US Auto makers may become extinct, caused by Unions

When I first saw this post I was going to ignore it for a couple of reason's. One, it would undoubtedly become a heated thread as these threads tend to. Two, William Boyd imo is a friggin' troll.

Having said that, I was watching the national news tonight and saw the piece about United Airlines out of bankrauptcy after three years. The highlights were the airline is flying with a few less planes, a whole lot of lay offs, the union workers took(or was it demanded) a 30% pay cut, retired workers saw their pension's reduced 75%. Oh, the CEO recieved a 15MILLION DOLLAR BONUS, other upper managers also recieved some hefty bonus's.

As I said there are good and bad union's. ymmv

Roy

Isn't United owned by the Union?

Don

I don't think so.... my 2 brothers are both retired from United and they bought stock for years on some kind of company contribution thing...

kind of like you buy "x" amount of stock out of your paycheck and we'll throw in "x" amount with it.. Mac

Tell this to Lee Iacocca. Unions are usually the scapegoat for bad management. Ford and GM automobiles have suffered in quality and lack of imagination. Just look at the design and quality of these cars compared to foreign counterparts, and one can see where the real problem is. If the assembly line workers don't show up to work, no cars are built. If management doesn't show up to work, everything runs fine.

That is true only for the very short term. A rather absurd line of logic to carry any further although I've heard it often with production line manufacturing workers.

Yep... obviously someone who's never read 'Lord of the Flies'

Unions aren't the cause of the demise of ANY US industries I can think of. The cause is the complete lack of protection of our markets and trade by BOTH parties of crooks in Washington. I'll admit that Unions contribute to higher auto prices in order to maintain a livable wage for American workers. Take away the Union and the US auto industry might come back, but the factories will be filled with immigrant labor. Enough of this and it won't matter whether we build cars or not because there will be no middle class to buy them. I'm not Union, nor am I from a Union family, I just miss those days when there was some stability in the workplace and we didn't have to be Union to get it. MMC

Did I read that right? "A livable wage"???? You're joking, right? There's no such animal anymore.

Back when the monies of the US were backed by tangible material, silver and/or gold, a "livable wage" was far less than today. As a fact, a spouse didn't _have_ to work to help make ends meet . . .uh, correction, wave at each other in a semi-friendly manner. But, of course, the dollar in your pocket was really worth nearly a dollar back then also and purchased a true dollar's worth of product or service.

Then, to be more exchangeable with worthless foreign currencies, we dropped those standards, opening the way to rampant inflation, with a government, especially the spend-it-like-there's no-tomorrow liberals, printing more fiat money to cover wasteful expenditures.

So, the government is at least partly to blame for those ridiculous union wages, but it would help if everyone would demand our money to be returned to a physically supported status.

BTW, Clinton never "balanced" the budget as he, and Congress, blew monies that should have gone toward the National Debt on pet projects.

Budd

Entire industry or particular companies? Unions have causes many companies to fold or bail from particular markets or move much of their production overseas in order to compete in a global market. Phelps Dodge closed down several mines in Arizona in the 80's as a very direct result of unions demanding high wages when the copper market was tumbling.

If the US Automakers concentrated on making what was good- better, then best, (meaning a vehicle that would have few problems and last longer) they could be top at their game too. Instead they get something that works well and change it to something that is not yet proven.

Considering the cost of new vehicles, A 3 year 36,000 mile is not that good of an included warranty on non-consumable parts. The warranty's on earlier vehicles were 1yr. / 12,000 miles, but the cost of the vehicle was a lot less even with inflation adjustments.

But then if vehicles last longer with less problems, the mentality is that they would sell less vehicles -so I guess there is no point in that.--J

Aw, gee, Miles, you gave clear and factual evidence . . now they have to consider the possibility they could be wrong. ;)

And not only large industry has suffered. Let's not forget the thousands of smaller manufacturers that going unionized has closed.

Budd

Miles, I'm curious. Perhaps I'm missing something here and I'm sure that it has to do with my belonging to a couple of union's. Having said that, please explain to me how it is that folks always expect the union worker and only the union worker to take a pay cut. A union does not go in and demand anything, it is negotiated between the employer and the union. The union and the employer agree to a wage structure, benefit package, health, grievance procedure, discipline procedure, absenteeism policy, safety, vacations, and the list goes on. The employer and the management team run the show. Decisions are made by management not the union. If the decisions are good do the union workers get a bonus? Of course not. If they are poor decisions is that the union's fault? It sure seems to be, cut the employees wage is the cry. Maybe I'm too old or stupid, but I do not understand how bad decisions made in the board room have to be paid for by the employee.

With regard to the Phelps Dodge, I have no knowledge as to what the particulars were, but as in any story there are two sides. A "wall street" theme does come to mind though. As I have said in the past some unions or union locals suck!! Others seem to work well with the companies that employee them. Let me make one point. Union's are made up of individual members, majority rules. If a member is unhappy with the representation he or she is receiving there is a procedure in place that he or she can use. It is called a ballot box, you elect your representatives. Further if enough members are unhappy, there is decertification, you vote the local out.

Roy

Who said always the union? Most of the time when cuts are needed they're done on both sides. You are making a very common but flawed assumption. You are assuming that in all situations there is an equal balance of powere between the union and the corporation. When the balance of power is tipped either towards the union or towards the corporation one side wins, the other loses. In many cases unions have gotten so big and so powerfull they squeeze a company right out of business or to take other measures such as moving operations elsewhere.

Normally market supply and demand of labor keeps things in balance and the pay benifits in check. If a company pays you too low then you vote with your feet. Companies must compete for your talent or skill. In some markets this balance doesn't work and a union is needed to balance it. However, if the power tips the scale to favor the union its every bit as bad for the general public as if its tipped in favor of the corporation.

