We haven’t said much about the United Auto Workers (UAW) lately. That’s because the union has kept a low profile. And why wouldn’t they? At the expense of nothing very much, their members continue to either draw the same paycheck (on the government’s dime) or cash-out (on the government’s dime). They also get billions in (federal) cash money into their VEBA health care superfund. And stock in both New Chrysler and New GM. Not that they really wanted a stake in their zombie masters, but, hey, it’s better than getting slapped in the face with a wet fish. Still, ’tis the nature of the beast to bitch. On the union’s far left, the The Party for Socialism and Liberation (“a newly formed working class party of leaders and activists from many different struggles, founded to promote the movement for revolutionary change”) has a thing or two to say about the UAW’s New Deal with New Chrysler. Only it doesn’t sound like the stuff of barricade manning.
The contract, which covers 26,800 UAW-represented workers, is full of concessions. The contract allows Chrysler to hire as many new workers as it can at a wage and benefit rate roughly half that paid to current UAW workers. Cost-of-living increases are suspended. Workers will lose two paid holidays in both 2010 and 2011 and will also lose performance bonuses and Christmas bonuses in 2009 and 2010. Meanwhile, the prices of food and gas continue to increase.
The contract calls for binding arbitration on a new contract through 2015. If no agreement can be reached on a new contract, the arbitrator must base total hourly labor costs on a rate comparable to Chrysler’s U.S. competitors, including foreign-owned manufacturers.
That’s a lot of concessions . . .
In the Wiggles World perhaps. Here in the real world, the UAW comes out of this smelling of roses. Despite ChryCo’s bankruptcy, not one union worker was thrown out on the street without a paycheck, a payoff, a pension or benefits. The new hires are the new hires. And their medical benefits took a symbolic hit.
Reading the PLS’ diatribe, you kinda get the impression that the union agitators understand this. Hence their call for a “broader fight back initiative,” and a conclusion that doesn’t really conclude much of anything.
What should labor do? Would it have been enough to reject the contract concessions and launch a fight against Chrysler? There is no guarantee that such an approach would have been effective, and it would have put labor even more on the defensive, allowing the media pundits to paint the UAW as the obstacle to “saving Chrysler.” Simply fighting a defensive contract-by-contract, company-by-company struggle is a recipe for defeat.
Workers have shown that they are ready to fight back, as the Republic Door and Hartmarx struggles have illustrated. Labor needs to launch a broader fight-back initiative, a political fight against the attempt of the capitalists to solve their economic crisis on the backs of the workers.
Here is reason that I’ll never ever again buy another UAW built vehicle. And that hurts to say as a Jeep guy.
This is just a fringe party, no one has ever heard of, getting attention by attaching themselves to the auto bailout issue. Move along, nothing to see here.
I’m sure they appreciate TTAC giving them some press coverage.
And we appreciate them looking at an interesting issue. Or lack thereof.
I believe the idea goes something along the lines of this:
TTAC: These Socialist/UAW members have no idea how good they have it.
Socialist/UAW: Actually, we believe everybody else has no idea how insanely, ridiculously bad they have it and rather than fighting for anything better themselves, they’d rather cut us down.
Reading the PLS’ diatribe, you kinda get the impression that the union agitators understand this. Hence their call for a “broader fight back initiative,” and a conclusion that doesn’t really conclude much of anything.
I think—or at least hope**—that their point is that the overall standards of employment for the middle class are deteriorating badly. Most actual socialists*** I talk to cite that as a serious concern: the fall of median income and the widening gap between rich and poor.
There’s nothing wrong with being worried about that. Its about time we started asking “Hey, how come 98th percentile is so high and the median is dropping like a stone?” rather than bitterly remarking about how we should be thankful for the relative pittance we currently have.
** Of course, I could be disappointed. Trade union socialists always bugged the hell out of me; you could tell that, were it not for self-interest, they’d vote conservative every damn time.
*** Real socialists being an important term to understand. The American Democratic Party, British New Labour, most trade unionists and a lot of people that get the panties of the right in knots are are not actually socialists.
If the dems finaly get the single payer health
plan thay want, then that means the UAW won’t have to cover their retirees health care, and the VEBA becomes an ENORMOUS windfall for solidarity house. Cause they AIN’T giving it back.
Chrysler, along with many other corporations, has been in deep trouble due to capitalist overproduction. Simply put, they had made more cars than they could sell at a profit.
Uh, Chrysler produced more vehicles than there was demand for because they had the choice to pay people to either sit on their ass, or build cars that might at least partially pay for the expense. The UAW seriously needs to take a look at the unemployment rate in this country and realize that those people that still have jobs are lucky. The ones that lost their jobs and were given severence or retirement benefits should also be thankful.
