Yesterday on the radio, I heard a story about a union possibly forming at Volkswagen in the U.S. (I don’t recall which state – one of the southern ones where they have their factory.) A politician said that unions would destroy the state’s auto industry, just as they destroyed Detroit.
Now, the deals unions made with auto makers did cause some problems; notably pensions that must be funded. But it takes two to tango. By accepting the unions’ demands, didn’t the auto makers help to destroy their industry by accepting the (rather great) short-term benefits? If unions are to blame, ISTM that auto makers are equally to blame. Given that the financial burdens imposed by the agreements are onerous, are they really the cause of the problems? Or is it the short-sightedness of automakers who continued to build cars nobody wants for a couple/few decades?
In short, was the politician right that ‘unions destroyed Detroit’? Or are the auto makers the primary cause because they sought short-term profits by neglecting the market and producing products that did not meet market demands?
That’s Fox News / Rush Limbaugh style wingnut propaganda. There’s a strong union presence in many of the best and brightest American cities (L.A., Chicago, Boston, New York, etc.)
Detroit’s got a weird set of issues and probably doesn’t serve as a “lesson” for anyone else, but it didn’t help that the domestic auto makers spent years gleefully producing unsafe rustbuckets while the Japanese were making better quality cars every day under their noses.
As I recall, it wasn’t the price of American cars that hurt sales, but the quality (broadly defined to include design). I’m not sure how much of that I’d lay at the feet of the Unions.
Circular argument…maybe the lower quality automobiles were made because costs had to be cut elsewhere to cover the exorbitant benefit and retirement packages that local labor demanded.
They both negotiated their contracts with the assumption of unceasing American dominance in the auto market, so imho, they both deserve a portion of the blame of what happened to Detroit. But only a small portion.
Really, the big problem for the city is that while the start of the mass manufactured auto industry required an industrialized central location so it could reach critical mass and take off, once created, the industry no longer needed to be (or even could be) situated in one city.
There was nothing exorbitant about those packages. Both the unions and management were simply too short-sighted to realize that the defined benefit plans they were negotiating wouldn’t be economically viable. They were hardly alone in that.
Detroit has never turned out well-built automobiles. American auto build quality has been a global joke for decades (nearly on a par with British build quality). What killed Detroit was trying to dictate to its market.
Today, Detroit is turning out well-built cars that even foreign buyers want, and that don’t cost any more to build than the turds of the 1980s and '90s.
Yes, this was a Right Wing guy who is against unions. He said that VW should not allow unions because of what unions did to Detroit – which begs the question of whether unions did destroy Detroit. (FWIW, VW is neutral on the issue. They are in many countries, and has experience with unions.)
This is my impression. Even in the '60s, there were people who were concerned about fuel economy. After the 1973 oil embargo, consumers demanded more fuel-efficient cars. Detroit responded by building huge, heavy cars as they always did. Their attempts to make their engines fuel-efficient, combined with new laws requiring that they be less polluting, were problematic. Styling was atrocious (remember the Mustang II?), and build quality was poor. Meanwhile, Japan was building Datsuns/Nissans, Hondas, and Toyotas that looked nice, were well-built, got great mileage (for the time), and polluted less. A lot of Detroit Iron was sold (they were cheap), but more and more people were looking for quality and efficiency and bought Japanese products. (And products from other countries.) Detroit responded by… Building big, poor-quality vehicles well into the '80s. They built their cars as cheaply as possible, seeming to count on the old paradigm of people buying a new car every two or three years. I think that they destroyed themselves.
On a tangent, Ford touts the F-150 as the best-selling truck. (Maybe the best-selling American vehicle? IDR.) The SO and I think of the F-150 as a disposable vehicle. They’re pretty good when they’re new, and fairly inexpensive. But they don’t last. If you want a truck that lasts, buy a Toyota.
