UAW resort losing millions

UAW resort losing millions
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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."


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