For over 60 years, The United Autoworkers Union (UAW) has sold itself as the protector of America’s working class. According to their web site, “We’ve used our bargaining power to demand – and win – a role for union members to ensure that consumers receive the highest possible quality cars and trucks.” Regardless of your view of the quality of UAW-built vehicles, the union’s gained tremendous power on the factory floor, secured a group of benefits that are the envy of workers everywhere and amassed a mountain of money. So, now that GM and Ford are in trouble, will the UAW give anything back? Here’s what the union has to lose…
The Big 2.5’s UAW members receive an average wage of $29.75 per hour and full medical coverage. They also get an average of 16.5 paid vacation days per year, on top of three weeks paid vacation (Canadian members get four weeks). UAW workers who transfer to a plant “outside of their area” get a $25k relocation allowance– even if they don’t change residence. Employment is guaranteed.
The UAW’s Director of Public Relations reports that only 40% of his union's membership work on automotive assembly lines. Paul Krell says the rest are drawn from a wide range of other industries— from casinos to government-funded schools. But even as the UAW successfully broadens its base, the total number of dues paying members has declined dramatically. According to Department of Labor, the UAW lost 144,719 active members from 2001 to 2005. The loss leaves them with 557,099 active members and over 500k retired members spread throughout the United States, Canada and Puerto Rico.
Crucially, despite the drop in membership, the UAW’s assets continue to grow. Over the same four years, the union’s financial holdings have increased by $93,722,955. At the end of 2005, the UAW reported assets totaling $1.235b, including over three-quarters of a billion dollars worth of treasury securities. The union earned $54.4m in interest income during 2005, mostly from their $914m strike fund.
Even when the UAW makes concessions, their cash flow remains sacrosanct. For example, the UAW struck an agreement with Chrysler that permanently denies seniority or full employee status to "temporary" employees at the automaker's Belvidere, Illinois facility. These “temps” receive 70 percent of a full timer’s pay as long as they work. After seven months, they get minimum healthcare benefits. And what do one third of Belvidere’s workers get in exchange for foregoing the usual union-negotiated benefits? They get to pay full union dues and vote on UAW-Chrysler contracts. And that’s it.
It must be remembered that the UAW has some pretty heavy expeneses, albeit mostly overhead. In 2005, the union spent $8.2m on lobbying and political activities. Another $88m went to UAW employees’ salaries. Forty-two million more covered the UAW employees' benefits. Even if union dues drop, these payouts will continue apace. According to union rules, the Executive Board can divert $50m from their strike fund to their general fund to support operations (as they did at this year’s convention in Las Vegas). In fact, they can transfer up to $60m per year from the same source for the next four years.
In short, the UAW is a large and extremely well-funded organization. Active members enjoy high wages and benefits (estimated by bankrupt auto parts supplier Delphi to cost $76 per hour) along with unassailable job security. Retired members also receive an extremely generous pension and excellent health care provisions. But now that Ford and GM have paid off tens of thousands of the union’s senior members, it’s the less tenured and “temporary workers” who hold the key to the UAW’s— and the automakers’ —future.
Ford and GM’s worker buyout programs have removed the workers who can most afford to make concessions. It’s highly unlikely that the remaining, less well-paid UAW members will agree to significant cuts to their compensation. Union bosses know that holding the line on wages, pensions and benefits could throw Ford and GM into Chapter 11. They also know that large concessions would trigger wildcat strikes, which could also lead to Chapter 11. But most importantly of all, they know they have the cash and non-automotive member base to survive a nuclear winter.
Given these factors, the UAW will do everything in their power to maintain the status quo. In the main, they’ll hold the line on their current compensation. At the same time, they'll dress-up minor concessions as "historic givebacks:" proof of their concern for their employers' well-being. (The tactic will absolve them of any blame if and when the automakers go belly-up.) The “radical” union members are the fly in the proverbial ointment. Whether or not the union bosses can keep them in line will ultimately determine the timing of Detroit’s terminal decline.
Nice article, Frank. I didn’t know the UAW’s coffers were so well-endowed.
Since I’d like to think there are two sides to every story, when will we find (here or elsewhere) a pro-UAW article describing today’s labor nightmares as concisely as Frank’s work?
If I don’t find it soon, I’m gonna think that silence is an admission of guilt. That and further proof that modern HR-management initiatives makes the UAW completely pointless.
And the band played on…….
I wonder if there is a possibility that the Big 2.5 are somehow exaggerating their financial difficulties in an effort to gain concessions from the union?
It seems to me that the Union has had better strategists and forward-thinkers working for them than the car makers have.
Sajeev,
I’ll get on the pro-UAW next week, as anti-Union talk boils my blood.
even if it’s true, jonny?
As one of my Economics professors used to say… “Unions artifically inflate the cost of labor.” But market forces are poorly matched to corporate greed.
I’d hate to see what a GM product would look like with under paid staff. Just look at the enthusiasm a Wal Mart employee has for their job. That being said, with what the UAW has done for the workers, good salary, benefits, etc., why does the current build quality still suck?
/Oh, and I’m guessing “Eight-eight million went to UAW employees’ salaries.” Should read Eighty-eight…
Especially if it’s true
If you could never get fired how good of a job would you do?
Whatever the salary… Just tie work performance to pay raises and introduce the possibility of getting fired.. That should wake them up.
I have seen UAW workers that have pillows at there work stations… out in the open.
Ask Rick Wagonner
Do you want his secretaries e-mail Jonny? I’m not going to ask.
I am all for the union concept, but what troubles me is the expectation that any business should have to pay folks who are not working and adding value to that business.
“If you could never get fired how good of a job would you do?”
Most people tend to slip into the union mentality and the quality of work slips. There is no incentive to do quality work, outside of personal pride. Having been employed in a union shop before, I can tell you that personal pride is rare.
“I’d hate to see what a GM product would look like with under paid staff. Just look at the enthusiasm a Wal Mart employee has for their job.”
It might look like a Toyota or a Honda. They are non-union and do just fine. As for Wal-Mart, just because someone is not enthusiastic, doesn’t mean the job doesn’t pay well. They just might have the entitlement mentality that is so pervasive today. People think they should get paid large sums of money no matter what the level of skill involved.
“That being said, with what the UAW has done for the workers, good salary, benefits, etc., why does the current build quality still suck?”
Good question. That just proves that the unions don’t solve the problem. Basing wage increases solely on cost of living and seniority is a bad idea. I think that giving raises based on job performance and quality of product are much better ways to increase wages. Seniority should be rewarded (and is through vacation time increases and others) monetarily and cost of living increases are necessary as well.
Paying people $30 per hour with free medical care and other generous benefits while protecting their job from almost any danger does not a equal a quality product. Of course, bad engineering and poor management decisions are to blame as well, but some problems are from the assembly line.
The picture is bigger than just the UAW.
I’m a management-side labor lawyer. I’m fighting a case right now against the UFW. I have every reason to despise these folks, but I don’t. I can get mad at an individual for being an asshole. I can dislike a certain statute or provision of the law, but I simply can’t be against the fundamental idea of organizing.
It’s quite possible that, as documented above, there are pretty nasty excesses going on. But that’s no more of an argument against organized workers than Enron is an argument for socialism. (Insert bad apple argument here.)
It’s not the workers’ fault that benefit costs are spiraling out of control, and it’s not their fault that GM and Ford have a tin ear for developing products people want to buy. It’s also definitely not their fault that the slowly unraveling neoliberal trade policies are shipping jobs abroad.
With less that 10% of people in unions anymore, they really don’t have enough heft to change the problems that face them. Go back and forth all you want about UAW versus GM: GM can’t build a car, and the UAW can’t save the workers. There’s more going on than just that.
Paying people $30 per hour with free medical care and other generous benefits while protecting their job from almost any danger does not a equal a quality product. Of course, bad engineering and poor management decisions are to blame as well, but some problems are from the assembly line.
That’s correct. It’s not incumbent on GM to set the standard for wages in this country anymore. Our economy is too diverse. That’s the problem with this debate: it’s locked in the 50s.
Something needs to be done, though, to make sure that people who work a skilled job and commit to it can make a living. If that’s not up to GM, then it needs to be up to someone. The UAW is just trying to hang on to as much of the old blue collar American dream as it can. Can’t fault them for that.
For a look at the UAW’s financial disclosure statements for the past six years, go to http://erds.dol-esa.gov/query/getOrgQry.do . Select “UAW” from the Union Abbreviation drop down menu, and “International” from the Union Type drop down menu. When you get the resuts, click on the name of the union in the Affiliation/Organization Name box. You’ll get a list showing the past 6 LM-2 reports they filed. One warning – they’re huge PDFs (300+ pages long) so it may take a bit for them to load, depending on your connection speed.
For a summary of the current UAW contract agreements, see http://www.uaw.org/contracts/index.cfm .
Having seen the word ‘radical’ go from (1968) ‘take off your clothes, smoke pot all day, live in a commune, legalize pot and heroine’ to (2005) ‘Maybe the press should do their job’, I’m having some trouble with that last paragraph. Are the ‘radicals’ 1968 radicals or are they 2006 radicals?
Jonny,
Let me help turn up the heat for you.
First, I recognize that the auto industry, more than almost any other industry in US history, needed union representation to correct a management/workforce power imbalance. The rest of us might still be waiting for a 40-hour work week, vacation and sick time benefits, health benefits and more without union representation present in US labor history. I also understand the impact of UAW wages on several local economies in the US.
In my younger days, I was a union member. At that time, I could not quite justify in my own mind why we had representation, what the true “value” of the dues I paid were, and felt the wall erected between management and workers.
I’m now a college-educated professional working in the Bay Area, (an area with one of the highest COL in the US). I’m making the equivalent of under $60/hour in total salary and benefits in a non-union role. I’m cost-sharing some of my own benefits. I’m not whining. I live here and work here for many personal reasons.
With the exception of NUMMI in Fremont, unless I’m wrong, almost every other auto plant in the US is in a relatively inexpensive-to-live location.
Please help me understand why someone living/working in the rust belt should be able to earn 25% in salary and benefits more than I do by bolting wheels on a Chevy. When it comes down to what the UAW”s achieved for workers, just how much is “too much?”
I’m wondering what would happen if every UAW member “split the difference”: gave half of their dues back to their employer, and kept half for themselves. They could even leave the option of rejoining UAW with a quick vote. Retirees would pay a portion of health costs. What impact might that have on the 2.5’s financial future?
Mr Williams article is fairly acurate.to a point.I am a 52 canadian been at GM 34 years started at 18 and high scool drop out [you can tell by my lack of literate skills]I made 80K last year with 10weeks vacation all my benifits are paid and I have a great pension plan.With my wifes income I gotta pretty good lifestyle.Am I gonna knock the U.A.W/CAW? not a chance!
Unions are on the run these days, the tables have turned.Unions were born in the 30s when workers were treated like dogs,some say unions have out lived thier usefullness maybe they have,but not from where I sit.
Take the unions out of the auto plants have temp. workers at 8 bucks an hr
and no benifits.Who pays for the lost taxes, who pays when they get sick who buys consummer goods.Are you listening Mr middle class cause your the one that is gonna pick up the slack.
How long do you think the non union TOYOTA and NISSAN plants would continue to pay big wages if they didn`t have the UAW breathing down thier neck?Not long I think
Your right Mr williams the unions are far from perfect but we are better of with them than we are without them.
