Or was it other factors? Were unions a neutral presence? Or do I have it backwards, did the unions help the auto industry survive where it would have failed earlier?
It is hard to have any discussion at all about what is wrong with the US auto industry – or at least, what needs fixing! – without the beginning, middle and end describing union perks, uncompetitive pay scales, massive benefits, etc etc. So personally I’m gonna go with “the unions did it”.
But I know that at least some folks around here disagree, so I’m putting up a poll. I want to know, really, who in this reality based community thinks the unions caused the downfall of Chrysler and GM, who thinks they had nothing to do with it, etc.
Fair enough?
Please share widely!
Why is Toyota beating GM? How about, “because their management didn’t decide that gas-guzzling SUVs and Hummers were the wave of the future.” Tough to blame the unions for that one.
<
p>Look, there’s plenty of blame to go around with the US automakers. But IMHO, management deserves the lion’s share of it. So I guess I’d choose option #3 in your poll.
I’m sure I am not the only one – even on this site – who thinks unions are cause #1. Its not an unheard of opinion.
<
p>Plus, the premise gave you the chance to point out the honkin’ SUV debacle. But then, who foresaw $5 gas at a time when SUV’s were both the fastest growing and most profitable things the companies had? Your point is still valid, but I’m just saying at the time SUV’s were the wave:
<
p>
<
p>http://en.wikipedia.org/wiki/S…
<
p>Wikipedia, caveat emptor, but I think that stuff is true. Ironically the next sentences are:
<
p>
…otherwise you’d have addressed David’s point. Who saw $5 gas? Anybody who understands the basic concept of limited and dwindling supply clashing with skyrocketing demand.
<
p>There are people on this site who agree with your anti-union position, sure. There are probably people on this site who agree with young-Earth creationism. Doesn’t make it right.
<
p>Detroit could likely get a gigantic profit margins of a cap that could travel underwater…but nobody would buy it. Making highly profitable products that don’t move is stupid economy. The greatest symptom isn’t that Detroit kept making gas guzzlers that get outsold by fuel-efficient cars, but that Detroit did that after they got screwed in the 1970s. The companies’ refusal to learn from their mistake shows Detroit’s disinterest in actually listening to their consumers.
<
p>But I’m sure you’d blame it all on unions.
I did nothing but address David’s point!
<
p>First, I said it was valid.
<
p>Then I pointed out that at the time SUV decisions were made, SUVs were selling profitably and small cars were unprofitable to build.
<
p>I agree with your point that building something that no one buys would not make sense. Profit margin needs to attach to volume in order to matter. But, this is exactly what was happening for years in SUV sales. Volume was high and profit was good.
<
p>There is no remedy, on the other hand, for losing money on a small car. Certainly high volume would not help đŸ™‚
<
p>(ps: you might retort that Bush foresaw $5 gas hence Iraq! joking.)
Demolisher exactly addressed David’s point, as he asserts.
<
p>If it needs restating, it’s quite well-known that the Big Three’s legacy cost disadvantage (I believe it was $2,000 or $3,000 per car) made smaller vehicles unprofitable. Source of these legacy costs? Union labor.
<
p>It’s not only that Toyota builds fuel efficient cars. It’s that they build better quality cars across all MPG ratings, and at lower costs … better value all around.
<
p>As do Mercedes and BMW and Hyundai, in US factories with non-union labor.
<
p>This is not to say GM and Chrysler management did not make mistakes. But the drag of union labor was, over time, fatal.
<
p>What do the woes of the MBTA, the MTA, The Boston Globe, and the Commonwealth’s fiscal health all have in common? Union labor.
<
p>Get it?
He says above, “But I’m sure you’d blame it all on unions.” and you have not disappointed the prediction. If businesses did what was right and included the costs of unionization in their business model in the first place I’m sure they could figure out a way to stay afloat.
They did, and tried to sell their product for more than it was worth, and by cutting all other costs: quality control, design.
<
p>If I must account for the cost of unionization in my “business model” while my direct competitor needn’t do so because its employees show no inclination toward unionization, then my business model is already doomed.
…is that your hypothetical competitor should assume a potential union when doing his calculations, or at least the costs of treating his workers in the same manner as if they were unionized. I’d also be careful about assuming anything about inclinations of the workforce. The absence of a union does not necessarily mean a lack of desire to unionize given the hurdles to organization that many workers face.
Must get E”F”CA so that the union can be imposed by Fiat. Ba-dum-bum.
<
p>Okay. I understand that. It also seems that many of the now killer union deals came during a age when American automakers assumed that they would own 90% of the North American market forever. Bad choice. Unfortunately, the unions seem to have assumed the same, and also made a bad choice. They are not innocent bystanders in what has become of the Big 3, and much of the rest of North American heavy manufacturing.
<
p>It isn’t “unionism” per se that gets me riled up. It isn’t really even the high wages, as problematic as they have proved to be.
<
p>It is the sheer absurdity of Wagner Act adversarialism, which was designed for a different age and a different economy. The entire notion of work rules is stupid. These contracts are thousands upon thousands of pages long. Manager A needs to solve a problem by sending out a missing part to the grumpy customer, but can’t just grab it and put it in fedex because the work rules require someone with the right job to do it. So he has to go find the shop steward, submit a request, and wait for the steward to pick someone, who s/he can only address through the steward. Or the employer is left unable to have video monitoring of the supply room, making theft prevention difficult. The sheer silliness is astounding to someone who has never worked in such an environment.
<
p>(When I was a kid, students at a nearby public high school had to carry all of their belongings with them at all times, because there were insufficient lockers in the halls to accomodate everyone. There were plenty of lockers in classrooms, but kids can’t be in classrooms alone, per the contract. The teacher’s contract also provided that homeroom started at 8:30, and therefore no teacher could be required to be somewhere 10 minutes early because that would violate the work rules. This is an outrage.)
<
p>Work rules have played a far bigger role in rendering American manufacturing defunct than have the wages alone, in my view. In turn, the evaporation of American manufacturing has played a pretty big role in income disparity.
<
p>So, yes, large scale unionism played a big role in turning starvation wage manufacturing jobs into pretty comfy middle class jobs, during a time when much of the manufacturing capacity of the rest of the world had been destroyed by war. Once that capacity was rebuilt, and expanded into new regions that had not previously been industrialized, those same gains earned by the union made the underlying business unviable.
I said that management was also culpable: poor design and fiscal mismanagement blah blah blah.
<
p>But even if products were competitive, how can they compete when their costs are $2,000 or $3,000 per vehicle more? They can’t.
<
p>And those additional costs weren’t from overuse of the corporate jet or fat executive salaries. No the majority of that cost disadvantage was union labor legacy costs — the Job Bank, the pensions, and retiree health costs.
<
p>I’ll put some subjective numbers on it: it’s 75% the union’s fault, and 25% management’s.
<
p>No. The source of these legacy costs is that management agreed to pay retirement benefits but failed to actually save up the money to do so. A worker who retired 20 years ago should not be costing the company any money anymore. If they are, it means the company did not save enough to meet its promises. Management was acting in bad faith by agreeing to pay retirement benefits without a plan for actually paying them. The result now is that the companies are failing. This is not the fault of the unions. The UAW was actually one of the main groups pushing for the PBGC, precisely because they were concerned that management was underfunding the pension and wanted to have the government ensuring that the pensions were fully funded as promised.
<
p>Had management been more honest, they probably would not have agreed to the pensions the way they did, because it would have raised the costs of the cars too much. Blaming the legacy costs on the unions is dishonest.
Lesson learned: if you want to be competitive in any industry, don’t negotiate with unions.
<
p>Lesson learned: if you become unionized, you’re doomed. GM, Chrysler, airlines, steel, railroads.
<
p>Lesson learned: if your the public sector and unionized, costs always exceed revenue. MBTA, MTA, state employees, the cracker-jack public school system.
<
p>How’s Card Check going to help? Forced unionism, and compulsory and binding arbitration (probably unconstitutional under the 5th Amendment.) But it’ll pass anyway.
The unions had nothing to do with it. Had the management made the same promises about pensions to a non-unionized workforce, the problem would be the same. The legacy costs are entirely a failure of management and have nothing to do with unions. The management lied to the workers by promising them future benefits without actually coming up with a plan to pay for them. That sounds like theft to me. I think the unions (and any other workers losing their pensions) should be allowed to sue the past managers to recover the money, since they can almost certainly show that the managers did not actually have a viable plan for paying the pensions as agreed to by contract. Which means the management was in breach of contract.
<
p>The legacy costs cannot be blamed on the unions. They come entirely from bad and dishonest management violating their side of the bargain.
<
p>Also, the railroads were not doomed by their unions. The unions were formed around 100 years ago. The railroads lost out to the highway system and air travel. The same thing would have happened with or without unions. The unionized airlines were not competitive once the Federal government stopped regulating routes and prices. The newer unionized airlines (such as Southwest) are doing fine. The old airlines have the problem that they came up with a business model that only worked when nobody was allowed to compete with them.
why, when a contract exists, freely entered into by the parties, anyone can blame one party to that contract for “all the problems.”
<
p>It defies logic. Unless the UAW bargains with guns.
strikes are the guns. What can a company do but acquiesce when strikes threaten everything that it is working for?
<
p>I couldn’t believe it last year when Buick finally came out with a good car (the Enclave) and everyone was so surprised they were almost giddy. What did the unions do? Go on strike.
