# Ford layoffs: how much responsibility does the UAW have? **URL:** \ **Category:** Great Debates\ **Created:** [January 24, 2006, 11:18pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466 "2006-01-24T23:18:14Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![rjung](https://avatars.discourse-cdn.com/v4/letter/r/45deac/32.png) [@rjung](https://boards.straightdope.com/u/rjung)\ **Post date:** [January 27, 2006, 7:15am UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/41 "2006-01-27T07:15:05Z")
“A fish rots from the head down.” Trying to shift the blame for Ford’s problems on the UAW is… well, about what I’d expect from the SDMB resident conservatives, really. ---
**Author:** ![treis](https://avatars.discourse-cdn.com/v4/letter/t/bc79bd/32.png) [@treis](https://boards.straightdope.com/u/treis)\ **Post date:** [January 27, 2006, 8:10am UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/42 "2006-01-27T08:10:34Z")
> [@Lightray](#): > > You’re missing that the costs of manufacturing a car fall into fixed costs and variable costs. > > Variable costs depend on the number of cars you make – overall, the company pays more in variable costs for making more cars, but they tend to pay the same amount in variable costs on _each_ car. > > Fixed costs, the company has to pay regardless of whether they make _any_ cars. The fixed costs will be allocated per car, based on the total number of cars made. So, more fixed cost is allocated to each car made, if you’re making less cars. If Ford’s sales were 25% lower than they’d planned, that effectively increased the fixed cost component allocated to each car by one-third. > > This is the same thing as “economies of scale”. > > The fixed costs for Ford probably include their pension obligations (maybe healthcare, too?). Ford is supporting a lot of retirees. Salaries can be more variable (as Ford just demonstrated), as the number of employees can be reduced to match the amount of cars made – but the pension and other obligations that Ford had incurred from employing those people remain costs to Ford even after the employee is no longer working there. > > So, cutting 25% of the workforce to match a 25% sales reduction will change Ford’s cost per car ratio – it just won’t be a 25% reduction. Still, the labor cost per car ratio has not changed. If L=Labor force and C=number of cars made. Before the cuts the cost per car was L/C. After the cuts it was (L\*.75)/(C\*.75). The .75s cancel out and you get L/C back out. ---
**Author:** ![Malodorous](https://avatars.discourse-cdn.com/v4/letter/m/e47774/32.png) [@Malodorous](https://boards.straightdope.com/u/Malodorous)\ **Post date:** [January 27, 2006, 8:49am UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/43 "2006-01-27T08:49:00Z")
> [@drachillix](#): > > Take away the incentives for good people to seek out those positions and you get what you pay for, tell you what I would happily take the job as CEO of Ford for oh $250K a year, I would suck at it and probably drive the company into a wall so hard it would make a Volvo commercial look like a first kiss. Well the people who are running Ford seem to be driving it into the ground pretty hard without you. And they’re still getting more then 250K a year. I agree with you that the “overpaid CEO” argument is somewhat nonsensical. As you say, it’s not a huge chunk of the total payroll. Still, I can’t blame the 30,000 laid off autoworkers for finding it a bit gauling to have a guy whose making millions of dollars while presiding over a huge decrease in Ford’s business complain that the problem lies in his having to pay the factory workers the pensions dictated in their contracts. ---
**Author:** ![Airman\_Doors\_USAF](https://avatars.discourse-cdn.com/v4/letter/a/e36b37/32.png) [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)\ **Post date:** [January 27, 2006, 12:22pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/44 "2006-01-27T12:22:21Z")
> [@rjung](#): > > “A fish rots from the head down.” > > Trying to shift the blame for Ford’s problems on the UAW is… well, about what I’d expect from the SDMB resident conservatives, really. I didn’t try to blame the UAW, I asked how much (if any) responsibility they have for the present condition of the company. Would it be possible for you to be honest even one time when you’re making an argument? Just once, that’s all I ask. ---
