Where Would General Motors Be Without the UAW?

[thedguy]

According to this guy, GM would be have been, and continue to, make the greatest cars ever. The ice caps wouldn't be melting, AIDS wouldn't have been a problem, and every time you masturbated god would save a kitten.

Where Would General Motors Be Without the United Automobile Workers Union?- George Reisman
This is a question that no one seems to be asking. And so I've asked it. And here, in essence, is what I think is the answer. (The answer, of course, applies to Ford and Chrysler, as well as to General Motors. I've singled out General Motors because it's still the largest of the three and its problems are the most pronounced.)

First, the company would be without so-called Monday-morning automobiles. That is, automobiles poorly made for no other reason than because they happened to be made on a day when too few workers showed up, or too few showed up sober, to do the jobs they were paid to do. Without the UAW, General Motors would simply have fired such workers and replaced them with ones who would do the jobs they were paid to do. And so, without the UAW, GM would have produced more reliable, higher quality cars, had a better reputation for quality, and correspondingly greater sales volume to go with it. Why didn't they do this? Because with the UAW, such action by GM would merely have provoked work stoppages and strikes, with no prospect that the UAW would be displaced or that anything would be better after the strikes. Federal Law, specifically, The National Labor Relations Act of 1935, long ago made it illegal for companies simply to get rid of unions.

Second, without the UAW, GM would have been free to produce in the most-efficient, lowest cost way and to introduce improvements in efficiency as rapidly as possible. Sometimes this would have meant simply having one or two workers on the spot do a variety of simple jobs that needed doing, without having to call in half a dozen different workers each belonging to a different union job classification and having to pay that much more to get the job done. At other times, it would have meant just going ahead and introducing an advance, such as the use of robots, without protracted negotiations with the UAW resulting in the need to create phony jobs for workers to do (and to be paid for doing) that were simply not necessary.

(Unbelievably, at its assembly plant in Oklahoma City, GM is actually obliged by its UAW contract to pay 2,300 workers full salary and benefits for doing absolutely nothing. As The New York Times describes it, "Each day, workers report for duty at the plant and pass their time reading, watching television, playing dominoes or chatting. Since G.M. shut down production there last month, these workers have entered the Jobs Bank, industry's best form of job insurance. It pays idled workers a full salary and benefits even when there is no work for them to do.")

Third, without the UAW, GM would have an average unit cost per automobile close to that of non-union Toyota. Toyota makes a profit of about $2,000 per vehicle, while GM suffers a loss of about $1,200 per vehicle, a difference of $3,200 per unit. And the far greater part of that difference is the result of nothing but GM's being forced to deal with the UAW. (Over a year ago, The Cincinnati Enquirer reported that "the United Auto Workers contract costs GM $2,500 for each car sold.")

Fourth, without the UAW, the cost of employing a GM factory worker, including wages and fringes, would not be in excess of $72 per hour, which is where it is today, according to The Post-Crescent newspaper of Appleton, Wisconsin.

Fifth, as a result of UAW coercion and extortion, GM has lost billions upon billions of dollars. For 2005 alone, it reported a loss in excess of $10 billion. Its bonds are now rated as "junk," that is, below, investment grade. Without the UAW, GM would not have lost these billions.

Sixth, without the UAW, GM would not now be in process of attempting to pay a ransom to its UAW workers of up to $140,000 per man, just to get them to quit and take their hands out of its pockets. (It believes that $140,000 is less than what they will steal if they remain.)

Seventh, without the UAW, GM would not now have healthcare obligations that account for more than $1,600 of the cost of every vehicle it produces.

Eighth, without the UAW, GM would not now have pension obligations which, if entered on its balance sheet in accordance with the rule now being proposed by the Financial Accounting Standards Board, will leave it with a net worth of minus $16 billion.

What the UAW has done, on the foundation of coercive, interventionist labor legislation, is bring a once-great company to its knees. It has done this by a process of forcing one obligation after another upon the company, while at the same time, through its work rules, featherbedding practices, hostility to labor-saving advances, and outlandish pay scales, doing practically everything in its power to make it impossible for the company to meet those obligations.

