Well, then we'll have slightly lower-paid workers still making shitty American cars that people won't want to buy. There's no secret to why people don't Buy American™ anymore; the cars suck. Unless Detroit takes the $7/hr that they suck out of the unions and puts it immediately into making good cars--and we know they won't; they'll just pay a dividend to shareholders--people will continue to buy Toyotas, Benzes and Beemers from the South, because they're better cars.
Posted by Matt Davis at June 22, 2005 10:17 AMSteve, I think you make some really good points, but I suggest reconsidering your knee-jerk belief that non-union jobs are inherently worse than union jobs.
The way I look at it is that unions are a necessary evil. They are required as a counter to abuse of power by employers. If you have a situation where the labor/management relationship is not adversarial, then a union may not be necessary.
Here's an example. There is a company called 'American Apparel' which I bet many of you know about, and probably a lot of you have some of their clothes. They are one of the darlings of the progressive consumer because they are one of the few garment companies that does their manufacturing in America and pays their workers a decent wage. I'm not going to try to tell you they are the perfect company with the perfect boss, but they put most of the garment industry to shame by demonstrating that you can pay workers a decent wage, treat them well, and still run a viable business.
Oh, and the owner is completely anti-union. If his workers decided to unionise he would probably shut the company down rather than negotiate with them. On the other hand, as far as I have been able to tell (and I have good sources on this) there really wouldn't be any benefit to the workers from forming a union anyway.
If Toyota is coming in with a philosophy of treating their workers well, maintaining clean and safe factories, taking care of injured workers, and paying good wages, what more do you want from them? If anything they are demonstrating that a company is better off at peace with their workers and focusing on executing their business plan than they are fighting them.
And believe me, I am a strong proponent of the right of workers to organize. I also believe that almost everyplace where you have a tough union which makes management's life difficult you probably have management that would mistreat the workers if they could get away with it.
Posted by Daniel Maskit at June 22, 2005 10:17 AMI don't think it's so much an issue of labor costs but an issue that Ford and GM are poorly managed and unable to respond to and in fact resist change. Wage concessions will not save them. As the price of gasoline continues to increase Ford and GM will go down because they have fought increased milage standards so no one can afford the vehicles they make.
Posted by Ron In Portland at June 22, 2005 10:22 AMEuropean and Japanese auto makers put their factories in the South specifically because they can avoid unions, which they have back in their home markets. They know they can cut a deal with the aristos in the Southern political landscape to line their pockets while allowing the politicians to project an image of doing something for the working man or woman. The give-backs, tax holidays, and training packages which the taxes of the prospective employees and their children and their children's children will be paying for just enhance the bottom-line of the companies in question. Those factories will never provide a positive cashflow to the states in which they're located. It's just that the intergenerational transfers have masked the net loss to each state. What a deal!
Posted by PrahaPartizan at June 22, 2005 10:27 AMThe problem, Daniel, is that in the process of forming an employment contract, one party to the bargaining has vastly more power.
Combine that fact with corporate law: The Directors and officers of a publicly-traded company have a legal duty to maximize shareholder value; aside from OSHA regs and the minimum wage, they are not under any legal duty to their laborers. Thus, if they bargain with an individual laborer and fail to exploit him/her, they are flouting the law, and can be sued.
I suspect that your t-shirt maker is not publicly-traded. If he were, he would not only be anti-union--he would be forced to be anti-worker. Same thing with Japanese companies: They aren't traded here, so they don't have to worry about extracting maximum value from each worker who signs on.
The only way for workers to protect themselves from a situation where the employer is obligated to exploit them is to organize.
Posted by Matt Davis at June 22, 2005 10:39 AMif buying a toyota supports US auto workers, why should anyone care if they "buy american"?
Posted by benjoya at June 22, 2005 10:42 AMWell, you're buying union-made goods...
Posted by Matt Davis at June 22, 2005 10:47 AMSteve,
I couldn't tell where the cost of benes and pensions for retirees came into your calculations. Because that's the problem, not the wages of the line workers.
I can recall when that Mercedes factory opened sometime in the mid-1990s. Which means, even if they hired 40-year old workers the year they opened, those workers are for the most part still working.
The Big Three is still operating factories first built seventy years ago (more in the case of the Rouge plant). Which means it has a generation and a half of retired workers it needs to support from the labor of the guys making their (for the most part) shitty cars now. Until THAT disparity in costs is addressed, Ford and GM will never be as profitable per vehicle as the non-American firms--or at least not until a generation passes (and Ford and GM don't have that long).
Posted by emptywheel at June 22, 2005 11:00 AMThe Big 3 are not well-managed compared to Japanese, Korean, and German companies, but even more importlantly, they don't invest in capital equipment and plants that are efficient. And they pay their executives way too much for value received. They don't value their workers.
Most buyers look for the best quality, best styling, best performance and best value, not whether the car is from a US or foreign-owed company. The Big 3 have been losing market share in the US for years because on the factors that buyers consider, they don't compete well.
The overt hostility between worker and management has a long history in the Big 3 because of management attitudes of deep scorn for workers. Management looks at worker-related issues as the source of their problems instead of looking at competitive factors that count to buyers. Yes, health care and pensions cost the Big 3 huge sums of money, but even without those costs the Big 3 would still be going downhill.
Chrysler is now doing much better under German management and ownership why Ford and GM continue to fall. Same labor contracts, same pensions and benefits.
The difference between Toyota and GM is not untion versus non-union. The difference is managment focus and attitude toward workers. GM and Ford management and board of directors are mentally living in the 1920's atmosphere of anti-union focus - to the exclusion of satisfying buyers and working as a equal team with their workers.