**Author:** ![control-z](https://avatars.discourse-cdn.com/v4/letter/c/eada6e/32.png) [@control-z](https://boards.straightdope.com/u/control-z)\ **Post date:** [January 27, 2006, 1:44pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/45 "2006-01-27T13:44:27Z")
> [@Dubious Weasle](#): > > I take it then that you don’t/wouldn’t ever negotiate salary? Well sure, but man-to-man, not as a mass force that will force the plant to shut down. ---
**Author:** ![Homebrew](https://avatars.discourse-cdn.com/v4/letter/h/c89c15/32.png) [@Homebrew](https://boards.straightdope.com/u/Homebrew)\ **Post date:** [January 27, 2006, 3:01pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/46 "2006-01-27T15:01:41Z")
> [@control-z](#): > > Well sure, but man-to-man, not as a mass force that will force the plant to shut down. Why would The Man negotiate with you one-on-one? You’re an interchangable cog. You have nothing to offer to distinguish yourself from any other worker. Here’s the offer. You don’t like it? The next guy will. It’s not a negotiation with both sides being somewhat equal. Without collective bargaining, labor has no leverage. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [January 27, 2006, 3:40pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/47 "2006-01-27T15:40:41Z")
> [@drachillix](#): > > Take away the incentives for good people to seek out those positions and you get what you pay for. So who is responsible for Ford’s [plummeting market share](http://www.detnews.com/2005/autosinsider/0501/06/A01-50668.htm)? Those incentivized managers who make all of the marketing and production decisions or the workers whose collective bargaining agreements the incentivized managers negotiated? > [@control-z](#): > > Well sure, but man-to-man, not as a mass force that will force the plant to shut down. Why not? Is there some rule against evening the odds? 😃 ---
**Author:** ![control-z](https://avatars.discourse-cdn.com/v4/letter/c/eada6e/32.png) [@control-z](https://boards.straightdope.com/u/control-z)\ **Post date:** [January 27, 2006, 4:50pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/48 "2006-01-27T16:50:29Z")
> [@Gfactor](#): > > Why not? Is there some rule against evening the odds? 😃 Union negotiations seem a lot like blackmail to me. “Give us more money and more benefits or we’ll strike, shutting down your production. If you try to hire replacement workers we’ll block and harass them.” Ironically they’re blocking the very same production that pays their salary. Biting the hand that feeds them. ---
**Author:** ![control-z](https://avatars.discourse-cdn.com/v4/letter/c/eada6e/32.png) [@control-z](https://boards.straightdope.com/u/control-z)\ **Post date:** [January 27, 2006, 4:51pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/49 "2006-01-27T16:51:33Z")
> [@Homebrew](#): > > Why would The Man negotiate with you one-on-one? You’re an interchangable cog. You have nothing to offer to distinguish yourself from any other worker. Here’s the offer. You don’t like it? The next guy will. It’s not a negotiation with both sides being somewhat equal. Without collective bargaining, labor has no leverage. Everybody’s got a boss. You talk to your boss. If he agrees you’re a valuable skilled employee there should be some bargaining room. Otherwise maybe it’s best you both part ways. ---
**Author:** ![drachillix](https://avatars.discourse-cdn.com/v4/letter/d/48db29/32.png) [@drachillix](https://boards.straightdope.com/u/drachillix)\ **Post date:** [January 27, 2006, 5:54pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/50 "2006-01-27T17:54:21Z")
> [@Gfactor](#): > > So who is responsible for Ford’s [plummeting market share](http://www.detnews.com/2005/autosinsider/0501/06/A01-50668.htm)? Those incentivized managers who make all of the marketing and production decisions or the workers whose collective bargaining agreements the incentivized managers negotiated? The managers are ultimately responsible for everything, thats how it works, you get the big paycheck, your ass hangs when its time to blame someone for the big screwups. The only problem I see with UAW is they have no incentive to flex or respond to market conditions the way the company does and or should. Would the UAW be willing to cut everyone to 30 hours a week for a while to get a company through a tough financial period like this rather than watch 30,000 people lose their jobs. From the looks of things,they would rather lose a quarter of their members than make everyone take even a temporary cut in pay. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [January 27, 2006, 6:28pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/51 "2006-01-27T18:28:36Z")