I think we should keep in mind the fact that before WWII, unions in America were instrumental in ensuring that corporate profits were shared with workers in a way that made for a relatively egalitarian society. As the episodes at River Rouge and with Pinkerton guards suggest, early union leaders risked their lives, as well as their livelihoods, to gain living wages, even middle class wages, for workers.
In the undeveloped world, workers continue to struggle to make a living wage, often through the efforts of courageous union leaders. That said, today’s unions in the US and Canada is in a much different place. Non-union workers in Toyota and Honda transplants are as well paid as those in UAW plants due to market forces.
A problem the Big 2.5 face is that the as factory efficiency improves, the need for assembly labor declines. Think about how factories have changed – in Henry Ford’s day, steel and other raw materials came in one end of a giant factory, and Model A’s came out the other end. A modern factory does little more than assemble pre-made major components, shipped from suppliers which are increasingly based overseas.
This means that the Big 2.5’s labor needs are falling, but their labor costs are fixed, due to guaranteed employment and locked in legacy costs for retirees. This is why Detroit has been looking to Washington and the UAW for help, so far without much to show for it.
I think the biggest problem Detroit faces is not the unions, but rather the union mentality. Friends who have worked for the Big 2.5 report that the firms act as if the entire company is unionized. White collar workers are beaurocratic, risk-averse, and uninspired, resulting in inactivity.
I think that if Wagoner and Lutz are successful in turning GM around, it will because Wagoner methodically works at removing the obstacles to success while Lutz inspires the troops to build great product. And if Mr. Ford and Fields fail, it will because their efforts were unfocused and overwhelmed by all the committees that defend inactivity.
We can blame the unions all we want, but at the end of the day, the destiny of our carmakers is in their own hands. For those of us who hold the Corvette, Mustang, Silverado, 300C, Enclave, Camaro, F-150, Jeep and Challenger to be sacred, let’s wish them well.
And now I will put my soapbox away for today.
Please help me understand why someone living/working in the rust belt should be able to earn 25% in salary and benefits more than I do by bolting wheels on a Chevy. When it comes down to what the UAW’’s achieved for workers, just how much is “too much?â€
Isn’t the real question: why aren’t you earning more? Not, why aren’t they earning less…
Now that Ford has joined GM and announced its next buyout plan for workers the UAW locals are again in reaction mode wondering what to do now.
They don't want their workers to take the plans unless the workers can be replaced. Why, because they are afraid of "extinction." This means union leaders will no longer be needed to rise up and yell and scream "after" every decision is made.
The retiree/automation matter has already been brought up several times here, so all I’ll do is post a link to a nifty article in the New Yorker that deals with this:
http://www.newyorker.com/fact/content/articles/060828fa_fact
It talks about the history of UAW pensions, and it also touches upon the similar problems in the steel industry. Have a look. You don’t need a login or subscription or anything.
stormj,
“Isn’t the real question: why aren’t you earning more? Not, why aren’t they earning less… ”
Not really. Like I said, I’m not whining. My standard of living is okay, so I have to assume theirs is much better.
The difference, to me, is that they not only have that better standard, but they also have enormous job protection not many of us outside that industry have.
I neglected to mention that later in my career, I was also foisted into a role where I represented local management against an eventually successful labor movement. I ended up losing my job after the vote. I still harbor no resentment (truly, go ahead and scoff y’all), because the situation was its own onerous cauldron, and national management was taking advantage. Yes, there are still situations in the US which still demand representation.
At the end of that vote, however, the new union members didn’t end up with better situations, just the “we’ll get ’em next time” mantra the union uses to self-preserve. And, IMHO, the company ended up with less-motivated, more-protected and mediocre labor. Many still have jobs there who would have (and should have) otherwise moved on to possibly more lucrative and satisfying careers.
“Isn’t the real question: why aren’t you earning more? Not, why aren’t they earning less… ”
Nope. If you know anything about market forces, the market will only bear what someone is willing to pay. Unions do not operate under that principle. They don’t care what a company will have to charge their customers in order to recoup their costs, they are solely interested in ‘their employee’s wealthfare’ (in other words, pilfering the coffers).
In the consulting world (I worked as a consulting engineer for 12 years), our hourly rate (and pay) was based on the market. If the market would not bear a rate of $150 for my services, I did not get the job.
the_vig, thanks for sharing that link, that article is excellent!!
It’d be interesting to know what Toyota and Honda plant workers in the US receive in wages and benefits for the purposes of comparison.
I’m wondering why the big 2.5 don’t come up with a way of transferring their retirement obligations into 401k’s for their employees?
I understand it would likely cost them billions, but it would only be a one-time hit.
If they are able to do that, they could then give their employees say a 15% raise that must be directed to the 401k’s. This would reduce the theoretical $79/hr they are making inclusive of healthcare and retirement spending.
I was born near Bethlehem, Pa. It was the home to the number two steel producer in America. 17,000 people worked in both the plant and main offices. Other plants were scattered throughout the Country. In the 50’s and 60’s these plants and their powerful unions ruled the commercial and social aspects of the area. But by the 70’s we started to hear that Japanese steel was cheaper delivered in Pa. than Bethlehem steel. We later heard that a new company in the south called nucor was melting scrap iron into steel and making the product for much less than bethlehem. (they were non-union). From this point Bethlehem steel began a slow downsizing and modernization of their plants ceased. There was much back and forth between the union and Bethlehem steel, and talk of them becoming competitive again. End result, by the year 2000 Bethlehem was gone. It no longer exists as a corp. It’s assets were dismantled by a successor company (the Bethelhem plant and offices are totally gone. The pensions and legacy benefits were dumped on the Govt agency that backs up bankrupt corp obligations (ie we the people) and this 100+ year old company is gone without a trace. I presume steel is still being made and sold in the US. but not by Bethlehem. Try and tell me or another Bethlehem resident that the “steel” wouldn’t exist at the end of the Century, you would have been laughed at.