<
p>http://www.cbsnews.com/stories…
<
p>
<
p>What can you do when your workforce walks off the job? Hire a new one?
<
p>What choice do you have?
You make it sound like the new model was the cause of the strike; I doubt that’s the case. When you have skilled labor refusing to work IS the biggest bargaining chip. Isn’t that the way a free market is supposed to work? Wages and conditions should improve if the demand for labor is high and supply is limited, just as cost of a product increases with high demand and low supply. The laws of economics works both ways.
You seem to object to the sides being equals. That accurate?
As recently as 2007, GM and Toyota both topped the industry in sales with each selling over 9.3 million cars. The difference was in the profitability of their operations.
<
p>I think sales is perhaps a red herring. It’s profitability that matters. Where are the examples of a profitable unionized auto manufacturer?
Shame on GM who negotiated with those unions. Agreed to terms that would eventually bankrupt GM. In addition by the 1990s GM was making junk for autos. Maybe Cadillac might be the only label worth saving. I bought a 1995 Blazer which was the most unreliable piece of junk I have ever owned. Prior to this I had owned many GM vehicles, next vehicle was a Dodge Caravan, another piece of junk. I now own two Toyotas and they are the most reliable trouble free vehicles I have ever owned.
<
p>In hindsight GM should of been forced into bankruptcy last fall. Would let the courts re-org GM instead of the Federal Gov’t. It will be interesting to see if Ford survives, I think they will, better product and no govt. funding.
Detroit’s output was crap relative to the Japanese back at least as far as the ’80s, Cadillac included. I agree that the unions got more than was good for them or the companies out of negotiations, and that the responsibility for that lies with management. Which bears on the silly question of the original post.
<
p>Unions are necessary, because without some opposing force, unfettered corporations will inevitably overwhelm the interests of the populace. That’s not a value judgment; it’s inherent in the interests that drive corporations. The only existing opposing forces are unions and the government. With our government so susceptible to money interests, it can’t be counted on to reliably rein in corporate avarice. It is the responsibility of corporate management to keep unions from overreaching. That’s where Detroit’s management failed WRT the unions.
<
p>They also completely screwed up the answer to the “what kind of cars should we be building” question, but no – that’s not the unions’ fault.
So: either bankruptcy the company several decades hence or face a bruising and costly strike today.
<
p>The unions had no interest in making sure the company survive, and had the leverage to get what they wanted. Which they now have.
<
p>But for the union side to now disclaim responsibility: “well, we’re stupid, what do we know, those evil managers shouldn’t have given us anything.” strains credulity.
<
p>The American auto industry was done in by (i) an overly agressive UAW, and (ii) management that failed to respond properly to an overly agressive UAW, and failed to manage the companies’ products in such a way that they could respond to changing consumer demand. Those twomanagement failures are very closely related, because over time, union work rules made it much harder for these companies to be flexible in response to consumer demand.
<
p>The reverse is true for demolisher types who seem to think that the unions, alone, killed the auto industry, when in truth they had an accomplice.
<
p>Crummy unions + lousy management = dead companies.
<
p>I’m not sure you want to say that. Job security is, quite possibly, the ‘prime directive’ of all unions. I’m not sure a union can, technically speaking, commit suicide.
<
p>
<
p>But…
<
p> NO unions + lousy management = dead companies
<
p>
The unions had no interest in making sure the company survive, and had the leverage to get what they wanted. Which they now have.>>CMD
<
p>I have read this assertion before in anti-union screeds. It, too defies logic. Workers have an interest in employer survival. That is so obvious, it seems manifest. Yet we get statements like the above going (frequently) unchallenged.
My sister is in labor relations for Ford (as in, she’s one of the people that deals with the unions) and her response to my forward of CMD’s screed was “what an idiot.” Which makes me wonder where his opinions come from…
<
p>As my sister says, the unions are the least of Ford’s problems.
So am I. I have been asking for cuts in state spending but a friend of mine works for the state and he said there is no fat to be cut in state spending.
What CMD says might have been true 20 years ago. It does not reflect the realities of today’s union relationships or marketplace. It ignores years of restructuring and cuts.
<
p>As a quick counter example: my uncle (also in Ford management) was part of an investigation into why Japanese built cars were so much more reliable. There were a couple of infrastructure reasons, like newer plants and more use of robots, but the biggest reason was the US companies were fixing defects in rework, rather than by shutting down the line, analyzing the problem, and fixing it everywhere. Japanese companies were also far more likely to take suggestions for improvement from employees. Ford management worked with the unions to rework their production processes (the program was called Quality is Job One). The result, starting with cars like the Taurus, was dramatically improved quality. Full union and management cooperation…
I don’t know if the word “union” has any bearing on that though. All companies, union and non-union should always be open to suggestions from the work force and I actually recommend a bonus program for workers who do find quality improvements or process improvements.
92% of US labor in non-union. 8% is union. This is down from — what? — 40% in the late 50’s. I’d say the average American working disagrees with you.
<
p>And what about this statement:
<
p>This is demonstrably untrue. It is the American consumer who holds all the cards. If the corporation behind the product doesn’t serve the consumer, the corporation is finished. Examples: The Boston Globe, GM, Chrysler.
<
p>Go down the list of major American corporations … most are non-union, and produce fabulous products Americans want.
<
p>Union work rules, not corporate avarice, are what destroy American jobs and quality products.
how does something like the Peanut Corp. of America salmonella situation come to pass? Did I have a chance to buy products that did not contain their peanut stuff? Not knowingly, because there was no way to find out that the Clif bar I bought at Trader Joe’s had PCA products in it. Here am I, the omnipotent American Consumer, making what I have every reason to believe is a healthy choice of product, only to find out after I omnipotently consume it that all of that product was recalled. Today, PCA is out of business. In six months, watch the same set of profit-driven executives recreate the company under a different name, using the same world-famous quality control. The fabulous products they produce will once again wind up in the foods we omnipotently purchase. Hallelujah!
<
p>Also see: anything that Halliburton and its subsidiaries have done in the areas of rebuilding New Orleans and Iraq, or in providing services to US troops in that country. Then explain why they aren’t “finished.”
<
p>In other words, please demonstrate the demonstrable untruth in the statement you dislike.
Guess that proven your argument applies to the entire economy.
PCA is just one a long line of things done to food that the consumer has no way of knowing about. It’s notable (but predictable) that you completely ignored the Halliburton references.
news:
KBR Connected to Alleged Fraud, Pentagon Auditor Says
Which follows this: Contractor under fire for Iraq electrocutions It’s Halliburton KBR again – they must have been “finished” after that! But wait – what’s this? Company involved in Iraq electrocutions gets contract
<
p>Not that it has anything to do with unions, but “If the corporation behind the product doesn’t serve the consumer, the corporation is finished” is just such a huge pile of manure that it stinks up anything else you have to say.
This is why a consumer-driven market by itself does not work for everyone. You say that non-union corporations produce fabulous products Americans want, which as a stand-alone statement is probably true, but doesn’t make it right. Wal-Mart for example sells its goods at bargain-basement prices which is great for consumers, but lousy for its workers. Unions exist precisely to level a field which the market by itself cannot and will not do.
By what standard is Walmart lousy for its workers? Sure, next to bolting on bumpers for $68 an hour or a cub reporter for the Globe getting $75,000, maybe a Walmart job pales. But GM and the Globe are bankrupt, thanks to costs exceeding revenues.
<
p>Walmart managers don’t kidnap folks off the street and force them to work there. In the marketplace of jobs, Walmart filled them all. A new Walmart opens up, and 1,000 stand in line to apply for jobs. Same with Home Depot.
<
p>If government, or unions, set the price of labor, there would many, many more bankruptcies.
They’re infamous for their treatment of employees. Here’s a Wikipedia excerpt:
<
p>
<
p>And then there’s the illegal immigrant problem.
Walmart does pay its employees so little that many of them are on government support programs (which means they are getting poverty-level wages). Which means that Walmart is subsidized by the government. Do you prefer government subsidies to unions?
“By what standard is Walmart lousy for its workers?”
<
p>Let’s see:
o Locking workers in the store overnight, with no way for them to get out in an emergency?
<
p>o Multiple findings by the NLRB and the courts that Wal-Mart illegally blocked workers from organizing?
(So much for your claim that W-M workers are “happily non-union” BTW.)
<
p>o Deliberate failure to pay overtime?
<
p>o Deliberate failure to pay for all hours worked?
<
p>o Paying so little that many Wal-Mart workers rely on public safety net programs- such as food stamps, Medicare, and subsidized housing-to make ends meet?
<
p>There’s bullshit in the comments above, but it’s mostly yours.
Germany is one of the largest if not the largest net exporter in the world. Their auto industry is not falling off a cliff. Yet they are far more unionized than is the US. They also have – gasp! – universal health care, essentially through a single-payer system which, I believe, is largely via the unions.
<
p>Hmmm….
Personally, I chose, “Unions are just one of many causes of the downfall” because I think that, yes, the unions hurt the ability of the U.S. auto companies to compete by restrictive labor practices and by helping to foster an oppositional ethic between management and labor that ultimately hurts everyone involved in the enterprise. But I think there were other more important factors, and Manny’s point is stark evidence of that.
Germany? Japan? France? Brazil? Mexico? China?
<
p>Nope. The US. To build cars with non-union labor. Mercedes built in Tuscaloosa, Alabama, and BMW built a $700 million plant in Spartanburg, South Carolina. The had the whole world to choose from, and they came here.
