Unions: Are they to blame for outsourcing?

So, GM and the UAW begin talks today to reduce labour costs.

$25 an hour more! That’s almost $50,000 per year in additional labour costs per employee! I realize this factors in health and pension, but $50,000 extra per year!

I can see how this started, when the big 3 were making money hand over fist and the hourly employee and his union wanted a piece of the pie. My thoughts are that that there should be nothing wrong with companies making money. Maybe Wal-Mart has it right after all.

There are some things that it just doesn’t make sense to manufacture in the US, which has a relatively high labor rate-- something that would be true even if there were no unions at all. So I don’t think it’s fair to say that unions are to blame for outsourcing. A union’s job is make sure the employees get the best deal possible, and I’ve noted many times on this board that unions are as much an element of the free market as anything else. Still, they have to mindful that they don’t put the company out of business or nudge management into deciding just to manufacture offshore.

As for the US automakers, I think there is plenty of “blame” to go around and that management has done a cruddy job of gauging the market. There’s almost no US car I would consider buying, except maybe if I needed a truck for work. That’s sad, because when I was a kid growing up, Detroit put out some of the coolest cars around.

The problem with Detroit is not just the high hourly rate; it is also union rules 9that describe jobs in detail and who can and cannot do them). The japanese plants (in the USA) are not hobbled with these work rules-which means they can cross-train employees to do many different jobs-the quality is better because the employee’s knowledge base gets better. the UAW generally opposes cross-training.

I wouldn’t buy a Big 3 car either, especially after finding out I’m out $600 for a cracked manifold on my Buick. Apparently they made it out of plastic, and they break regularly. The Internet is full of complaints about them. Piece of shit.

Sorry, I guess this belongs in the Pit. But in a sense it doesn’t, 'cause here’s one more customer who won’t buy a GM, Chrysler or Ford because my direct experience with Asian cars is that they’re more reliable and cheaper to maintain.

Governmental mandates are far more to blame. Minimum wage laws (since some union contracts specify wages are tied to the minimum wage through some multiple), environmental laws, health and safety laws, overtime laws, child labor laws, etc. all make outsourcing more attractive.

Now you can argue for the morality of any or all of these things, and I’m not advocating that they all be repealed; however, they do impose a cost on doing business in the US that doesn’t exist overseas. From a purely economic standpoint, they are harmful and encourage outsourcing.

I agree on all of those things except minimum wage. First, not all contracts tie wages to the minimum wage. That doesn’t sound like a smart thing to do, since we go through long periods under republican leadership where it lags behind inflation. So I doubt very many unions are doing that. But even if they do, to argue that minimum wage is responsible for high wages because wages are tied to it is non causa pro causa. You could negotiate a contract where the wages are tied to anything you like. You could negotiate a contract where the wages are tied to sunspots; that wouldn’t mean sunspots are responsible for the wage level. There is presumably some increment by which the wages exceed the minimum wage; it is this increment that would be the determining factor as to whether the wages are excessive, and that increment is determined by the parties doing the negotiating.

Maggie broke the power of the unions in the U.K. in the 1980s and we’ve still been hit by outsourcing.

I didn’t say all union contracts were, just that some are. I also never said that the minimum wage is responsible for high wages. I merely mentioned it as being one of several government mandated expenses for business that increase domestic costs. The mention of it being tied to union contracts was an example of how a minimum wage hike can increase salary costs for more than only those who receive minimum wage.

We are starting to see the consequences of importing products from countries that lack product safety enforcement. Chinese toothpaste, anyone?

Sure. All those heavily unionized programmers and computer techs are responsible for sending so many of their jobs to India.

One might also look up the history of Daimler-Chrysler and read the European views of the discrepancies between the salaries and benefits of the Chrysler CEO when compared to that of Daimler’s.

Have unions contributed to the loss of jobs in the U.S.? Sure, in the way that any industrial labor market will tend to raise wages to the point where some second tier industrial country with a (currently) lower standard of living will be able to do the same labor at lower cost. (Take a look at the situation regarding South Korea “taking jobs” (or market) away from established Japanese companies once the Japanese were hauling in so much money on exports and the next generation of Japanese workers began insisting on a share of that pie.)

