So can you point me to all those cheap automobiles that are made by the non-union shops please? :rolleyes:
All labor costs account for less than 10 percent of the cost of an automobile. Automation has eliminated jobs at an incredible rate in the last 50 years.
Auto companies compete with companies that do not pay health care due to universal coverage. in their nations.
Productivity has gone up steadily .
If you just hate unions say so.
With a union, US workers make 20 times that of someone in China. Without the union, it’s only 10 times. Meaningless difference.
Exactly. Advanced Western economies like the US, UK or Australia will never compete on labour cost grounds with China, India, or other developing countries. We have to do things they can’t yet do, not engage in a hopeless competition with them on things they can do as well and cheaper.
A public company has an obligation to maximise its returns to its shareholders, so if it can reduce its costs by outsourcing it not only should, it must or risk being sued by the shareholders.
Outsourcing is a good thing. It reduces international poverty, reduces the need for overseas aid, brings cheaper goods to market, and helps all trading economies grow. Focusing on the jobs you’ve lost in making cars or steel or computers misses the jobs you’ve gained in other more advanced areas, like the online economy. Not to mention that those jobs you’ve lost to the developing world were often the dirtiest, nastiest and most monotonous ones.
Touche’. In a Michael Moore kinda’ way though, shouldn’t there be a commitment to communities? How the hell do you just close down a plant, lay off 5,000 people, and do it all in the name of increasing profits and management bonuses? I’m straying from my original OP.
If I were a shareholder, I’d be looking for returns at any cost.
If I were an employee, Id be looking for the best contract I could get.
If I were the CEO however, I would realize that a balance is necessary. A lot of unions, IMHO, have failed to realize the balance until it’s too late. At which point the jig is up and the plant moves elsewhere.
Take a reading for comprehension class, then go back and read what I actually wrote.
“If”. You can’t prove what the “natural” wage level would be since the market is not allowed to seek its own level. It is possible that ALL wage levels would be lower with no minimum wage.
Uh, no. If a union contract specifies that wages are a multiple of the prevailing minimum wage, then there is a direct correlation. Inflation has nothing to do with it.
Is there a returned commitment from the community to the business? If a new factory opens up across town, paying 20% more, are those 5,000 workers going to stick with the old company, at the old wage, or will there be a mass exodus to the new, higher paying company?
Ultimately, Unions and Management deal with the balance of power in the worker/company relationship. In a time/industry where workers have little individual power, unions help to secure reasonable working conditions and wages.
In a time/industry where workers already have significant power (i.e. the ability to change jobs) unions can upset the balance. In order to justify their existence they negotiate overly restrictive work rules, or force wages to uncompetitive levels, and encourage the company to exit the local industry for greener pastures.
Ultimately, though, I can’t say they are to blame for outsourcing, it’s a truly natural aspect of commerce. When things become expensive to produce locally, you have them produced where it is cheap and transport it in. It’s a concept that shouldn’t even elicit a raised eyebrow. A union operating in a particular company can help create a scenario where outsourcing is a good business move, but outsourcing existed long before unions did.
(bolding mine)
My reading comprehension is just fine, Smitty. Your economics are off though, other than in the Adam Smith pure free market world that my economics professor said leads to distortions in the market that have to be corrected and regulated by the government in some way.
(bolding mine) I don’t suppose sometime in the past 100 years somebody at GM looked at their number of workers, did a quick calculation of the medical costs of their future retirees, and said, “Maybe we should cut back on dividends so we can fund these future costs.” :mad:
What would you suggest they invest these funds in? With the cost of medical treatment rising more than twice as fast as the general inflation rate whatever they put in trust would generate income more slowly than the growth of the obligations, requiring yearly infusions of capital in any event. By keeping these on a pay as you go plan, they were, in effect, investing the money in GM, assuming the company would generate enough income to pay the obligations.
Maybe they should have funded it earlier, but it wasn’t until 1997 that the Financial Accounting Standard Board made it mandatory to carry the obligations on the books. Since then GM has placed $16.5 billion in a dedicated trust, but the yearly outlay still outstrips the trust income by a considerable margin.
Nobody at GM ever forsaw a time when the expenses for retirees medical benefits would exceed that of active employees. Their declining market share combined with retirees living longer lives, combined with the skyrocketing costs of medical care made it impossible to predict the health care situation.
