The UAW Ad for the Auto Industry Bailout

[nathanm]

quote:Originally posted by Gaspar


I believe we are seeing the end of an archaic system that squashes the liberty of it's members in exchange for perceived security.

This statement does not follow from what you wrote.

If it did, my comment would be this: Yes, every man for himself is a much better philosophy. (It worked great when we had that in the past) [B)]

[Gaspar]

quote:Originally posted by nathanm

quote:Originally posted by Gaspar


I believe we are seeing the end of an archaic system that squashes the liberty of it's members in exchange for perceived security.

This statement does not follow from what you wrote.

If it did, my comment would be this: Yes, every man for himself is a much better philosophy. (It worked great when we had that in the past) [B)]

As a fan of Unionized labor, could you provide any example the improvements that the UAW has produced for the consumer?

[Red Arrow]

quote:Originally posted by RecycleMichael

My company has a fleet of six vehicles...

How many does it take for Congress to consider bailing us out?

One more than you have, however many that is. []

[nathanm]

quote:Originally posted by Gaspar


As a fan of Unionized labor, could you provide any example the improvements that the UAW has produced for the consumer?

Unions do not exist to benefit the consumer, they exist to benefit the employee.

However, if you take employees as a subset of consumers, there are certainly benefits to those consumers, such as more money, which lets them buy more things, which I suppose does even trickle down to you and I by increasing production volumes, thus lowering the cost of goods in general.

However, go back to my first sentence. It's not about you, it's about the employees. Thankfully, through the efforts of various unions over the years, many new employers treat their employees well as a matter of course, thus obviating the need for a union in that particular shop.

And yes, there are downsides to unions. They sometimes are havens for corruption, just as any organization with cash sloshing around is, including the companies which they bargain against.

[cannon_fodder]

quote:Originally posted by nathanm
Unions do not exist to benefit the consumer, they exist to benefit the employee.

I am not an auto employee.  As a consumer then, you can find no benefit that the UAW has provided me.  As a consumer, the UAW adds no value to my purchase.

And that's the whole point.  If they don't benefit the company or the consumers than 2/3 of the equation numerically loses out. Of course, in the big picture for every union member making more money there is a consumer somewhere paying for that.  

Labor unions ARE the market. They should be able to understand them.  Pricing your labor in such a way as to price them out of jobs was a bad long term decision.  They failed to see that in the big ticket the unions offered nothing to the consumer.  Like all products that do not have value to the consumer, we stopped buying it.   And now thousands will lose their jobs.

Plenty of parties had a hand in this.   Certainly management, but the union held some cards also.  

GM hired bankruptcy counsel today.

[nathanm]

quote:Originally posted by cannon_fodder

quote:Originally posted by nathanm
Unions do not exist to benefit the consumer, they exist to benefit the employee.

I am not an auto employee.  As a consumer then, you can find no benefit that the UAW has provided me.  As a consumer, the UAW adds no value to my purchase.

And that's the whole point.  If they don't benefit the company or the consumers than 2/3 of the equation numerically loses out. Of course, in the big picture for every union member making more money there is a consumer somewhere paying for that.  

Labor unions ARE the market. They should be able to understand them.  Pricing your labor in such a way as to price them out of jobs was a bad long term decision.  They failed to see that in the big ticket the unions offered nothing to the consumer.  Like all products that do not have value to the consumer, we stopped buying it.   And now thousands will lose their jobs.

Plenty of parties had a hand in this.   Certainly management, but the union held some cards also.  

GM hired bankruptcy counsel today.

As others have so vehemently pointed out in their anti-union polemics, the current payscales are not very different between the domestic and foreign automakers in their US plants.

The problems are the sudden shift in the market due to the oil price shock that lasted longer than most expected and the retirement benefits the domestic automakers pay more of and the foreign makers do not. These are mostly past obligations that no amount of current bargaining can easily change.

Auto sales in this country are in the toilet (Ford less than others, interestingly). If the Big 3 hadn't been cash poor and saddled by the constant drain of their defined benefit retirement plans they wouldn't be in this situation.

Nor would they be in this situation (or at least in as dire a situation) were it not for oil speculators.