IIR my history correctly, unions had a chance in the late-'60s/early-'70s to institute single-payer health care. The Nixon administration wasn’t keen on ‘socialism’, but I think they were in favour of that approach. Unions didn’t want to pay into single-payer, and wanted the corporations to provide health coverage. I think we’d be in a better place today, if the unions had relented on that point.
From all accounts, the Ford Taurus (1985) was a good car in its time. A friend’s father had a 9th-generation Ford Thunderbird (1983-1988) that was a good car too. By today’s standards they were crap. But in their time they were a sign that Detroit was finally getting the message. But they came after a decade and a half of tone deafness.
To be fair, that’s basically what a strike is. ‘Give us what we want, or we will shut down your business.’ But that’s only one side of the equation. The other side is that the company makes a counter-offer. Eventually, an agreement is reached where neither side gets everything it wants but both sides get some of what they want.
Once having agreed to union demands, the company needs to ensure its viability based on the terms they agreed to – and which they calculated would keep them in business. So if the company goes bankrupt, it’s a demonstration of the evolutionary aspect of the Free Market. According to Free Marketers, if they can’t compete, they deserve to go out of business. The way I see it, they refused to take smaller profits and build what consumers wanted.
Was Ford Motors as destroyed as GM and Chrysler? Just as unionized. A more unionized industry would be the movie industry. Is Los Angeles destroyed or about to be by unions?
A stronger case can be made that US based car companies must pay for health care benefits while car companies in other countries do not. Government pays for health care in those countries and those countries don’t spend a twentieth of what the US spends on military.
Also, a lot of blame needs to go to the unregulated mortgage derivatives industry that wiped Detroit’s tax base more or less directly.
When I say ‘Detroit’ here, I’m using it as shorthand for the U.S. auto industry. I think the mortgage fiasco is more to blame than anything for *the City of * Detroit’s current situation; but since the story I heard and the comments by the politician were referencing unions and the auto industry, that’s what I’m talking about here.
Well, not exactly. According to Free Marketers, unions are cartels and if management can’t form cartels workers shouldn’t be able to either (else the equation gets unbalanced.)
Actually, part of the problem is that the big-3 were slaves to their market, which wanted big cars that didn’t cost a lot, plus trucks. That was always their bread-and-butter, and there were numerous attempts over the years to produce more “European” cars. Some of these attempts failed, some were nominally successful, but never to the degree that they could shift the direction of the company. Even though the market for big, cheap cars was shrinking, it was still very profitable.
The UAW played a role in that as the market shrank, union agreements prevented the automakers from slowing production. They were required to pay X number of workers whether they built cars or not, and it was cheaper to have them build cars that there wasn’t any demand and sell them for a loss than it was to have them sit around and do nothing. GM was hemorrhaging money 10 years ago – on average, they lost several thousand dollars for every car they sold – but they couldn’t stop building them, and this led to a further cheapening of their image.
Eventually the unions caught up, and the rules they have now are much better than what they had 10 or 20 years ago. I firmly believe that without the UAW, the big-3 would have been able to react faster to the changing market. But management was also to blame for chasing easy money instead of spending capital to reshape the companies as early as the late '70s. Alan Mulally eventually did a fantastic job of doing this at Ford, but it was only possible because the bankruptcy negotiations GM was going through with the UAW changed the playing field for everyone.
I should note that the US dealer network and US franchise laws also played an effect in all of this; the big-3 have too many dealerships and had too many brands, a throwback to the heyday of the 50s and 60s, and part of the “build cheap cars and sell them at a loss just to keep the factories running” strategy was keeping the massive dealer network stocked with metal. Closing dealerships and shuttering brands cost Detroit a lot of money.
There’s a lot of blame to go around, and while the UAW definitely shoulders some of it, it’s not fair to simplify that down to “unions destroyed Detroit.”
I wonder what Shodan makes of the unions in German auto plants then?
Seems to me that they know how to work with management, and there has been plenty of strife in the German factories over the years, still, it appears to work well enough.