The UAW's Culpability in the Current Unpleasantness

Great Debates
1

I wrestled with which forum to put this into, and arrived here. Mods, if this is the wrong place, I apologize in advance.

Okay, so I’ve been doing a lot of reading about the Big 3, and their begging for a bailout.

A common meme that often comes up in these conversations is “Screw the UAW! It’s all their fault we’re in this situation!”

While I can see the logic behind some of the anger (the UAW has clearly priced themselves out of competitiveness), I don’t at all understand how the UAW could be responsible for anything approaching this whole mess.

My thoughts:

[ol]
[li]The contracts are not handed down from on high by UAW. They’re negotiated with the automakers. As such, the automakers are at least as culpable for the current mess as the UAW.[/li][li]I’m willing to submit that the cost of said contracts is somewhere between “unreasonable” and “outrageously unsustainable.” So why did the automakers agree to them? I don’t mean this as a rhetorical device. I seriously want to know.[/li][li]Why would we trust the people who agreed to such apparently toxic contract terms continue to run the roost?[/li][li]There’s often a tone of “How dare they?!” in the people who complain about the deals hammered out between the unions and automakers. Why wouldn’t the UAW fight for the best contract possible for its members? Aren’t the automakers trying to do the same for themselves?[/li][/ol]

That said, though, I don’t see any way out other than to let the Big 3 fail, and negotiate contracts more in line with current financial realities. Will it hurt people employed by the automakers? Absolutely. C’est la vie. “But, people who work on the auto-lines aren’t very well educated, and will never find a job which pays a comparable salary!” I can foresee someone arguing. Tough. IMHO, they essentially won the lottery being paid so well all these years as uneducated, semi-skilled labor. Let them compete in the real world for a change.

Please point out where I’m wrong or short-sighted. Is there some side of this whole situation I’m not seeing?

2

The side you are not seeing, perhaps, is the side that says assignment of culpability is not necessarily required at all, particulary retrospectively.

Business fail. Pay too much for labor, or have management that bets the wrong way, or have your product eclipsed by smarter or luckier guys elsewhere–there doesn’t have to be culpability. It’s human nature to assign blame but there is no requirement to assign it.

3

You’re right…that is a side of this that I didn’t consider, and thank you for bring it to my attention.

4

The reason the company agreed to the contracts is because they could afford them. They were cleaning up. Labor cost is 10 % of the price of a car.

5

The art of negotiation is to never give up something without getting something back in return. My understanding of the UAW contracts is that many of the benefits were given by the Big 3 back when they were the dominant world players. They could afford to be generous. Now they can’t afford some of the things they signed onto 20 years ago but UAW negotiators won’t give them up, thus the Big 3 are saddled with expensive contracts.

I’d give this more credence if it was just one or two automakers were hurting been when all three have their hats in hand it seems something must be behind it.

6

I’m not meaning any snark here. If the UAW won’t give up on a point that the automakers can’t afford, what’s to stop the automaker from rejecting the contract, then replacing the UAW with scabs when they strike? I was under the impression that businesses have pretty wide latitude these days to replace striking workers. (I may be way off about that, of course). I just don’t see why it’s the UAW’s fault that the Big 3 failed to plan ahead. The UAW and the Big 3 seem to have each other by the balls, and neither wants to let go.

NB: I would never advocate an automaker engage in union-breaking. I’m just saying that as a thought problem. I’m under-informed about the automaker situation, but my default position in labor disputes is usually to support the union.

7

Both sides are to blame, and I don’t think we need to try to divvy up blame like a percentage. The union made an overly greedy bargain back in the day, the government thought it was a gran’ ol’ ideyer, and the companies said, “Eh, what the hell. We’re doing all right.” Well, thing changed. Management got less flexible and more entrenched and insular. The union got complacent and foolish and didn’t want to give up the good old days.

Provided neither side resorts to violence or criminal offences, the company can break unions anytime they like. Unions have no special right to exist, and neither do corporations.

8

Yeah, I think this is pretty much my view. The UAW is probably being bullheaded, but I doubt Luca Brazi is in there with the auto execs. They don’t like the deal, they have options. Telling the UAW to stuff it might be painful, but it won’t be a picnic for the UAW either.

9

Gettelfinger was on today saying they have made concessions 4 times since 2000. They are in the process of doing the same now.

10

http://rawstory.com/news/afp/Union_joins_automakers_in_pledge_to_12032008.html Heres the UAW telling how they are doing their share.

11

Agreed

Much of the problem with the Big 3 today is a result of legacy costs negotiated way back when the UAW had all three companies by the balls and the companies had somewhat of a monopoly on the market of decent automobiles, the VW bug not withstanding. The companies could pass on the extra cost to the consumer much like our governments do today when civil service unions negotiate and strike for pay increases. But back then, the Big 3 weren’t subject to back to work legislation.
Later, when foreign automobiles got more competitive and corporate philosophies centred on quarterly profits, the short term economic benefits for the big 3 to succumb to union demands and get there increasingsly expensively financed automation resources producing instead of strike idled made a lot of sense.

Today, unless the Big 3 can convince the UAW to pare off almost $30 per hour of labour to produce an auto, there’s no way they can compete with the rest of the auto industry.

Well, they probably aren’t the same people who are actually responsible for the legacy costs

Its more like “how dare they come to us for a bailout”. They got greedy, played good cards but in the end their luck turned.
We don’t need them. Honda, Toyota, KIA and BMW still have money sitting on the poker table, and the game is still very much alive.

12

Yes, but for different reasons. However, essentially you are correct…the UAW isn’t to blame for the whole thing. Or even, realistically, the majority of it.