<
p>If German auto manufacturing is so great, why did they come here? Toyota, Mazda, and Hyundai all have plants in the US, all with non-union labor.
<
p>All are hurting, but only GM and Chrysler are failing … because of union work rules and legacy costs.
Any cite on the non-union part of the equation? Either that the plants are non-union or lack of unionization was the reason to build?
<
p>As has been pointed out to you in other places, BMW also chose to build in South Africa, China and India, among other places.
<
p>
<
p>As has also been pointed out to you in other places, Mazda is UAW. Mercedes Benz (near) Tuscaloosa (actually Vance) Alabama has been charged by the NLRB with violations of National Labor Relations Act, specifically: intimidating workers attempting to unionize. Both the UAW and IAM (International Association of Machinists and Aerospace Workers) have been asked, by Mercedes employees, to help organize a union.
<
p>
A hugely important reason is that it’s a hedge for fluctuating currency values.
There are a lot of reasons for building autos near the market where you are selling. The reason why the automakers tend to choose the South vs. the North is a function of unions, among other things, but the choice to build in the U.S. is not primarily due to union issues.
and labor costs are a large part, whereas shipping costs are not. Union labor is expensive labor primarily because of work rules, not labor rates.
<
p>Mexican or Brazilian labor costs are 50% to 60% less than US costs. Why doesn’t MB or BMW build there, and ship into the US? That would be cheaper.
<
p>Why can’t Detroit compete with non-union US auto companies?
<
p>The answer is US non-union auto labor is the highest value labor in the world … the highest quality and most output per dollar of labor cost.
here:
<
p>
I’m not sure about “falling off a cliff”, but it does seem that they have their issues:
<
p>2004: http://www.businessweek.com/ma…
<
p>
<
p>2008:
https://www.express.co.uk/post…
<
p>
<
p>and
German Auto Industry Facing the Abyss
<
p>and
April 2009:
http://www.spiegel.de/internat…
<
p>All that said, lets go ahead and grant that the German auto industry is in much better shape than the US auto industry, and it is also highly unionized.
<
p>One interesting thing that seems different about German and US unions is this:
<
p>http://ideas.repec.org/p/cpr/c…
<
p>
<
p>This seems to be highly significant. If unions are doing less to drive up wages, then one major problem is eliminated. Are German unions “better” than American unions in this regard?
<
p>Or is it not “wages” that are the problem, but rather, benefits?
<
p>http://www.sfgate.com/cgi-bin/…
<
p>Here is another interesting article that considers similarities and differences in unions in different countries, from the British perspective:
<
p>Unions in Germany: better placed than their British counterparts?
<
p>
<
p>(reforms, by the way, which dropped Germany’s unemployment from worst-in-EU to something more tolerable. no I lost the link. but the point is that even the German unions attempt to hinder progress, they just seem less successful)
<
p>Finally, any difference in output or productivity or innovation between different societies must take into account culture. One possibility would be that, unions or no, German workers participate in a harder working or more diligent or more efficient culture (notwithstanding short work weeks!) than our auto workers do here in the US. I have no studies to back this up, just food for thought.
<
p>Are the German unions less damaging, more productive, or both? Or are the unions irrelevant and its all management quality? (Why would that be??)
<
p>I’m afraid that a concise and well supported answer is not easy to come by.
<
p>
Very interesting stuff, but I don’t think it refutes my post.
<
p>I find it fascinating that when the Right attacks the UAW as “too expensive”, they cite an hourly cost that also includes current costs of retired UAW workers, e.g.:
<
p>
<
p>What does GM’s past choice to underfund its liabilities have anything to do with today’s workers? It’s a very unfair little trick.
Little trick, that’s rich.
<
p>The terms and conditions of the Job Bank, pension program, and retiree health care plan have always been a component of the UAW contract and contract negotiations.
<
p>Why should this not be included in “labor costs?”
<
p>Like Globe “lifetime employment”, GM’s legacy costs are the result of decades of union demands and management cave-ins.
Let’s agree to disagree on that, OK?
<
p>I suppose that, to your thinking, health care, paid vacations and sick days are also cave-ins?
Not because they were granted, but because the terms upon which they were granted were too rich.
… it’s not so much the hourly rates, vacation days, or sick time. Union hourly wages aren’t that much different than non-union.
<
p>It’s the work rules. It makes union labor 30% to 100% more “expensive” when measured as cost of labor per unit of output.
<
p>But in the case of GM and Chrysler, with the weight of all the retiree benefits — how many are there, 900,000? — on top of the 350,000 active employees, how does anyone survive?
<
p>Aren’t the Globe’s troubles are instructive to you? Revenues are down, but the paper can’t respond by cutting costs because of the union contract. Until they threaten bankruptcy to “reform” those contracts. This includes pensions and lifetime employment.
<
p>Get it?
<
p>The WHOLE world is in defined contribution retirement plans. Except unionized industries, and the freaking public sector. There’s no way this can continue and still have companies be competitive in a global market.
Like the ones that insist on health and safety standards in the workplace?
<
p>Or the ones that insist on just compensation?
<
p>What about the ones that require that tasks be performed only by those trained to perform them?
<
p>Doing things the right way is just such a drag, isn’t it?
but I dont think you staked out any actual point or claim did you? You just posed a thought. Assert something, and it may or may not be possible to refute.
<
p>
when somebody wrote “I have no studies to back this up, just food for thought. “
the idea of an “assertion”, which is actually claiming something
<
p>with the idea of backing it up with evidence or studies. Manny did neither, all I ask is the former.
“I have no studies to back this up, just food for thought. “
<
p>Ask yourself, if you dare, why, and under what circumstances, unions came to be so important and, as you yourself infer, so integral a part of American capitalism.
<
p>As to your specific point regarding American auto workers, the deal that was collectively bargained for, and signed off on, by then Detroit management, has turned out not so good. This is a distinct failing on the part of the management who bargained with the unions and bargained, apparently, very poorly. Yet another, in a long list, of management failures on the part of US automakers. Under a free market capitalist system, whether you bargain individually or you bargain collectively (via, say, a union…) you can’t be faulted, or so I’m told, for getting the best deal possible… At least, that’s the reasoning I’m hearing regarding the TITANS of FINANCE ™ who, I’m repeatedly told, deserve the millions that they’ve been given.
<
p>Consider, if you will, that two individuals, Joe and Fred, entered freely into a contract that would later turn out to go deeply bad for Joe. Would you blame Fred? Of course you wouldn’t. You’d say “Tough luck, Joe. That’s the free market fer ya! You made your bed, now sleep in it.”
<
p>Why is this any different if Fred isn’t an individual, but rather the Federation of Readily Employable Diemakers”. It isn’t any different.
<
p>On a more general point, you yourself contribute to the problem by seeing the situation in starkly adversarial terms. I’m certain you’ll agree that the Germans know how to make really good cars (and, I’ll add, who aren’t broke over it). The Germans have a much saner approach to unions/management. Our vision of union/management antagonism, written into our very laws, lies closer to the problem than the unions who bargained for, and got, a good deal.
<
p>
From what I can tell, the UAW/CAW has almost one representative on the Board, and owns the majority of the company. The only people getting screwed in this union deal is the union.
<
p>To be sure.
<
p>I was speaking to Demolishers point that ‘unions have destroyed’ the auto industry in America. The deals the union struck with Detroit management in the past are looming large in the context of impending bankruptcy. For example, either Chrysler or GM pays something close to 100% health benefits to something like a population 9 times its workforce (family coverage, etc) and has some retirees from the 1970’s still collecting hefty retirement packages. All this is on top of the high(er than average) wages paid to employees. This is the subtext of Demolishers criticisms of unions: that the bargaining done between management and unions has long skewed favorably towards unions.
<
p>My point was, and remains, that Detroit management has been, for a long long time, dumber than a bagful o’ hammers… and entered into collective bargaining with the unions that, as is now clear, didn’t turn out so well. Further that, under current capitalist ideology (an ideology to which Demolisher presumably subscribes) corporate woes ought to be laid at the feet of management, not unions. Herein lies the dichotomy of much current free market thinking…
<
p>On the current deal and the possibility of the union getting screwed, as I alluded to earlier, antagonism between management and union lies at the core of our labor and collective bargaining laws. These laws draw bright lines. Such lines might make union representation on the board problematical. Yes, I agree that it is insane. We ought to change the laws.
<
p>
UAW is pretty much being made whole at the expense of other creditors and in the process agrees to its position of having its shares voted by an independent trustee. That’s not a good deal? Keeping the $28 per hour and keeping medical coverage unchanged isn’t a good deal?
<
p>Accept the alternative: get $.50 on the dollar in liquidation because UAW is an unsecured creditor and vote the shares of an insolvent and inactive company.
That this entire process is a giant taxpayer gift to UAW members, and doesn’t appear to have much change of changing the fundamental underlying problems that plague the company in the first place?
from here
If one considers that unions represented 40% of the American workforce in 1960, how important are they now? Representing 8%?
<
p>I would say losing 80% of your market share is poor performance. I claim it says something about unions.
<
p>QED, the vast majority of American workers do NOT want to belong to a labor union.
<
p>Perhaps this is so. But I was responding to Demolishers argument that they are responsible for the fall of the American Auto Industry. Surely impact, as much as representation, is an adequate measure of ‘importance’. If, however, they have no impact, then Demolisher has no argument.
<
p>
<
p>It might also say something about what people (like you) says about unions.
