Unions Aren't To Blame For Automakers' Woes
Health care coverage, pension programs, and guaranteed vacation time for union workers is not what destroyed the auto industry. There were no union shops at AIG, Bear Stearns, Freddie Mac, and Shearson Lehman. Still, those poorly-run companies failed for the same reason America's Big Three failed. It is misfeasance, malfeasance, lack of vision, and management greed that is at the heart of the failing auto industry. But demagogue senators like Richard Shelby from Alabama and Jim DeMint from South Carolina see an opportunity in all of this management failure. They see this as an opportunity to vilify the UAW and every other labor union that has a goal of improving the lives of American workers.
The Economic Policy Institute (EPI) has studied the impact of American labor unions for a decade. They have given us the data about why the American Labor Movement matters. According to the EPI, the efforts of unions to raise compensation for their members also increases the compensation packages for nonunion workers by about 20%.
Nonunion middle-wage workers and blue-collar workers without college degrees realize huge benefits from the efforts of organizations like the UAW and AFL-CIO. One aspect of organized labor that corporate management is most fearful of is the critical role labor plays in legislative activism for all workers in issues like workers compensation for injured workers, unemployment insurance, workplace safety, wage and hour increases, and health coverage requirements.
Individual, nonunion workers are not the ones who pay for lobbyists to create legislative change. Union blue-collar workers are the ones who jump on buses bound for Washington, DC to demand fair treatment for all workers. If that centralized, organized mouthpiece for labor is destroyed, then so is the only advocacy vehicle available to the nonunion worker. Then, the Walmart formula for workers' rights becomes the new ugly reality for all of America's work force.
Senators like Shelby and DeMint have much more kinship with GM's Rick Wagoner who was paid $14 million to lose $39 billion for GM in 2007. Those senators get their campaign money not from organized labor but from characters like Alan Mulally and Robert Nardelli who flew into DC on their private jets to ask for help when collectively, they personally made $120 million for losing almost $4 billion last year at Ford, and Chrysler. These same characters chose to put up millions to lobby against national health care. They also unleashed "K" Street to fight congressional efforts to improve fuel efficiency standards on their gas guzzling products. But today, they are telling us that healthcare costs for their workers will bankrupt their companies. And they are telling us that they can't sell the fuel-hog dinosaurs they ordered their workers to build.
In light of the long-time lucrative and cozy relationship conservative senators like Shelby have had with the auto industry's country club gaggle of CEOs, you can bet there is more at work here than a senator's desire to protect taxpayers. Eight years ago, conservative strategists boldly made the statement that America's unionized labor needed to be crushed in order to end labor's political clout. The bankruptcy of GM and Ford will help accomplish just that.
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@LeftRight
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Michale, you obviously did NOT read what I wrote. The person that I was replying to said that the credit crisis had nothing to do with the Big 3 collapsing, and I called THAT a flat out lie!
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Actually, the person said, "The big 3 can't make a profitable car. They can make a hybrid car but they lose money on it."
It was that, I thought you were replying to when you said, "It's a lie"..
My bust...
Michale.....
S'okay! He had said that, but I was replying to the portion that said that the credit crisis wasn't causing the troubles.
Thank you for being the voice of sanity. No one in their right mind can justify blaming the unions for this. To suggest that the middle man is the problem is the oldest trick in the book. And everyone's read that book by now.
Unions went too far ........ did themselves in ...... got no sympathy for them nor the ignorant company CEO'S that failed all of us. Pelosi needs to go.
Wow! I am completely convinced of the thorough brainwashing that has been wrought upon my country. We complain about the disappearance of the Middle Class, yet we support policies that continue this disintegration. We complain because we can't find jobs that allow us to support our families, yet we continue to bash the Unions that help provide these good wages. We complain about fat cats of industry foundering on unearned profits, yet we continue to support policies that force them to share. America needs to wake up from this nightmare and realize that if we don't have a Middle Class, we will cease to be a prosperous nation. It is said that our economy is vibrant and healthy when consumer spending is robust. Who will buy your goods and grow our economy when there is no Middle Class? Wall Street banks are getting a handout; Union workers are not asking for a handout. They want to support their family by working. Wages are not welfare. Why do we continue to weaken our families when the family is what we claim to support the most? Unions are not to blame for automakers woes, and I do not think it is fair for unions to pay the price of poor business management. I am a taxpayer and would prefer giving automakers a bailout, helping people just like me, rather than to continue handing out massive amounts of bailout money for people whom I do not believe even know people like me.
