no wonder the US auto industry is dying

http://www.detnews.com/2005/autosinsider/0510/17/A01-351179.htm WAYNE -- Ken Pool is making good money. On weekdays, he shows up at 7 a.m.
at Ford Motor Co.'s Michigan Truck Plant in Wayne, signs in, and then starts working -- on a crossword puzzle. Pool hates the monotony, but the pay is good: more than $31 an hour, plus benefits.
"We just go in and play crossword puzzles, watch videos that someone brings in or read the newspaper," he says. "Otherwise, I've just sat."
Pool is one of more than 12,000 American autoworkers who, instead of installing windshields or bending sheet metal, spend their days counting the hours in a jobs bank set up by Detroit automakers and Delphi Corp. as part of an extraordinary job security agreement with the United Auto Workers union.
The jobs bank programs were the price the industry paid in the 1980s to win UAW support for controversial efforts to boost productivity through increased automation and more flexible manufacturing.
As part of its restructuring under bankruptcy, Delphi is actively pressing the union to give up the program.
With Wall Street wondering how automakers can afford to pay thousands of workers to do nothing as their market share withers, the union is likely to hear a similar message from the Big Three when their contracts with the UAW expire in 2007 -- if not sooner.
"It's an albatross around their necks," said Steven Szakaly, an economist with the Center for Automotive Research in Ann Arbor. "It's a huge number of workers doing nothing. That has a very large effect on their future earnings outlook."
General Motors Corp. has roughly 5,000 workers in its jobs bank. Delphi has about 4,000 in its version of the same program. Some 2,100 workers are in DaimlerChrysler AG's Chrysler Group's job security program. Ford had 1,275 in its jobs bank as of Sept. 25. The pending closure of Ford's assembly plant in Loraine, Ohio, could add significantly to that total. Those numbers could swell in coming years as GM and Ford prepare to close more plants.
Detroit automakers declined to discuss the programs in detail or say exactly how much they are spending, but the four-year labor contracts they signed with the UAW in 2003 established contribution caps that give a good idea of the size of the expense.
According to those documents, GM agreed to contribute up to $2.1 billion over four years. DaimlerChrysler set aside $451 million for its program, along with another $50 million for salaried employees covered under the contract. Ford, which also maintained responsibility for Visteon Corp.'s UAW employees, agreed to contribute $944 million.
Delphi pledged to contribute $630 million. In August, however, Delphi Chairman and Chief Executive Officer Robert S. "Steve" Miller said the company spent more than $100 million on its jobs bank program in the second quarter alone.
"Can we keep losing $400 million a year paying for workers in the jobs bank and $400 million a year on operations? No, we cannot deal with that indefinitely," Miller said in a recent interview with The Detroit News. "We can't wait until 2007."
Guaranteed employment
The jobs bank was established during 1984 labor contract talks between the UAW and the Big Three. The union, still reeling from the loss of 500,000 jobs during the recession of the late 1970s and early 1980s, was determined to protect those who were left. Detroit automakers were eager to win union support to boost productivity through increased automation and more production flexibility.
The result was a plan to guarantee pay and benefits for union members whose jobs fell victim to technological progress or plant restructurings. In most cases, workers end up in the jobs bank only after they have exhausted their government unemployment benefits, which are also supplemented by the companies through a related program. In some cases, workers go directly into the program and the benefits can last until they are eligible to retire or return to the factory floor.
By making it so expensive to keep paying idled workers, the UAW thought Detroit automakers would avoid layoffs. By discouraging layoffs, the union thought it could prevent outsourcing.
That strategy has worked but at the expense of the domestic auto industry's long-term viability.
American automakers have produced cars and trucks even when there is little market demand for them, forcing manufacturers to offer big rebates and discounts.
"Sometimes they just push product on us," said Bill Holden Jr., general manager of Holden Dodge Inc. in Dover, Del., who said this does not go over well with the dealers. "But they've got these contracts with the union."
In Detroit's battle against Asian and European competitors that are unencumbered by such labor costs, the job banks have become a major competitive disadvantage.
Breaking the banks
Analysts say the jobs bank could be a bigger issue than health care in the 2007 contract negotiations, particularly at Ford. It has a younger work force than GM, meaning any workers Ford sends to the bench are likely to stay there for a while.
"Ford is under pressure from investors to cut costs," said Roland Zullo, a research scientist at the University of Michigan's Institute of Labor and Industrial Relations. "At the same time, the unions are going to be under pressure to protect jobs."
Given that, he expects a compromise that allows for the jobs bank to continue but not on the scale of the current programs. "There's going to be a lot of give and take," he said.
