The American Spectator

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Auto Worker Comeuppance

10.2.07 @ 12:01AM

RACE TO THE BOTTOM
Re: Eric Peters's Striking It Poor:

Nice to see Eric Peters stop worrying about the effect of government-mandated emission standards on the domestic auto industries and start focusing on the real problem. But readers should have been told it isn't the "unions" who are the problem, it's the workers themselves. When I was growing up in Detroit, almost everyone I knew had a relative in the auto industry -- most were low-level salaried or hourly workers. The way the auto worker culture functioned was to hate "management," complain constantly, demand your rights as defined by the contract and anticipate the next strike.

During the "good" times with lots of overtime bucks rolling in, you bought that new car, the cabin on the lake, the snowmobile, the RV, etc. During the good times, you complained about how much management was getting compared to the workers, whined that all the overtime was killing you and told your buddies on the line how unfair the whole system was. When the frustration built up and the contract talks broke down, you geared up for the strike -- maybe saved a few extra bucks and sold off the toys you bought during the good times. Of course, everyone else was selling their toys, so you generally got pennies on the dollar, but so what.

Each plant and warehouse location had a few rabble-rousers to constantly remind everyone that management was screwing them. The union reps, goaded by the rabble-rousers, raised the stakes during each new contract negotiation and assured their guys and gals the company could afford the increased demands if management would only give up their outrageous bonuses. And to this day, nothing has changed in auto culture sociology. The workers are willing to go down with the ship as long as management suffers.

When Cerberus bought Chrysler this summer and paid a fraction of the price Daimler had paid a few years before to acquire Chrysler, the Detroit Free Press ran the usual puff pieces on how Chrysler would be turned around with a bright and glorious future. The workers wrote in with half-threatening advice for the new owners regarding how they should treat labor and the unions. The financial implications of the purchase didn't cause a ripple of concern among the workers, although any competent business person could read between the lines and see a company on life support and slowly dying.

Detroit created a class of wealthy, unskilled workers by paying them more than skilled and professional workers in other domestic industries and most other countries as well. But it couldn't create a working class of business people that understood markets or economics -- and the inevitable occurred. When our beloved auto industries gasp their last, the workers can finally claim their victory over management.
-- Patrick Skurka
San Ramon, California

Yes, the UAW is a cancer eating away GM and the other of the Big Three auto companies.

GM management should have confronted the union thugs a long time ago. I say thugs because that's what the union is. Face it, UAW members have relatively low education and their skill levels are low. The fact is that they could be replaced rather simply if a free market was in play. But it isn't. In the past, what kept the Big Three from moving aggressively to protect themselves from being eaten away by the UAW is that the union basically had a license allowing for criminality and violence. This was the legacy of the long reign of Democratic Party dominance in Washington starting in 1933 until the mid '90s.

This latest labor contract will do little to help GM. Its high cost structure is still there, and more tellingly, the union has not been broken as it has to be if the patient to survive. If GM was serious about a turn around, it would declare bankruptcy and abnegate the union contracts and start fresh. Anything else is wishful thinking.
-- Peter Skurkiss
Stow, Ohio

Actually, there is a fourth option, albeit also known as the "nuclear option." The beauty is in its simplicity and elegance.

Tomorrow, the three horsemen -- GM, Ford, and Chrysler -- shall shutter all component and final assembly plants and relocate those labor-intensive operations to India and China forthwith: facilities and workers are standing by. The simplicity is akin to ripping a band-aid off an already-mestastized abrasion. The elegance is two-fold: first, killing the union albatross hanging around the companies' collective necks; and second, becoming competitive in a global market by leveraging the low-cost, moderate-skilled labor currently in supply.

The concept at issue is called "comparative advantage." There is no longer a comparative advantage in keeping low to no-value cost centers in the U.S. if those same cost centers can be undercut by overseas competitors.

This now frees the automakers to fully concentrate on the only value-creation process available to them (based on their industry) in the United States -- R&D. Since the mid-'90s, the U.S. has transformed, at warp speed, from a post-industrial economy, to a knowledge-based economy. Those who have transformed successfully are now reaping the rewards. Those who did not (automakers, computer manufacturers, and in the past, buggy whip manufacturers) established a history of multiple-quarters in the red.

Divest high-expense operations in the States; re-establish those operations in low-cost countries; throw the unions a big wet kiss; and give Congress a big "Thank You" on behalf of those who want to establish the card vote.

Waiting the "next 5-10 years" is a sure-fire losing strategy.
-- Owen H. Carneal, Jr.
Yorktown, Virginia

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