Saturday, December 06, 2008

Some Friendly Advice

It now looks like the Big Three automakers are going to get some help from the government, but not the massive bailout given to the financial community. Congress appears to favor "short term loans" of about $20 billion to ease the automakers through 2009. The congressional shift from $0 to $20 billion appears to have been facilitated by the dreadful report showing the loss of over half a million jobs in November more than by the hastily drafted plans by the auto industry to show that with a little help they could return to good health. Still, the shift did come, and Detroit has to be breathing a little easier.

The plans presented by the Big Three are notable insofar as they include some rather dramatic concessions by the United Auto Workers union, including approval of a delay in funding the retiree health fund trust. I find that rather curious. I don't recall Wall Street workers having to make concessions for the bailouts. In fact, as I recall, Messrs. Bernanke and Paulson wouldn't even consider cutting the outrageous pay and bonuses of the icons of Wall Street. That quibble aside, however, the fact that the UAW did make those concessions in order to save jobs was probably necessary.

Unfortunately, the UAW probably does deserve some blame for the state of the Big Three, but not because the union got too much for their members. Rather, they didn't do enough to unionize the auto plants of foreign (primarily Japanese) companies which opened in the US in the last couple of decades.

Jonathan Cutler, associate professor of sociology at Wesleyan University, makes just that point in an op-ed piece published in today's Los Angeles Times.

It seemed clear from the hearings that to OK any larger bailout plan, Congress was going to insist on cutting labor costs. Already, [Ron] Gettelfinger [president of the United Auto Workers] has coughed up concessions on job security protections and delayed payment to a retiree healthcare trust and is talking about modifying contracts.

And yet there is nothing inherently unsustainable about employing a high-priced, unionized workforce. The crisis of Detroit's wage bill is entirely relative. Specifically, their labor costs far exceed the low-cost, nonunion American workforce at the U.S.-based, foreign-owned plants of competitors Toyota, Honda, Nissan and Subaru.

If the UAW really is to blame at all, then, it is because of the union's utter failure to unionize any of the transplants. What has the UAW been doing all these years? Isn't it the responsibility of any good union to protect union employers from competitive labor disadvantages by organizing wall to wall, throughout the industry? How could it have left these transplants unorganized? ...

It is not too late to save the Big Three. But the solution is not to tear down the historic and heroic gains won by prior generations of UAW workers. If there is hope long term -- for the unionized Big Three companies and for the UAW -- it rests in dealing with the unfinished business of the 1980s: unionizing the unorganized transplants.

As Prof. Cutler points out, the Japanese plants in the US are non-union, but their counterparts in Japan are heavily organized. The Japanese union plays the same role as the UAW, even having had a say on the "outsourcing" of the industry to the US in order to save on shipping costs. Why didn't the UAW connect with their brethren in Japan to forge an alliance which would allow for the unionization of the Japanese plants, thereby keeping industry-wide competitiveness?

The lesson the UAW has just had to learn the hard way is an important one. Hopefully the union and its members remember how to flex their muscles on the issue.



Blogger Diane said...

Not all of the plants are in the South. There's one in Ohio, which has always been a pretty strong union state, yet that plant is non-union.

But, for the most part, you are right. Still, when those plants were being envisioned, the UAW could have been in contact with the head of the Japanese union and urged him to insist on those plants being organized before signing off on the plans. The American union didn't bother.

7:34 AM  

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