Ninth, without the UAW tens of thousands of workers — its own members — would not now be faced with the loss of pension and healthcare benefits that it is impossible for GM or any of the other auto companies to provide, and never was possible for them to provide. The UAW, the whole labor-union movement, and the left-"liberal" intellectual establishment, which is their father and mother, are responsible for foisting on the public and on the average working man and woman a fantasy land of imaginary Demons (big business and the rich) and of saintly Good Fairies (politicians, government officials, and union leaders). In this fantasy-land, the Good Fairies supposedly have the power to wring unlimited free benefits from the Demons.

Tenth, Without the UAW and its fantasy-land mentality, autoworkers would have been motivated to save out of wages actually paid to them, and to provide for their future by means of by and large reasonable investments of those savings — investments with some measure of diversification. Instead, like small children, lured by the prospect of free candy from a stranger, they have been led to a very bad end. They thought they would receive endless free golden eggs from a goose they were doing everything possible to maim and finally kill, and now they're about to learn that the eggs just aren't there.

It's very sad to watch an innocent human being suffer. It's dreadful to contemplate anyone's life being ruined. It's dreadful to contemplate even an imbecile's falling off a cliff or down a well. But the union members, their union leaders, the politicians who catered to them, the journalists, the writers, and the professors who provided the intellectual and cultural environment in which this calamity could take place — none of them were imbeciles. They all could have and should have known better.

What is happening is cruel justice, imposed by a reality that willfully ignorant people thought they could choose to ignore as long as it suited them: the reality that prosperity comes from the making of goods, not the making of work; that it comes from the doing of work, not from the shirking of it; that it comes from machines and methods of production that save labor, not the combating of those machines and methods; that it comes from the earning and reinvestment of profits not from seizure of those profits for the benefit of idlers, who do all they can to prevent the profits from being earned in the first place.

In sum, without the UAW, General Motors would not be faced with extinction. Instead, it would almost certainly be a vastly larger, far more prosperous company, producing more and better motor vehicles than ever before, at far lower costs of production and prices than it does today, and providing employment to hundreds of thousands more workers than it does today.

Few things are more obvious than that the role of the UAW in relation to General Motors has been that of a swarm of bloodsucking leeches, a swarm that will not stop until its prey exists no more.

It is difficult to believe that people who have been neither lobotomized nor castrated would not rise up and demand that these leeches finally be pulled off!

Perhaps the American people do not rise up because they have never seen General Motors, or any other major American business, rise up and dare to assert the philosophical principle of private property rights and individual freedom and proceed to pull the leeches off in the name of that principle.

It is easy to say, and also largely true, that General Motors and American business in general have not behaved in this way for several generations because they no longer have any principles. Indeed, they would project contempt at the very thought of acting on any kind of moral or political principle.

One of the ugliest consequences of the loss of economic freedom and respect for property rights is that it makes such spinelessness and gutlessness on the part of businessmen — such amorality — a requirement of succeeding in business. Business today is conducted in the face of all pervasive government economic intervention. There is rampant arbitrary and often unintelligible legislation. There are dozens of regulatory agencies that combine the functions of judge, jury, and prosecutor in the enforcement of more than 75,000 pages of Federal regulations alone. The tax code is arbitrary and frequently unintelligible. Judicial protection of economic freedom has not existed since 1937, when the Supreme Court abandoned it, out of fear of being enlarged by Congress with new members sufficient to give a majority to the New Deal on all issues. (Try to project the effect of a loss of judicial protection of the freedoms of press and speech on the nature of what would be published and spoken.)

Any business firm today that tried to make a principled stand on such a matter as throwing out a legally recognized labor union would have to do so in the knowledge that its action was a futile gesture that would serve only to cost it dearly. And a corporation that did this would undoubtedly also be embroiled in endless lawsuits by many of its stockholders blaming it for the losses the government imposed on it.

But none of this should stop anyone else from speaking up and making known his outrage at what the UAW has done to General Motors.

source

[jayhawk]

I agree with everything.

I work for Nissan, and they had, around 2002-2004, the Monday morning problem, but that has ceased. All the cars, with the exception of the Murano and 350Z, are either made in Mexico or in The South, where you can get quality non union employees who are *gasp!* grateful to be employed (as they should be) and making some damn fine products now.

My car is union made. In Japan that is, where there is respect and reasonable terms from both the employer and employee. I suppose in UAW eye's that is insane.

[RUU-CHAMA]

The anti-uaw commandments of sorts, for other businesses to look at everyday and shudder then drop to their knees and thank God that they are not GM.