<
p>You might also want to check your math; The BLS puts 2008 union representation (and representation by “employee association similar to a union” aka a guild, or other collective bargaining unit) at just under 14%. Remember, too, that the American workforce in 1960 was both smaller overall and smaller as a percentage of the population. I haven’t run the numbers, but I’m fairly certain 14% of todays workforce isn’t 80% smaller than 40% of 1960’s workforce. So, yes, while union membership has fallen, it hasn’t fallen by that much.
<
p>
<
p>When I was growing up, I was taught that QED (which goes at the end of your statement) could mean either “Quid Erat Demonstrandum” which means, “that which was to be demonstrated” or “Quid Errato Dictum” which means, “That which was wrongly stated”.
<
p>
<
p>Let’s take a moment to think about how difficult it is to form a union in this country…
<
p>Whomever is the patron saint of serendipity, he/she’s working with me today… just as I sent my previous reply the above link landed in my RSS reader.
<
p>
“QED, the vast majority of American workers do NOT want to belong to a labor union.”
<
p>If it were only a matter of what they want, Americans would all be thin, college educated luxury car drivers.
<
p>You’ll admit, I hope that there’s a little more involved in winning union representation than just saying “please”, won’t you?
<
p>And that, perhaps, corporate leaders have undertaken an aggressive anti-union public relations campaign over the years to make the effort seem not worth it?
to questions like this.
<
p>Are you enjoying any of the following>
<
p>- Paid days off
– Vacation
– An eight-hour work day
– A five-day work week
<
p>Answer yes to any of these, and you two are being helped by a union.
.. are helped by the reforms that unions brought early in the last century?
<
p>Surely you aren’t saying that if unions went away, we wouldn’t get vacations anymore?
<
p>
…we don’t need unions anymore.
<
p>It would be great if management were always so benevolent that unions wouldn’t be necessary, but that’s not the case. They must continue to fight for just compensation, workplace safety, professional standards, etc.
I will.
<
p>The profit motive inexorably pushes corporations to reduce wages and benefits of all kinds. All other things being equal, a corporation that doesn’t pay its workers for vacation time has a competitive advantage over one that does. If you don’t think that has anything to do with the increasing use of contractors and temp-workers in most industries, you’re not thinking it through. Unions serve to prevent that where they exist.
<
p>A sufficiently-empowered corporate class would surely attempt to make inroads on the fringe benefits we take for granted.
<
p>See, I figure if my competitor cancels vacation I can probably get all their best people for no additional salary, wouldn’t you think? Maybe they can hire my least productive people after I let them go since they have no other job. (BTW: Is it OK to note that some people in jobs completely rock while others aren’t so good?)
<
p>The premise the employers rule the job market seems no more realistic than the premise the employees rule it.
<
p>I also wonder about why Henry Ford doubled wages in 1914.
<
p>I also wonder about highly successful non unionized industries such as high tech (Microosoft, Apple) and others.
Do you think it’s that easy to find a decent job? Perhaps you haven’t noticed that every time the job market tightens up, as it is doing now, companies tend to cut back on benefits. It’s easiest for them to do that with new hires. So while I was able to negotiate for 3 weeks vacation when I was hired 4 years ago, I probably couldn’t get that today, since the company’s laying off and otherwise trimming the payroll. If I left this job for an identical one at another company (one facing the same market forces), I would almost certainly lose a week’s vacation pay.
<
p>If I couldn’t find a “permanent” position, but had to take a contract job, I’d lose all of the benefits I now have. Which is why it’s interesting that you bring up Microsoft, with its history of using contractors in place of permanent employees, for the purpose of denying them benefits. The company also favors hiring foreigners over US citizens because it can pay them less. Hewlett-Packard did something similar. Lots of coding jobs were also moved to China and India. The general effect of all these practices was to depress the earnings of software engineers. Unless you’d like to see ALL the good jobs move offshore or go to foreigners, you might not want to hold up Microsoft as a model.
<
p>If you’re genuinely interested in why Ford offered higher wages, I bet you could manage to find out. Might have something to do with his repressive policies toward workers.
First of all, contractors get higher pay to compensate for no benefits. The main thing they don’t get is any job security whatsoever.
<
p>Second, hiring foreigners in IT is quite well known as a symptom of the massive skill shortage in the US. From your own article:
<
p>
<
p>Which is a different thing that “offshoring” IT labor, which does happen purely to drive down costs. We’ll see how that strategy works out for everyone.
What you’re describing as the symptom could easily be described as the cause.
<
p>Here’s an alternative description for you: Companies hire H-1B workers for low pay, making only a sham attempt to hire native workers. The H-1Bs are basically indentured workers, since they can’t easily move to another company or demand higher pay. So they depress the wages. Native-born college kids see that tech/science isn’t as great a field to go into as it once was, so they major in something else.
But they’d be harder to take.
Most people don’t actually get vacation or sick time. As unions have lost power, the protections won through legislation are being eroded.
Don’t they get several weeks over there? Does anyone know the relative power of unions there?
Most people do not get vacation? Most people do not get sick time?
<
p>I was not aware, can you please offer some supporting evidence for each?
<
p>
From an Urban Institute study on sick leave:
<
p>Only 45.8% of families under the poverty level have access to any paid sick leave, only 61% between 100-200% of the poverty line do, although 83.6% of those above 200% of the poverty line do. For folks on the job less than 1 year, even those at 200%+ of the poverty line, only 61.7% have access to paid leave time.
<
p>
<
p>So I’ll eat crow that my “most” comment overstated the truth, but with many offered less than a week and a sizable portion offered none, the idea that adequate paid time off exists in this country is a myth.
<
p>This does not get to the issue of whether people are allowed to access that PTO in a way that is reasonable. For low income workers, securing a union contract often means access to paid time off for the first time, in that way unions help.
<
p>My quick reaction to your question on whether the UAW holds any responsibility for the downfall of GM and Chrysler is yes, they do, but not for the reasons you state. Right wing dominated unions in the 1950’s and 60’s failed to turn their bargaining power into a real social safety net. Labor (ie: most unions) failed to expand their benefits to the population at large, or to proactively organize with the anti-war movement, african-americans, women, immigrants and the LGBT community. This divorced the denial of rights these groups faced with the denial of the right for democracy in the workplace.
<
p>If the left hadn’t been purged from the unions, US labor law wouldn’t stink so much and all those southern auto plants would be union, Toyota and Honda would be union – WalMart would be union. GM wouldn’t have legacy costs greater than Toyota, both would pay taxes to pay for Pensions and healthcare for retirees. If GM failed because they made crummy cars, a company would go away, not the notion that people deserve a decent pension.
<
p>
List of things that conservatives believe were useful before they were born but now must be curtailed:
<
p>-Unions
-Affirmative action
-Congressional authorization of war
-Banning torture
-Executive privilege
-Ideologically motivated judges
-Burying the Senatorial filibuster
Oh, wait, no.
Management: More than “not building cars that people want” the problem I always see is that the American brands did not build vehicles with the quality of foreign companies. Like negotiating labor contracts that allow the company to remain viable, building cars that last seems a management responsibility.
<
p>Unions: Specifically the UAW outside of the American plants. Is the problem that workers in Detroit make too much or that workers elsewhere make too little? Union workers look bad because they make so much, relative to nonunion workers. But haven’t workers been taking pay cuts in real economic terms for years? So shame on unions for not organizing other plants and places to keep those wages from falling through the floor.
<
p>Trade agreements: Talk about selling out American workers. I’m all for offering opportunities to other countries to make and trade their goods, but when the real game is we can get it there cheaper because they’ve got a slave workforce, some real protections (for foreign workers) needs to be built in. American union workers have to compete with nonunion workers to see who will work for less. Union and nonunion workers in America have to compete with Chinese workers to see who will work for less.
Think of two cars competing in the same market segment, each starting at $100, when the companies are exactly the same. Now, begin to increase the labor costs associated with one. Account for all of the costs, even if relates to some retiree, because costs are costs. Now one car costs $110, and one costs $100. How do you save the $10, so that each costs $100 again? You cut some other corners. Anyone who has spent 10 minutes inside a GM car in the last decade knows that they save their money by making cheapo interiors. You save money on design. You save money by having 10 different cars on the same “platform”– each of which is crummy.
But there are many guilty parties in this one. I was a “buy American” person back in the 80’s and earl 90’s until I realized I was being used and abused. American cars were pure junk compared to imports and they are still significantly inferior.
<
p>I don’t blame GM for building and selling big trucks since they were making a ton of money on them (remember, that is what companies are suppose to do… make money). I do blame them for not having the backup plan for t when the inevitable oil/gas prices skyrocketed. management deserved to be slapped severely for that lack of planning. The design engineering team needs more slapping as they continue to sell cars which rot out in a few years, design cars which are terrible to maintain (some need to jack up engine to change spark plugs…), brake lines could be coated with plastic like SAAB does but GM doesn’t so they rot out in a few years, spare parts don’t line up like the originals, gas mileage is terrible, resale value sucks…
<
p>Union labor and lackluster work ethics have delivered the death blow. I have been hoping for bankruptcy for GM for months now so they can retool and come out swinging but it will take years for Americans to believe the American car they buy is on par with the 1999 Toyota Camry out in the driveway which still runs like a champ vs. the 2001 Taurus rust bucket which was towed away years ago.
I’m always fascinated by conservative logic, and I was wondering if you could guide me through your answer. You start off with “unions are the #1 reason” and then describe that “American cars were pure junk compared to imports and they are still significantly inferior”.