The problem with this is that foreign car manufacturers don’t seem to have problems MAKING CARS IN THE USA. Or Canada. Nissan has a humongous complex of assembly plants in Tennessee. Toyota and Honda are doing very well in North America. Many of their parts suppliers are alos in the USA and/or Canada.

Why is it those companies are enjoying so much success building cars in the USA, when the Big 3 are not? The same laws apply. The same minimum wage and laws that affect GM’s Oakville assemply plant, just down the road from me, affect Toyota’s new Woodstock facility. The same EPA regs that affect the Ford plants in Michigan affect the aforementioned Nissan plants in Tennessee.

I know. I didn’t say you said that.

I disagree. If the wages are higher than the minimum wage, then the minimum wage law is not increasing costs.

If that happened, it would be purely incidental. It’s just as likely that being tied to MW would cause salaries to lag behind inflation, thus reducing costs. You can’t logically identify MW as a cause of increased business costs unless it happens to be a business that hires employees at MW and would likely pay them less if there were no MW. If they pay more than that, then the connection is not there.

Greed is the blame for outsourcing. The search for cheap labor so that the profit margin can continue to grow and grow and grow is what drives outsourcing. What boggles my mind is that they don’t think about what the long term affects will be upon soceity.

By “they” I assume you mean the vast number of consumers who constantly demand cheaper goods, right? Their greed, right?

What boggles my mind is that people don’t realize “outsourcing” has been going on almost forever. This isn’t something new that WalMart invented. Plenty of people realize that protectionist measures are more hurtful to the economy than trade.

That’s outside their remit, surely? But governments can rebalance things somewhat by applying import duties.

Yeah, who elected the government that enacted such horrible things? :rolleyes:

Minimum wages, the 40 hour work week, workers’ health and safety & consumer protection are good things, doncha know.

Wow. Talk about selective quoting. That poster specifically said he wasn’t calling for a repeal of worker protection laws. But they do contribute to outsourcing, which is what the OP is asking about. Whether they are “good” or not is separate issue.

Yeah, and the Japanese aren’t exactly slave labor, Japan has a high standard of living and a high per capita income. I can’t imagine that there is anything intrinsic to the auto market in Japan that makes it vastly cheaper to make cars in Japan versus the United States. Like you mentioned, many of the major Japanese manufacturers make a significant portion of the cars they sell in the United States in the United States. Toyota plants dot America and employee thousands of Americans.

According to this Toyota has 40,000 employees in North America, has made 14m vehicles here, and has given $300m in philanthropy in the United States since 1991.

Since the late 1980s 4.7 millions Toyota Camrys, 4.2m Toyota Corollas, 2m Tacomas, 1m Siennas have been produced, not to mention hundreds of thousands of Toyota Solaras, Lexus RX 330 (which are made in Ontario.)

It’s far more complicated than just blaming the Unions. When I was working at the auto companies 4 years ago we were looking at bringing in parts from Korea at 1/3 the price of the parts we bought here in the US. Were those US parts made in union plants? No. Why were the Korean parts cheaper? Not raw material, but labor costs (and overhead of the supplier). Open trade has given US companies access to suppliers who can manufacture products at a cheaper price. I read somewhere that as a country becomes more and more technologically advanced, it moves away from things like farming, mining and manufacturing (the activities that truly generate wealth), towards services like accounting and lawyering (what is the real verb? litigating?), which are activities that just move the existing wealth around.

It’s the cost of legacy obligations that makes the costs of domestic automakers so high. In September of 2004 GM reported that the unfunded medical benefits obligation was in excess of $61 billion dollars. Cite How many automobiles do you have to sell to make $61 billion? Even if the foreign automakers producing cars in the US gave identical retiree benefits, which I strongly doubt, they’ve been here a significantly shorter length of time, and have a much higher ratio of workers to retirees.