By the Numbers
Vehicle Cost
For GM’s Chevrolet Silverado pickup truck
Price: $40,000*.
Share of cost for retiree health benefits: $1,000.
Overall cost to GM for retiree health costs: $3.3 billion in 2006.
Number of retirees: 432,000 covered by GM medical benefits.
GM’s total 2006 cost for health benefits: $4.8 billion, for employees and retirees.
*Prices vary by model and optional equipment.
Market share
U.S. automakers’ share of the domestic market
1962: 87 percent*.
2002: 63.5 percent.
2007: 53.1 percent.
*Record
SOURCE: Bloomberg News
70 cents of every dollar of medical cost is for retirees. If anyone had a crystal ball that predicted this I’d like to see it.
First of all, Mr. Rolleyes, there are two questions being banding about. 1. Outsourcing in general and 2. The specific problem of the automobile industry.
If you want to debate, I’m happy to do so. If you want to throw out cheap driveby posts, don’t expect a response from me.
Nah - this idea that MW laws cause all wages to seek a higher level is just Libertarian dogma. There’s no evidence that this is the case. If you make $25/hr., it’s because that’s what your time is worth to your employer. He’s not gonna care what the minimum-wage level is that the kids are getting at McDonald’s.
“Uh”, yourself. You’re not understanding what I wrote. You’re talking about a situation where both parties choose to tie wages to the MW, but through a multiple of the MW. The MW law doesn’t set the multiple; the parties do. The MW might go up, and then the salaries would go up. But it could just as easily remain static, and keep wages behind the cost of living. Inflation has EVERYTHING to do with it. Do you believe that salaries don’t increase over time with inflation? Are you making the same salary as a person in a similar position would have made in, say, 1900?
If two parties AGREE to tie wages to a multiple of the MW, it’s illogical to say the MW is responsible for the salary level. That’s like if two parties agreed to tie their wages to Pamela Anderson’s chest measurement, and then claiming that Pamela Anderson’s big tits is a cost factor.
Back when profits on vehicles were 5 to 10 k per vehicle, the auto companies were raking in the profits. They could have put money into the fund. They did not. They took a stand that the government would allow them to escape their obligations. Vans and suvs made huge profits. They chose not to pay into the funds knowing if they created a large enough crisis they could get out for free.
The simple fact is if auto makers had treated their employees fairly in the first place there would never have been any unions and if after all the sitdown strikes and various struggles of the labor class that had to be endured just to secure the right to collective bargaining and the resulting strife associated with said bargaining labor would certainly have been foolish to take the auto companies’ word for the fact that costs were skyrocketing and endangering the business. To say that Wal-mart has the right idea is to fail to learn from history and force the employees to organize in order to protect themselves and their families. If there is one company that does not have the right idea it is Wal-mart. I predict those jobs will never be outsourced.
Do you actually have evidence of a union contract that ties wages to the minimum wage? It sounds like a pretty silly idea to me since the wage is so stagnant.
Weeeeeel, back in the sixties quite a few of us saw that Detroit’s inefficiencies, both in product and producing that product, were going to cause them problems as foreign manufacturers caught up. When the first Energy Crisis hit and Toyota, Honda, and the others began eating the big Three alive we were already saying “I told you so, and it’s only going to get worse.” And you’re saying they only started making up for lost time in 1997, almost 25 years later, and then only after the Gummint forced them? After decades of medical costs rising faster than inflation and with an ever-enlarging pool of retirees? Sounds like criminal neglect, if ya asks me.
I’ve seen this meme on the Internet for years. Does anyone have any hard evidence to back it up? It’s often used as an excuse for companies that wish to ignore their obligations to their workers and community.
Bad management resulted in the inroads of foreign manufacturers. When the VW came in we had no answer. When gas went up smaller more fuel efficient cars came and we were behind. When we started to make them we increased the size gradually until they were intermediate instead of small. If we had continued development of fuel efficient and alternative cars we would have been far ahead. Our corporations leaders are interested in maintaining and increasing their huge wages. This is done by showing up at yearly meetings with good profit numbers. If they would have invested in technology they could have stayed ahead. But ,the system rewards a short term selfish management style. We do not plan far in the future.
I have a Business Organizations book from law school with a huge chapter dedicated to shareholder lawsuits. It happens and it’s ugly for a corporation to defend. It also doesn’t do a lot for its stock if the corporation is constantly sued by its investors.