<
p>That leads me to conclude that you believe that union actions are more hobbling to a company that produces “significantly inferior”, if not outright “junk” products compared to competitors. Is that correct?
I have answered the questions on unions before and I was worried about people complaining about me repeating myself.
<
p>Less money on union labor (and benefits, pensions…) means more money to spend on engineering, higher quality parts, research… resulting in better cars to be sold.
…less money for executive paychecks, bonuses, stock options, etc. could achieve the results you mention. Sorry, but you set up a false choice that I don’t accept.
excessive compensation for executives could also help companies retool.
I know this first hand in the real estate construction business.
<
p>Example: union flooring contractors have work rules which yields around 80 square yards of carpet installed daily. A non-union flooring contractor can lay up to 200 yards daily.
<
p>Even at 2x the installed output, the non-union work is usually superior, especially if I pay the same hourly wage rate. Actually, I can pay MORE because the productivity is so much higher.
<
p>And did I say the work is superior?
<
p>The poor workmanship of US autos was legendary. It was only until the Japanese built plants in the US, to hedge against the import quotas of the 70’s, that US union auto workers began to improve their quality. The were FORCED to.
<
p>The NON-UNION US auto worker is the most productive, highest quality auto labor in the world, as proven by Mercedes, BMW, Toyota, Hyundai and Mazda which could have located their new 21st-century factories anywhere in the world, and chose to build US plants.
Productivity shouldn’t be the only measure. In Lowell, the millworkers were incredibly “productive” in that they worked long hours and operated multiple looms at once. The health and safety conditions were horrible in this environment AND wages were low. Not to mention they got to rely on southern slave labor, the opposite extreme of unionized paid labor. There is a moral imperative here especially when you realize that taking your arguments to their logical extreme is essentially advocating slavery. Afterall, that would REALLY cut labor costs to an absolute minimum, wouldn’t it?
If you changed it to “could have located their new 21st-century factories anywhere in the country, and chose to build plants in the South“, you are on-point.
<
p>Almost all vehicles built in the U.S. are for domestic consumption. There are substantial structural advantages to doing so that are independent of labor cost.
<
p>Also, why doesn’t Subaru’s zero landfill assembly plant get included in anyone’s list? They built Camrys there too now. I toured this plant last week; it’s awesome. Here’s a good article about it.
what those “substantial structural advantages” are if not cost advantages? Savings on shipping by sea?
<
p>Point-to-point international shipping costs for cars is not that large a component of cost for the car manufacturers, something like $400 per vehicle by sea (sorry no citation, but you can personally ship a car from Germany to NJ for around $1,000.)
<
p>I think my global point is still valid. It’s not a labor rate issue, it’s an all-in labor cost per unit output issue. That includes work rules, Job Banks, and the legacy cost burdens (i.e., the retirees.)
<
p>And didn’t you make my point vis-a-vis comparitive advantage of non-union labor over union labor, i.e., Detroit versus the south?
Demolisher, what do you believe is a moral imperative, or the greatest good for society:
<
p>1/ A company that makes healthy profit, or
2/ A workforce that enjoys a high quality of life?
<
p>You seem to be saying the two are mutually exclusive, and you prefer the first. Am I wrong?
Perhaps you inferred it from my dislike of unions? Then from there you would have to assume that only union workers have a high quality of life?
<
p>In fact I believe that there are plenty of non unionized companies in which the workforce enjoys a high quality of life.
<
p>If you force me to choose between the 2 hypotheticals, I would have to choose the former because a company without profit is unsustainable. (Hence the high quality of life would have to come to an end – like it has been doing for laid off auto workers for decades).
<
p>But, just to be totally clear, I do not and would never presume to judge, legislate, or dictate how good or bad anyone’s quality of life should be, nor how much or how little profit any company should make. To me that would be arrogant and intrusive, and counter to the principles of freedom which I believe in.
<
p>Over the long haul, the free market vastly improves all of our qualities of life via the innovation that comes with freedom and competition.
<
p>As an aside, I’m guessing that today, by most measures, you and everyone you know live better than any royalty ever did prior to the industrial revolution.
<
p>
As is a company without a workforce. Just as labor is sometimes implicitly reminded that they wouldn’t have jobs at all without the business, management should be reminded that there would be no profit without people actually laboring to make that profit.
Banding together is the only way to make management take notice sometimes.
Apple, Google, Microsoft, Walmart, Berkshire Hathaway companies, etc. All non-union, successful, and with contented labor.
…tech companies treat their workforces very well. I’m extremely skeptical of including Wal-Mart in your list, however.
… Microsoft tried to get away with a large percentage of contract workers and it led to some extremely sour relations in the late 90’s early 00’s.
Until the schidt hits the high tech fan.
Remember Digital?
How did Polaroid do when things got tough?
You don’t need unions for the good times.
… a company without profit is sustainable, if it has a solid growth plan and access to credit. As I recall, FedEx spent almost a decade in the red before it made a dime.
…much of it still does.
but how many of those companies are using organized labor? Can you name even one?
<
p>
I typed “federal express union”* into Google, and lo and behold, the first article that came up was about FedEx pilots voting to unionize in 1993. A bit further down was a 2007 article about the first FedEx drivers’ union being organized. Funny what you can learn with Google.
<
p>*Actually, I typed “federal expree union”…dang auto-correct is turning me into one lazy typist.
But,
<
p>FedEx
COMPANY
<
p>Founded 1971 in Little Rock, AR, as Federal Express. Changed its name to FDX Corp. in 1998, and to FedEx Corporation in 2000.
<
p>So I think they were no longer an unprofitable startup when the unions moved in. Took em 22 years!
<
p>By “those companies” I meant startups, or companies that have never yet made a dime. Sorry if that wasn’t clear.
of course it’s not going to have a union. It takes years just to organize into a union. What’s your point?
How is the US Steel business? Appliance manufacturing business? Automotive business? The list goes on… Transportation, how would Amtrak be without massive infusions of cash from Uncle Sam?
Amtrak doesn’t work because the US is not Japan or Europe. We’re a car-obsessed, thinly populated country outside the coasts, with a better road infrastructure, lower gas prices, etc., etc.
Seems to me that Verizon’s doing pretty damn well these days. Since you’re so willing to put all the blame on unions for the downfall of the steel industry, I assume you’re going to be giving all the credit for Verizon’s success to its many thousands of union employees?
<
p>Public transportation isn’t a for-profit business, not in America or anywhere. In the first or second grade, we used to get little quizzes where we had to pick “which one doesn’t belong.” You should look for some of them online for practice.
The field is not level yet with towns being wired for phone suddenly enriching the cable business. Regulations abound giving benefit to companies/industries like Verizon/Telecom… With a true level playing field I would argue that Verizon would get its ass kicked by the new sleeker lower cost “non-union” company and my answer is “just wait”. There are plenty of examples where the “established” technology company ends up losing to the new comers, once the field is level. Verizon workers are way overpaid for their work and fall into the quasi-government jobs from what I can tell (overpaid, underwork, 9-5, great benefits and never worry about their future…)
<
p>”which one doesn’t belong” … interesting.
Setting aside the obvious public sector nature of “public transportation,” it’s only public when government MANDATES it. Example: the MBTA, Amcrash, and — oh the horror — the Steamship Authority.
<
p>They all lose money, i.e. fares do not cover costs, and need to be on taxpayer funded life support forever.
<
p>I would hazard a guess that in terms of passenger and tonnage miles, the VAST majority of transportation is PRIVATE, and for-profit, like airlines, bus companies (Peter Pan,) taxis, and all the road, sea, air, and rail freight companies.
<
p>If CSX, Maeserk, and Bonanza Bus can make money, why not the MBTA?
<
p>
If you think airlines are profitable, you obviously aren’t paying attention. How many airline bankruptcies are there per decade? I think it’s been running at about 2-5 per decade. And the airlines don’t pay anywhere near the full cost of the airports, while the train system has to pay more than the full cost of maintaining the tracks. Amtrak loses money because it is less subsisdized than the airlines and because it is required to serve the whole country even though only the Northeast Corridor is profitable. If the government subsidized rail travel as heavily as it subsidizes air travel, rail travel would be cheaper.
<
p>Buses do not pay for the infrastructure they use (bus gas taxes do not come close to covering the damage a bus does to the highway). I do not know anything about direct subsidies of bus companies, however they do get nearly free highway routes to use. If Amtrak didn’t have to pay more than the full cost of the railroads, then it would also be profitable.
<
p>The MBTA’s costs are more than covered by fares. The T is losing money because they were given debt from the big dig, which had nothing to do with the T (and arguably the T’s revenue is down because of the big dig making it less unpleasant to drive into the city). The interest costs from that debt are higher then their losses.
<
p>So it is clear that whether a transportation system makes or loses money is determined more by how much the government subsidizes them then by anything about their labor practices. The subsidized systems make money, while the systems that subsidize other areas of government lose money.
<
p>Taxis are profitable without subsidies, and they also do not have to subsidize other projects.
<
p>Cruise ships hardly count as a means of travel. People don’t go on cruises because they are a good way to get somewhere. They go on cruises because they are like giant resort hotels. It doesn’t make sense to compare them to other forms of transportation, when the primary purpose of a cruise is entertainment, and people pay a higher price for the entertainment than they do for the transit. There is very little boat travel outside of cruises and ferries anymore. I don’t know anything about the costs or profits of ferry companies.
it took years before it made anything, now it’s practically the only retailer out there doing better in the past 12 months than the 12 months before it.
