"Oh, the poor unions!" says Max Fraser, a "2006 Intern" now scribing full time at The Nation. The budding curmudgeon supposes that The Big 2.8 will be the death of the unions (not the more likely murder-suicide). That's because Detroit's robber barons just keep squeezing those wages and benefits. Unfortunately, his explanation of how this is happening, and why we all should be worried is… well, let's just say Mr. Fraser has penned the Chrysler Sebring of rants. In a sweeping example of internally-inconsistent analysis, Fraser manages to blame Toyota and Honda for paying their workers more than UAW guys make– and then urges the UAW, for the good of the workers, to get into Toyota and Honda's factories as soon as possible. Fraser also manages to insult and put down outsourcing, insourcing, rural areas, and the "Third Worldization of the American South." Gee, with all those corporate headquarters in the South (Coca Cola, Nissan, Wal-Mart, Saks Department Stores, Home Depot, UPS, Bank of America, Lowe's, Wachovia, Sprint-Nextel, just to name a few), a $3b biotech industry in North Carolina's world-class research triangle, and the busiest airport in the world, the "Third World American South" sounds like a pretty productive place to me.
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Around four years ago, before he left on a four year assignment (since extended to eight) to create and head my employer’s 300 person low cost country sourcing operation in China my old boss was heard to say,
“In the end all the work will come back to Alabama & Arkansas. The jobs will go to China, then Vietnam or Thailand, then maybe India, but in the end the American South is where they’ll wind up.”
I saw him six months ago. He still stands by the statement, plus he thinks the dwindling dollar may speed the process.
The problem when looking at the South as a tech center is that most of the people in RTP, Metro Atlanta, etc, aren’t originally from the south. The poor ignorant redneck (hey, I grew up in a double-wide trailer) is for the most part, still a poor ignorant redneck. Some states (notably NC and GA) have however made a college education extremely affordable (in many cases free in GA) which has allowed a good deal of upward mobility (and kept the recent migrants from concentrating all of the wealth in their hands).
I’m not bitching about the situation, I’m just saying, there are definitely some 3rd world esque parts of the south left, just waiting for the screen door factory to reopen.
I have been of this mind for a while. I interned at Briggs & Stratton for about a year and a half. While I was there, I learned that the employees up north were still unionized. When the union really started giving them headaches, BAS started moving their plants south/midwest. Now, a lot of the automotive transplants are building their plants down here. It may have ramafications that I am not aware of, but it is a blessing for the local economies.
Typical culturally elitist, pseudo-marxist crap from The Nation. I’m a left-of-center guy, but that absurd rag just makes me wanna cringe.
I read that as “American South Needs UAW SAT”.
I was understood why the UAW needed it’s own version of the SAT, but was trying to figure out why it was just the Southern UAW that really needed it…
Sadly, Max probably gets all the lefty-lit-chick tail he wants (if he’s into that sort of thing).
Not that I’m bitter, mind you.
When I was born in 1972, Cobb County, just NW of ATL had about 65000 in it. In the 2000 census, the population was listed as 607000. I didn’t know anyone with ten kids but I did have a lot of classmates who were from the Rust Belt…
A lot of people in the South moved here from the north; this has not been an entirely bad thing, of course, since if you visit Mississippi, for instance, you will not find a lot of people who have moved there from Noo Yawk but you will find a lot of poverty and not a lot of opportunity. So, I for one welcome our carpetbaggers and damnyanks, and want to assure our northern neighbors that all the industry and capital that has moved down here will not be used for evil purposes when/if the Confederacy rises again.
GEMorris:
there are definitely some 3rd world esque parts of the south left,
As there are in most other regions of the country. In fact, I’d say that most inner city areas of our major cities have more in common with third world regions than the majority of the South.
@NeonCat93
Way to go on the tail comment. That’s a keeper
Are the bombed-out-Bosniaesque parts of Detroit part of the “Third World” South as well?
@Virtual Insanity:
You mean, the places where you can buy an entire house for $8000?
Axel, you got 4 out of 5 right on The Nation. But it’s terribly unfair to describe it as “pseudo-marxist.” The Nation is dyed in the wool Marxist! They ought to be grateful that there are any laid-off auto workers; that nourishes their view that the American proletariat is as oppressed as in Czarist Russia.
And because writers for The Nation are utterly clueless about why and how profit-seeking firms create jobs, they will never understand why Honda might sensibly prefer to build elsewhere than Detroit.
As a metro Detroit native who relocated to the South in 2000, I feel qualified to comment on Mr. Fraser’s opinion of the south. The statements simply reaffirm some of the bigotry and hatred that “the South” experiences on a regular basis. Which “backwater” is he talking about?
Could it be, perhaps, that the non-union factory workers could be happy without union represention? Last time I checked, the Spartenburg, SC BMW plant was increasing it’s shifts due to new products.
The answer, Mr. Fraser is LESS socialism.
I wonder if Max Fraser is related to Douglas Fraser, who was president of the United Auto Workers union from 1977 to 1983. He negotiated with Chrysler during the government-sponsored bailout.
If that’s the case, geeber, then HELLO conflict of interest! Would be yet another reason not to take that rag seriously.
I must say, Berkowitz’s column strikes me as being far more of a “Chrysler Sebring” of a rant than the original article does. It significantly misreads and misrepresents Fraser’s argument, and no matter what you think of unions and Fraser’s affection for them, that to me is a disservice. I’ll bring two concrete examples — conveniently, the only two concrete items from Fraser’s piece that Berkowitz actually discusses, among his bits of random fluff.
Berkowitz writes: “The budding curmudgeon supposes that The Big 2.8 will be the death of the unions (not the more likely murder-suicide).”