The UAW is on strike at Bell Helicopter currently over medical insurance benefits or some such, and every now and then I pass by there. I just want to tell them to be thankful that they are employed at all and get back to work.
AG:
+1.
Chrysler produced more vehicles than there was demand for because they had the choice to pay people to either sit on their ass, or build cars that might at least partially pay for the expense.
The demand was lacking because the cars were not appealing or particularly good.
What should have been bread-and-butter vehicles such as the Sebring never sold in the same numbers that the popular competitors did, even after dumping most of them into rental. Companies tend to lose money when they make stuff that people don’t want. They didn’t produce too many cars, they produced too many lousy ones.
Labor is not a major cost component of automaking; the main source of expense is parts. Companies that make losing cars are doomed to lose money; lower wages would have only reduced the losses, not produced profits.
You think the UAW got a sweet deal? You should check out what the very non-socialist Goldman Sachs got.
Psarhjinian,
Socialism is as socialism does.
Socialists make bad cars. Truth bro.
As far as median income goes, give this a listen to:
http://www.econtalk.org/archives/_featuring/thomas_sowell/
Ken G wrote:
Socialists make bad cars. Truth bro.
I think that would be news to the people of ‘socialist’ countries like Germany, Sweden, Italy, Australia, Canada, etc.
Smart money will build new plants in the south. Any company that would tool up in Detroit now with the UAW work rules the way they are there would be crazy.
By stating that the UAW is a Socialist Party/Union is wrong. The UAW is made up of veterans, teachers, mechanics, assemblers. International Reps have BA’s and MA’s.
The bail-out money which will be paid back came with strings attached. Wall Street had “none” and they still coninue to draw bonus’s from taxpayers money.
I’ve said it around here before, but its worth repeating.
Industries that are not stuck in the legacy of Union vs. Management in the USA are not just doing well, they thump on everyone else. Semiconductors are a good example. The internet is another good example. Biotech isn’t even a comparison in so much as USA vs. Rest of Planet – everyone else loses, badly.
In-so-much as their social dynamic, the Detroit companies remind me of an industrial analog to Colonial Williamsburg or Mt. Vernon: a protected little bubble of unreality where you can see how people did things in the old days, before we figured something better.
The crystallization of power-structures in both the union and the boardroom of the Detroit outfits is what killed them. The ultimate failure of the domestics viewed politically or ideologically can only be characterized as a very, ahem, “bi-partisan” effort here. There are no good guys, just a den of thieves.
Socialists make bad cars. Truth bro.
I don’t think the point is what form of political economy you subscribe to, it’s how capable and willing you are to execute. Capitalists are just as willing and able to make crap.
For years, the Germans and Japanese made better cars than the American marques did, despite being more socialized. Heck, out of the American plants, their highest-quality products often rolled off Canadian assembly lines (Ford:Oakville, GM:Oshawa), again despite Canada being more socialist.
I’ve also heard variations on Sowell’s points. I’ll say that I disagree, offer up Walter Benn Michael’s podcast as an alternative (if not directly related) counterpoint and spare the rest of TTAC a completely off-tangent debate on the topic.
Industries that are not stuck in the legacy of Union vs. Management in the USA are not just doing well, they thump on everyone else. Semiconductors are a good example. The internet is another good example. Biotech isn’t even a comparison in so much as USA vs. Rest of Planet – everyone else loses, badly.
I don’t think it’s so much a Union/Management thing as it is a problem for the producers of high-cost, high-sale-price discretionary products.
Semiconductors and biotechnology are relatively easy (in cost terms) compared to, say, heavy manufacturing: once the R&D is done, the cost to produce is far, far lower and much more transportable to low-cost regions. Internet-based businesses and consulting can, effectively, have next to no physical overhead outside of labour.
What is hurting—in addition to manufacturing— is discretionary retail and (especially) housing. Neither is particularly union-heavy. I don’t think it’s the adversarial nature as much as it is being stuck holding debt or inventory when the market collapsed. If you’re a consulting firm or a drug maker or a chip fab you can cope with that a lot more easily than the likes of General Motors.
Thank you Ken G.
Fascinating listen.
Psarhjinian ain’t gonna like it, but I do.
I want all of you to stop complaining about your jobs, fall down on your knees, and thank God that you live in the USA.
Thing is, before pressure was put on companies to change (and a large part of that was union organisation), there were working conditions almost as bad in the US.
Read up on the story of tetraethyl lead workers, DuPont’s ‘House of Butterflies’, or the US Radium girls.
Thank God you live in the USA, but spare some thoughts for the people who fought to make it the kind of country you would want to live in.
One begins to wonder, does it really cost less now to build a vehicle stateside and sell to the North American Public, or is it cheaper to import European and Asian models into the U.S?
“Socialism” is such a great slur here in the US. Like comparing your opponent to Hitler during an election campaign, it’s a tried and true slur that sticks regardless of merit.