Jerry, there are still a number of steel manufacturers in the US. I work for a company that supplies large industrial equipment to many industries, including steel.
We have equipment in Nucor, many of the ex Beth Steel facilities (most now owned by Mittal Steel), California Steel, and others.
And this takes me to my second hypothetical question/statement: I assume General Electric has not suffered the same financial pains with their 300,000+ employees because they don’t have company sponsored retirement and benefit obligations?
From February 1999 through that same month in 2003, and then again for six months in 2005, I was a member of the National Writers Union, which is (still to my knowledge) affiliated with the UAW. It was an attempt to grow a union for people who really, really need one: freelance writers.
As a fedgling union, it was more of an assocation, than an actual union. Grievance officers – yes, they had them and still do – could cajole publishers who were paying; but true legal recourse usally came only when an individual writer him or herself sought out an attorney.
That was in stark contrast to the union my father belonged to, until his death in 1967: the International Brotherhood of Electrical Workers (IBEW). They would “go to the matt” for you, paying for legal counsel, if need be.
In 2005, when I had a major flap with a major asshole named Richard White, a publisher and vice-president of Sams Technical Publishing, over a book I was working on for him, the Writers Union was of limited use. That was no reflection on the NWU itself, just a reflection of its limits. It was, of course, the reason I let my membership lapse again.
There is strength in numbers, as this piece on the UAW itself shows. The National Writers Union, on the other hand, lost half its membership – down from about 7,000 nationally to about 3,500, when I left it – and that also made it a joke (at least to predatory witless asses such as the aforementioned Mr. White).
I believe that like the NWU, the UAW’s power is receding, in the midst of the world economy. American workers are just going to have to understand that it is not the 1950s anymore and Walter Reuther is long gone.
My gripe is why those of us in private industry have to continue to pay the inflated wages of those in the public employees’ unions? Does anyone remember the term “public servant”?
If auto workers in Michigan are going to be asked to take home less, and have less pension money, maybe that “pain should be shared” by those who do maintenance at public universities – such as my slumlord/landlord who has acquired 15 properties, while working as a public leech.
Yes, it does all relate back to politics. But neither of the so-called major parties wants to go up agains the public unions. They saw what happened to Arnold, in California, when he did so. For what it is worth.
Nope. If you know anything about market forces, the market will only bear what someone is willing to pay. Unions do not operate under that principle. They don’t care what a company will have to charge their customers in order to recoup their costs, they are solely interested in ‘their employee’s wealthfare’ (in other words, pilfering the coffers).
Sorry about the phantom post above, my words appear to have vanished.
Here’s the gist of what I wrote:
On the contrary, it is precisely because unions use market forces that people appear to have a problem with them. They negotiate with more leverage, and, therefore can get more money. The same as a large corporation.
Furthermore, any notion that the corporation itself isn’t trying to maximize profits from its customers are magically diluded. That’s exactly what they do.
Anyway, none of this answers the question as to why it’s a good thing for Americans’ wages to be depressed. Why is it? Lower consumer prices? That doesn’t appear to have made life better over the last 30 years. We have more families with two workers and less time for the kids, and WAY more debt, personal and governmental.
I say god bless if you can get more. Since I’m an at-will employee, I would be afraid to use “maximum leverage.” I’d probably get canned.
This isn’t to say that unions can’t be bad; they can. It isn’t to say that they can’t have negative effects on prices and production; they can. But saying that they’re to blame for the american auto industry is silly. It might be a part–at most–of the problem.
Hell, the only people more shat upon by the automakers besides the employees are … the shareholders!
So, stormj…
What happens when the balance of power is too heavily weighted away from the company and in UAW hands? Aren’t we seeing that now?
Does the market give Ford the choice of trying to sell a $30,000 Fusion built in Detroit instead of one built in Mexico at a market price of $20,000?
The good news is Hyundai and Kia are heavily unionized, and from the look of things there, they have workers with the same mentality.
So, either those companies (if their execs stay out of jail) will move more production to the U.S., or they will suffer the same end results as the Big 2.5.
“Isn’t the real question: why aren’t you earning more? Not, why aren’t they earning less…”
You can ask the question, and the answer is easy. If his salary was increased, the unions would bitch and call for their salaries to increase as well.
That’s similar to the real reason so many people want to raise the minimum wage. Only about 2% of the population makes minimum wage, and most of those are high-school age. What raising the minimum wage will really do is raise the wage of union workers nationwide, since many, if not most, union contracts have wages connected to the minimum wage.
Why are we so hung up on the union as the bad guy?
It seems to me that GM builds a car with less than 25 hours of labor. Even at $75/hour, that’s less than $2000 worth of labor in the car. What’s so onerous about that? IF I understand the warranty costs corrrectly, GM could save the same amount of money per car by cutting their in-warranty repairs in half (i.e., build the cars better) as they’d save cutting their labor costs in half. As a bonus, if GM built the cars better, they’d sell better and they’d have better resale value.
And how did Detroit get into this fix? Wasn’t the UAW concerned that robots and other factors would be eliminating their jobs and they wanted to guarantee people that had put a lot of their lives into Detroit that they’d be able to eat? Is there something wrong with this goal?
And the union did not decide to build the Aztek. Bleah.
Compared to the New Jersey PBA, the UAW looks like amateur night.
Cops who work in suburban towns in North Jersey typically “earn” $100K base pay after 7-8 years on the job. With OT, many cops gross $150K/year. They all get 100% coverage for medical, vision, dental. Full retirement after 25 years at 2/3 last year’s pay with COLA and full medical benefits.
I know a cop who is retiring in a few months at the ripe old age of 48. His pension will be about $70K with full medical benefits.
If the NJ PBA is the “Blue Mafia”, the NJ NEA is the education Taliban. Teachers in NJ are typically paid $80K/year after 10 years on the clock. The amount of power the NEA has in Trenton is truly frightening.
