Detroit Free Press, September 7, 2008, Sunday

Detroit Free Press

September 7, 2008, Sunday

Detroit Free Press

UAW resort losing millions; Union funds Black Lake golf course

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER

BLACK LAKE -- Down a lonely country road far from the interstate hangs a banner at the UAW's golf course: "Public welcome."

But a review of the golf course and adjacent education center's financial statements indicate that not enough people have been visiting.

The UAW International's golf course and education center operations on 1,000 acres near Onaway have together lost $23 million over the past five years, independent audits obtained by the Free Press show.

Both are run as for-profit corporations, according to paperwork filed with the U.S. Department of Labor, and the UAW has been propping them up with loans.

"There's a lot of debate over what to do," said Arthur Wheaton, a union expert from Cornell University. "They've been having trouble there trying to get enough people to go through there to justify the expense," he added.

The facilities are reminders of another time when the autoworkers' union was flush with dues-paying members. But now the U.S. auto industry is losing money, the UAW is losing members and some people are questioning the need to keep the money-losing operations.

The UAW and others defend the properties as important assets and point out that President Ron Gettelfinger has been aggressive about cutting costs to protect the union's financial health.

While the UAW International has a huge reserve of money, the union filed financial records with the federal government stating that it spent about $2.7 million more than it took in during 2007 -- the third time over the past five years that the union spending exceeded receipts, records show.

"All you have to do is look at the membership trends and realize that there was a golden age when they could easily support the education center," said Hal Stack, director of the Labor Studies Center at Wayne State University.

"It could be that either things turn around or they sell it," he added.

From a peak of 1.5 million members in the 1970s, the UAW ranks have dropped to just 465,000 regular members, according to its most recent federal filings.

In 2007 the UAW had receipts -- union dues, fees and other income -- of $327.6 million and it spent $330.3 million. While losing members, the UAW International, since at least 2000, has been able to hold fairly steady in the amount of money it brings in and spends, according to federal records. It has $1.2 billion in net assets.

Gregg Shotwell, a UAW activist, is not troubled to learn that the education center is losing money. "When you are educating and training union members, that's the business of the union. That's never a loss," Shotwell said.

But the golf course is a different story to Shotwell. "We should be running a union -- not a country club," he said.

The education center, which opened in the 1970s, was legendary UAW President Walter Reuther's dream -- a place where workers could "gather and learn and work together to build a community and solidarity that would help build a strong unity as part of the educational activity," said Roger Kerson, a UAW spokesman. "That vision has certainly succeeded."

Walter Reuther's vision
The Walter and May Reuther Family Education Center, or Black Lake, as it is often called, clearly holds a special place in UAW history.

"UAW members -- if you've never been to the UAW Family Education Center at Black Lake, it's worth begging your local union president for an opportunity to attend a conference here," Dona Jean Gillespie, of UAW Local 602 in Lansing, wrote on her blog, Blue Collar Heart, last month. "There's a peace here at Black Lake," as though Walter Reuther's spirit were present.

Last year, 9,000 members attended classes at the education center and 13,000 rounds of golf were played, including 1,000 donated for charity events and such, Kerson said. UAW members played 4,000 of the rounds, he said.

"The UAW family education center is an integral part of our union. It provides very important training and education activities for our members," Kerson said. He declined to talk about specific operation numbers or plans for the future.

The UAW Web site says the Black Lake facilities are funded from interest on the union's strike fund. "No union anywhere in the world offers an education center of this magnitude to its members. With its stunning design, beautiful location and warm, open atmosphere it is the envy of labor educators."

Course cost $6 million
The UAW opened the adjacent Rees Jones-designed golf course, which reportedly cost at least $6 million, in 2000, before Gettelfinger became the union's president. The UAW said that it has won several honors, including rankings by Golf Digest and Golf for Women magazines.

UAW members and retirees get a 20% and 30% discount, respectively, on greens fees, according to the course's Web site. Golf with a cart on a summer weekend costs $85 for 18 holes. The course offers five tees on nearly every hole to reflect a golfer's skill. The par 72 course can play from 5,058 yards to 7,030 yards.

"Our objective is to make it a state-of-the-art facility that continues to provide the best possible education for our members, while also giving the center the potential to be used during off times as a conference center for outside groups," the golf course's Web site quotes Gettelfinger saying.

Wheaton, the union expert from Cornell University, estimates that he has taught training courses at the Black Lake education center around 40 times over as many as 10 years. "We were part of doing training programs for the UAW and Ford several years ago, and they started to say instead of teaching in other places we want to do many more of our programs at Black Lake, specifically to help utilize the facilities," Wheaton said.

Wheaton said the UAW opened the golf course with the hope of attracting more people to the facility, even going so far as to invite the public.

Stack, the Wayne State labor expert, said the education center "has been losing money for some time."

"In the old days, they had a percentage of the per capita that supported the education center. Obviously when they had a million-and-a-half members, that was no problem," Stack said. "As they have declined in membership and dues income, their budget available to support the education center has subsequently declined."

Stack added: "Given what's going on in the economy, they don't have as many members to go up there as used to be going up there all of the time."

When the Detroit automakers hire workers at a second-tier wage allowed under the new labor contract, Stack said he could see an immediate need for the education center to help train new members. "One could argue that the educational effort becomes even more critical," he said.

Loans keep center afloat
Both the resort and golf course are held by a UAW-controlled holding corporation called the Union Building Corp, which is a not-for-profit organization that holds real estate for the union, records show.

The golf course is operated by a for-profit corporation called UBG Inc., which was set up for just that purpose, Labor Department records say. The education center, which reportedly has rooms to sleep 400 people, is operated by the for-profit UBE Inc. The union values the center at $27.3 million.

UBE's management of the education center has generated revenue of about $30 million over the past five years -- and net losses of $20.5 million. The operations were hit hard last year by a $5.9-million payment to an employee pension fund. And from 2003 to 2007, revenue at the education center dropped by 18%.

Over the same five years, revenue at the golf course dropped about 14%. Over five years, UBG has generated a net loss of $2.6 million. Records indicate that since opening in 2000 the golf course has never turned a profit.

Audits of both UBE and UBG by Clarence Johnson, a certified public accountant from Royal Oak, said UBE had a negative retained earning of $20.6 million and UBG had a $4.2-million negative retained earning at the end of 2007. The two entities had loans payable to the UAW International worth a total of $24 million.

Aside from the loans, UAW International's financial statements show expenses to the UBE for several conferences and other activities. In 2007 alone, the UAW International paid UBE $3.3 million for services.

Also, the union's executive board is authorized to transfer money to UBE "to help supplement the cost of education activities at the Family Education Center," a past financial statement to members said.

The losses at Black Lake are small compared with the UAW International's overall budget, said Sean McAlinden, an economist and labor expert from the Center for Automotive Research in Ann Arbor. "That's not going to bother them for a while, but I bet it's something that they're working at."

Contact TIM HIGGINS at 313-222-8784 or thiggins@freepress.com.