Given the funds we've outright given to the financial industry, I don't think the loan package that's on the table is at all unfair.

I can't say it's at all surprising given the current political climate, which is pretty much anti-manufacturing. I guess we'll just have to see whether we're making a monumental error in shortsightedness or being wisely frugal.

[we vs us]

Lucky us!  Hoover is alive and well!

quote: WASHINGTON (AP) — A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.  

Senate Majority Leader Harry Reid said he was "terribly disappointed" about the demise of an emerging bipartisan deal to rescue Detroit's Big Three.  

He spoke shortly after Republicans left a closed-door meeting where they balked at giving the automakers federal aid unless their powerful union agreed to slash wages next year to bring them into line with those of Japanese carmakers.  

Republican Sen. George V. Voinovich of Ohio, a strong bailout supporter, said the UAW was willing to make the cuts — but not until 2011.  

Reid was working to set a swift test vote on the measure Thursday night, but it was just a formality. The bill was virtually certain to fail to reach the 60-vote threshold it would need to clear to advance.  

Reid called the bill's collapse "a loss for the country," adding "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

Nathan's exactly right about labor and the purpose of unions.  Unions don't exist to add value to the consumer.  They exist to protect a unique commodity -- labor -- from abuse.  Yes, in this situation the autoworkers share some responsibility for pricing their own labor, but they're also in constant renegotiation with management, and are responsive to changes in the marketplace.  Labor doesn't simply make demands which absolutely must be met by mgmt, or else.  

We're also not still in the age of anarchists and socialists, and trainloads of strike-breaking Pinkertons.  The relationship between the UAW and the Big 3 is mature and stable, and it's simply a misperception that labor holds the whole industry hostage to its outsize labor demands.  

[Red Arrow]

Accepting wage and benefit cuts to match the profitable "foreign" manufacturers' compensation for US employees seems to be a painful but not unreasonable solution. The companies need it now, not in 2011.  Management salaries and benefits need to follow the same example.

[Gaspar]

quote:Originally posted by nathanm

quote:Originally posted by Gaspar


As a fan of Unionized labor, could you provide any example the improvements that the UAW has produced for the consumer?

Unions do not exist to benefit the consumer, they exist to benefit the employee.

Thank you! That's exactly what I was looking for.  The consumer is the one that votes with his or her dollars, and now that the unions have taken responsibility for the quality and price of production, they ARE in the business of ultimately serving the consumer.  They have chosen to ignore the consumer over and over again, and now the consumer has chosen to ignore them.

The End.

[we vs us]

That's a whole lot of axe grinding right there, Gassy.  How do you figure unions have "taken control"?  They are only one factor of many that goes into pricing the production of a car.

[bokworker]

I may be way off base but, it would appear on the surface that the difference in the wages paid by the non-union "transplant" auto manufacturers is probably pretty close to the union dues that the employees of the domestic auto pay..... in other words, it appears to me that the cost of keeping the union in business is the problem. Ron Gettlefinger and his colleagues are the ultimate leeches... living off of the "gains" that they negotiate for their members. These "gains" add absolutely nothing to the value of the product or benefit the consumer in any way.. instead, they are a headwind that the companies have to overcome vs. their competitors.

When times are good a company can fight through these headwinds... but when times are bad they can be the death knell. Additionally, the car business has been cyclical forever. For management and labor to now claim that it is the cyclical nature of the business that is killing them is disingenuous at best, downright ignorant at worst. Nothing about their business has changed except the intractible nature of their cost structure.

[Gaspar]

quote:Originally posted by we vs us

That's a whole lot of axe grinding right there, Gassy.  How do you figure unions have "taken control"?  They are only one factor of many that goes into pricing the production of a car.

Not really.  They mandate production speed, and the cost of production is directly related to union oversight.

I have a friend, Armondo, who worked for the UAW in St. Louis. After he put in 38 years and retired, he worked as a "union rep" in his old plant.  He always used to joke about how his job was just to make sure people didn't work too fast.  Used to make me so angry.  he said if they worked too fast they could lose their overtime.

That's the first time I became aware that the UAW was not focused on worker efficiency, productivity, or advancement, but only on worker compensation and advancement based on tenure rather than performance.