<
p>Facebook loses millions every year, but has almost unlimited access to capital for exactly the reasons you state. Once it becomes profitable, it may very well become more profitable than Google.
…comment on an old thread:
<
p>
…the workers themselves being the management? Yes, it sounds very Marxist, but at least the people making decisions about profits would also be the ones having to actually labor for them. I’m sure the workers would be smart enough to realize that they just can’t give themselves a big raise, thus forcing prices up, themselves out of business and ultimately out of a job.
… labor is on the board, along with finance. I actually like this idea, although in this country it’d be a conflict of interest. The actual parties interested in the welfare of the enterprise should be the once that navigate it. Shareholder value is only one interest among many. Shareholder interest alone might, for example, warrant liquidation while broader interests differ. Our system has operated (functionally) under the assumption that business exists for shareholders alone. (This assumption becomes more than just functional in the 80s.)
<
p>This is absurd on it’s face.
<
p>We as a society, like having businesses for many reasons, but only shareholder value is represented in the machinery of the rules and the governance structures. We, as a society, like business for the jobs they create, for the economic boost they can give to geography, and we appreciate corporate citizenship that takes an active role in civic life. Since these are the values we actually hold with regard to business, IMHO, these values should be represented in the machinery and governance structures of business.
<
p>My 2 cents.
I take your point, but the Steelworkers have a seat on the board of Goodyear, there are plenty of Employee Stock Ownership Plans with employee representation on the board and worker cooperatives are owned and run by employees.
If it’s a public company, the ESOP shareholders have the same rights as other shareholders – like at United Airlines. If it’s private, the ESOP shareholders get to vote to direct the trustee in the event of a sale or other big event.
<
p>Often the ESOP gets board seats, however, and they do vote – the ESOP cannot only be for the unionized employees, however. It can exclude unions, but it can’t be limited to them. Other times the union gets a board seat in proportion to their share of the company, but it’s not related directly to the stock.
<
p>In a cooperative (and there are big ones like cooperative home care in NY with 1,500 employees) everyone gets a vote of some sort.
… the cite I had. There was a PBS documentary comparing and contrasting the U.S., German, and Japanese corporate governance rules. I think it would have been around the late 90s.
<
p>This is false. Have you taken Economics 101? The topic of the factors of production, labor markets, and capital deployment are all discussed.
<
p>It’s not slave labor. There’s a market for labor just like for big screen TV’s. People of their own free will choose to work in a company because of personal ambition, interest, and wages. Companies have to ATTRACT and COMPETE for workers, just like for capital or for customers. Focus only on the interest of the shareholders and you cannot retain labor. There’s no magic. They pay me, I work for them. S=D, market equilibrium.
<
p>What sort of Dickensian workplace are you imagining that without unions we’re lost?
Large oversupply of labor, and no specialized skills needed for any job. Put the workers in a pretty bad spot, as every one was 100% replaceable, at almost zero cost to the employer.
<
p>That economy has ceased to be, however, and therefore the dynamic has shifted.
… are discussed, but the purpose is shareholder values… Labor, factors of production, capital deployment… these are not ends, they are means. For the company itself, our system says the end is ‘shareholder value’, not ‘jobs’. Of course they exist in a labor market and a stock market, but they exist for the stock market and decidedly not for the labor market.
United Airlines is owned by the unions, for example. I believe the UPS union owns a controlling stake in their company, as well. It’s a model that can certainly work, but it’s tough to get at that point.
Demolisher, if I assume that you believe in a free market, I’m hard pressed to say why you oppose unions. Don’t you support the right of people to bargain collectively? I assume you support the right of people to invest collectively.
<
p>
and to be clear, I am not proposing outlawing unions, by any stretch!
<
p>I just believe that unions have gotten too big and powerful and are generally harmful to the organizations they live in. Thats bad for the economy and not great for the free market, but, certainly organizing is something people are free to do.
<
p>Now just stop bailing them out with government funds and the free market will fix it.
<
p>
I’ve missed either the need or the action of bailing out unions. It’s incredible that anyone still believes simply “the free market will fix it” as you stated above.
not the unions themselves per se, although you could actually argue that UAW’s ownership of Chrysler was the sweetest plum.
<
p>The market will kill inefficient companies, thereby “fixing” it. Efficient / competitive companies will continue to innovate and bring us all cheaper and better products. Thats the fix I refer to.
GM and Chrysler still have employees. Absent a government bailout, zero of them would have jobs. I think it is fair to judge the entire auto industry bailout as an effort not to have these jobs evaporate, along with the union that organizes them.
<
p>In addition, the terms of the Chrysler proposal have everyone taking a haircut except… the union.
<
p>I don’t think it unfair to characterize this as a huge transfer of taxpayer money to benefit the UAW.
<
p>The UAW hasn’t taken a haircut in recent weeks (and months, and years)?
<
p>I beg to differ.
<
p>And do you want to talk two-tier wages, circa 2007-8, etc.?
<
p>The UAW, for all its faults, has been making very significant concessions over the past several years. Painting them as the winners in some sort of boondoggle is just wrong, in my opinion.
Which is, indeed, a huge transfer of taxpayer money to UAW workers, while doing little to nothing to ensure that Chrysler will not collapse again in the near future. Which is to say, a boondoggle.
<
p>You are right that the UAW has made concessions elsewhere, but always a day late and a dollar short. Which is to say, only after the concessions won’t make that much of a difference.
“he United Auto Workers announced Sunday that it has reached a tentative agreement on concessions in its contract with Chrysler LLC – a key step in final efforts to help the automaker avoid bankruptcy.”
<
p>That’s not related to the bankruptcy?
No haircut?
<
p>
<
p>Yeah, that’s a sweet deal. I’m gnashing my teeth that I couldn’t get a piece of that action.
The health care fund, in particular, and they’re getting equity. Meanwhile, secured creditors are taking a haircut.
<
p>The entire point of being a secured creditor is that one has priority over unsecured claims. So, yes, a boondoggle. “conceding” future wages cuts is not a concession, but an acknowledgement of reality.
<
p> The incentive for the union and the company to negotiate reasonably is nil, because no less than the President of the United States has promised that the company will not be allowed to fail.
What it boils down to is that the secured creditors are getting screwed worse then the unions. That’s a reason to squawk, but it’s not some horrible miscarriage of justice- bankruptcies are by their very nature.
<
p>Let’s remember that we’re talking about $300M owed to the holdouts vs. the several $B that the union traded for equity re: VEBA.
<
p>Ignoring the details of who gets to cut whom in what line, for me the whole thing boils down to this:
<
p>- A Chrysler bankruptcy is risky, not just to Chrysler and its dealers, but to its suppliers, many of whom supply GM, Ford, and other US assembly plants
– A longer bankruptcy means higher likelihood of systemic impacts- see e.g. this summary of the systemic issues involved
<
p>So the dissident bondholders were willing to increase the risk of systemic impacts to the US auto industry in order to get a better cut of their $300M. That’s their right, and arguably their fiduciary responsibility (though I’d make the case that they have a fiduciary responsibility not to screw up the whole industry). But it doesn’t mean they’re not jerks for doing so.
<
p>I happen to think Obama’s doing the right thing. I believe that screwing these bondholders more than the union retirees is in the best interest of our society.
But the point is, again, that the reason the secured creditor can be forced to do this– when there is no legal reason for them to do so– is because the government is in an extremely interventionist mood. Which is to say, interested in doing a favor for the UAW.
For future investments, expect a premium if you’re buying bonds from a unionized company. Expect more premium if buying bonds in a swing state.
Who’s been paying interest to the bondholders since the bailout loans were made? Ah yes, the taxpayer.
<
p>And Obama’s promised that the company will not fail? What? Did I miss something?
Bondholders get what they would have gotten anyway in a liquidation.
<
p>UAW gets a gift– jobs at an employer that is not, and will not be, a viable business in the foreseeable future. For the cost of the gift, we could have just simply given each Chrysler worker about $100K, in cash, which might at least have been money well spent.
<
p>So, yes, transparent taxpayer gift to small but politically powerful interest group in a swing state.
What numbers did you use to come up with 100k? Did you include any retirees?
<
p>Are you sure bondholders would do as well in a liquidation? I don’t think that’s a safe assumption.
<
p>Let’s see if I got this right:
<
p>1. Feds gave bailout loans a few months ago. That kept Chrysler from going Chapter 11 => Chapter 7 right when the broader economy was accelerating the wrong way. My feeling at the time, and my feeling now, was that this was money well spent, if only as a delaying action. (MI unemployment is 13+% and climbing right now).
<
p>2. Feds are giving another loan of $4B or so now (I’ve lost track- are we at ~$10B now)? Again, this keeps Chrysler from going Chapter 7, and facilitates a sale to Fiat.
<
p>Will Fiat-Chrysler work? You assume no. I am less sure.
<
p>The thing you need to know about Marchionne- at the risk of falling into CEO hero worship- what he did at Fiat was simply unbelievable. Fiat circa 2004 made Chrysler- even today- seem like a well-run organization (actually, in some areas, it is- it’s parts warehouses have shown substantial labor productivity improvements over the past couple of years). I could tell you a couple stories about hijinx at the old Fiat, but doing so on this forum could get me fired.
<
p>Here’s an interesting article on the big M.
