Saturday, December 20, 2008

The UAW and the Bailout

I don't even know where to begin with this one, so I guess I'll just jump into the middle. I'm not a big fan of unions. In fact, I think that whatever usefulness they once had has now gone by the wayside. The kinds of worker protections that the threat of strike and collective bargaining once brought are now largely enshrined in employment law. Unions now primarily artificially inflate wages and make US goods and services more expensive than the market would dictate.

Case in point is the current auto imbroglio. I have seen estimates that wages, healthcare and retiree benefits for UAW members add upwards of $2000 to the price of every union made automobile manufactured in the US. While US automakers have made great strides in closing the quality gap with foreign competitors, starting $2K in the hole on every car made creates a market in which they are clearly uncompetitive.

Apparently, the White House tendered loan guarantees set "targets" (which I fear are simply that) for UAW to concede wages in order to bring them into parity with non-union automakers. Here's how this article puts it:

"Those and other concessions would essentially erase the significant distinctions between union and nonunion auto workers, and the lack of such union worker advantages would render moot the union's fundamental purpose, some industry analysts and labor experts said."

Well there you have it. The UAW has artificially inflated the wage scale of union labor, and now that they've helped create a situation in which the companies they serve are non-competitive, they are crying foul as their very reason for being is questioned.

I find it also interesting that we see here an entire industry coming apart at the seams in no small part due to the machinations of organized labor---at the same time that the new administration and its stooges in Congress are getting ready to force "card check" legislation upon the workplaces of this nation, making free and fair elections a farce where unions try to organize. Do we really want to see MORE of this kind of thing? What industries are we next willing to prop up?

He whose 15 minutes surely is over, Barney Frank, had this to say: "The president has added an unfair assault on working men and women, which could require them to accept a disproportionately large reduction in what is currently legally owed to them," he said in a statement. "I am particularly opposed to the notion . . . that could give foreign auto companies in effect the ability to dictate wages for all American auto workers." A couple of things on this one: the President seems to be the only person capable of actually doing something for the labor unions at this point, i.e., help them keep their jobs--I don't know why Barney is bitching. Secondly, foreign auto companies are not "in effect" dictating wages for American auto workers--the free market for labor is. If the plants in the South weren't paying enough, well then people wouldn't work there. It really is that simple.

Ford doesn't want the loans (it wants access to them if it needs them) and Chrysler shouldn't get them (they are a private company, owned by Cerebrus, a Private Equity firm). It comes down to whether or not to save GM--Chrysler is done (let's not forget, Chrysler was saved by loan guarantees from Uncle Sam once already). I find myself increasingly thinking that it is time for GM to go bankrupt and restructure. Yes, it will be yet another hit on the economy...but I am also increasingly beginning to feel we've just about bottomed out on this, that there isn't much downside (if any) left. Let's get it over with and start rebuilding this country.


Goldwater's Ghost said...

I commend Ford on their decision. Now if they could only make a car I'd want to buy, like a Mustang hardtop convertible with a decent looking interior for instance...

Mudge said...

Another well-written and thoughtful article, CW. Thanks

Anonymous said...

Barney Frank, had this to say: "The president has added an unfair assault on working men..."

Cut me a break. The only blue collar type on Barney's mind is the construction worker from the Village People.

Happy Hannukah!

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