Armondo was a nice guy to argue and drink a beer with but he said he ran a bolt gun for 20+ years until they brought in a robot to hold and bolt the doors, then he spent about 18 years supervising the robot.

When Daimler came in they wanted to promote the Mercedes production incentive system where each line and each worker becomes a member of a team and competes for product quality against other production teams. Incentives and bonuses would be based on the quality of product that each team put out.  You can imagine how that played out.

[cannon_fodder]

quote:Originally posted by we vs us

That's a whole lot of axe grinding right there, Gassy.  How do you figure unions have "taken control"?  They are only one factor of many that goes into pricing the production of a car.

The Big Three pay out on average $73.26 per hour of union labor.  $73.26.  That is the companies cost per hour to work a union man.  That DOES NOT include legacy costs in any way, the SEC filings reflecting those costs specifically explain that it is expenses for currently employees in line with GAAP.  That is the cost for that employee currently working.  If you count legacy costs, which are largely already funded, the figure would be $104.26 per union man hour.  

The average UAW member brings home near $70,000 in cash wages, doesn't have to contribute a dime to his 401K (guaranteed pension), has no payments for his health care, has his life insurance covered, has dental coverage, disability insurance....  All with a high school degree.  

Source: http://www.heritage.org/Research/Economy/wm2162.cfm   (very well referenced)

By all accounts the union labor and legacy costs add between $2500 and $3500 to the production cost of a Taurus over a Camry.  Hence, the Camry can have more features and higher quality and sell at a similar price point profitably.   Which is, of course, why the Taurus consistently sells at a discount ($2,500 cash back!) to make sure they can sell it... and why they lose money.

When labor costs approach THREE TIMES the national average, I'd say they have significant control.  All the crap about legacy costs is a red herring, health care costs are a non-factor when compared to non-UAW US based auto plants, and the argument that wages "really aren't that high" simply doesn't hold water.  

Counting benefits, a UAW employee with a high school degree does about twice as good as the average Tulsa attorney (median pay ~ $80,000, no overtime allowed).  If an attorney in Tulsa didn't get enough business the response would simply be that they need to either improve their quality or lower their wage rate - or shut up and find a new profession.  For some reason an auto worker making twice as much should get a Congressional bailout.

I applaud the union for doing so well and getting their members such an amazing package.  I disparage management for continuing to concede to such wage demands as well as failing to lead the companies forward so many other levels.  Labor and management both worked very hard to destroy the US auto sector.

[Gaspar]

Well then. . . I think attorneys should unionize.  It seems that relying personal performance and productivity is unfair.  What about benefits CF?

This is a travesty.

Lets start an lawyer's union and demand equal treatment and a tenure based income.  We could mandate a $300/hr rate for all attorneys on a scale that increases to $600/hr the longer they have been in the business.  

This is so cool!  We could be union bosses and wear big black suits and smoke cigars.

Public defenders, judges, paralegals, and legmen could join too.  We could negotiate with the Gubment and strike if they refused to meet our demands.

Awesome!

[we vs us]

Actually, something HAS changed about their business, and that's the complete unavailability of credit for both them and their customers.  Customers can't buy the product without it, and the company can't survive the downturn without it.  The financial industry would normally be the ones providing that credit but, you know, they're the ones hoarding their own bailout funds, the funds that were provided to them to reliquidate those credit markets.

The fact that this entire argument has come down to whether or not the workers can play ball immediately (during the worst economic times since the Great Depression) or in two years is testament to how a lame duck rump of Republican senators can control the legislative process to serve their ideological needs. It's even more transparent if the amount of time and money in question is equal to union dues.  That pretty much proves that the sticking point is the existence of the UAW, and that the GOP sees a golden opportunity to break the the union.  The tragedy is that they're willing to destroy an entire American industry to do it.

I really can't fathom this hostility to organized labor, unless it's something in the conservative genes.  A reflexive suspicion of the guys and gals who make your stuff, maybe. The irrational fear that they might demand so much that they drive their employers out of business, perhaps. Either way it's typical Objectivist hysteria, based entirely on slippery slope logic that posits the worst that can happen, rather than real world cause and effect.