But does the jobs bank make any sense in a climate of shrinking profits and declining market share?
"Labor wants the (jobs bank) because they want protection for their members," Zullo said. But he added that the jobs bank was also designed to help the companies by ensuring that skilled workers did not take their talents elsewhere.
"Companies invest in training," he said. "It protects that investment."
The investment only makes sense when viewed from a long-term perspective, a vantage point Wall Street is not known to favor.
"If they're going after the job banks, that would signal to me that the folks at the top have lost faith in their ability to recoup market share," Zullo said. "That would suggest to me that they really don't see a turnaround."
Analysts and labor experts believe some sort of compromise is inevitable as pressure builds on Detroit automakers to lower operating costs.
"The union probably realizes the money to pay for these programs probably doesn't exist," Szakaly said. "There's going to have to be some give on the jobs bank."
While the job banks may exemplify the sort of excesses that give unions a bad name, experts say it is wrong to cast all the blame in the direction of Solidarity House. He said the leaders of GM, Ford and Chrysler also bear some responsibility for the current problems.
"If these guys built cars people wanted, this wouldn't even be an issue," Szakaly said.
'Put out to pasture'
That view was echoed by Dan Cisco, another member of the jobs bank at Michigan Truck, as he drained a cup of coffee with Pool and other idled workers at Rex's restaurant in Wayne last week.
Ten members of UAW Local 900 are currently assigned to the jobs bank at Michigan Truck. They are all gun-welder repairmen -- or "gunnies." It is a classification each says they earned through decades of hard work.
And none of them is ready to give it up.
While some might envy their life of leisure, workers like Cisco, 56, feel humiliated by the program.
"I felt like I was useless -- like I was put out to pasture," he said. "It's just like how they treated the veterans. During the war, we were heroes. When we came back ... "
Cisco adjusts his cap, emblazoned with the familiar silhouette of a captive American POW, and sighs.
Michigan Truck, which builds the Ford Expedition and Lincoln Navigator full-size SUVs, used to be one of Ford's most profitable plants. Today, the nation is turning away from the big trucks and sport utility vehicles it builds.
Cisco, Pool and eight other gunnies from Michigan Truck have been in the jobs bank program since their positions were eliminated in July. They all have more than 36 years with Ford and are among the highest-paid workers in the plant. They say the company is asking them to accept one of the $35,000 retirement packages it is offering to trim its blue-collar headcount.
Most say they have no interest in retiring -- or spending the rest of their careers doing crossword puzzles.
"We want training," Dale Hall said.
Classes are available, the workers said. They have been invited to take courses on bicycle repair, home wiring and poker. Silk-flower arranging is also available.
"They might as well just give us a basket-weaving class, set us in the corner and let us feed the pigeons," Cisco said.
Community service
Not everyone in the jobs bank is spending their time marking it.
Dan Costilla, a member of UAW Local 602 in Lansing, was a body shop worker at GM's Lansing car assembly plant until it was closed in May. Now, instead of grinding joints, he rides herd over 16 of his former plantmates, making sure they keep their appointments at the local thrift store or Head Start program.
"I'm making sure that everything's going smooth," he said.
In the five months since Costilla and his co-workers have been unemployed, they have been busy mowing lawns for the handicapped, patching roofs for senior citizens and chaperoning youngsters on field trips to the zoo. It is all part of a community service effort organized by the union, with the support of the company.
"They realized you could only sit so long at the job bank office," Costilla said. "Your bones, they get sore after a while sitting down."
Bob Bowen, former president of UAW Local 849 in Ypsilanti, said the original intent of the jobs bank program was that idled workers would be gainfully employed on community projects or learning new skills -- real ones that they could actually use on the assembly line.
"The idea was not to have people loafing," Bowen said. "But that was a concern."
The problem, he said, lies in the way the jobs bank is administered.
Instead of setting up a central authority to manage them, responsibility was largely left to union locals across the country. Some organized community projects and job training. Others passed out decks of cards and hooked up VCRs.
Ken Pool said he can only take so many more World War II documentaries and crossword puzzles.
He and the other members of Michigan Truck's jobs bank planned to meet with a lawyer. They have already filed numerous grievances, accusing the company of age discrimination, but have heard nothing from the union or the company.
Now they are going to see if the courts can help.
As for Costilla and his colleagues, they are getting ready to go back to work at GM's new Delta Township plant. Costilla acknowledges that many of the union members are not looking forward to going back to work at the factory.
"The majority of us would rather stay here doing what we're doing," he said.
"You're not on the line, chasing a car."
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wrote:

[snipped]
Unions at their best... Unbelievable.
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We cannot generalize about unions. They are a necessary evil. Without a union, you get fired if the boss hates your guts. So, some protection is not a bad thing. When protection takes a form of welfare, though, it's another story. Is it fear of strikes that pushed GM to give hugely generous benefits to its workers? If they don't reverse the tide, they will sink. $31.00 an hour to work on building cars bought by many people who make less than a third is, IMHO, a bit immoral. But, hey, we believe in capitalism, don't we!!! They say it's the best system in the world. It's far from perfect. It's hard to justify paying so much for a car. You loose half of its value in the blink of an eye, even if you still owe 2 thirds to the bank and if you are going to pay many more hundreds of dollars in repair. A friend of mine used to own a Ford dealership. He went to a dealers meetings where the Ford people asked them if they'd like a car that would be better build and would last 20 years without major problems. They voted NO. So, they could build better cars if they wanted to. Is it any wonder that so many people buy Japanese cars? Dollar for dollar, my perception is that they are build better. Case in point: 2 years ago, my son was hit by a guy who forgot to make a stop. My 93 Camry went to the bodyshop for 3 days and I had the pleasure to drive a brand new Alero. I kid you not. My Camry with 250,000 kilometers drove 100 times better than the brand spankinbg new GM car. I'm convinced. ;-)
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This sounds typical. In the 60's, here in No California, I belonged to Operating Engineers Union. I was gradesetting (setting guide stakes for equipment to get the slopes/grades right). The union had a classification for "Journeyman trainee". Purpose was (supposedly) improve the skills levels. Most of the time they sat on cutslope watching. When I tried to get one of them to work with me (I got same pay as operators) to learn my field, there was all kinds of excuses from the boss (let the SOB sit), the worker (its to hot, can't walk that much in my cowboy boots, no shade) (equipment all had shades/umbrellas).
And my favorite one from the union Business Agent "its to complicated to expect them to know/learn any math".
Ah the good old days!
But I made good money cause of it!
Ron
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Sounds like a mangment problem not a union problem. ;)
mike hunt

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It becomes a union problem when there are no jobs. You can blame management all you want, but you still have no job. Blame management some more, but you still have no job.
I suppose if the Union workers were really motivated, they would buy the bankrupt company and run it themselves. This has been done before - successfully :-)
Mike Hunter wrote:

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The only way for GM to save itself is to die, then resurrect itself as the fine company it once was, and pay its workers the same wage and benefits as the foreign manufacturers do domestically. And please, don't someone tell me how the imports are screwing the poor American worker. I live a few miles from the Georgetown Camry plant, and people fight for those jobs.
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Sean Elkins wrote:

GM also needs to build cars that will last as long as Toyotas with a minimum of non-routine problems. Ditto for Ford and Crapsler. I honestly believe that this is why the big 3 are gradually losing market share. Their reliability may have improved over the years, but there is still a fair gap in the differences in reliability, especially over the long term.
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snip

Exactly!
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You forgot to say in my opinion. LOL
mike hunt