...continue to support policies that DO NOT force them to share...
You've got it right on the money. 30 years ago if you would have tried to blame the failure of any corporation on the unions, you would have been accused of attacking the livelihood of the middle class. Three decades of unbridled corporate lobbying, marketing campaigns and disinformation later, and now suddenly the middle class has been duped into blaming it's own standard of living on the economic crisis while the idle rich walk away with the largest wealth gap in the history of this nation since the days of the robber barons.
I suggest dealing with the big three independently. GM is asking for the largest bailout. Its management has evolved the least toward cutting our dependence on foreign oil. I understand the amount they are asking for, is greater than the present value of their company. Why don’t we just buy them out? A federally owned automobile manufacturer could pursue the development of electric cars and hybrids which presently are not economically competitive. As a taxpayer, I am willing to invest in the losses that are inevitable during this transition. I feel the current business minded management should be replaced by new management with a focus on the future rather than trying to compromise the values of the past with current needs. As for Ford & Chrysler, lend them what they need to remain solvent and re-tool.
I haven’t heard anything about natural gas during these discussions of retooling Detroit. The “Pickens’s Plan” makes sense to me. There is a market for heavy automobiles that won’t go away. Soccer moms want SUVs to safely transport their families. I need a truck to plow my driveway. Couldn’t Congress pass a law that would demand any new vehicle over a certain weight run on natural gas? This would include all vehicles that are presently diesel such as semis, school busses, farm equipment, and utility vehicles. It could include personal trucks, Hummers and SUVs. Part of the stimulus package to rebuild our infrastructure, could be supplying service stations with a natural gas pumps.
@LeftRight
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Actually, that's a flat out lie!
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Actually, it's quite the truth...
The profit margin of Trucks and SUVs is huge..
The profit margin on any other vehicle is very very small..
The profit margin on fuel efficient vehicles (30+ mpg) is non-existent..
Which is why GM has less then 8% of it's models that are 30+ mpg..
It's GM's own greed that has brought them to this point.
They don't deserve to be bailed out.
They haven't EARNED a bail out...
Michale.....
Not a BAIL-OUT. That term is nothing but a hot-button talking point. Full of intended pejorative connotations. Straight out of Fox News and fringe talk radio
Far different than a loan, which is being negotiated. And as a major American industry, the Big- three certainly has EARNED the right to be heard in Congress. There are 3,000,000 jobs on the line.
And, 3 months from now when all the BAILOUT money is used, those 3 million jobs will STILL be on the line..
And the country will be 50 BILLION dollars poorer...
Same situation as now, 50 BILLION dollars poorer...
So, why waste the 50 BILLION dollars??
And, make no mistake. This is a BAILOUT... If the companies don't get it, they will go bankrupt...
Hence a BAILOUT..
Or are you saying they could survive without the money???
Michale....
Michale, you obviously did NOT read what I wrote. The person that I was replying to said that the credit crisis had nothing to do with the Big 3 collapsing, and I called THAT a flat out lie!
Unions are a major problem. GM has to sell enough cars and make enough selling those cars to pay 450,000 retirees each month. It's a bad business model and should fail. These problems came to being long ago.
Nov 23, 1970
The biggest and costliest strike in more than a decade ended after 58 days as UAW and GM leaders agreed on a new contract. GM acceded to a union demand for unlimited cost-of-living increases. if inflation continues strong, the settlement could be far more expensive than GM intended. Early Retirement. The pact provides a first-year wage increase of just over 13% for a typical assembler. The union won a considerable victory on the toughest issue¬"30 and out," or retirement at any age after 30 years of work on a pension of $500 a month. Management had argued intensely that SUCH A PROVISION WOULD DOUBLE ITS PENSION COSTS of $250m a year. In the end G.M. gave in. The two sides agreed on a retirement plan that is bound to be envied ¬and eventually copied ¬by organized labor everywhere. Starting next year, a worker with at least 30 years of service can take his $500-a-month pension at age 58; the following year the age limit will drop to 56. this year's contract may turn out to be a historic one, leading to a substantial reduction in the retirement age for working Americans.
Thank you for the data, which is a strong argument in favor of a strong union presence in the auto industry. The gall of workers who demand a retirement after 30 years of service to a company is just breathtakingly self-serving!