<
p>I don’t know if Fiat-Chrysler will work. But if anyone could turn around Chrysler, it would be Marchionne. And the product mix actually fits, more or less. Chrysler’s main problem is that they basically sell zero cars. I’ve been looking at sales data for Chrysler in 2009, and as bad as it is on the truck side, the car numbers are simply grisly.
<
p>And this is a pretty good opportunity for Fiat to re-enter the US market. They’ll have a dealer body in place, with the lower performers already culled out, etc. And they got the product for if/when oil goes $100+.
<
p>I think the Administration’s policy on the automakers has been approximately right (and remember what and how much was done before Obama took over). Letting Chrysler go to Chapter 7 would really screw up US auto manufacturing- and not just the Domestic 3, as the import factories use a lot of the same suppliers (they just treat ’em better). In my opinion, it’s in the national interest to at least let Chrysler die slowly. And the UAW took another haircut; any way you slice it. Maybe they didn’t take enough of one for your satisfaction, and maybe some distressed debt got a worse deal than they wanted. Too bad.
They are a third rate company, in a rather minor economic sector. The initial bailout money, designed to prevent a disastrous bankruptcy, was apparently a complete waste. The bankruptcy plan– lets make money selling crummy Fiats slapped with the badge of a crummy American label– is at best a hail mary pass, even if the CEO is the next superstar CEO. This is a thing that Daimler Benz paid someone to take off their hands, after all.
<
p>Why should the financial sector get bailed out but not the auto industry? Because the financial sector is so directly connected to every single business that exists, while the auto industry just isn’t anymore. In other words, I wa skeptical of the panicked nature of the initial bailout, and nothing since has been comforting.
<
p>The most “essential” thing about the auto industry is the 17 electoral votes from Michigan in 2012.
<
p>Ok, so as of 3/31/09 Oppenheimer Senior Floating Rate Fund had $1.2B in assets, of which 1.1% were in Chrysler. Note that this is a junk bond fund; nothing wrong with that, but they’re big boys and understand the risks.
<
p>Meanwhile, the other fund had ~1% of their assets in Chrysler.
<
p>Now, first off, the numbers don’t add up; the two funds have <$2B in assets, and $100M / $2B is >> 1%. So either they added holdings recently (presumably bought on the cheap), or there’s some other inconsistency in accounting that’s over my head.
<
p>Regardless, worst case these guys were due to take a pretty small hit due to an extraordinary circumstance. And they were basically willing to throw a spanner in the works, with large associated risks to the broader economy, to protect themselves. That’s their right, but it doesn’t exactly make them sympathetic figures.
<
p>Finally, here’s an interesting comment on the Auto News article (sorry, $ subscription):
<
p>
“Section 363 Sales” are the norm in bankruptcy cases nowadays. Their extreme rapidity are somewhat controversial in bankruptcy circles, unless one is a big NYC or Delaware law firm.
<
p>(Imagine: You are a small company, perhaps sole proprietor, and the big receivable you have been worrying about files bankruptcy. You read about it in the paper on Monday. On Wednesday, you get a notice in the mail. On Thursday, you get 400-500 pages of legal gobbledygook, and on Friday realize that one of these pages is a notice that the debtor’s assets are to be sold for $X, or to the highest bidder, in two weeks time. Is $X what the debtor is worth? You have 10 days to find out, hire a lawyer, draft the paperwork, hire an expert, and present your evidence. If it takes you 11 days, or if the rush leaves you at a disadvantage, you lose and can’t appeal.)
<
p>The Adelphia creditor’s lawyer couldn’t prove value on short notice, and that particular bankruptcy court gets a lot of business because it wouldn’t give him any time to do so. Chrysler of course filed in the same spot.
<
p>So, to sum up: it isn’t that the precedent (or certainly the law) is on Chrysler’s side, it is that the practice in that specific court is, notwithstanding the law and precedent.
<
p>_______________________________________________
<
p>I don’t see what the percentage of assets of the bond funds in Chrysler has to do with anything. Is that even the face value of the debt, or has it been “marked to market” because the funds know that they are about to be shafted? In any event, most estimates that I have seen put the total number of people that work at Chrysler at 70-80,000, which is about the average number of jobs lost every two weeks for the last eight months.
It’s about the suppliers (many of whom, even in the best of times, are generally teetering on bankruptcy).
<
p>And the dealers.
<
p>And the retirees.
<
p>And the MI economy (Map of pain: http://www.slate.com/id/2216238)
<
p>(BTW my employer, a small company, has a receivable with Chrysler…)
<
p>The percent of assets is relevant because we’re talking about chump change for this fund. Yes, they have every right in principle to fight for their chump change, but they could also have been sporting (and smart from a PR perspective) and gone along with the herd, with little bottom-line pain.
<
p>It’s debatable whether or not the Feds actions are the right thing to do. I think they have done the right thing, more or less. It’s the characterization that the UAW got handed this huge plum that bothers me, when in fact they just got less pain then they would have under Chapter 7. But there are a ton of reasons why Chapter 7 serves almost no one’s interests, including even the bondholders.
than so is the number of employees, which is minor (macroeconomically speaking) because manufacturing is no longer the foundation of the entire economy.
And think through your logic again. You are better than that.
<
p>And read this.
<
p>I’ll draw out the key part:
<
p>
<
p>Think about that.
<
p>It’s not just the ~60k Chrysler jobs.
80,000 Chrysler employees. Say, another 160,000 “supplier” jobs in rough numbers, which is much more than has been estimated by the administration in pitching this bankruptcy plan. So, 240,000 jobs.
<
p>Cost of bailout: $4 billion a few months ago, gone, $6 billion more through the bankruptcy. $10 billion, give or take a buck or two.
<
p>That works out to around $40K per worker. And for this, we will likely not fix very much. They will have access to Fiat designs, which they can sell in North America if they can find a way to (i) build them at (ii) a price at which they can make money. Which is to say that they’ll be back with hands out within the not too distant future, again becoming wards of the state. If we just gave the money away to the 240,000ish workers, it would probably be cheaper in the long run.
<
p>And all this is a rehearsal for GM, which will cost more and accomplish less.
I’ve missed either the need or the action of bailing out unions. It’s incredible that anyone still believes simply “the free market will fix it” as you stated above.
Really?
<
p>There are infinitely fewer union employees now, as a percent of the population, than their was in the 50s and 60s. The facts don’t back up your assertions.
long ago, peaking in the late 70s early 80s. We’re in the late stages now, some wonder if unions will survive / continue to be relevant? (Hence card check?)
<
p>But unionized companies/industries have been going down all along, don’t you find? Whereever possible at least. Hard to say what value unions add to government labor.
<
p>So you would advocate the “cancer” only in companies you don’t like? Union Carbide, say?
You think there are only 2 choices – advocate or outlaw?
<
p>It is so tempting to characterize this as a typical liberal worldview: you can outlaw anything you don’t like!
<
p>
You say unions are a cancer. To me that means: eradicate them. Are you retracting that characterization?
OK, thats cool. So, what you’ve identified is that I would actually like to see them eradicated, yes, that is true. But there are many things that I would like to see eradicated, the government eradication of which might trample on our liberties.
<
p>Example: communists. Can’t really outlaw them, can we? The whole McCarthyism debacle taught us that. Yet I find their philosophy to be dangerous, backwards, immoral and horrible. And whenever implemented at the nation level, mass murder seems to ensue. But damned if I can outlaw them!
<
p>I’d also oppose things like card check, which I think fails on the merits in any case.
<
p>Does this make sense?
<
p>My further opinion: Luckily for me, it seems like the unions do a good job of eradicating themselves. Unfortunately, though, they keep taking down American industries / companies with them.
<
p>
I think you should take a fresh look at unions. During the campaign, I met some union workers. Unions help people who need it.
<
p>And like I said above, they continue to help you and me.
The fact that you think McCarthyism proved that you can’t outlaw Communism makes me suspicious of any invocation of American history you choose to employ.
Toyota and Honda aren’t having the same trouble as GM and Chrysler for 2 reasons: 1. They’ve made better cars and thus have a better reputation, 2. They don’t have the same “legacy” costs. In 20-30 years, they will. Their US plants are too new to be paying costs associated with retirement — no one’s retired in there plants yet. Their lack of unions have nothing to do with this fact. UAW’s agreed to slash benefits and salaries to the point where not only do they not have any salary advantages to Toyota or Honda workers, but in many factories UAW employees actually earn less.
<
p>I could add more reasons, such as the fact that both Toyota and Honda receive massive help from the Japanese government that goes far beyond anything we’re doing for Chrylser and GM now, but I’ll spare you the details.
<
p>Furthermore, and pardon me if this point blows your anti-union mind, if unions are such a huge-ass problem to the American car companies, why is Ford still doing okay?
<
p>Insofar as you can say the American Auto Industry’s been destroyed (we do have 2 of the world’s 5 largest auto companies by sales volume — Ford and GM), the auto industry destroyed the auto industry. They got complacent with trucks and SUVs and fell behind in reliability. Ford started getting better in making reliable cars earlier (they’re as reliable as Toyota now & the Focus has kicked butt all over the world, etc.) and thus hasn’t been in the same dire straights as the other companies.
<
p>But no matter how you slice it, the unions have not been “the problem.” Indeed, the erosion of the American middle class directly correlates to the erosion of unions across America. Thus, the problem for America has been the lack of unions. Period.
<
p>2. Briefly quantify how much money the Japanese government is giving their auto companies and cite a source.
