Are the Unions to Blame?
I am not a huge fan of the UAW.
It has been obtuse, even obstreperous. But the idea that the
collapse of General Motors and Chrysler Corp. is the fault of the
unions is swill of the worst sort. Because not only is it false,
if accepted it will simply mean that taxpayers are made to shovel
more money down the gullet of companies that won't make the
necessary changes to their business model because they haven't
been forced to confront the fact that their problems have not
been caused by "the unions" -- the braying mantra they've been
falling back on for years now.
Point Number One:
While almost everyone in the media and elsewhere is talking about
the failure of the industry, note that Ford is not in trouble
like GM and Chrysler are in trouble. It is GM and Chrysler that
are on the verge of bankruptcy. Ford itself is healthy -- and
only in danger of being dragged along with GM and Chrysler
because the collapse of those two would have a catastrophic
ripple effect across the entire industry. Toyota, Honda and all
the others would be gut-shot, too.
And yet, Ford uses UAW labor just like GM and Chrysler. But Ford
somehow makes money -- or at any rate, loses less than GM and
Chrysler have. What to make of this? Could it be that perhaps
Ford's business model is -- dare it be said -- more attuned to
market realities and better set up than GM's and Chrysler's?
Point Number Two:
GM and Chrysler claim the core problem is so-called "legacy
costs" -- meaning the pension and health-care obligations they
owe current and retired UAW workers. There is an element of truth
to this; the Japanese automakers don't have to worry about health
care costs because the Japanese have national health care (which
means everyone pays, instead of just the automakers).
Fair enough.
But to pin GM and Chrysler's current debacle on "legacy costs" is
at best a half-truth. A quarter-truth, really. The real problem
-- in Chrysler's case -- is an obsolete, unattractive product
line. Not all of its cars -- but enough to gum up the works very
badly indeed. Chrysler failed to produce a successful successor
to the formerly hot-selling Neon economy car; the PT Cruiser
(also once a big seller) is now seriously dated; the Magnum and
Pacifica wagons were huge belly flops -- as have been the Jeep
Patriot and Compass and Commander. The list goes on.…
In GM's case, it is a divisional structure that should have been
completely redone at least 20 years ago. It is absurd that an
automaker whose total market share is only 20-something percent
continues to try to sell cars through six full-line divisions
(Chevy, Saturn, GMC, Pontiac, Buick, Cadillac -- plus Hummer) and
hawks often as many as three or even four rebadged versions of
the same basic car.
Whose fault is this? The unions?
Please.
The UAW did not decide to keep Saturn long after it became clear
that Saturn was a money-loser that also competed with Chevrolet
as GM's economy car brand.
The UAW did not decide to sell the same basic trucks and SUVs
through multiple divisions -- adding to the R&D and
manufacturing costs of each vehicle and reducing the potential
profit per vehicle by who knows how much. (Probably an amount
equivalent to the $1,500 or so in "legacy costs" GM cries so much
about.)
The UAW is not responsible for the Pontiac Aztek or GTO; the
Chevy SSR, the slow-bleeding of Oldsmobile or the failure to
update one of GM's most successful car franchises -- Camaro --
allowing it to die an ignominious death and giving away the
market to Ford and its super-successful Mustang.
The UAW did not decide to keep the god-awful Chevy Cavalier in
production long after it had become an embarrassment; it was not
the UAW that kept GM from bringing out a competent small car
capable of competing on equal terms with the best Japanese small
cars until just three years ago.
It goes on an on and on.
As for Chrysler: whose fault is the "merger of equals" (the
buyout of what was a successful Chrysler by a pillaging Daimler
Ag) that allowed the company to be ridden like Ned Beatty in
Deliverance from profitability to penury? Daimler
literally sucked the life out of Chrysler -- leaving it with no
money to fund new models and update existing ones.
This is the UAW's fault?
Come on.
Bottom line, the problems besetting GM and Ford are systemic and
structural. The unions may not be helping, but the idea
that they are the cause and that if only GM and Chrysler
could cut their pay and rid themselves of the obligations they
have to current and former workers, all would be well -- is rank
nonsense of the first order.
But it looks like the taxpayers are on the hook -- because the
federal government has fallen for the bait. On Friday, it was
announced by the Bush Administration that some $17 billion would
be made available to the ailing automakers. If the money is not
conditioned on more than just forcing UAW concessions, but on
addressing some of the much more cancerous problems laid out
above, all we'll get is a brief "time out" before we're right
back to where we were… about six-eight months from now.
My UAW Story
One of the sticking points in the negotiations for the bailout of
the Big Three has been the question of how much more the United
Auto Workers (UAW) should give up to save at least two of
America's auto companies.
Clearly, more must be sacrificed to make the companies
competitive with the foreign transplants and the other auto
imports into the North American market. The substantial
differential in the overall compensation package-wages, benefits,
vacation, retirement, work rules and the like-cannot remain if,
say, GM is to survive as anything other than a ward of the
federal government. This is a hard truth, one that is painful to
embrace absent the sharp lash of necessity.
My own personal UAW story involves an appeal of a denial of a
permit to build a pole barn on a wetland in Michigan. I was
working in the state environmental agency on Great Lakes issues
at the time, the late-1990s. Since I was an attorney and had run
regulatory programs in my home state of Missouri, I was asked to
help clear up a backlog of cases through mediation and,
hopefully, settlement without recourse to costly, full-blown
administrative hearings complete with lawyers, court reporters,
further appeals and aggravation for all involved.
One day I traveled to northern Michigan, to the field office in
Gaylord, I think, about two-thirds of the way up the Lower
Peninsula, the mitt of Michigan so to speak, to meet with the
person appealing his permit denial.
As it turned out, the fellow appealing the unfavorable decision
was from southeast Michigan, just outside of Detroit. He walked
into the room accompanied by a GM legal insurance lawyer, with
his wife. His four kids were waiting outside in his 30-foot
Suburban.
He was a gregarious, big fellow, with muscular arms and a barrel
chest. He sported a GM baseball cap and a T-shirt with UAW on it.
Or maybe it was the reverse.
In any event, he was a very nice guy, a family man, which
immediately put him on my good side. He had a place or cottage
"up north," which everyone in Michigan, Wisconsin (including my
wife) and Minnesota has, usually handed down through the
generations. Seasonal migrations "up north" are rivaled only by
the mass migration to Florida at spring break in that part of the
country.
This fellow wanted to build this barn at his cottage, his home
away from home.
"Mr. Mehan, I love the environment; but I have to build this
barn," he said after we got through the pleasantries and down to
business. "I own a jet ski, a party barge, a snow mobile and a
boat. I can't leave them out through the winter, and I don't want
to haul them back and forth each year."
What came of the mediation totally escapes my memory, but I
vividly recall thinking about the lawyer, the wife, the four
kids, the Suburban, the jet skis, the boat, the snow mobile, the
party barge, and the fact this guy probably worked hard on an
assembly line.
"Is this a great country or what?" was my first thought.
My second was: "This can't last -- can it?"
For decades people who worked for the Big Three were not
working-class but definitely members of the middle class, without
the tie or gray flannel suit. You could quit high school, if you
were so inclined, and get a really well-paying job working on the
lines at Ford, Chrysler and GM, although hard overtime was
assumed. The pay-off was great wages, tremendous benefits, a lot
of vacation and a wonderful retirement. It was not just a living
wage, but a very robust and comprehensive compensation package.
An autoworker could support a good-sized family without his wife
having to take a job outside the home unless she wanted to.
It was an exceptional set of circumstances, not duplicated in
many other industries or other parts of the country.
The Big Three and the UAW no longer dominate ev