Maybe it was socialism that forced Chrysler, GM and Ford to make bad cars? Of course! Genius!
One begins to wonder, does it really cost less now to build a vehicle stateside and sell to the North American Public, or is it cheaper to import European and Asian models into the U.S?
Yes.
Long answer: it costs serious money to start up production, especially from the ground up. That said, it also costs serious money to import a high-volume model from offshore, especially if it’s a low-cost product.
So, it depends.
I want all of you to stop complaining about your jobs, fall down on your knees, and thank God that you live in the USA.
That line of logic always bothered me because it amounts to “Be thankful for what you have, because you could have it worse.”. It’s a favourite of people who support dubious causes because it makes them look clean by comparison.
Why not ask why things are getting worse, rather than stomp down on people who are trying to hold the line or make it better? I’m not saying the Union is faultless (or even, in some matters, smart), but I think it would be worth asking why the American education or heath-, child- and elder-care systems are middling at best, rather than saying “Well, at least you don’t live in Eritrea!”
Why has no Republican been able to make the obvious case that Joe Taxpayer is shelling out tens of billions to provide $3200/month pensions and silver (formerly gold) plated benefits to 50 yr old UAW retirees?
@psarhjinian: Indonesia. Follow the link.
@indi500fan: they have, the media is so distracted by Michael Jackson that they have not reported the issue.
AG
+1
Pch101:
Labor is not a major cost component of automaking; the main source of expense is parts. Companies that make losing cars are doomed to lose money; lower wages would have only reduced the losses, not produced profits.
Accounting of labor costs must be missing some key element or cost within union shops. Are retiree health benefits included? Because something is missing from this accounting picture.
I’ve familiar with both union and non-union environments. Although I’ve never been in a UAW plant, I’m very familiar with their perks, benefits and numerous job classifications – all of which I could see easily increasing labor costs by 50+ percent (if implemented in the medical parts field).
Is my 50+ percent enough to make GM compromise in other areas so that they make Cobalts instead of Civics?
Anti Union rhetoric is incredible. Regardless of your viewpoint since the transplants showed up and domestics started their decline it’s simple to see that the overall quality of compensation for US auto factory worker (regardless of the make) is going down. This means well, that it’s worse to be a factory worker now than it was 20+ years ago.
So essentially, so some people could save a few bucks and drive a marginally superior import we fucked the overall quality of life for an entire industry! Awesome! Wait screw this, we’ll pay the Auto workers minimum wage with as few benefits as possible! Then we’ll have tons more R&D (and we’ll quit paying the white collars what they’re worth too) to build the best cars possible! The consumer wins, every one else involved LOSES! I loved unfettered capitalism and crushing those who would stand in its way!
Yep, it was big bad socializm that drove GM and Chrysler under, not a bunch of bad execs with bad product and no desire to improve.
And the decimation of the middle class is a real thing. Not that I think the UAW comes out angels, unions had their purpose and their time and they seemed to have outlived it. But Japan and Germany have car industries that are practically infested with government and seem to do okay. And German unions are not pushovers (although they are more reasonable in some ways, because there is a huge social safety net that isn’t present here).
indi500fan :
Why has no Republican been able to make the obvious case that Joe Taxpayer is shelling out tens of billions to provide $3200/month pensions and silver (formerly gold) plated benefits to 50 yr old UAW retirees?
The same reason said group won’t make the obvious case that Joe Taxpayer is shelling out tens of billions to provide golden parachutes to 50+ yr old Wall Street and Banking executives from firms who TOOK THE GOVERNMENT BAILOUT MONEY….
Accounting of labor costs must be missing some key element or cost within union shops.
Not particularly. Wages are operating costs, just as they would be anywhere else.
What you are missing is that auto making is a capital intensive business where labor is a small piece of the overall cost picture. Cutting the cost of a minor category does little to the total. That’s just arithmetic, and is true in this case because of the nature of what an automobile is (a complex device consisting of thousands of parts and assemblies.)
There is a reason why car makers have opened plants in the US, while other industries have been shutting then down and offshoring them. The cost structure in automaking is different, and the ways in which profits are generated are different. It is possible to make a car in the US and turn a profit, whereas that can be quite tough with cheaper commodities.
If you do the math on GM, as I have on other threads here, you can see that GM loses money largely because it has no brand equity or pricing power, so it sells cars for less than it would cost anybody to make them. It’s a revenue problem, not a cost problem.
If GM is to have a future, it lies not in fixating on cost reductions for the sake of them, but in making cars that Americans want to buy at a price above the normal cost of production. It’s quite possible that unit costs would have to increase in order for that to happen; the focus needs to be placed on making better vehicles, which may require more investment, higher parts prices and wage stability.