That demand has made the company uncompetitive, which is why it is now failing. It's great for the retirees as long as GM remains in business, but GM won't remain in business much longer. Even if they get a govt bailout, it will be a short term fix. These problems will only get bigger in time, not smaller. Isn't it sad when the success of a company is largely determined by how many retirees die in a given year?
Yeah! in the 70's and 80's when the industry was hiring lawyers instead of creative engineering types the UAW had a voice at the table and while they specefied job security what was their suggestion about model evolution to sustain the industry and the earth? The mystery of petro futures had been revealed as an end game decades ago. Blue collar does not mean blind! and ther is some culpability there. But, still I never want to get into an argument with the heroic Pap!!!! peace and prosperity to you all
Let's be serious here. When a union sits down with the employer there are some things that are considered union only. There are some things that are considered management only. And there are some things that are considered fair game to both. When you are talking about a manufacturing job, the choice of WHAT to manufacture is SOLELY a management decision, and the UAW would have been laughed out of the talks had they tried to butt in!
Unions are to blame. Its simple. Comparing the current financial meltdown to the auto industry problems is apples and oranges. The financial meltdown was caused by missteps during 2005 and 2006 with poor lending and investment decisions. The auto industry has a model that doesn't work. The labor unions caused the cost of the average car to rise to an unprofitable levels. Unions are fine but they are run like political machines. They sacrifice the future workers well being in order to fill the pockets of their leadership and supporters. They became so powerful that they became, in effect , partners in the auto business. They had a responsibility to look long term. They didn't . They took the fast cash and left the problems to future generations.
Yeah, because we ALL know that the unions are the ones who are designing the large gas hogs that the Big 3 cannot sell anymore, and we ALL know that the unions were the ones trying to stop a national health care plan, and we ALL know that the unions are to blame for the credit crisis that is harming the auto industry because they wanted people to be able to make enough to afford what they needed without having to resort to actions like putting their gas on their credit card and refinancing their homes at 50% interest!
Manufacturing a lot of trucks and SUVs instead of cars has little to nothing to do with the Big 3's current dilemma. Second, these companies were losing a lot of money long before the credit crisis. Third, people make plenty enough to buy cars. The problem for the American consumers over the last years is that they over-spent because of easy credit and cheap borrowing costs, not that they don't make enough money.
Part One of Three Comments:
LETTER TO THE UAW
Brothers and sisters of the UAW: now is the time for you to take the lead in negotiating a Federal bailout. The auto executives do not have your interests’ at heart and they are not negotiators who will receive a sympathetic hearing from either Congress or the public.
True, you did not have any role in the auto industries’ misguided strategy to bet all of their chips on large trucks, SUVs and cars. True, you did not design the cars that no one wants to buy. True, you did not twist the arms of the auto industry labor negotiators. I have sat at many labor management contract negotiations. Usually, management is represented by highly paid attorneys, actuaries, management consultants and top management personnel. Labor has poorly paid attorneys, an International Union Vice President and maybe some lead local union officers who, more often than not, come right off the shop floor. You are correct: you are blameless.
Like the pedestrian who sets off in a crosswalk without regard to approaching traffic because he or she is in the right, being right is not better than being dead. And, you, the Big Three UAW autoworkers could be dead if you do not take the lead role in the Federal bailout negotiations.
I
Part Two of Three UAW.
In bankruptcy, the Big Three executives may go on to other positions or retire. Those who make $14 million a year probably saved some money, have a huge pension and deferred compensation due (protected in bankruptcy). Perhaps they will be lured to stay on by bonuses and extra retention pay justified by the need of continuity and experience to wind down affairs. Bankruptcy is not the answer unless you can answer this question: who will provide debtor in possession financing?
The worker on the shop floor will go to the unemployment line. Many will find jobs but these new jobs will be at the bottom of the seniority roster: no five or six week vacations, sick leave, holiday pay or defined pension plan. Reduced pay will be the least of the pain. The men and women on the shop floor have the most to loose. So, why shouldn’t you be playing a lead role in these upcoming negotiations?
Yes, what you give up and give back will be painful too. But you will have your collective feet on the floor and hope for a new day. And you have plenty to give back thanks to the artful UAW negotiators. Americans while proclaiming to be capitalists think like socialists. They want a level society. They are unhappy when fellow workers have benefits they don’t have like your job bank provisions or the Cadillac health plans for both active and retired employees.
Comparing the financial meltdown to the auto industry problems is actually like comparing apples to applesause. The immediate problem that the auto makers face is two-fold: A) they can't get enough credit for day-to-day operations, and B) their customers can't get enough credit to purchase their cars.