BTW, one party you didn’t mention that should be shouldering part of the blame is the government. Part of the problem the auto makers have is imposed on them by our own government. Which brings us to another party…We, The People. We want basically everything from our home grown businesses. We want them to make the products we think we want, we want them to make a profit (but not TOO much profit…that would be Bad™), we want them to jump through hoops for us AND we want them to provide wages so that the workers building the products we think we want can make a really good living. In short, we want it all and we want it now…and then, when someone brings (from another country) is able to bring a vehicle to market cheaper or better built (because their labor costs are low enough that they can do either or both of those things), we then go and buy that car…and piss and moan about how American cars suck.

All these things (and the auto manufacturers themselves don’t get out of the blame game either…in fact, they probably SHOULD get the lions share of the blame) factor into the equation. It’s never as simple as being able to point the finger at one party and say they are to blame.

The did it for a variety of reasons. For one thing, we demanded it of them. For another thing they had too…they needed those workers if they were going to build the cars. No workers, no cars. For another thing, they were short sighted and stupid. Also, the government (catering to our collective wishes) applied pressure.

lol…we put a gun to their heads (figuratively…The Market and all that jazz) and TOLD them what we wanted. Our government put a gun to their heads (more literally) and TOLD them what the people expected. Labor put a gun to their heads and demanded better wages (hard to blame them to be honest) and benefits, and they didn’t really care what this did to the companies from a competitive standpoint. Also, you are looking at this in hindsight…which has 20/20 vision. At the time that a lot of those contracts were negotiated things weren’t as they are now, and US auto manufacturing was still very competitive world wide.

BTW, who exactly should we ‘trust’ to ‘run the roost’…and what makes you think it’s up to us to decide who should or shouldn’t run it? Who do you think would be a better choice…and how would We, The People, decide that exactly? Besides how we actually DO decide…which is with our pocket books.

Exactly. Why SHOULDN’T the UAW fight for the very best they can get? Especially since we WANT that for them…and for ALL American workers. We (and they) don’t really want to be bothered with concerns about what that does for the competitiveness of those companies. As I said, we want it all…we want all the regulations, we want all those happy workers making a good wage…AND we want cheap and well made products that get high mileage and last forever. We WANTS it…yeeesssss my precious, we does.

Well, like I said, the parts you aren’t seeing are all the OTHER fingers in the pie…they are part of the ‘blame’ as well. Another thing you might not be seeing is FOREIGN manufacturers. Take the Japanese for instance. Their government directly subsidizes their auto industry. Kind of hard to compete with that (though the Japanese have run into many of the problems we are facing…which is why several of them actually build cars HERE. Ironic, no?). In China and other places they are more concerned with capitalistic expansion than they are with the niceties of their workers having a decent standard of living (again, ironic for the ‘Workers Paradise’, ehe?). South Korea also subsidizes their industries IIRC…and our Euro-buddies get subsidized by us (they don’t pay a lot for their own defense, leaving that little detail up to us…which means they have more pie to pay for little things like free health care and such).

-XT

13

Not just anytime. Only after the labor contracts expire. Also, is this true for the Big 3? A car is made up of a lot of parts lots of which have been outsourced. Can an American auto company bring in scabs without being crippled by a loss of necessary parts from sympathy strikes against their suppliers by the UAW or other unions? I’m not saying they can’t. I just suspect it’s not that easy.

14

Cite?

15

Certainly the management of GM has made it’s mistakes, but the UAW is/was a ball and chain that kept them from responding to challenges. At most companies, if you improve the efficiency of a process, and cut out 5 jobs, you’ve done a good thing. The company now produces the same product at a lower cost, and as a result is healthier and more profitable. Not so at GM. If you cut 5 jobs, you can’t actually fire 5 employees. Best case is they find jobs somewhere else. Worst case you have to keep paying 3/4s of their salary for doing nothing. See this article for numbers and further explanation: Why U.S. automakers like GM and Ford are losing money - Jan. 26, 2007

It’s definitely true that the american auto makers missed the boat on fuel efficient, reliable, and economic cars. But once they missed that boat and started losing market share, they were screwed. In other words, they were selling 1,000,000 cars in 1980, but only 950,000 in 1981. However, since they didn’t have any real option to cut capacity through factory idling and layoffs, they still had the cost of manufacturing 1,000,000 cars. That means suddenly their cost per car went up, and thus became much less profitable. So they neglect the brand, lose another 50k cars, and now they are dividing cost for 1,000,000 cars over 900k cars sold. That makes them less profitable, so they neglect it, and the cycle continues.

The only way for any of these companies to return to profitability is to drastically cut the number of manufacturing capacity and the number of models sold. The UAW is a big, big obstacle in accomplishing the first, and there are significant obstacles in accomplishing the second.

16

They have already done this. I haven’t seen anyone mention the landmark 2007 UAW contracts that will nearly eliminate the labour gap.

From here - Detroit Local News - Michigan News - Breaking News - detroitnews.com

Unfortunately -

From here - Detroit Local News - Michigan News - Breaking News - detroitnews.com
The bridge loan should help them make it that far. I’m hoping that part of the congress requirements will be a dramatic acceleration of the consessions already agreed to.

17

I think another piece of the puzzle is that the automakers agreed to provide health insurance back when healthcare and insurance costs were much much less than they are today.

18

10 percent. So if ythey worked free it would not solve the problem.

19

This article differs:

By my math, and assuming those numbers are right, the extra labor costs between American and Japanese car makers comes out to $2,415 per vehicle. That is $485 short of the gap in profitability. That number likely could be eliminated through reduced capacity, brand consolidation, and dealership reduction.

20

I think it is more than just wages. Union rules can be nutty and an impediment to efficiency in a number of ways. Another poster wrote the following in a thread a few weeks ago. I assume it is ok to cut & paste all of it here.