Look, I work with unions every day. Our Collective Bargaining Agreement with one of our bargaining units is ninety pages long. Shit is byzantine, complex, and often unwieldy. On the other hand, the guys, most of them, know what they're doing. Negotiation and implementation is a dance, but it's entirely manageable if you make minor efforts to cultivate an air of openness and trust.
Here is a telling exchange between Stretch Gregory and the new head of GM:
GREGORY: Well, let's talk about how you can do more. How many union jobs are there in a typical factory for General Motors that have nothing to do with producing automobiles?Yo, pencil neck, you never heard of human resources?
HENDERSON: Well, actually every job we have in the factory has something to do with producing an automobile. Whether it's obviously putting the actual car together or supplying materials to the line or maintaining the equipment that’s in the plant. So we have worked very hard and if you look at external surveys, for example, like a Harbor Report, we have closed the gap in terms of competiveness, in terms of the manpower. We have within our operation. We need to do more. Every person in the plant has something to do with putting together a car or truck.
GREGORY: But in some factories, you have a shop steward who's responsible for appointing--whether it's a civil rights chief or an education person, these are all union jobs that don’t have anything to do with producing the cars.
HENDERSON: Well, we have--the union has key jobs, as you identified, but let's take an example. Let’s take health and safety-- we work together with the union health and safety in our plants. We have the safest plants in the United States, in fact, around the globe. And I think providing, for example, a safe work place is very much in the best interests of the company as well as the union.
The idea that GM has been crippled by its unions rather than by its crappy finance arm and the fact that it relied too heavily on the light truck/SUV revenue streams to fund its whole creaky operation is nuts. Auto unions have been inflexible, yes. That is their institutional purpose. But they're not responsible for the lousy state of their industry.
It is of course also worth noting that every other nation with a major auto industry indirectly subsidizes that industry, especially its labor costs, by providing universal health care and generous social security/public pension programs.
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And, in such a set-up, businesses actually save money because they don't have to have as much overhead for employee benefits and the like. Economies of scale and all that.
Well, yeah, but I once knew this guy who had this friend whose brother was in a union once and he, uh, didn't like it. And that's why unions are bad! Harrumph!
I will never forget my orientation at Universal Studios Florida. The guy from one of the performance crews was going through all the ins and outs of employment, and he said that, unlike some other folks in town, we were non-union. He said it with this weird whoop, and the whole room was united in cheers. I always wondered what I was missing.
And, in such a set-up, businesses actually save money because they don't have to have as much overhead for employee benefits and the like. Economies of scale and all that.
Or at least appear to save money by dumping those costs on the taxpayers instead of it being directly on their books.
Freiheit - 1.) union employees pay taxes; 2.) non-union employees receive public benefits; 3.) the businesses do save money, not only in appearance.
Big business did not foist public health care on Western Europe and Japan.
The costs are on the taxpayers individually or collectively. But yes, the business owners will have to pay greater taxes as citizens in exchange for not paying it as a business expense and, heaven forbid, we all would, too. Collective security means a collected responsibility.
It is of course also worth noting that every other nation with a major auto industry indirectly subsidizes that industry, especially its labor costs, by providing universal health care and generous social security/public pension programs.
OTOH, Japanese car companies operate factories in the US and apparently turn a profit from the cars made in those factories. AFAIK, neither the American taxpayers nor the Japanese taxpayers pay for the health insurance that those employees receive.
Yes, I'm sure that Japanese car companies are getting various favors to entice them to open car factories here, but every other big business gets some sort of favors too if you look closely enough. Despite all that, Japanese firms are able to turn a profit while making cars in the US, but American firms aren't able to do so.
Healthcare costs may explain a lot, but they certainly don't explain all of it.
Of course, our system, the envy of the world, means that those without insurance crowd into hospital emergency rooms, which are the most expensive way of providing health care.
unlike some other folks in town, we were non-union. He said it with this weird whoop, and the whole room was united in cheers. I always wondered what I was missing.
Yeah, ain't this just all-American! You see this attitude so often, you either have to learn to laugh at it, or cry.
"I'm 'Going Galt' to protest the fact that Obama is raising taxes on people who make ten times more money than me, while cutting taxes on people in my own income bracket!"
"Down with food safety inspections!"
"My municipal tap water is the safest in the world and costs me a fraction of a penny per gallon. But I want to hand the water system to a private company and see what happens!"
(Too lazy to provide webcites, but you know they're out there.)
What was that old saying about your economic prospects if you underestimate the intelligence of the American people...
Heavens. What a bunch of commies.
The cauliflower recipe was good though, much better than I expected.