> [@control-z](#): > > Everybody’s got a boss. You talk to your boss. If he agrees you’re a valuable skilled employee there should be some bargaining room. Otherwise maybe it’s best you both part ways. In large companies, your boss generally is not the person who determines your salary and benefits. ---
**Author:** ![Lightray](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lightray/32/391_2.png) [@Lightray](https://boards.straightdope.com/u/Lightray)\ **Post date:** [January 27, 2006, 6:51pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/52 "2006-01-27T18:51:11Z")
> [@treis](#): > > Still, the labor cost per car ratio has not changed. If L=Labor force and C=number of cars made. Before the cuts the cost per car was L/C. After the cuts it was (L\*.75)/(C\*.75). The .75s cancel out and you get L/C back out. My point was that labor costs include both salary costs, and pension/benefit costs. Reducing workers adjusts only the salaries; pension obligations remain. Granted, the downsized workers are no longer _increasing_ their part of the pension obligation, but by hiring them in the first place Ford had already committed to an ongoing cost that downsizing isn’t going to make go away. It could be that the labor:car cost ratio before and after idling the plants will be much the same. But based on what I know of the costs at my own, union-plant, place of employment I’m skeptical. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [January 27, 2006, 7:01pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/53 "2006-01-27T19:01:09Z")
> [@drachillix](#): > > The managers are ultimately responsible for everything, thats how it works, you get the big paycheck, your ass hangs when its time to blame someone for the big screwups. The only problem I see with UAW is they have no incentive to flex or respond to market conditions the way the company does and or should. Would the UAW be willing to cut everyone to 30 hours a week for a while to get a company through a tough financial period like this rather than watch 30,000 people lose their jobs. From the looks of things,they would rather lose a quarter of their members than make everyone take even a temporary cut in pay. As I pointed out before, unions represent workers. The UAW has no say at all in whether a particular term is accepted or rejected. So what you are really saying is that the workers are unwilling to cut their time from 40+ to 30 a week for a while to help the company through a tough financial time. On that score, the thing speaks for itself. If they were willing to do it, it would have been done. Seemingly most of them are too overtime dependent to make that concession. [More UAW workers bankrupt: Autoworkers who used to thrive on overtime now find it tough to keep up their lifestyles](http://www.detnews.com/2005/autosinsider/0509/18/A01-318432.htm) Could they have become so overtime dependent without a union? I don’t know. Don’t get me wrong. I have been on both sides of the fence, and I can see both sides of the argument. The Ford worker’s pay and dependence on overtime is definitely part of the problem. The UAW’s role in these issues is complex and can’t be usefully described as flexible/inflexible, IMO. FTR, I have been a union member (in fact I have been on the negotiation committe of a union). I have also represented unionized employers in various matters before the NLRB. ---
**Author:** ![Malodorous](https://avatars.discourse-cdn.com/v4/letter/m/e47774/32.png) [@Malodorous](https://boards.straightdope.com/u/Malodorous)\ **Post date:** [January 27, 2006, 7:11pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/54 "2006-01-27T19:11:02Z")
> [@drachillix](#): > > The managers are ultimately responsible for everything, thats how it works, you get the big paycheck, your ass hangs when its time to blame someone for the big screwups. In what sense does “your ass hang”. I mean perhaps you get blamed verbally, your stock options go down and maybe if you really screw up you get fired. But you’ve still collected that huge paycheck until that point, so it’s not like getting fired is a huge hardship as compared to the condition of workers that you’ve laid off. If they, say, cut the right hand off failed CEOs, then I’d agree the risk justifies the huge paycheck. But as it stands, the only risk the big payday seems to be compensating them for is the threat of…not getting as many big paydays if they screw up. > [@](#): > > The only problem I see with UAW is they have no incentive to flex or respond to market conditions the way the