Tell me, do you feel none or very few union workers are over paid? I know several such as a college kid making $18/hour to put saran wrap on meats because he belongs to the meat packers union. That is WAY above market value for that job and it costs the rest of us.

For decades copper prices had been climbing. Unions negotiated decent yearly wage increases. Global copper prices in the 70's and 80's fell sharply. The US copper mines could simply not give the 10% raise along with other benifits that the union wanted as they had done for years prior. Phelps Dodge said they'd have to agree to a 10% cut or the mines would close. The union felt they were bluffing and held their ground. The mines all closed and every single worker was out of a job. The mines still have never reopened. This is a classic mentality of so many unions. Too much power that tips the balance away from natural market balance.

Pick a thread.

That being the case, I was reading today that gm union workers took some deep pay cuts in nov., now some of the top management are starting to take cut's. I'd bet that is a short time they come back wanting more from the workers.

No, not in the least

Here is where we sorta differ. A union and a company agree to certain stuff, they sign a legal, enforcable, contract. How does the union become so powerfull that they squeeze a company if they are operating under a contract?

Maybe because my experience with unions have been construction(a couple of years) and railroad, where all is governed under the railway labor act. I don't see how, with a contract any scale can be tipped unless it is after the fact as result of poor negotiation on either party.

Hell Miles, to be honest, some days everybody is overpaid. 18 bucks @hr to only wrap meat seems excessive.

Miles you be the company and I'll be the union. We sit down with the goal of reaching a agreement. We bargain and do it with our eyes wide open, there is give and take and compromise on both sides until a agreement is reached that both side can live with. You as management get a book or contract, you use one half and I get to use the other to ensure that we both live up to the terms of that contract. Where during the length of our contract do things get tipped?

Just a thought, as I said I know nothing about Phelps Dodge. The union struck and then were locked out or the mines were closed. I'll make the assumption that it was some time ago, 10 or more years. If the mines had any value why didn't they reopen after the strike was broken with non union workers? As I said, a bit of "wall street"?

So? If sales profits continue to fall and costs such as health insurance continue to skyrocket then the high benifits being paid out have to come down. You can stick to your union ways and say no way and force the company to move more overseas. Your choice.

Here you prove my point that you assume that the balance of power is equal between both sides such that a contract is negotiated equally. Often thats simply not the case. You don't believe that some unions are powerfull enough to gain leverage in their favor when negotiating that contract?

Thats because you assume the terms of any contract negotiated is perfectly balanced and neither side has any bargaining leverage against the other. My family has been in the construction business for decades. Unions can and have shut down many construction companies especially smaller ones that lack the capital to fight the big unions.

Thats often what unions do because they gain enough power to leverage contracts in excess of market value.

As soon as the union gets so big and powerfull they control far more than just one company. They represent an industry. Companies loose any leverage to negotiate an individual contract. How is a small grocery store supposed to be able to negotiate against the grocers or meat packers unions when they are but one store? The balance is tipped to favor the union.

Unions also have a habit of shutting down non-union companies regardless of whether that companies benifits are already above the unions. How? They subsidize union companies in an area allowing that company to bid jobs under market. They keep it up until the company folds up. Makes no difference if the company already is paying above union wages.

They ran for awhile with non-union workers who crossed the lines. People were shot at and deaths did occur. Has a pretty good effect of keeping others from working. These mines are in small towns. When the mine dies the town dies.

Shouldn't they be negotiated at the end of the existing contract?

It is a global market now, most are overseas and have been for quite some time.

Miles, where is everybody's indignation when a company like Walmart comes in and put's 100 or more small companys or stores out of operation? There is none unless it affects them personally. But that is okay? Sure you get a bunch of jobs, mostly part time with zilch for benifits.

How about the corperation that deliberatly wrecks part of itself?

A made a movie about the practice, called Wall Street with Douglas as the lead. Read up on the Eastern Airline / Continental Airline horror show. I believe that was run by a guy named Lorenzo out of Texas. Or one I was involved with, Timothy Mellon of that wonderful Mellon family of PA and his deal. He managed to wreck 3 railroads here in New England and NewYork.

Do you wonder how much of a right off that idle mine is?

If at all possible yes. What happens when costs such as health insurance go up 30-60% per year? After several years of this somethings gotta give and the contract may not be up yet. You can argue theres a contract so not gonna budge and hope the company stays afloat.

Roy, what is your point? To bring up one example of a lousy company isn't representative of the problem at large. Walmart is an example of a company where the balance of power favors them. Is that to mean thats always the case? You seem to not realize the extent of damage that unions have done to many industries. I gotta pay $8+/lb here for a decent steak because of the dang unions with their absurd meat packers wages.

Not much. To idle it costs very little. IRS won't allow continued loss write off's or the mine is deemed no longer a business. All thats left is to write off the capital in the form of depreciation. The net result is that if it's idle its a net loss, not a net gain.

It didn't have to be a global market and US tariffs are far too low.

And where have you seen a WalMart come in and destroy the Mom&Pop stores???

Back In Canon City, Co everyone screamed the same thing before the WalMArt, "It'll destroy the the small stores!!!!"

And they were wrong. The only stores that went out of business were already poorly managed. Today, there's about 25 new small businesses that have come in and opened up since I moved away 6 years ago. I'd say you claim was worth as much as the strike pay from the union I once belonged to, nothing.

Mom&Pop stores are specialty stores offering goods and services a conglomerate store can't compete against, noyt to mention they generally have a rather exclusive clientele.

Gee, have you considered the possibility it was the best way to avoid being dominated or forced into bankruptcy

Go argue with somebody else.