Consider that all of the above is paid for by the sucker taxpayer so market forces don’t directly apply. Also take this into consideration next time you all bitch about the UAW.
Skor…
Your post disgusts me.
Are you saying that police and teachers are overpaid? It would seem as though New Jersey treats its public servants better than most.
What do you feel your safety and children’s education is worth? Minimum wage? Just above poverty line?
Think of these public servants as investments, not leeches.
stormj, you missed my point entirely. The union does not care what the manufacturer is going to have to charge to recoup their costs. If the manufacturer has to charge an exhorbitant amount for their product to cover their overhead, then they will lose sales. If they don’t want to lose sales, they will have to sell the item at a lesser cost, thereby lowering their margins, breaking even or even selling it at a loss.
The unions take NONE of this into consideration. This is one reason why over-inflated wages are bad. The second is inflation, but that is another topic.
Blunozer,
If you think my post is disgusting, you should get a whiff of my breath.
Sure NJ treats it’s public servants better than most, and I’ll show you my property tax bill to prove it. On average we pay the highest property tax rates in the USA.
So what is your children’s tranportational safety worth? Minimum wage? How about slave labor rates for the stuff that’s made in China?
It’s all about the children, isn’t it?
I know quite a few public “servants” in NJ and most of them are leeches. Especially the cops, but especially the teachers.
BTW, I hope you’re being sarcastic. If not your handle fits perfectly since you’ve got your nose stuffed up cop ass.
Blunozer,
When I see a fantastic teacher at a public school, I’ll agree with you. Their issue is not pay, it’s that they’re upset about spending all that money to get a degree and then end up spending all day with a bunch of whiny children.
And cops? What do they do, anyways? Mostly they just sit on the side of the road and wait for someone to zoom by — and I don’t see that as being worth nearly $100k a year. They do some things that others don’t, but I’m sure the police and fire departments of most every state could easily merge. Then they’d need fewer of both and I could feel that they’ve earned that $100k/yr.
Settle down there boys. Discussing union politics needn’t be a full contact sport.
Bluenozer has a legitimate perspective. And so does skor. The differences between the two are extremely illuminating; as is the fact that the prospect of rhetorical reconciliation hangs out on the far side of inconceivable.
And if you think this argument is divisive, wait until the labor situation down at bankrupt parts supplier Delphi blows up. All rhetorical Hell will break loose.
Which may not be a bad thing. The debate over jobs, pay, unions, the middle class and international trade is a discussion that’s long overdue.
Let’s be clear about what a union does: it abuses market power to exercise monopoly pricing power, and so extract too much money from consumers. Unions do this, just the same as AT&T of 1970 did it. A union is a rent-seeking monopoly, end of story. If you didn’t take Economics, “rent-seeking” means you’re somehow gaming the system to receive more money (revenue, profits, salary, benefits) than you would if people were allowed to act freely.
I have no sympathy for what lies ahead for the unionists of Detroit. All Americans for decades were extorted of way too much money for way too little car in order to support these unionists. If in buying my next Honda Civic, I push the entire US auto industry into oblivion, I’ll be perfectly happy — becasue I’ll have a sweet Civic. Don’t care about the rest.
Don’t sugar coat it. Tell us what you really think.
So for arguments sake let’s say that tomorrow we all wake up and no plants are unionized. Everybody make $18 an hour, and has no benefits. Do you honestly believe that any of the big 2.5 would suddenly cut prices, and pass the savings on to the consumer?
With chapter 11 not far off for any of them, you’d be delusional to think that.
And lucidpellucid am I to assume that your sentiment extends to CEOs of fortune 500 companies who make tens or hundreds of millions per year?
Millions and Trillions
So if I understand correctly, there are 500,000 (500k) active UAW members (alot not in the auto industry) and their assets around $1,200,000,000 (1.2B) Not sure if there anything related to the additional 500k retiress. Let’s imagine they don’t exist.
If one were to divide one number by the other, ~$2,400 per head it is. So considering the huge numbers of members, those assets are really small. Especially when most of it is a strike fund (to pay workers when they strike)
I’m not convinced they are either large or well funded.
Granted, they hold their employers by the balls. But everyone signed the contract. Sure, they signed the contract when they could not build the cash cows fast enough, and at that time, the “jobs bank” a.k.a. get paid and stay home program was just a theoretical possibility, just in the contract to make the workers feel warm and fuzzy. No, nobody ever thought it would become true. Even less a huge burden.
The only way out of this sticky crap is to clean slate everything. Chapter 11, kill the union contract, sell the current pension liability to the Fed Pension Insurance thingy, renegotiate contract, turn future pension into a 401, kill a few brands, shake a lot of the bad debt (chap 11 style) and get reborn leaner, better, faster. Did I mention killing half of the dealerships and selling over the internet, direct to consumer, Dell style?
It worked for the airline industry. Several time. For several of them.
Do you honestly believe that any of the big 2.5 would suddenly cut prices, and pass the savings on to the consumer?
There is absolutely no doubt that they would. In case you haven’t noticed they’re ALREADY cutting prices and passing it on to the consumer as much as they can, even without your concessions — in the form of incentives, employee pricing plus, cash back, zero percent interest for 6 years to anything with a pulse. These are just means of cutting prices.
It’s entirely common for companies to cut prices in order to gain market share. It happens all the time in markets where prices could make a difference in market share. GM and Ford have lost huge amounts of market share — GM is down to 14% in California. There is no question they’d love to cut prices further if they could find ways to cut costs, because then a few more people would buy their cars. Bill Ford and Rick Waggoner would both like nothing better than to announce that they’ve regained 2 points of share. That might save their jobs (which they are both, in reality, going to lose.)
am I to assume that your sentiment extends to CEOs of fortune 500 companies who make tens or hundreds of millions per year?