company does and or should. Well, their incentive is not having their members laid off. Out of curiousity though, was a cut in pay/pensions in return for no layoffs even offered? As I showed above, the loss of jobs corresponds to a proportionate loss in market share. Would Ford be willing to keep a couple tens of thousands of workers on at reduced pay despite the fact that they didn’t have enough cars for them to make anyways? Would they have to redesign their factories to make them less efficent, to give everyone something to do? And at a certain point, if the union workers accept the same pay/benefits as non-union workers, it destroys the point of being in the Union (and paying dues) in the first place. If Ford needs that level of concessions, the workers mind as well stick to thier guns and if they get layed off, go work in a non-union shop. ---
**Author:** ![Lightray](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lightray/32/391_2.png) [@Lightray](https://boards.straightdope.com/u/Lightray)\ **Post date:** [January 27, 2006, 8:07pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/55 "2006-01-27T20:07:06Z")
Ford should have not only suggested a cut in pay or pensions, but _cashing out_ their current pension plan, and implimenting something new. Probably the UAW contract would have prevented that, but it’s been a common fix for many companies in recent years. ---
**Author:** ![bizzwire](https://avatars.discourse-cdn.com/v4/letter/b/958977/32.png) [@bizzwire](https://boards.straightdope.com/u/bizzwire)\ **Post date:** [January 27, 2006, 8:19pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/56 "2006-01-27T20:19:45Z")
> [@Malodorous](#): > > I agree with you that the “overpaid CEO” argument is somewhat nonsensical. As you say, it’s not a huge chunk of the total payroll. I (and others, I’m willing to bet) never meant to imply that that lavish salaries and bonuses were to blame for the shortfall, but it’s hard to blame the workers when management reward themselves obscene amounts of badly needed money for bad management. I can’t help but notice when I watch television that, no matter what the time or the channel, every third commercial is a car advertisement. Ford should yank every TV, radio, and print ad for a year- it’s clearly not working anyway. According to [this cite](http://www.nielsenmedia.com/monitor-plus/in_the_news/releases/M+AutomotiveAdvertising.htm), they’d save **768 million** dollars (a 19% increase over last year…what’s wrong with this picture?). ---
**Author:** ![crazyjoe](https://avatars.discourse-cdn.com/v4/letter/c/f14d63/32.png) [@crazyjoe](https://boards.straightdope.com/u/crazyjoe)\ **Post date:** [January 27, 2006, 8:49pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/57 "2006-01-27T20:49:42Z")
> [@Malodorous](#): > > In what sense does “your ass hang”. I mean perhaps you get blamed verbally, your stock options go down and maybe if you really screw up you get fired. But you’ve still collected that huge paycheck until that point, so it’s not like getting fired is a huge hardship as compared to the condition of workers that you’ve laid off. If they, say, cut the right hand off failed CEOs, then I’d agree the risk justifies the huge paycheck. But as it stands, the only risk the big payday seems to be compensating them for is the threat of…not getting as many big paydays if they screw up. Indeed…everyone loves to trot out the risk that CEOs and executives take as part of their daily jobs to mitigate the huge salaries they receive, and yet, on one year’s worth of their pay most people could live comfortably for much of the rest of their natural life. Beyond that, if the DO screw up, most often they are held accountable for minimal amounts, and the executive recruiting firms have them in a new job within a few months. The old boy’s network is alive and well, and everyone in it likes to pretend that it doesn’t exist and they got where they are because of “hard work”. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [January 27, 2006, 8:57pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/58 "2006-01-27T20:57:52Z")