If unions run like political machines, what exactly do corporate executive boards run like? The PTA? Are you telling me they /deserve/ the multi-million dollars they pull down in salary and bonuses while the company is on the rocks? How many private jets or mansions do you think anyone with a union card owns?
I disagree. Its not a credit problem. The big 3 can't make a profitable car. They can make a hybrid car but they lose money on it. The only cars they make money on are trucks and SUV's. Their fixed costs are too high. The southern car companies are better at producing cheaper cars in the same way China is better at producing all of their stuff for less money than we can. They have lower costs.
From Weissman's blog today:
Fourth, manufacturing wages and salaries don't contribute much to the cost of a car. Total labor costs are less than 10 percent of list price. If UAW workers donated their time and all savings were passed on to consumers, it would only lower the cost of a car by $2,400. It is true that, historically, auto industry jobs have paid well compared to other blue collar jobs. Going forward, however, this will be less and less true. The concessionary UAW 2007 contracts call for many new hires to start at $14 an hour, and the UAW is preparing to offer even further concessions.
$2400!
As for corporate management policy---Don't make me laugh.
Whether or not the auto industry brought about its own destruction is irrelevant. Ultimately, the sheer greed of unskilled laborers demanding $80,000 annual salaries for rudementary assembly plant jobs that require the intellectual capacity of a 2 year-old indicate that the low-lifes affilitated with this industry have ultimately served the purpose.
With people busting their asses through college only to receive thankless compensation for years invested in Masters and Ph.D's culminating in jobs that require actual skills for a change, I say let's allow those lazy good-for-nothings on the factory floor to rot.
Really? $80,000/yr???? Let's go do some rudimentary math here, shall we? The average pay for an UPPER tier employee with the Big 3 is $28/hr. A common figure for hours worked in a year is 2080. That works out to be $58,240. After taxes, you are looking at closer to $50,000, with no other deductions.
Consider also that the unions agreed to MAJOR concessions the last time around, meaning that anyone who gets a job with the Big 3 NOW comes in at $14/hr. Using the same numbers, that means that the NEW workers are earning $29, 120/yr. Then there's taxes on THAT, bringing the total closer to $25,000 per year before any other deductions!
Granted, OT will increase that total, but that's the COMPANY'S fault for not ensuring there are enough workers!
And to claim that the job requires "the intellectual capacity of a 2 year-old" shows that you do not understand what is actually involved. It's not necessarily as mentally demanding as a lawyer or a doctor, but they make many TIMES what a UAW worker makes!
The unions should fight for as much as they can get. But they are either fighting for a one years pay, 3 years pay or 10 year pay. If they want $70/ hour and they can get it , more power to them but they should know that it can't last. They have an interest in the future of the business. The leadership should have acted more responsible to their membership years ago..
Excuse me? My "lazy good-for-nothing on the factory floor" father works in a factory. He, along with my mother taking a job to support the household, invested the money in an education for myself and my brother so that /we/ could be college ready. I also worked all through high school (for part of the time at the same factory as my dad), putting the money away so I could pay for college.
It must be nice to be born to rich parents so that you never have to do an honest day's work in your life to put yourself through school (at present, I work a full time 3rd shift job -- at the same factory -- so that I can afford to continue my education part time).
These comments speak less to the topic at hand than to your peculiar brand of misanthropy. If I follow the drift of your comments through to an end conclusion, one would have to agree not to personally encourage or contribute to the kind of excesses the UAW has shown, and in your opinion, indeed has contributed to the sorry state of affairs in the auto industry. Therefore, if you own a car, you need to get rid of it and vow not to replace it with another. Otherwise, you will be encouraging these "lazy good-for-nothings ". In the meantime, you need to find a cave to live in, since everything in your present immediate environment has been made, erected, or installed with the same hand labor you so despise.
Again, I must address the reality..
Of course the Unions are SOLELY to blame for the crisis the Auto Industry is in...
But, along with the CEOs and Management, the Unions SHARE responsibility.. They are not blameless...
Michale.....
Please elaborate, perhaps with more than just opinion. Would appreciate something more than Cpt. Kirk and Madonna quotes this time around.
Labor unions and management are partners in this business. Unions know the profit and loss potential with every decission made. They know that competition from southern states would have an effect on GM sales and profitability. They are partners with management. They should have taken steps decades ago to insure the profitability of the companies so they could insure that workers would have a job to go to in the morning.
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