<
p>3. One reason Ford might be doing better is that unions have agreed to benefits cuts: http://www.lansingstatejournal…
<
p>Note, though, that they were and may still be right on the edge:
<
p>http://www.economist.com/busin…
<
p>4. Can you please quantify what you claim as the “erosion of the middle class”? Looking at the latest census, it seems to me that the vast majority of Americans are not in poverty. http://www.census.gov/prod/200…
<
p>http://en.wikipedia.org/wiki/F…
<
p>
I’m not wasting an hour of my life digging up links. If you start reading Emptywheel, you’d have all the answers on 1-3, plus you’d know that one of the chief reasons Ford is still doing okay is that they were smart enough to keep enough cash flow to get through the bad times. The fact that they still build reliable cars people want to drive helps a lot — quite unlike Chrysler.
<
p>
<
p>While most people don’t live in poverty, the gap between the very rich and everyone else has been growing exponentially, especially during the Bush era. If you don’t know that, you’re just not paying attention. In terms of the middle class, it’s a much greater struggle to stay afloat today that it was in the 90s, for example. Wages for the middle class haven’t appreciably risen in several decades. The entire Reagan, Bush & Bush years were all huge losers for anyone who wasn’t in the top 1/5 of American wealth.
<
p>
http://www.kyklosproductions.com/articles/wages.html
First off, Lol! “Go read my favorite lefty blogger that you’ve never heard of on some lefty blog that I like called fire dog lake and if you can get through all the torture posts you’ll eventually find some relevant lefty opinions that prove I am right”. Nice one. Safe to say I’m not wasting an hour of my life reading a random lefty blog!
<
p>So the rich-middle class “gap” means erosion, does it? I suspected as much. Even though the middle class continually does better over the long haul, the rich do even better than that, therefore the middle class is eroding? I don’t think that makes much sense. The middle class gets hurt in a downturn just like everyone else, but show me any long term downward trend in standard of living, wages, or size of the middle class and you’ve got an argument. Otherwise all you have is envy.
<
p>by percentile:
http://en.wikipedia.org/wiki/F…
<
p>median:
http://en.wikipedia.org/wiki/F…
<
p>Those graphs don’t seem to support your larger implication, do they? They certainly don’t seem to be trending along with union ebb and flow. The also do not support this assertion:
<
p>
<
p>You might be able to get stuff like that by cherry picking stats and fooling people with them. Lies, damn lies, etc. I’m here to help.
<
p>
worked in the industry for many years and has outclassed the entire mainstream media in terms of journalism on those ‘torture’ issues.
<
p>The search function works well.
<
p>I wish I could point out more stories, but unfortunately I didn’t save any links and I’m not spending hours finding them all and rereading everything. But it’s well worth reading her on Detroit and pretty much any other issue. She could be the best “citizen journalist” in the country.
<
p>
<
p>It’s far more than that. Middle class wages have barely gone up beyond the rate of inflation over the past 30 years. The only period in which they appreciably gained in any quick period was in Clinton’s later half. They’ve completely stagnated during the Bush administration, including the “boom years” of said admin. Taking into account inflation, just about everyone but the very wealthiest earn less now than they did before Bush.
<
p>BTW – Graphs may look nice, but they can be easily manipulated. For example, how much more are people earning in that time period adjusted for inflation? Pretty much nothing. And how many families had 2 people working then as compared to now?
<
p>A median household income of 35k (per that graph) in 1965 is a helluva lot more than the $46k it lists now. If anything, your graph proves my point. The median family is struggling far more today than they did in the 60s and 70s — to the point where it’s pretty much taking two people to earn the same buying power as one back then. This is doubly or triply so for people without a college education.
the graphs I linked to are already adjusted for inflation. If you look at the Y axis on the median income graph, for example, it is labeled “… in 2003 dollars”.
<
p>Also I hope you can see the humor in this:
<
p>
<
p>the immediately
<
p>
<
p>You presume alot Ryan. Like that someone who already disagrees with most of your opinons might would want to spend hours reading some stuff that you can’t even link to or summarize decently, purely based on your opinion that it is good.
You can or can’t decide to read a different writer who says things, backed up with a great deal of research, that may be counter to your thoughts. Totally up to you!
This table shows that from 1973-2007, a period of significant union decline, there was a small increase in median compensation, but a larger increase in average compensation (showing increasing inequality) and an even greater increase in productivity (showing that compensation increases are falling significantly behind productivity increases).
<
p>Without strong unions to demand a share, compensation doesn’t keep up with increased productivity.
<
p>A lot of both the Japanese and German plants in the US, in particular the South, receive tax breaks for locating their plants.
and not a single post anywhere to back it up?
<
p>I honestly can’t tell if those are joke votes or what.
<
p>
There are plenty of comments pointing to the benefits of unions. Former DNC chair Steve Grossman never tired of proudly pointing out while running for Governor in 2002 that he ran a union shop, that “never had a strike, never had a lockout, never had a matter go to arbitration”. Some people do know how to treat their workers and Grossman managed to do quite well for himself in the process.
“How culpable are the unions in the downfall of Detroit?”
<
p>The answer chosen by 4 people is:
<
p> Unions are actually helping the industry survive – 4 votes (17.39%)
<
p>Show me any post in this thread that claims that unions are helping the US auto industry survive its current perils.
Particularly the need to keep funding the underfunded pension fund?
<
p>Pure speculation, obviously – I actually did not vote this way.
If the UAW wasn’t such a big supporter of Obama, and Michigan wasn’t a key swing state for getting elected, there would likely be far less attention being paid to the industry. It’s not only because autos are important that the government is working to bail out these companies, but because autoworkers are organized.
<
p>Conversely, if Toyota was seeking the same kind of benefit, there would likely be plenty of protests like those directed at Bank of America
<
p>
It doesn’t get to the issue of cause, but if your looking for a bailout and your not a banker, being a heavily unionized industry is the next best thing.
Fairly cynical though, wouldn’t you say? To complete the point you could show how non unionized industries of similar size have gone down with no bailout; but I think that the truth of your point is obvious. Its just damn cynical to cite political payback as a “legitimate” piece of help.
<
p>I bet you none of the 4 had thought of this, though!
<
p>
I think it is an open issue from Manny’s thread above whether or not German unions / labor are somehow different (or less effective) than US unions.
<
p>But what if we compare management? In particular, if Chrysler is going down primarily due to bad management, as some of you suggest, then wouldn’t bringing in new, better management fix it? What if we could bring in the very same management that runs the successful German car companies?
<
p>Luckily we have a case study of that very thing: Daimler-Chrysler.
<
p>During the merged period, Daimler management was in control of the company. But they could not make it profitable, despite (one would assume!) every effort. In the end, Daimler chose to eat a painful undoing of the merger and now has gone on its merry way while Chrysler has ended up in bankruptcy.
<
p>Doesn’t this example put to rest the assertion that it is all (or even primarily) management’s fault? Doesn’t this underscore that some other problems must have made Chrysler untenable?
<
p>http://www.washingtonpost.com/…
<
p>A staggering loss, but no other option! And this despite the infusion of world class management – and technology! (remember how they lifted the E-class chassis for the 300?)
<
p>Why would that be?
<
p>It seems like this thread is full of evidence that unions not only do damage but in the auto industry case, caused an unresolvable course towards bankruptcy.
<
p>Foreshadowing:
<
p>http://seekingalpha.com/articl…
<
p>Is it possible that anyone still believes union related costs aren’t the largest single underpinning for all of this current trouble? Even as every single discussion of remedies comes around to either government bailout money or union negotiations. Nothing else is even discussed in any articles or news discussing current challenges of the industry.
<
p>Look I know you guys are ideologically aligned with unions, and they are big part of the base, and they once improved the lot of the workers. Problem is, they couldn’t stop improving it. They improved it all the way out of existence.
<
p>
Chrysler is hardly alone in not addressing it’s own management issues,… and this happens in union and non-union companies alike. CEO accountability is at an all time low and unions have nothing to do with it.
Look, plenty of people want to blame unions for GM’s collapse, but when there’s a glaringly obvious explanation staring us in the face that has nothing to do with unions, the fact that people keep brining it up just makes the rest of us shake our heads.
<
p>American car companies focused on the few cars that people have least wanted to be in the past few years. They constantly fought against legislation that would’ve had them all increase their gas mileage in parallel. Gas prices shot up and energy became a hot social issue and people stopped wanting most of the cars GM staked its profits on. Then we got a recession and again, people wanted small/cheap/efficient/reliable – something other than what GM had to offer.
<
p>These decisions were made by management. They could’ve seen it coming. A lot of us saw it coming. Lots of newspaper and magazine articles saw it coming. Management went for the short term boost, and now come the consequences.
<
p>Unions weren’t what motivated management to make these decisions. A legal and business system that encourages short term decisionmaking, rewards corporate offices and top management to the extreme for short term success, gives no incentives whatsoever for them to worry about the long term, and pushes the cost of long term failure primarily onto employees and other larger groups who are not the people who made the decisions … that is what motivated these kinds of decisions.
is health-care costs. It’s actually cheaper to build cars in Canada because they have a rational health-care system. Some of the Detroit automkers have move production of some cars North of the border for just that reason.
One that every other industrialized nation has figured out makes the most sense. From a business perspective it is completely rational to operate in a country that takes care of health benefits, so they don’t have to pay for it themselves.
http://www.reuters.com/article…
<
p>
<
p>