Friday, December 26, 2008

How the Auto Workers Unions are Ensuring the Destruction of the Big 3 Automakers

The taxpayers of the United States and Canada are giving the Big 3 Automakers a renewed chance at life. And the response of the union leaders in the U.S.? "Thanks suckers, but we're not going to offer a bit of help. In fact, we want even more!" You can read more here. Note the mutterings of Democrat Congressman Barney Frank; clearly bought & paid for by the unions. For those who have forgotten, he's the same one who many blame for acting in a pivotal role in our current financial crisis.

Up here in Canada, watch for the heads of the Canadian Autoworkers to have a very similar attitude. The comments on this discussion thread are most enlightening. I'd like to highlight one in particular:

The reason for the ''bailout' is because of the importance to the overall economy of this particular industry. Think of what would happen to the Saudi economy if oil production stopped. The auto industry isn't as supreme as oil, but GM's payroll is almost 9 billion a year, and a 1998 strike knocked a full percentage point off the US economic growth that quarter.

ulianov - you wrote:

"Unions don't manage the car companies, they don't design the cars, they don't control the price of fuel, they don't approve bank loans, and they don't ask for free trade agreements with countries that refuse to buy products manufactured in North America."

I disagree with your view. The CEO of the car companies, in their management, MUST include the union presence and its effect. This includes costs of production (i.e., contracting out, out-of-country contracts, costs of car production or less man-hours of work etc).Research and design has to be considered with the union in mind as to costs of production. The CEO must also consider the demands of the union in attempting to obtain bank loans, for a bank may very well say that the union costs are so high that the profit margin is too low to provide for future investment by that car company. As for countries that refuse to buy products manufactured in N. America - that's also a result of the union costs which have driven the price of production beyond the carrying capacity of the local consumers.

The union costs are not just 8% of production, but include, for example, an approximate $1,600 per car 'legacy costs' for retiree's health and benefits for their pension. The legacy costs are an enormous drain.

Then, normally in hard times, an industry would reduce production. But GM's union agreements mean that it can't legally close plants or lay off workers without enormous penalties! That's what the union has done!!! Get it, Ulianov? The union has transformed a production industry into a service centre for workers.

The industry can't get enough money to research and develop new cars; it can't reduce the costs of production because it can't reduce even the NUMBER of workers! It can't close plants. Its only reason for to serve those workers. To hell with car production.

Even if GM halts its production, it STILL has to pay the workers, and their pensions and health care and other benefits. That is, what the union has done is to set up a situation where the car industry can't reduce its production because its production has NOTHING to do with cars but with workers. It can't lay them off, can't reduce its numbers of workers..and when they retire, the benefits are an enormous cost. Those union legacy costs are an enormous drain and this union-caused legacy is the basis of much of what ails the auto industry.

Toyota, Honda, Nissan didn't get trapped by the unions, didn't transform from car manufacturers into worker service centres. They are able to turn their profits into profitable new designs, which the Big 3, with their different focus on Benefits To The Workers - were unable to fund. For example, GM put only 7 billion on research and development vs Toyota's 15.3 billion.

As for 'bailing out the banks', please remember that the banks are not unionized, and the purchase of insured mortgages has nothing to do with production costs of anything.

Posted by: ET at December 26, 2008 6:12 PM

No comments: