Free Markets, Free People

UAW

Why the UAW lost in Chattanooga

Robert Samuelson offers his analysis:

On paper, unions can deliver three things: higher wages and fringe benefits; greater job security; and better working conditions, including protection against arbitrary or unlawful management practices. In the 1950s and ’60s, unions could win these gains. Now, greater competition has eroded their leverage. Workers weighing the reduced advantages of being unionized must also consider the possibility that high-priced, rigid union labor might one day cost them their jobs. In Chattanooga, this calculus went against the UAW.

And:

Private-sector unions lost their power to protect jobs and raise incomes. Unions were caught in a vise. If they pressed for higher wages and fringe benefits, they risked destroying jobs. Companies might lose sales to lower-cost rivals; or they might move to anti-union states or low-wage countries. Even protecting existing compensation levels became hard because — in extremis — companies might fail. On the other hand, if unions abandoned traditional bargaining goals, they might infuriate rank-and-file members and be accused of “selling out.”

I think, on those two points, he’s right.  But there’s a third point he doesn’t mention that I think is just as important.  VW chose Chattanooga when it had plenty of opportunities in union states to set up its plant.  When it chose Chattanooga, it chose an area whose citizens lived in a state that believed in a “right to work” without interference from unions.  It put its plant in an area with that sort of a culture, a culture that is essentially anti-union and without the pervasive union culture you find in union states.

Additionally, as Samuelson points out, companies over the years have learned what sort of practices they must use to keep unions out, especially in the South.  Consequently those sorts of business practices have gradually made unions much less necessary and has therefore badly eroded the leverage of unions.  Take that eroded leverage to a “right to work” state and the results are likely not something a union would like, as the UAW discovered. When workers do a cost/benefit analysis, unions mostly come out on the negative side of things.  And then, of course, there’s Detroit today:

A works council may be worth trying, but whatever its virtues, they were overshadowed by the UAW’s past. Hardly anyone doubts that high labor costs and obsolete work rules contributed mightily to the crackup of the Big Three. VW’s workers recoiled; they kept the status quo. For the UAW, success in one era sowed failure in the next.

Workers saw no advantage to an association with the UAW.  It was a smart move on their part, even as they worked for a decidedly union-friendly employer.

Irony and the law of unintended consequences visit the UAW

You could also entitle it "meet the new boss, same as the old boss". What I’m talking about is a recent meeting between UAW bosses and GM workers. To say it didn’t go well would be a vast understatement)(via Sweetness and Light):

Workers at a General Motors stamping plant in Indianapolis, Indiana chased United Auto Workers executives out of a union meeting Sunday, after the UAW demanded workers accept a contract that would cut their wages in half.

As soon as three UAW International representatives took the podium, they were met with boos and shouts of opposition from many of the 631 workers currently employed at the plant. The officials, attempting to speak at the only informational meeting on the proposed contract changes, were forced out within minutes of taking the floor.

The incident once again exposes the immense class divide between workers and union officials, who are working actively with the auto companies to drive down wages and eliminate benefits.

Actively working with the auto companies? They are part owners now of the auto companies – they’re "management" for heaven sake.

Interesting how it suddenly looks when you’re on the "other side", huh?  And in the face of vociferous opposition, the UAW officials abandoned the podium.

All of this was written up at the World Socialist website.  There’s also a video which gives real credence to the story. In the beginning someone from the local is speaking. He or she (I really couldn’t tell which) then introduces the UAW international drones at about 2:48. As you watch it, it will remind you of some of the townhall meetings of last summer:

The article goes on to say:

Workers at Local 23 voted 384-22 in May to reject reopening a previous contract, which had guaranteed that wages would remain intact in the event of a sale. GM first announced its intention to sell the plant in 2007, threatening to close it if it did not find a buyer.

Despite overwhelming opposition by the rank-and-file, UAW executives secretly continued negotiations with JD Norman, which they outlined in a document sent to workers last week.

Pretty bad when your union which is now management sells you out, isn’t it?  To paraphrase one worker, “they’ll still have their jobs while they sell ours out”.  Wow – wasn’t that the argument against the hated “management?”  Heh …

Irony – it’s really something to be appreciated sometimes, isn’t it?  The UAW always wanted control of the auto companies didn’t it?  Now it has it – sweet, huh?  And private sector unions wonder why their membership is dropping like a rock.

~McQ

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Michael Barone: The Three Rules Of Obama

Michale Barone, observing the Obama presidency as it unfolds, has penned his own “Three Rules of Obama”.

Rule one:

First, Obama likes to execute long-range strategies but suffers from cognitive dissonance when new facts render them inappropriate.

Barone cites Obama’s long range strategy of conciliatory diplomacy with the likes of Iran and North Korea being “undercut by North Korea’s missile launches and demonstrations in Iran against the mullah regime’s apparent election fraud.”

His assumption that friendly words could melt the hearts of Kim Jong Il and Mahmoud Ahmadinejad have been refuted by events. He limits himself to expressing “deep concern” about the election in the almost surely vain hope of persuading the mullahs to abandon their drive for nuclear weapons, while he misses his chance to encourage the one result — regime change — that could protect us and our allies from Iranian attack.

Obama apologist continue to insist his policy of “restraint” is the right course. Events and history seem to argue otherwise. Bottom line: not very agile when his presumptions are shattered.

Rule two:

Second, he does not seem to care much about the details of policy.

