Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, December 23, 1993                   TAG: 9312230173
SECTION: BUSINESS                    PAGE: B6   EDITION: METRO 
SOURCE: STUART SILVERSTEIN LOS ANGELES TIMES
DATELINE:                                 LENGTH: Medium

UNION BUYOUT COULD BE WAVE OF THE FUTURE

Experts said the complicated bid for Unit- ed, which calls for the unions to grant major concessions, could spur other transportation and manufacturing companies to reorganize along similar lines.

"Finally, America has an example of an alternative to slash-and-burn restructuring," said Joseph Blasi, a Rutgers University expert on employee ownership. "We're going to see a lot of major companies use this model of restructuring.

Experts noted that the proposal by United's unionized pilots and machinists for employees to buy at least 53 percent of the carrier is a landmark agreement partly because of its size. The complicated transaction, valued at $4.55 billion or more, would be more than twice as big as the nation's largest employee buyout to date.

But perhaps more important, say advocates of employee buyouts, the agreement is the first time that employees have initiated a buyout of a big, still-healthy company because they want a say in mapping its future, along with saving jobs.

"You can strike over wages and working conditions, but you can't strike over business decisions. The unions at United realized they needed a new tactic, and this is it," said Corey Rosen, executive director of the nonprofit National Center for Employee Ownership in Oakland, Calif. "If this is successful, other employee groups will want to do it, too. If you can do it at United, you can do it anyplace."

Henry Hansmann, an economist and law professor at Yale University, said the deal appears to be "the only way" United and its unions "could find to renegotiate their labor contracts. And that's how it should be seen, rather than as a real shift in control."

In fact, Hansmann said that control of the company could become a critical and divisive issue for United later on. He said one key rule of employee buyouts is that they work best when the workers involved have similar economic interests.

Hansmann noted, however, that at United and other airlines, the pilots and machinists unions have often viewed each other as rivals. "Every dollar more that they [machinists] get paid is a dollar less the pilots get paid," he said.

While conceding that the employee buyout trend is likely to spread largely as a way to extract wage concessions from unions, Hansmann said its impact will be blunted by the fact that most U.S. companies aren't unionized.

Employee buyouts already are common in the airline business, which has been hurt in recent years by such factors as high labor costs, low productivity and stiff competition.