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minimum
gap
I would love for you or someone to prove that this assertion is true. My day job is at a plant with thousands of cars in the parking lot. I'll bet there are not 5 Toyotas more than 10 years old in the lots on any given day (versus 100s of newer ones). There are many old US cars in the lots. I know this is non-scientific, but I just don't see the number of old Japanese cars that the claims of "super" reliability suggest there should be. Over the last 30 years my family, close friends, and myself have owned a large selection of cars from most major manufacturers. Nothing in our collective personal experience indicates that Japanese cars in general are particularly reliable or long lasting (assuming similar treatment and maintenance). In fact, I'd say the opposite was true. Again, non-scientific, but anytime someone makes the claim that Japanese cars are super reliable and last forever, I just have to ask myself how come I don't personally know of even one that is so great. My SO drove a Camry wagon to 250,000 miles, but it was a POS when she finally dumped it. She has now driven a Plymouth mini-van to similar mileage, and it is in far better shape than the Camry was at the same stage of it's life (not that it is great). I have personally owned Mazdas, Datsuns, and Toyotas and none have been all that reliable. And I noticed that even the Lexus dealer has a service department full of broken cars.
I just want someone to show me some proof that Japanese cars are sooooo much better than GM cars (or Fords for that matter). Until I see some sort of proof (and I don't mean the Consumer Reports or JD Powers popularity contests) I am just going to mark the legend of Japanese auto quality as advertising driven hype.
Ed
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What about resale value? That's the market telling you a Honda or Toyota is worth a much higher % of original value than a GM or Ford.
I've seen 5 year old Hondas with 100K miles for sale for 10.5K (US $). That's about 1/2 original price. Somehow the market thinks they hold their value.
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I'll bet money that when my Toyota is ten years old I'll get more money for it than I did for my ten year old Dodge Caravan.
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I'll bet you paid a lot more money to drive home that Toyota van than a comparable Dodge van as well ;)
mike hunt
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In fact only a couple thousand more than a 94 Caravan and I got more stuff and bells and whistles on the Toyota plus I got a non-rattle smooth ride with better gas milage plus more room. The Toyota was a far better value for me, but to be fair the Sienna was not available in 1994. As far as a 2004, perhaps yes a little more, but it was as I said worth it. Having said that, if I were using it for a business then I would go the cheap route and buy a Caravan or whatever I could get for the least money, in fact I'd try for a two year old something, then drive the hell out of it and then junk it. All depends on what you want. You drive a Lexus I seem to recall, then why couldn't you drive a Focus or something similar, a throw away so to speak. We all have our pleasures and fun money to spend on cars. I hate rattle traps.

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.dbu. wrote:

You probably will. I looked at a 2001 RAV4 with 44K miles. It was going
for only $3,000 less than a new 2005 RAV4 with 2 miles. They hold their values!
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That proves nothing. People have been conditioned to think they are better, whether they are or aren't. My Sister has owned two Hondas. Her current Civic is decent, if not spectacular. It is 9 years old and definitely looks it (paint falling off, interior dull, minor oil leaks, but nothing too bad). I'd say it and my 14 year old F150 are in about the same condition. Her prior Honda (an Accord) was more troublesome. Rust was a problem, and if you drove fast (say 75) the front doors would start whistling like a banshee. She likes Hondas, but if she was honest, she would have to admit the two Fords she owned were just as reliable. Why does she like Hondas? I have no idea. She hates Toyotas, so it can't be a Japanese car thing. My Parents have not owned anything but Fords for at least 40 years. I doubt if they have spent as much as $500 on repairs on any one car in all that time. My Mother's last two Grand Marquis ('92, and '00) have never even been back to the dealer for any sort of repair. Can you do any better than no problems? I keep trying different brands, but it is very difficult to evaluate changes in the quality of cars if you are trying to compare a 2001 Toyota to a 1965 Chevrolet - which is the sort of comparison I think a lot of Toyota / Honda owners like to make.
Ed
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That's good that you've had a good experience with them. But I don't think resale value is meaningless. It may be a lagging indicator if recent US quality has improved, but it's still what the market says. Why would people assume Japanese is better quality if it isn't so? How could they all be wrong?
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Hate to ask a question of a questioner but if what you say were actually true, why does everybody not believe that and buy Toyotas? GM, Ford and even Chrysler outsell Toyota and Honda. The market say THOSE buyers must not believe what you believe. ;)
mike hunt

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Mike Hunter, 10/19/2005,8:42:12 PM, wrote:

Maybe it's because they have been influenced by the exorbitant amount of advertising by the Big Three.
You make lots of good points, but every Toyota and Honda owner I have met has not gone back to American cars. One example is the fellow at church last week. I saw him get into his 4Runner and asked him when is he going to get one like the newer one parked next to him. He said he'd like to but there's no reason to buy a new one yet. He said he has had less problems with his 4Runner in five years than he had with his Cherokee in one year.
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