There is no CEO’s union. CEO compensation is not an issue of monopoly pricing power. Some of them are incompetent and overpaid, including all the ones in Detroit, but that’s a different kind of issue of corporate governance — I have no problem at all in principle with a CEO making millions in a free market. A good CEO in the right situation could be the difference between creating 100 billion dollars of wealth for shareholders, or killing the company. How do you decide how much to pay a guy like that?
And I don’t mind movie stars and rock stars and novelists making millions. For that matter I’d have no problem with autoworkers making a million a year if that was the free market clearing wage.
But whenever and wherever there is a union, the market is distorted and people start getting screwed. First the consumer and the unlucky workers who aren’t invited to join the exclusive club; but finally the union pays the piper.
I want to see Unions make headway in countries that resemble America during the Industrial Revolution. I’ve spent months in India, and no matter how many Indian call centers and tech companies take jobs away from America, poverty is still widespread.
Beggars roam the streets of Bombay by the thousands (tens of thousands perhaps), live in filthy shanty towns, have no education, few possessions and have little opportunity for improving themselves. Lower class working folk have it better, but the opportunities Americans have are few and far between there. Course, that’s just India.
American Unions need to export their craft to foreign countries that need their clout to help the poorest of the poor. Not only would it level the global manufacturing playing field, it would help thousands of people.
logan, you answered my question as to where did all that Bethlehem steel capacity go when they went under, somebody else more efficient is making the stuff, even in some of the old Bethlehem plants. The big two things that are different are the United steel workers and their members are not operating in those plants. Could this be a mirror image of what the car industry will be? Will others, sans UAW, be operating assets formerly with ford & gm? Is this the way legacy costs are finally dealt with in American industry?
I agree with scor. I live in the People Republic of New Jersey. We recently had the government shut down for a week as the governor and legislature could not agree on a budget. When they finally agreed a budget with “draconian cuts” it went from 28 BILLION dollars for last year to 31 billion for this year. How is that a cut? Then the goverment workers who were furloughed for a week bitched about the loss of that week’s pay. So the union dominated governor and legislature ended up paying the workers for that week anyway. I live in a 2 bedroom cape cod style house and my property taxes are over $5,000 a year. I say these things because NJ is totally dominated by the unions. They only care about themselves, certainly not the taxpayers. I am sure the UAW feels the same about car buyers. The only difference is that the Big 2.5 will either get concessions from the UAW (unlikely) or end up in bankruptcy. Here in NJ, there is no such market force to stop the unions.
Hey guys. Just registered today but I’ve been reading TTAC for nearly a year. This thread motivated me to take the next step and post something. I currently work for Ford Motor Company as a Product Analyst of Electrical commodities. For a brief period during college (1997) I worked part-time at Wayne Assy (built Escorts/Tracers at that time) and got a taste of the UAW. Since the time I’ve always had very strong very negative feelings about unionized labor. As I’ve aged and become a wiser person, my feelings have neutalized somewhat. There are many aspects of the current contract which I feel hurt the image of the UAW. Most of my reservations about the UAW regard greedy leadership……which consequently is my reservation about the Companies themselves. I can’t fault the membership for wanted a better life….who doesn’t? The whole business needs to be revamped from executive compensation right down to the janitor’s compensation.
Looking at the labor ssues in American from a 20,000 ft perspective is difficult for most and quite scary for those that can. When talking about reducing labor costs in American you are talking about reducing the disposable income that supports every non-industrial job. Our economy is becoming increasingly service based and those service based companies only exist with a large middle class looking to spend it’s disposable income.
None of the issues are easy to deal with nor are the solutions going to be pleasant for Americans in general. A look back in history shows many empires that once ruled the world and then eventually lost that power to the next ’empire’. Americans need to grasp the fact that we are not entitled to wealth and that we don’t figure out how to change our culture or we WILL lose our power to the next ’empire’.
Ship the UAW to China. They get better human rights; we have less burden.
I’ve never understood why Ford and Chevy can’t get their perceived(or actual) quality up to how Honda/Toyota’s are perceived to be.
Look at what is wrong with the current vehicles and fix or improve them. How hard can it be? It seems the easiest thing and the thing all the automakers are best at is building those spot welded, sheet metal uni-bodies. It’s unreal what cars go through and they still hold up. Amazing considering the gauge of metal they are made of and they are only spot welded together.
So what are the major reliability issues with a Ford or a Chevy compared to a Honda or a Toyota? I’ve never owned a H, T, or C, just Fords. Drive a gutless ’01 4 banger Ranger to school everyday. 50 miles round trip. 75k miles on it. Never a problem.
“That being said, with what the UAW has done for the workers, good salary, benefits, etc., why does the current build quality still suck?â€
I was working for Ford as a Production Supervisor when we built Pintos and the first gas line ups started. Before that I was also an assembly worker for 5 years.
The headlines were full of headlines about the poor work ethic and lack of care on the part of the union workers compared to the Japanes who played ping pong on breaks, did push ups before shifts and sang the company song.
As a supervisor being beat up everyday and watching the same ill fitting parts coming down the line at me everyday and then getting screamed at at after every shift by a production manager who only cared about production numbers I can tell you quality has very little to do with the workers.
As I said to mt superintendant one time, you give me Pinto parts and I put it together perfect, at the end of the line it is still a Pinto.
Now that I have been involved in engineering and Quality for a number of years I have come to realize just how right I was. Suppliers are constantly pushing the cost/verses quality balancing act, with accounting having their finger on the cost side of the balance. The guy on the line just wants to put the parts together with as little hastle as possible and go home. Believe me any one here who talks about pride has never put 300 thousand gas pedals in a car in a year, a sense of pride for each individual car is very hard to maintain.
“That being said, with what the UAW has done for the workers, good salary, benefits, etc., why does the current build quality still suck?â€
This all drags up some old memories, but somehow the future of Ford that was apparrent to the workers and a mystery to management is all coming to pass.