[conceptualman]

while it is true that the obligations imposed by the uaw are pretty onerous , it is the fault of the idiots at gm for being stupid (or corrupt) enough to agree to them in the first place ,imo .

if the uaw represents the workers of all 3 automakers , i see that as a conflict of interest situation . the union leadership can be influenced (paid) by one automaker to incite a strike at a competing automaker .

if the value of the stock goes down enough , then the ownership of gm may be bought by a private investment firm . maybe then they can clean up their mess .

this same kind of problem caused a lot of corporate bankruptcies in the 70s

i have always been suspicious of groups whose position is predicated on the fact that they can strike and intimidate the employer and replacement workers . from what i have seen and read the union is motivated by workers rights to some extent , but primarily by being able to squeeze more money out of an employer than would be worthy in a free market situation .

i remember seeing a picket line for a food service company near where i live . they were marching with signs saying "this company pays substandard wages and benefits for this area " or something like that , and i remember thinking " then go work at another fucking company if it is so much better ! ". they seemed like such sad sacks with that complaint .

but at least some unions have training to improve the skills of their membership . it is nice that such unions have something more to offer than the grace of not going on strike .

[zenkidori]

Originally Posted by conceptualman

i remember seeing a picket line for a food service company near where i live . they were marching with signs saying "this company pays substandard wages and benefits for this area " or something like that , and i remember thinking " then go work at another fucking company if it is so much better ! ". they seemed like such sad sacks with that complaint .

From that response it seems like you don't quite understand what you are talking about.

[thedguy]

Originally Posted by zenkidori

From that response it seems like you don't quite understand what you are talking about.

I agree.

[conceptualman]

Originally Posted by zenkidori

From that response it seems like you don't quite understand what you are talking about.

what part do i not understand , then ? that is what i observed .
if the grass is greener on the other side , then go where the grass is greener .
please tell me what you mean ...

[zenkidori]

Do you SERIOUSLY think that employers will abuse, underpay, or overwork their employees in a fertile job market? Of course not! because people would do exactly what you said, they'd jump ship to another job, they'd have a shitty retention and they won't do it. but when the job market is tough and unemployment are on the rise, that's when shitty management will put the squeeze on their employees, because where else are they going to go?

Also, think about this, you've worked at a company for let's say 10+ years, done a lot of hard work and as a result you've been rewarded with raises, some benefits, maybe a pension or something, and then new management comes in and says you're not worth it, and cuts your pay and benefits. Are you going to just jump ship, even in a good job market, just so you can start out at the bottom of another company and claw your way back up?

Also, what if the only alternatives are far away? You going to pull up stakes, sell your house, move your wife and kids for that job, or are you going to fight for the one you've had?

The UAW is a very very very bad example of a union, and contrary to what many people believe as a result of the UAW, unions are NOT useless in "today's modern age". Just think of any job where immigrants, legal or not, are taken advantage of, any of those jobs could use a union. Just think of a job that is dangerous and undercompensated, or has the potential for management abuse for whatever reason. Those are all places where unions can benefit workers, but if you let the bosses run around and go nuts, like the UAW, then you've changed from doing good and trying to keep balance, to running a racket.

[tigger]

Originally Posted by zenkidori

Also, think about this, you've worked at a company for let's say 10+ years, done a lot of hard work and as a result you've been rewarded with raises, some benefits, maybe a pension or something, and then new management comes in and says you're not worth it, and cuts your pay and benefits. Are you going to just jump ship, even in a good job market, just so you can start out at the bottom of another company and claw your way back up?

Yes . My dad went through that exact ordeal about 2 years ago now. He worked for a company that builds concrete saws, Diamant Boart, for the almost 15 years. They got bought out by Husqavarna iirc, who closed one of Boarts facilities; literally doubling the work load at my dad's plant. On top of that, they cut his pay substantially and stopped offering benefits. So he (and literally 3/4 of the employees) quit. Which is exactly what Husqavarna wanted, now they build noticeably shittier products but they managed to raise short term profits. My dad eventually got a job for a company that builds those airport baggage tractors and carts, with about the same pay and benefits Diamant Boart offered him before the takeover, and more opportunity for advancement.

I do agree though, that the UAW is a shit union and if it were legal I'm sure the big 3 would have ditched them years ago. A friend of mine is a carpenter (a fucking carpenter!) for the UAW at the Ford Claycomo plant. He makes $27 an hour doing nothing. He brings 3 newspapers to work each day, reads them front to back, each one. Every once in a while he's got to go fix a door, or a chair, or some trim. He knows that there are thousands of other union guys just like him, not doing a damn thing but making over 60k a year with full benefits. It's terrible.

