.

Union officials acknowledge their discomfort with the union being a major shareholder. “The reason we’ve received this equity stake is we’re trying to help the corporation survive and fund the VEBA,” Mr. Fredline said.

The Obama administration has pushed hard to bring out the U.A.W.’s cooperative side, evidenced by the union’s agreeing to a wage freeze and the no-strike clause.

But the union is likely to continue fighting future layoffs, plant closings and line speedups — there are many ways to pressure management without going on strike.

“They’ll want to maximize the number of jobs for their members, and they’ll use their influence for that,” said Sean McAlinden, chief economist with the Center for Automotive Research. “And there are other fears the industry has — they might want to force G.M. to only use unionized suppliers. And they could use their political influence to make it easier to organize the international automakers in the South.”

Under the rescue plan, the federal government will own 60 percent of G.M.’s stock. It might be politically difficult for the union to confront the federal government if it were managing the company. But President Obama emphasized on Monday that he wants professional managers, not the government, to run the company.

While workers often feel an initial thrill about employee ownership, after several weeks of drudgery back on the assembly line, the thrill sometimes wears off and the us-against-them attitude toward management reasserts itself.

But Christopher Mackin, president of Ownership Associates, a firm based in Cambridge, Mass., that advises businesses and workers about employee ownership, argued that the U.A.W.’s roles need not conflict.

“When you get workers to understand they are the owners of the enterprise,” he said, “they realize there are two significant bites of the apple: one is when you get paid in current compensation, and one is what you get paid for success” through profit-sharing or an employee stock ownership plan — although he noted that VEBA stock ownership differed from traditional employee ownership.

Some employee-owned companies have failed, however, because management, mindful of their employee owners, often gave in to wage demands. That, some analysts say, helped drive United Airlines into bankruptcy when it was employee-owned.

For this reason, industry experts say, the Obama administration structured the G.M. and Chrysler plans to lessen the union’s voice in management. The retirees’ health fund has six public-appointed trustees and five union-appointed trustees. Though the union health trust owns 55 percent of Chrysler, it will hold just one seat on the Chrysler board. And at both automakers, the health fund’s shares will be nonvoting.

All this makes clear, one administration official said, that the union will not dominate and “this will not be Gettelfinger Motors.”

The U.A.W. president, Ron Gettelfinger, says he wants to sell the health fund’s shares as soon as practical. The union’s advisers have warned it would be unwise to tie up so much of the fund’s assets long term in a single company’s shares.

This, some say, could cause the U.A.W. to make nice, at least for a while. “In order to sell their shares at a good price,” said Maryann Keller, an auto industry analyst who runs her own consulting firm, “they’re going to at least give the appearance of helping maximize profits.”