When the American quality was starting to cost sales back in the early 80’s and there was some extended production shut downs at our plant, the Ford Dearborn wizards had a quality revelation.
Our plant manager came back from Dearborn and called all of the production supervisors and general foreman into a conferance room. He announced that his instructions from head poffice where to not pass any defect from one station to the next. If an employee could not do his job zero defect than stop the line and do the repair before starting up the line again. The union employees had the power to stop the line and get it right. That dedication to Quality by Ford was in all fo the papers the next day. Ford had a better idea. Quality was job one.
“The Reality” The Plant Manager left the room and the Production Manager got up. He said I would like to explain to you all how this program will work. ” The very first one of you A** H**** that stops a line had better have new emplyment lined up, this meeting is over”
We never stopped a line. And that Production Manager continued to move up the Ford management food chain. I don’t imagine he had a revelaton about building Quality cars at any point and his managemet style worked well for him, so why would he or those who wanted his success do it any other way. I sometimes wonder if the Ford Family or the board memebers who make decision have the slightest clue about how their company really runs.
PS:“The Reality†The Plant Manager left the room and the Production Manager got up. He said I would like to explain to you all how this program will work. †The very first one of you A** H**** that stops a line had better have new emplyment lined up, this meeting is overâ€
That plant Manager was right they finally did stop the lines for Quality issues, it just took a few years and not on his watch. The customer are doing it.
Well said daro31 the only comments I have read here that have any credibility, are from those that have actually set foot inside an auto plant.
What again is the total Union-cost per vehicle?
8%?
6%?
This akin to attacking the NEA and “Welfare Queens.”
A smokescreen.
And lock your doors, because Willie Horton is out there!
What again is the total Union-cost per vehicle?
8%?
6%?
That is the direct cost, but what about the cost of poor quality. I have also been employed in a union shop (not automotvie), and I can tell you the predominate attitude was “I don’t care, because not matter how poorly I do my job, I’ll still have it tomorrow.”
This akin to attacking the NEA and “Welfare Queens.â€
And they are worthy of attack if you believe that our children should be educated, not indoctrinated; and if you think people should work for what they get, if they are able. All the NEA is good for is increasing teacher salaries and throwing more money at the problems of education. While I agree that, in some cases, teacher salaries are not appropriate, increasing pay and more funding do not create a better learning environment for children; discipline and parental involvement do. Teachers in the Dallas ISD make $42,000 per year the first year. Since they work about ten months per year, that equates to $50,400 starting salary. That is in line with many other degreed positions (engineers, chemists, physicists, etc…).
A smokescreen.
And lock your doors, because Willie Horton is out there!
The point of Willie Horton was not that there was one criminal on the streets, but hundreds of thousands, if not millions, released by bleeding heart judges who deemed that the poor, pitiful criminals were a victim of society and not deserving of proper punishment.
Is it just meThe NEA is the National Endowment for the Arts, which I believe costs taxpayers a whopping… $1 per year each.
And quality? Last time I checked American cars were as reliable as those built in any other country. Didn’t JD list Buick as #1 recently?
And if we cared about our children, teachers would make double that. And knock off this the equivalent of $50,400. They make $42,000.
“Teachers in the Dallas ISD make $42,000 per year the first year. Since they work about ten months per year, that equates to $50,400 starting salary. That is in line with many other degreed positions (engineers, chemists, physicists, etc…).” – TexasAg03
What’s wrong with having a teacher – a degreed position – make money “in line with many other degreed positions?”
And $42K, by the way, is not a typical starting wage. In the suburbs around here, it’s less, something like $30K.
As far as I’m concerned, if there’s a teacher quality issue the first reason is because we’re not paying enough. What does private industry pay someone who closely supervises and continually monitors up to 30 different people? And a private industry supervisor can motivate people who NEED their jobs and income with salary rewards; teachers don’t have that sort of tool at their disposal.
If you want more quality control opportunities, offer the teacher unions a 30% across-the-board increase, in return demand some meaningful changes to the tenure and merit system. Make the risk worth the reward.
As for the comment about “indoctrinated,” I’ve never seen an example of this in a public school. The teachers I know (4 kids through public school) were good at keeping their private opinions private.
Jonny, in the context of previous posts here concerning unions and teachers’ salaries most people reading your post (including me) thought you were talking about the National Education Association not the National Endowment for the Arts, which to my best knowledge has nothing to do with union membership or benefits.
I was talking about weirdo smokescreens that distract people from the fact that no matter what Wagoneer does (like say, lose billions of dollars), people get mad at school teachers and unions.
And $42K, by the way, is not a typical starting wage. In the suburbs around here, it’s less, something like $30K.
The $42,000 per year average was for the Dallas ISD. Most of the other suburbs were the same with a few as low as $39,000 per year (McKinney). Northwest ISD was at $44,000 per year. In my hometown, the average starting salary is around $36,000 per year (population 20,000). My point is that teacher pay is not really that low compared to the hours worked. There is nothing wrong with the pay being in line with other degreed positions. My point was that they are in the same range, which is a good thing. I’m just saying that the pay, in many areas, is not all that bad. Yes, in some places, the pay is terrible. However, the same can be said of any job.
I was talking about weirdo smokescreens that distract people from the fact that no matter what Wagoneer does (like say, lose billions of dollars), people get mad at school teachers and unions.
I agree that Wagoner, and others, have not done well and deserve a great deal of criticism. I also agree that most teachers are good people doing an excellent job in a flawed system. The problem is the overall agenda of the teachers’ unions, which is focused more on pay than on quality of education. A recent study showed that, in Washington D.C., the average annual expenditure per student was about $15,000 in public schools, and about $4,000 in Catholic schools. However, the Catholic school students did much better in testing. Why??? Discipline and parental involvement. And these were not rich private school students, but average Catholic kids whose parents had income levels to the public school parents.