Health insurance costs are especially burdensome for companies that have been around for a long time and have to pay those benefits for a large pool of retired workers. Gladwell wrote about this in The New Yorker:
http://www.newyorker.com/archive/2006/08/28/060828fa_fact
Irrespective of bad choices on what cars to make, and irrespective of union inflexibility, the company becomes untenable because of the costs associated with the legacy workers, even a huge company like GM. Of course that problem doesn't disappear if health insurance is shifted from businesses to the nation, but in theory it should be more manageable since the burden is shared more widely.
MJF
Auto unions have been inflexible, yes. That is their institutional purpose.
As important as inflexibility has been to the Catholic Church and, I don't know, medieval Chinese bureaucracy, it isn't actually a vital capability for the modern manufacturer. All the Monday-morning-quarterbacking by the blissful proletariat ignores the difficulty of changing organizational direction when most of your employees think agility is a bad thing. Not to mention all of your former employees whom your predecessors on both sides of the union-management divide screwed decades ago and who now just... won't... die.
I mean, a normal company pays into the 401(k), and fires everybody when the market turns. After the bankruptcies, so will our auto manufacturers.
I mean, a normal company pays into the 401(k), and fires everybody when the market turns. After the bankruptcies, so will our auto manufacturers.
This unintentionally (I'm assuming, given your tone) points to a more meaningful underlying issue which is what happens when the principle reason for being of any public company is the maximization of shareholder profit even as share values are increasingly divorced from such, you know, ephemeral intangibles as actual profitability.
Meanwhile plenty of foreign companies with robust union workforces have been plenty successful. The reason the extant unions in the US can seem so ossified is that those very public provisions that everyone else in the developed world takes for granted are provided by employers and are under constant siege as being irredeemably burdensome. More public health and welfare spending means that unions are less focused on merely holding the line against losing their benefits or retirement.
As for bankruptcy, I don't get the point. That's exactly it: when your business has so failed and your obligations become so burdensome, you declare bankruptcy. But in the interim, the idea that GM will survive or willingly reorganize if only the UAW will let them is totally absurd.
As an aside, the UAW has also diversified its portfolio, namely into the lucrative and growing field of graduate students.
I'll attempt to be more intelligible.
Of course there is nothing we can do to "save" GM or Chrysler, any more than there was forty years ago when they were flush (Ford may be an exception, but I doubt it). There was always a sunset inherent in their bright shiny business model. The real and political capital poured in over the years has moved the horizon, but it hasn't eliminated it. I suppose it must have seemed at the time that there was a limited supply of $40/hour (more when you count retirees!) wrench-turning labor, but this is the 21st century. These companies could never kick their overpriced labor habit, and now they are dead. Lots of investors have made money timing the fits and starts of their demise, but now the music has stopped.
It is true that unions in other nations and industries have been more flexible, just as the firms that employ them have. I'd also suggest that those other unions haven't so aggressively sold their own members down the river; whose idea was it that pensions would be provided by the company directly rather than through an independently-managed fund? The point is that this union has not been flexible, and therefore the companies around the necks of which it is fixed have not. Those who have gravitated to management in Detroit haven't been the type to thrive in a dynamic environment either. As static as the car industry has been (thanks, protectionism! boo, consumers and environment!), it couldn't remain permanently mired in the 1960s. The UAW isn't the only actor in this tragedy, but it's on the playbill.
But we're talking about yesterday. The UAW is done, and it isn't because of inflexibility. Unions themselves are an aberration, which only appear in particular milieux. In the near future, labor will not be a scarce resource. Companies that operate as if it is will fail.
I also have to take issue with your contention about government-supplied entitlement in the developed world. (As if that were our competition now!) While wages and benefits are not perfectly substitutable (as many a healthy young man has cause to lament!), absent other restrictions they're almost that. When taken at a national level, health-and-old-age benefit rights are actually orthogonal to labor productivity. Meanwhile, the 88% of American labor that is not unionized manages to survive, with employer-supplied healthcare and without it.
It was the executives' job to lead, the unions' job to flex as needed. He says it well, but it could be said more simply, I think.
And fuck; I could have said it better. The owners were hindered from following their interest, the unions unwilling to yield theirs. Also: an appeal to nature, as if industrial capitalism and Anglo-American economics are any less aberrant than trade unionism and collective bargaining (or the oil economy).
Did I miss anything?
"[T]he 88% of American labor that is not unionized manages to survive, with employer-supplied healthcare and without it."
i suppose they aren't ALL dead, for which our system deserves credit. but many of them have begun surviving under bridges.
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