The “closing” of Guantanamo is perhaps the perfect example. Obviously politically satisfying at the time it was announced, its execution has been an absolute fiasco. None of the underlying problems of closing the prison had apparently been researched or considered when the promise was made.

And that’s not the only example:

He subcontracted the stimulus package to congressional appropriators, the cap-and-trade legislation to Henry Waxman and Edward Markey, and his health care program to Max Baucus. The result is incoherent public policy: indefensible pork barrel projects, a carbon emissions bill that doesn’t limit carbon emissions from politically connected industries, and a health care program priced by the Congressional Budget Office at a fiscally unfeasible $1,600,000,000,000.

Obama sees himself as the grand vision guy and it is up to his minions to put his vision together. Of course, that sort of outsourcing is bound to come up against competing agendas. He doesn’t seem to take that into account, apparently doesn’t do the necessary work to assure his version of his agenda is the dominant one and the result is chaos. Bottom line: his legislative and executive inexperience is the worst enemy of his aggressive agenda.

Rule three:

Third, he does business Chicago-style.

“Transparency” and “openness” are now just a words as he and his administration begin to insist on more and more executive privilege. And there’s also the example of the IG mess, not to mention the stories of threats and intimidation toward auto company bond holders and banks.

Key point?

From Chicago he brings the assumption that there will always be a bounteous private sector that can be plundered endlessly on behalf of political favorites.

Just ask the UAW (and other unions) and ACORN. And Barone uses precisely the right word here – plunder. All of his grand plans are based on plundering the rich and redistributing the spoils to favorites. A more destructive presidency is hard to imagine.

Hope and change.

~McQ

Reinventing The Flat Tire – Chrysler Set To Try A Variation Of The British Leyland Model

There’s some interesting stuff out there to read about the Chrysler bankruptcy, like people asking “why wasn’t this done in the beginning”?

Simple answer – in the beginning there was no way to secure the UAW a majority stake in the company. Now, as Felix Salmon points out, that’s been accomplished:

The broad outlines of a deal are already clear: Fiat will take a 35% stake in the company and manage it; the UAW will have a 55% stake; and all the government’s TARP funds will be converted into a 10% stake. Present-day creditors do not get equity but rather get cash; the sticking point is exactly how much cash they will get. And of course present-day shareholders — Cerberus and Daimler — are wiped out, and top management will be replaced.

Of course the reason Chrysler is headed into bankruptcy is because all of its bondholders weren’t satisfied with the deal offered through taxpayers money. As you might imagine, Think Progress has the “progressive” spin on the situation:

As Bloomberg reported, “Obama’s team had first offered secured lenders $2 billion for their $6.9 billion in loans, and then raised the offer to $2.25 billion. In a game of chicken, the holdouts asked for $2.5 billion, and Obama’s patience ran out.” Steven Pearlstein put these numbers into perspective:

What you need to know about these vultures is that their idea of fairness is throwing 100,000 people out of work and denying retirees their pensions and their health benefits just so they can liquidate the company and maybe squeeze an extra 15 cents on the dollar from their Chrysler debt. Of course, to get that extra 15 cents, the hedge funds would probably have to fork over a penny or two to pay the army of $700-an-hour lawyers needed to spend two years working it through the bankruptcy process.

The greed factor here is really appalling, but bad intentions can sometimes produce a good result.

The greed factor here certainly is appalling, but not on the part of the group Think Progress would like us to believe is the problem. I mean, how dare secured lenders ask for more money than a paltry 30% of what they lent Chrysler? In the new world of what’s fair, apparently asking for 30% is unfair and greedy. And frankly with an administration which has tossed trillions around like they were beads at Mardi Gras, it seems that somehow $250 million more was just a “bridge too far” when it came to keeping the deal together.

More importantly, what in the hell is the President of the United States doing involved in this sort of process to begin with? Oh, wait, the UAW gets 55% ownership?

Nevermind.

Salmon again:

All of this is necessary but not sufficient for Chrysler to have any hope of a long-term future. One of the more interesting things going forward will be how Chrysler manages to turn itself into a smaller, nimbler, change-oriented company while being majority owned by the UAW — which is nobody’s idea of a change agent. In general, if you need a dose of creative destruction, big unions are not the place to look.

You think? Another wonderful deal put together by the folks who want to run your health care. And yes, I know this isn’t perfectly analogous to the British Leyland situation, but it certainly has some striking similarities. A labor union will most likely have to decide between it’s previous decades of focus and producing cars that people want and can afford. And government involved in the deal up to its armpits.  In case you missed it, the government will appoint four of the nine member board and the Canadian government will appoint one.  Fiat is essentially a management entity with only 3 on the board and a 35% stake.  And while the UAW will only have one seat, it will be a seat representing 55% ownership.

Yeah, nothing can go wrong with that.

~McQ

Fiat CEO Says Chrysler Deal Up To UAW

A fairly clear statement of intent if you ask me:

Fiat would walk away from a tie-up with US carmaker Chrysler unless unions agreed to a new, lower wage deal, Sergio Marchionne, the chief executive of the Italian motor manufacturer, said.

In an interview with Canada’s Globe and Mail newspaper, Mr Marchionne said he would scrap the deal unless Chrysler unions agreed to match the lower costs of Japanese and German-owned plants in Canada and the US.

“Absolutely we are prepared to walk. There is no doubt in my mind,” Mr Marchionne said in comments published online. “We cannot commit to this organisation unless we see light at the end of the tunnel.”

So, UAW and associated unions, job or no job?

Your choice.

~McQ