Unions are definitely not all bad though, so it makes me mad when republicans take a story like this and imply that all unions are this way. No, most unions are interested in the preservation of their employers. The UAW definitely seems like a leech in this respect. "Let's bleed 'em dry! Who cares about tomorrow!". What really makes me mad is that the union leader said something about how GM needs to design some cars people want. Shit, it seems to me that people like the cars, they just don't like them falling apart. Like the crap headliners in the eighties cars, or the problem they had with head gaskets on the gen IV truck engines. That's not a "design" problem, it's a build problem.

[conceptualman]

Originally Posted by zenkidori

Do you SERIOUSLY think that employers will abuse, underpay, or overwork their employees in a fertile job market? Of course not! because people would do exactly what you said, they'd jump ship to another job, they'd have a shitty retention and they won't do it. but when the job market is tough and unemployment are on the rise, that's when shitty management will put the squeeze on their employees, because where else are they going to go?

Also, think about this, you've worked at a company for let's say 10+ years, done a lot of hard work and as a result you've been rewarded with raises, some benefits, maybe a pension or something, and then new management comes in and says you're not worth it, and cuts your pay and benefits. Are you going to just jump ship, even in a good job market, just so you can start out at the bottom of another company and claw your way back up?

Also, what if the only alternatives are far away? You going to pull up stakes, sell your house, move your wife and kids for that job, or are you going to fight for the one you've had?

The UAW is a very very very bad example of a union, and contrary to what many people believe as a result of the UAW, unions are NOT useless in "today's modern age". Just think of any job where immigrants, legal or not, are taken advantage of, any of those jobs could use a union. Just think of a job that is dangerous and undercompensated, or has the potential for management abuse for whatever reason. Those are all places where unions can benefit workers, but if you let the bosses run around and go nuts, like the UAW, then you've changed from doing good and trying to keep balance, to running a racket.

the picket line for that food service company wanted more money . they wanted a raise . from what i observed . they would have framed their complaint differently if their pay had been cut . and when i saw this , the economy was doing well . also food service isn't a specialized job with specialized skills which cannot be transferred over to a different line of work . they were a bunch of people making a bunch of noise to get more stuff . that is what it was . maybe they got more pay , but that approach works only so far until the company says ," we're outta here ".

i did not say that was the average example of a union .

i am not saying there is no use for unions .

however , i think that any union should be a company union . that makes more sense , economically . the japanese did pretty well with company unions in terms of quality and economically .

hopefully ,if you have worked somewhere for 10 yrs ,you have enough skills to get you a pretty good job elsewhere . if not , that's rough , i must admit . but a lot of people leave their industrial jobs afraid of what will happen and wind up in better jobs than what they had , too .

apparently , the legal protections to the benefit of the uaw have put it in a position of being able to play the role of racketeer . the big questions in that case are what are the protections , how to remedy it , the difference between protecting the worker and protecting the union ,how to take away the barriers to competition in the employment market .

i have also had union jobs in the past . there were advantages , sure , but the biggest problem i have with it is that there is no reward for making an effort , and no punishment for being lazy . just try to look average . i find it boring to live that way .

any free market needs information exchange . even the labor market .
i also wish to say that maybe more information exchange is in order about the dangers associated with different types of jobs . chemical , biological , repetitive motion , etc . categorized , with ratings , average pay , risks , medical expenses associated with it , etc. in an easy to compare and understand format . then a job searcher could weigh their options and risks . there could also be a rating for spread for a given job (the variety of risks / benefits ).i doubt anyone has this yet .
it's an idea

[nomix]

Just blaming the UAW is silly. There's always more than one side to a story.

As for unions as a rule, they work nice as long as they don't go greedy, simple as that.

And I see the guy criticize health benefits, well, a happy worker is a productive worker, and an unhappy worker is an unproductive worker. It boils down to this, if you have to worry about your health, you're unhappy. If you turn sick, and can't afford to go to the doc, you stay sick for longer, that's more sick time and more time off work.

That's bad, isn't it?

[zenkidori]

Most employers have health plans where the employer pays part of the health cost, and you pay the rest, plus co-pay when you go to the doctor. Usually they take a little bit out of each check for it, but AFAIK the UAW healthcare cost is all on the business side, and it's very good.