The Big Three whine about foreign competition, and shift blame for their collapse onto the UAW. Yet the Big 3 created both the UAW and the foreign competition. Let us look first at how the Big Three created the UAW.
In the early days of the auto industry, when workers had no representation and no power whatsoever to control their own lives, Henry Ford treated them like slaves. Even though he paid the highest factory wages in history, labor turnover was in the 70% range. A lot of money can compensate for horrible working conditions, but only up to a point. Lets look at some of the working conditions that resulted in the creation of the United Auto Workers.
Ford hired thugs to “handle employee problems.” Many of them were World War I vets, and some of them were ex-convicts. Henry Ford ran Detroit like Al Capone ran Chicago. Every cop, judge, and government official was in his back pocket. He had an elaborate system of industrial spies, much like the secret police in the old Soviet Union, that reported on the personal lives of employees. Ford did not approve of alcohol, and employees who drank ended up on a list of undesirables. After the Bolshivik Revolution in Russia, Lenin was so impressed by how Henry Ford controlled employees by shear intimidation that he sent a team of NKVD (secret police) to Detroit to study Ford’s methods, and later incorporated those methods into the communist system of people control.
Ford was so paranoid about labor unions that if an employee was even suspected of supporting a union, he would be terminated, and lucky if he did not receive a physical beating from Ford’s thugs, which he euphemistically called his “Service Department.” Talking on the job at the Ford plant was forbidden, and employees devised a method of speaking out of the sides of their mouths to workers to their left or right. This became known as “Ford Talk.”
I met a man at the Sharonville Plant who was a kid during the Depression, and his Dad worked at Ford. One of the snitches reported that he had stolen tools. Thugs from the Service Department forced their way into the home one night and demanded to know where the stolen tools were. But of course their were no stolen tools. Snitches often reported misdeeds to strengthen their postion at the Ford plant. Henry Ford rewarded eyes and ears that he felt was on his side.
The thugs beat the man’s father unconscious, in front of him (age 8) and his mother. When his father collapsed in a pool of blood on the kitchen floor, the thugs ransacked the house, searching for nonexistent stolen tools. The next day the man was terminated, on the strength of a snitch’s lie, even though no tools were found. The family nearly starved, because when you were fired at Ford, you never got another job anywhere near Detroit. That man carried a hatred of Ford with him for the rest of his life. When I met him he had 28 years at Ford, and told me that every single day he made Ford pay for what they had done to his father. Sabotage, high absenteeism, holding back production, and purposely running defective parts were his weapons of revenge.
Many American corporations treated their employees badly during those turbulent decades when a working man was looked at as stupid and controllable. All of these kinds of companies eventually unionized. They did so as a self preservation mechanism, and to be treated with human dignity. They needed an organization with enough power to counter balance corporate tyranny. Yet many companies never did face an organized labor revolt. These were the companies that treated employees with dignity and respect, and listened to them. Employees that felt their employers would listen to their complaints seldom felt the need to unionize. But the coal, steel, railroad, and auto industries created the unions which they would later blame for their demise.
Now lets look at how the Big 3 created the competition that beat them at their own game on their own turf. In the late 1960s and early 70s Toyota was a weak, undercapitalized, inexperienced company that few had even heard of. Everything coming out of Japan was considered junk, as in junk ashtrays and knicknacks sold in gaudy souvenir shops on Times Square. It would still be that way today if Detroit had not literally opened the doors and invited Toyota and others onto the American playing field.
Someone in Detroit came up with a brilliant idea called “planned obselescence.” It involved engineering cars to last shorter periods of time. Parts that would fail first were embedded deep in the engines, transmissions, and electrical systems. The parts that failed were not that expensive. But the entire car had to be ripped apart to replace the failed parts. The rationale was that people would tire of spending so much on repairs, dump the cars, and buy new ones. That would increase sales without the need to increase the number of people buying cars.
But the low quality produced by Detroit in the 70s was only partially rooted in planned obselescence. Larger parts were played by pushing vendors to cut costs, and running machines until they literally fell apart. At the Sharonville Plant incoming components from vendors deteriorated so badly in quality that additonal people had to be assigned to cull out the junk before it got into the transmission. Machines were never repaired properly. Makeshift repairs were made to get the machine back on line, whether the parts it made were good or bad. I was so shocked by the quality standards that I started a collection of defective parts that were routinely assembled into Ford transmissions, and put them in boxes in my garage, along with the specification sheets for those parts, so they could be checked with a micrometer and compared to the spec sheets. By 1979 I had eight large cardboard boxes of defective parts sitting in my garage. At the Sharonville Plant one of the machines in my department would wobble so badly that the operator had to put the back of a pack of paper matches between the slides to make the machine run “acceptable” parts. Another operator brought in a large rubber band everyday to loop around the arm of a machine, or it would not run. Ford’s answer: keep a supply of large rubber bands at the foreman’s desk and keep running the machine.
While all of this was going on, and while Ford was building transmissions that would result in the largest recall in automotive history, and building Pintos that burned people alive, Toyota was quietly increasing market share by building high quality, reliable cars that eventually drove demand through the roof. By 1979 Ford dealer’s lots were packed full of cars that no one was buying. But at Toyota there was a two month waiting list, and they had no cars on their lots. All of them had been sold. Chrysler paid $50 to anyone who would test drive a Chrysler and bought a new car, no matter which brand. People test drove Chryslers, bought Toyotas, and applied for a $50 Chrysler rebate. The auto industries response to the explosion of demand for better quality foreign cars, and the abandonment of cars made by the Big 3 was a series of “Import bashings.” Auto workers would smash Toyotas and Hondas with sledge hammers in front of TV cameras, while a large picture of the attack on Pearl Harbor was shone in the backgound.
So the U.S. auto industry created the UAW, and then blamed the UAW for its failure. It created immense demand for foreign made cars by producing junk for 20 years, and then whined that the “foreign devils” were responsible for the collapse of Detroit. Sounds more like a spoiled child than the largest industry in the United States.