Fraser actually acknowledges that the deals may be “necessary measures to keep the reeling Big Three from bankruptcy” even if they may also end up “killing” the union. He gets the whole “murder-suicide” angle.
Berkowitz writes: “Fraser manages to blame Toyota and Honda for paying their workers more than UAW guys make– and then urges the UAW, for the good of the workers, to get into Toyota and Honda’s factories as soon as possible.”
Fraser actually cited a single Toyota factory where, recently, “workers for a foreign automaker for the first time averaged more in base pay and bonuses than UAW members working for domestic automakers,” while pointing out that “UAW’s vaunted benefits packages have brought total compensation for members well above that of their nonunion peers.”
Fraser’s argument is actually pretty simple and pretty coherent. The wide gap in labor costs between the Big 2.8 and foreign brands with U.S. factories is a fatal competitive disadvantage to the former. Labor costs include both wages and benefits, and it is in the latter category in particular in which the foreign companies economize. They have such low costs because they locate in cheap labor markets (i.e. the South) and face no union pressures. In response to this competition, Detriot is pressuring the unions to make concessions, which will bring Detriot’s costs in line with the foreign competition — and make the unions functionally irrelevant, since workers are getting no more with a union than they would without one. (Note: This is the market at work.) The only way for the unions to remain relevant is to unionize the presently non-union foreign-owned factories, in order to demand more salary and benefits and drive their labor costs up to Detriot-like levels. Then the Big 2.8 will no longer be at a competitive disadvantage, and the union will have leverage over all domestic auto production. (Note: This would be a form of monopoly.)
Like it or loathe it, it’s a pretty simple and coherent argument. It could easily be bad industrial policy, but it is not incoherent.
well mr. Fraser did not tell us anything we did not already know.
“The only way for the unions to remain relevant is to unionize the presently non-union foreign-owned factories, in order to demand more salary and benefits and drive their labor costs up to Detriot-like levels.”
Baring massive federal government intervention in the markets this is never going to happen. Given that the US has hog-tied itself with various trade agreements there is pretty much no chance of erecting import barriers to keep imported cars out. So if the UAW somehow managed to drive up the costs for transplant factories those factories would simply close. Then there would be no US based auto manufacturing at all.
jthorner,
Maybe, maybe not. Mexico has been an option for a while — ever since NAFTA — and while some plants have moved down there (Ford, for instance), many foreign companies are still choosing the U.S., albeit the less expensive parts (which are still more expensive than Mexico). Similarly, we’ve been importing all sorts of cheap junk from China for years now, but cars haven’t been part of that mix yet. Many electronic components are made in places like Malaysia, but we don’t see too many badge-engineered Protons on American roads either.
Much of the low-skill work has been beaten out of auto-making through mechanization, and having a higher-quality workforce is worth the extra price. Even though U.S. labor costs are higher per man-hour, locating here may in fact be the all-around cheapest option, because you get so much more per man hour, you can save transport costs, etc. Considering the fact that foreign automakers are opening new plants here as we speak, we have to assume that they are not just locked-in to a losing labor market, but actively find the U.S. attractive.
If we assume that carmakers benefit (i.e. profit) to some extent from being in the U.S. as opposed to Mexico, then we have to ask how these “spoils” are split. The consumer might see some savings through lower costs (or higher quality for the same money). Or the corporation might not lower prices as far as possibe, and keep some of the excess as cash profits. Or the workers could unionize and demand higher wages, cutting into consumer savings and corporate profits. Or, as is the case, all three could happen to some extent.
If the unions amass very great bargaining power, they could try to keep most of the benefit of being in the U.S. for themselves, as opposed to splitting it among the other groups. As long as they do not overreach, they could demand at least somewhat higher wages and benefits without seeing their jobs migrate to Mexico. That’s what they’re after.
If the unions amass very great bargaining power, they could try to keep most of the benefit of being in the U.S. for themselves, as opposed to splitting it among the other groups.
Which is a little like the recipe for Rabbit Stew that starts out “First, catch a rabbit.”
How can the unions “amass” power when they are becoming less relevant every day? At this point it seems like they’re in a catch-22: If they coerce the workers into supporting wage or benefit cuts, then they might be able to save the worker’s jobs, but at the cost of making themselves irrelevant. After all, if the only thing the union can do is cause them to lose benefits, then what the hell good are they?
Or, they can play a game of “chicken” with the domestic manufacturers, threatening strikes that will surely put the domestics into bankruptcy – the old “If I’m going down, I’m taking you with me” ploy. Problem there is that the manufacturers can then (a) Start offshoring more of their production which cuts the union out completely, (b) pull out their golden parachutes and glide to safety while the corporation crashes, or (c) just go into bankruptcy court and use a chapter 11 proceeding to void all or most of their union contracts. Either way the big wheels get to live another day while the union and thier constituents are tossed out on the street.
With that kind of an environment, I just don’t see how the union will be able to “amass great bargaining power.” In fact, I don’t see how they’ll be able to hang onto what little bargaining power they have now.
“Amass great bargaining power” means unionize the foreign-owned plants in the south, in addition to the domestic plants that have long been unionized. That way, the UAW has a monopoly over the automobile factory labor supply across the U.S., and can extract uniformly high salary and benefits packages from all factories in this country, instead of having some factories with significantly higher costs than others.
I think we can both agree that if the UAW does not manage to unionize the southern factories, and remains entrenched only in the old Detriot plants, they will be subject to harsh competition from non-union shops and their bargaining power will continue to erode.
Moving into the non-union plants in the south was the whole point of the original article, and that is the way in which they could manage to amass this elusive bargaining power.