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inherent in union ownership become most apparent during collective bargain- ing. As an investor, the UAW is interest- ed in lower labour costs and enhanced competitiveness. As a union representa- tive, the UAW seeks more jobs, higher wages, and job security. Reconciliation of these competing interests is not an easy task. The North American labour relations structure encourages unions and companies to settle their differences through the use of economic clout: for the union, the right to strike. For the company, the wherewithal to withstand a strike. It is no surprise the right to strike has been suspended as part of the deal seeing the UAW in the dual roles. The conflicts in UAW's agreement mirror those of unions participating on the boards of companies whose workers they represented in the 1980s. United Air Lines, Inc., experienced difficulties when two of its unions achieved owner- ship interests in the airline, including seats on the board, in exchange for wage concessions. Union-nominated direc- tors struggled to balance their fiduciary duties to shareholders with their ongo- ing obligations to the union. Hyatt Clark Industries, a former bearing manufacturing division of GM slated for shutdown, was resurrected in the 1980s as an employee-owned corporation. Employees, represented by the UAW, accepted a 25-per-cent pay cut and invested millions of dollars to finance the corporation. In exchange, the union received three seats on the board of directors. Initial wage sacrifices by workers early on led to modest oper- ating profits. By 1985, however, the con- flict between ownership and bargaining agent surfaced. Management sought to reinvest profits rather than increasing employee compensation. Workers began a work slowdown that, combined with increased competition, resulted in Hyatt Clark's declaration of bankruptcy, plac- ing the union-nominated members of the board in an impossible situation. When properly structured, union input at the board and ownership level can result in a positive contribution to organizational success. But under our system of labour relations the balance between ownership and employee repre- sentation is simply not sustainable over the long term. There is nothing in the UAW/GM/ Chrysler agreement that effectively cir- cumvents this inevitability. Unlike the experience of the 1980s, the UAW is not drunk with the prospect of influence at the board and ownership level. The deal was one driven not by ideology but rath- er by the practical reality of a disastrous alternative. The suspension of the right to strike until 2015 is revealing. The deal between the car companies and their union is a short-term survival strategy with a five-year window. The union's ownership interest is fleeting. The UAW will no doubt jump at the first lucrative opportunity to sell its stake and quickly and comfortably slip back into its tradi- tional role of representing people rather than running corporations. IH Henry Dinsdale and Jeff Goodman are labour and employment law partners with Heenan Blaikie LLP in Toronto. Heenan Blaikie is now at the Bay Adelaide Centre, a LEED® Gold Standard building in the heart of Toronto's downtown business district. We are excited to introduce you to our new home, reflecting our values, as well as our commitment to evolve in an ever changing environment. As always, innovation, attention to detail and practical solutions will be the hallmarks of our client service. We remain committed to meeting our clients' business needs and surpassing their expectations. We look forward to welcoming you to our great new space. Queen St. W. Osgoode Station Our new office address is: Bay Adelaide Centre 333 Bay Street, Suite 2900 PO Box 2900 Toronto, Ontario M5H 2T4 Canada Richmond St. E. Adelaide St. W. * King St. W. St. Andrew Station Front St. W. King Station Front St. E. Queen St. E. Queen Station Heenan Blaikie LLP • La wy ers I Patent and Tr ade-mar k Agents Calgar y Sherbrook e Otta w a 8 • OCTOBER 2009 Untitled-8 1 Toronto Montreal Vancouver Q uébec Trois-Rivières Victor ia P ar is Singapore • heenanb laikie .com INHOUSE 8/24/09 11:25:03 AM Yonge St. Bay St. University Ave. We've Moved! Over 480 business lawyers and professionals across the countr y and around the world.