The Wall Street Journal, May 21, 2009, Thursday

The Wall Street Journal

May 21, 2009, Thursday

The Wall Street Journal

Union's Rich Assets Recall the Glory Days

By KRIS MAHER

The United Auto Workers is sitting on $1.2 billion in assets, making it, by that measure, the richest union in the country by far.

Among the UAW's assets: $700 million in U.S. Treasury securities; $321 million in other investments, mainly securities; and $100 million in fixed assets, including a $3 million townhouse in Washington's Dupont Circle and a $33 million lakeside retreat and golf course.

Altogether, the union's investments generated about $38 million in interest in 2008, according to the UAW's latest filing with the Labor Department.

The auto industry's implosion has hurt the union, leaving it with fewer dues-paying members. Last year, it took in $161 million in dues from 431,000 people, according to its filings, down from $206.5 million from 654,000 members four years ago.

But the union can't readily use its funds to help members who lose their jobs -- or to cover operational costs or provide money for political campaigns, according to Jerry Tucker, a former UAW regional director. Most of its assets are tied up in its strike-assistance fund, which had $871 million at the end of 2007.

In recent years, the union hasn't had many big strikes, and under its recent agreement with Chrysler LLC, it gave up the right to strike for six years. But in 1970, about 660,000 UAW members struck for 10 weeks, consuming most of the then-$900 million fund, Mr. Tucker says.

Long term, the UAW's financial health could hinge on what happens to the union-operated trust funds covering retiree health-care benefits. "That potential liability could be enormous," says John Russo, a co-director of the Center for Working-Class Studies at Youngstown State University in Ohio.

If the funds -- which are expected to be backed by Chrysler and General Motors Corp. stock in the future -- fall short, the union might be forced to dip into its treasury to cover some costs.

The UAW's most notable asset is the Walter and May Reuther Family Education Center, which includes the Black Lake Golf Club and 1,000 heavily forested acres in Onaway, Mich.

The union bought the property in 1967. It included a hunting lodge once used by auto executives and celebrities, including Lucille Ball and Desi Arnaz, who honeymooned there in 1940.

The UAW named its new property after its longtime president, whose ashes were scattered there following his death in 1970.

The Onaway site was envisioned as a place to train Detroit workers at week-long conferences. After a renovation in the 1990s, the property has a gym with two full-sized basketball courts, an Olympic-size indoor pool, exercise facilities, table tennis and pool tables, a sauna, beaches, trails for hiking and biking, sports fields and a boat-launch ramp.

The center offers courses on leadership, political action and civil rights, hosting about 10,000 visitors annually.

In 2000, at the height of the SUV boom, the union commissioned the $6.7 million golf course. Named the No. 2 "Best New Upscale Public Course" in North America that year, it's ranked 34th on Golf Digest's current list of America's 100 Greatest Public Courses.

But the resort has been a drain on the union, losing an estimated $23 million in the past five years and forcing the UAW to borrow to keep it afloat. Given the union's current troubles, it has become a sore point for many members.

UAW members and retirees can golf at a discount, but according to retiree and union dissident Gregg Shotwell, "It's more designed for the upper echelon in the UAW." He says, "We're supporting a luxury that doesn't add value to the union."

"I heard the golf course is spectacular," adds 40-year-old Ed Kasprisin, who has been laid off from GM's Lordstown, Ohio, plant. He says he took a weeklong course at the education center in 2002 and never saw the course. "Is that a necessity in these times? Probably not," he says.

But even if the UAW wanted to sell the course, it might have a tough time. "People are not going out and buying golf courses," says Arthur Wheaton, who teaches industry education at Cornell University. And especially, he says, not one so remote.

A UAW spokesman declined to comment for this article.