The UAW can't prevent GM and Ford from failing, because the failure causes are not under their control. A buyout of GM and Ford by foreign companies and a thorough management housecleaning is the only likely success solution.
Posted by JimPortlandOR at June 22, 2005 11:33 AMJim
Chrysler does NOT have the same labor contracts and benes. Here's the UAW's list of UAW-made cars and trucks. You'll find only two Chryslers on there, and some Dodges and the Jeeps. But a number of Chrysler's most successful cars (like the PT Cruiser) are made elsehwere. And Daimler Chrysler will depart even more from UAW contracts in a few years when they start importing a Chinese-made car to the US. (The claims that Chery--a Chinese car which will be available soon--will be a threat in the US, are ridiculous, because the car is shit; but a Daimler-Chrysler car made with Chinese labor? Game over.)
Posted by emptywheel at June 22, 2005 11:58 AMemptywheel is correct, in that the major difference between US automakers and the foreign companies who build cars in the US is the pension and health care benefit packages.
GM and F have a defined benefit program. Toyota, for example, has a defined contribution (like a 401k) program.
The UAW tried to get a great deal for their members, and dumb management at GM and F agreed to it. So while those managers are sippin' cocktails on the beach at this point, the ramifications to GM and F have been lethal. They might end up in bankruptcy.
Posted by muckdog at June 22, 2005 12:37 PMemptywheel is correct, in that the major difference between US automakers and the foreign companies who build cars in the US is the pension and health care benefit packages.
Nonsense. If Ford and GM were making cars that people were lining up to buy they wouldn't have to offer incentives, rebates, low financing, etc. The major problem these companies have is that they are badly out of step with a changing market.
The current 'Employee Discount for Everyone' deals GM is offering dwarf the cost of the retiree health care. I just looked up a couple of different vehicles, and was offered discounts of $4-6,000!! You don't cut prices like that if there is a decent demand for your product.
you're buying union-made goods
sure, that works for me, but i don't even own a car.
Posted by benjoya at June 22, 2005 01:05 PMmuckdog
I'd go further though and point out that this is a feature of the age of the industry, more than almost anything else. The steel industry had the same problem, the airlines are having it now.
If you're still paying benes (not just pensions, but also medical) for two genertaions of retired employees, you will not be competitive against someone who doesn't HAVE two generations of past employees. Particularly if that someone also is in a country where the government pays for these things.
Posted by emptywheel at June 22, 2005 02:36 PMsure, that works for me, but i don't even own a car.
Actually, I was hoping to make my own response sound exactly as lame as you made it look.
The real story about foreign car makers in the South is the crazy willingness of Americans to sell themselves out to foreign elites for jobs in a way that we find profoundly unseemly when the same foreign elites stand in the way of killing brown people or producing toxic factory emissions.
Posted by Matt Davis at June 22, 2005 02:58 PMMuckdog is right to a point. Healthcare benefits paid to retirees are hurting them badly. However, the layoff was a result of people not buying their cars. Toyota plant utilization in America is over 100% while GM's is in the 80's. They can't keep everyone busy, therefore they have to shut down plants to keep up with Toyota... Dead capacity is a killer in manufacturing... Let me know if anyone cares enough for me to find the utilization % link...
Posted by Tex at June 22, 2005 03:06 PMLet me know if anyone cares enough for me to find the utilization % link...
I know I'd like to see it. I'd also like Detroit to make good cars; I have a feeling you're more likely to deliver than they are.
Posted by Matt Davis at June 22, 2005 04:01 PMUtiization GM = 85%. Utilization Toyota = 107%.
If you're still paying benes (not just pensions, but also medical) for two genertaions of retired employees, you will not be competitive against someone who doesn't HAVE two generations of past employees. Particularly if that someone also is in a country where the government pays for these things.
Oooh. You could be right. Specially since that old Toyota has a younger work force, and people don't seem to be getting real old in their plants (you know how that nasty union wants to get people to retirement age). Toyota is better at controlling its healthcare costs (heck, they built in-plant pharmacies...poor Wal-Greens). And so you know, GM has a 401(k) also. But the bottom line is that GM turns out an uninspired product that largely sucks. It's business, but they want to bust their employee's balls because management sucks (THE REPUBLI-CON IDEAL). So it goes.
Lest we forget. Remember the mid 80's when the American car manufacturers got the Reagan administration to put a $1000.00 tarrif on all Japanese car imports so that American manufacturers could be more competitive. The American manufacturers then raised their prices by, you guessed it, $1000.00.
Posted by phidipides at June 22, 2005 07:20 PMWe are talking about cutting or eliminating worker wages and benefits, but what about all of the nepostism that both GM and Ford are rife with? If one is a fifth-removed great grand-something of the founders, then they are still receiving 'distributions' generated off the backs of the workers.
If GM and Ford were to get serious about this private family-based entitlement program, then I could believe that they could resolve their economic difficulties. But as both GM and Ford are producing an inferior product that the better managers at the foreign companies can exploit every way they can, I don't see anything changing any time soon.
GM and Ford investors have no one to blame but their executives for the crap they produce - and workers for the crap they are given in return for their hard labor under company-imposed working conditions.
Posted by pessimist at June 22, 2005 08:47 PMThis article references the study I was talking about.
Yeah, GM has a 401k now, but before they had pensions and must honor those obligations from prior management decisons. They do need a managment shakeup over there. You shouldn't wait until your company is at junk bond status before taking measures to stop the bleeding.
Posted by Tex at June 23, 2005 04:22 AMwhy is it advantageous for foreign car companies to build cars in the U.S?