I would love to see teachers get paid more, but at what point do you draw the line? If teachers start out at $75,000 per year ($90,000 per year for a 12 month job), the how many will be teaching for the money? I want people there that WANT to be there. I don’t know what the best method to accomplish that is, but I don’t think it is all money. Obviously, that has a tremendous influence, but just raising teacher pay does not make better teachers.
I have recently thought about teaching as a career. I have a degree in mechanical engineering and I push paper all day. I haven’t done any calculations pertaining to design (other than basic arithmetic) since I graduated. I want to make a difference as an engineer, but I don’t think I’ll get the opportunity. However, as a science or math teacher, maybe I could make a difference. The best part is, I wouldn’t have a huge pay cut to deal with, but if I teach, I want it to be because that is what I want to do, not because it pays well.
Whoops!! The low pay in the Dallas area was Mesquite at $40,500 per year starting salary. The Texas state average was $41,000 in 2005, the national average was $47,000. Considering that Texas has a lower cost of living than many states, that is pretty good starting pay. Of course, once again, the most important thing is to get the BEST teachers for the job. That includes, but is not limited to, a good salary.
TaxasAg03 wrote:
“I have recently thought about teaching as a career. I have a degree in mechanical engineering and I push paper all day. I haven’t done any calculations pertaining to design (other than basic arithmetic) since I graduated. I want to make a difference as an engineer, but I don’t think I’ll get the opportunity. However, as a science or math teacher, maybe I could make a difference. The best part is, I wouldn’t have a huge pay cut to deal with, but if I teach, I want it to be because that is what I want to do, not because it pays well. ”
Make a difference by teaching math and science? How? If you haven’t noticed, manufacturing is dead in the USA — and not just the auto industry.
Back in 1970, 35% of the labor force of the State of New Jersey was DIRECTLY employed in manufacturing. Today it’s 8% and dropping like a stone. New Jersey once had two Ford assembly plants — Edison and Mahwah — and a GM plant in Linden. Ford Mahwah assembly was the largest auto assembly plant in the world when it was built in 1957. Today there is a hotel on the sight of the Mahwah plant, Edison is a pile of rubble — soon to be town houses — and Linden is closed. For the first time in 80 years, there is no auto assembly in the State of New Jersey.
I know a guy who spent 20 years working for Kearfott Guidance. He was one of the engineers who worked on the inertial systems for the Space Shuttle. After he was let go from Kearfott, he spent years without being able to find another engineering job. A couple of years ago he found work in the engineering field, at half his previous salary and no retirement or health care benefits.
I know another guy who runs a valve manufacturing business, he refuses to hire any American engineers. This guy will place an ad seeking engineers for a ridiculously low wage, when he doesn’t get any takers, he applies for H1B workers. His Indian H1B engineers are happy to come to America and work for $28K/year.
If I come off like a cynical bastard, it’s because the world made me this way. You are wasting your time.
Make a difference by teaching math and science? How?
Those are the subjects I would be able or would want to teach. All education makes a difference, and that is where I would try.
If you haven’t noticed, manufacturing is dead in the USA — and not just the auto industry.
True, with the current situation. However, if we really wanted, we could change the situation. For instance, pass the FairTax bill. Elimate the IRS and most of the negative tax implications for businesses in this country. Stanford did a study a few years ago that said businesses would move back into the U.S. with such a plan in place; and they are as liberal as it gets!
Bottom line; if we give up, then we are done. Period. We need to fix our educational system and get people out of the “government provides for me” entitlement attitude. I went back to school at age 31 and married and had my son while doing it. It wasn’t easy, but it was worth it. Many others have done the same, and more, in much more difficult circumstances.
If I come off like a cynical bastard, it’s because the world made me this way. You are wasting your time.
What would you suggest I do, then??
Caffiend:
As one of my Economics professors used to say… “Unions artifically inflate the cost of labor.†But market forces are poorly matched to corporate greed.
I’d hate to see what a GM product would look like with under paid staff. Just look at the enthusiasm a Wal Mart employee has for their job. That being said, with what the UAW has done for the workers, good salary, benefits, etc., why does the current build quality still suck?
It is not a question of turning directly to “underpaid”. It is a question of cutting the special benefits of the UAW Workers to a level where the big 2.5 could survive. Look at VW in Germany – they struck deals with the workforce, by which gradually the pay (which is more than 20% above average workers pay) went down a bit and made VW again more competitive.
It seems that the UAW, being faced by the option of really cutting pay and/or benefits, or go down together with GM and Ford simply chooses the latter: to go down still waiving the flag. This is ludicrous.
I see it mentioned often that the union labor portion of the cost of a vehicle is small, perhaps 6-8%. The percentage alone means nothing without a comparison to the competition. If GM and Ford are paying 7% per car in labor cost vs. 4% at Honda or Toyota, now you begin to understand the problem. Much of a vehicle’s quality today is not in the assembly process itself but in the quality of the parts and subassemblies. Every automaker would love a few hundred more dollars to spend on better parts and materials while staying within their cost structure. Just like drinking Diet Coke with your BigMac, every little bit helps.
That old saw about “to understand all is to forgive all” is a lot of tripe. Some things, the more you understand them, the more you loathe them.
–Robert Heinlein….
Dose anyone remeber what happened to British Laylend? A generation witch ingnores its history has no past….. or future.
Unions are un-american . today when people hear unions they think lazy and fat poor quality work and high pay. there is no problem with the quality of american cars. they are spoiled and dont know how to work hard . it makes me ashamed of my country men. unions have not been needed since the 50’s . they and not the quality is what has hurt our reputation. and driven up proces on everything from cars to oil . we are not going to fix things in the auto industry until we get of the UAW. shame on them now when FORD, GM need them . they are as greedy as ever