> [@Lightray](#): > > Ford should have not only suggested a cut in pay or pensions, but _cashing out_ their current pension plan, and implimenting something new. > > Probably the UAW contract would have prevented that, but it’s been a common fix for many companies in recent years. The union and the company can renegotiate a collective bargaining agreement to modify new pension rights. The problem that many of the older employers are having is that their existing pension and health care obligations (to retirees, for example) have become too expensive. [http://www.sltrib.com/business/ci\_3437976;](http://www.sltrib.com/business/ci_3437976;) [http://www.nj.com/business/ledger/index.ssf?/base/business-2/1138344785123310.xml&coll=1;](http://www.nj.com/business/ledger/index.ssf?/base/business-2/1138344785123310.xml&coll=1;)[http://www.detnews.com/apps/pbcs.dll/article?AID=/20060120/AUTO01/601200372/1148/AUTO01;](http://www.detnews.com/apps/pbcs.dll/article?AID=/20060120/AUTO01/601200372/1148/AUTO01;)[http://www.alternet.org/story/31127/;](http://www.alternet.org/story/31127/;) [http://www.pww.org/article/articleview/8474/1/306;](http://www.pww.org/article/articleview/8474/1/306;) [http://www.mlive.com/news/jacitpat/index.ssf?/base/news-15/1138122348284710.xml&coll=3;](http://www.mlive.com/news/jacitpat/index.ssf?/base/news-15/1138122348284710.xml&coll=3;) [http://www.smh.com.au/news/business/the-big-squeeze/2006/01/27/1138319451024.html](http://www.smh.com.au/news/business/the-big-squeeze/2006/01/27/1138319451024.html) Getting out of that quagmire is a little more complex, at least if the plan is covered by ERISA. > [@](#): > > Q. When can an employer end a pension plan? > > A. Employers can end a pension plan through a process called “plan termination.” There are two ways an employer can terminate its pension plan. > > The employer can end the plan in a standard termination but only after showing PBGC that the plan has enough money to pay all benefits owed to participants. The plan must either purchase an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or, if your plan allows, issue one lump-sum payment that covers your entire benefit. Before purchasing your annuity, your plan administrator must give you an advance notice that identifies the insurance company (or companies) that your employer may select to provide the annuity. PBGC’s guarantee ends when your employer purchases your annuity or gives you the lump-sum payment. > > If the plan is not fully funded, the employer may apply for a distress termination if the employer is in financial distress. PBGC cannot grant the application, however, unless the employer proves to a bankruptcy court or to PBGC that the employer cannot remain in business unless the plan is terminated. If the application is granted, PBGC normally will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds. [http://www.pueblo.gsa.gov/cic\_text/employ/pension/pension.htm#ending](http://www.pueblo.gsa.gov/cic_text/employ/pension/pension.htm#ending) ---
**Author:** ![rjung](https://avatars.discourse-cdn.com/v4/letter/r/45deac/32.png) [@rjung](https://boards.straightdope.com/u/rjung)\ **Post date:** [January 27, 2006, 9:03pm UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/59 "2006-01-27T21:03:51Z")
> [@Airman Doors](#): > > I didn’t try to blame the UAW, I asked how much (if any) responsibility they have for the present condition of the company. Oddly enough, I don’t recall singling you out in my post, **Doors.** 🙂 ---
**Author:** ![control-z](https://avatars.discourse-cdn.com/v4/letter/c/eada6e/32.png) [@control-z](https://boards.straightdope.com/u/control-z)\ **Post date:** [January 28, 2006, 2:48am UTC](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466/60 "2006-01-28T02:48:06Z")
> [@bizzwire](#): > > I (and others, I’m willing to bet) never meant to imply that that lavish salaries and bonuses were to blame for the shortfall, but it’s hard to blame the workers when management reward themselves obscene amounts of badly needed money for bad management. > > I can’t help but notice when I watch television that, no matter what the time or the channel, every third commercial is a car advertisement. Ford should yank every TV, radio, and print ad for a year- it’s clearly not working anyway. According to [this cite](http://www.nielsenmedia.com/monitor-plus/in_the_news/releases/M+AutomotiveAdvertising.htm), they’d save **768 million** dollars (a 19% increase over last year…what’s wrong with this picture?). I think that would be a fatal mistake. Advertising brings in new business and keeps existing customers in the family by demonstrating that the company is still out there innovating. Many people won’t know about new/updated vehicles unless they see the advertisements. [Previous page](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466.md?page=2) [Next page](https://boards.straightdope.com/t/ford-layoffs-how-much-responsibility-does-the-uaw-have/341466.md?page=4)