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The UAW is voting against concessions that would put their compensation in line with the compensation imposed by the government on GM and Chrysler when they took the bailout. Ford is now at a competitive disadvantage due to higher labor costs. This disadvantage could result in more jobs being cut in the U.S. and sent to slave wage nations. It could even sink Ford Motor Company.
Ford is struggling under a debt load that is more than double the debt of its two domestic competitors after the bankruptcy and bailout. Ford has shown losses every year since 2005 and will certainly show a loss this year. They do not expect to return to profitability until 2011, at the earliest. They have made tremendous strides in improving quality and the work atmosphere in their plants. Ford has come a long way and is now the top U.S. car company. It would be a foolish move if the UAW fails to agree to wage and benefit concessions that will put Ford on an even playing field with GM and Chrysler. It could kill the goose that laid the last golden egg in Detroit, and that would be tragic for the nation.
Capacity utilization in the domestic auto industry is now just 62%. What this means is that many plants have been shut down, and tens of thousands of auto workers are unemployed. Also unemployed are tens of thousands of other people who have depended on the auto industry, such as suppliers, retail stores, construction companys, etc.
Over the past 40 years we have seen a number of industries brought down by unreasonable demands of labor. This would include the steel industry, the railroad industry, and parts of the chemical industry. The Monogahala Valley in Western PA used to be the home of more than 100,000 steel workers. Now the estimated number of steel workers is 9,000, and most are employed in small specialty steel companys, rather than the immense mills that were a mile long and a half mile wide and employed upwards of 8,000 men each. What happened to these mills? In a word, the union.
In the fifties and sixties the USW (United Steel Workers) pushed for constantly increasingly wages and benefits. By 1960 they had negotiated 13 weeks paid vacation, and a steelworker made far more than the average college graduate. During this time Japan, Germany, France, and other nations that had been flattened by war built new, modern steel mills and could sell steel much cheaper that the U.S., largely due to outrageous labor costs and antiquated mills.
New methods and technologies were perfected and used in the mills in Europe and Japan. U.S. steel companies tried to adopt these new methods, and the USW fought them every step of the way because for them it meant fewer jobs. Eventually the entire U.S. steel industry began to shut down, and for a few years, in Pittsburgh, conditions were every bit as bad as they were during the Great Depression. Steel and coal towns along the Mon and Yaug rivers became nearly deserted rural slums because all the jobs had disappeared.
The railroad industry suffered a similar fate. The union negotiated job descriptions during the era of the steam trains. As new technologies were developed, the union demanded that the jobs negotiated during the steam train era be retained. One example was the fireman. The job of the fireman was to shovel coal into the boiler of the steam engine. Of course when diesels replaced coal fired steam engines in the fifties, firemen were no longer needed.
Yet the union demanded that the job of the fireman be retained, since it was negotiated into the contract. There were wildcat strikes and work stoppages. The railroad companys caved and agreed to pay a fireman to ride on every diesel engine, even though he had no function, and could not be assigned other work, since his job description was “fireman.”
A problem soon developed. There was no place on a diesel engine for a fireman to stand. He had to stand in the cab, holding on to the sides. There was no place for him to sit. So the union demanded that the company provide a seat or a cot for the fireman to sit or lay on so he would not get in the way of the engineer. The railroad companys again caved in to union demands and provided a cot for a non working fireman to lay on every single trip of every diesel train. This was labeled “featherbedding” by the Pittsburgh Press. No one could believe when Penn Central Railroad, the mighty “Pennsy” went bankrupt. It had been the largest railroad company in the world at one time, much as GM was once the largest auto company in the world. Of course union demands were not the only thing that took the Pennsy down. But it was certainly a major factor.
I am familiar with the auto industrie’s version of union “featherbedding.” There were rigid job descriptions, and you could not assign a man to work “out of classification.” Thus we had guys sleeping on makeshift beds in the men’s room. We had guys who worked no more than 3 or 4 hours per shift but got paid for 8. No company can absorb these kinds of costs indefinitely, as we saw when the “Mighty Pennsy” folded, and now, the mighty GM. Will Ford be next?
I am very familiar with the necessity, years ago, for labor unions, which fought for basic human rights, the dignity of the working man, and fair treatment and fair pay. Indeed, the unions have built the middle class in this country. Unfortunately, they went crazy and are now destroying the middle class that they have built. The prosperous, growing middle class that took decades, struggle, and sometimes violence to build is now being dismantled, and the union has played a large role in that dismantling.
Even with wage and benefit concessions imposed on GM and Chrysler, auto workers still make a darn good living. An awful lot of people wish that they made that kind of money. Many wish that they had a job, any kind of job, paying any amount of money. The UAW would be foolish indeed to push Ford into sending even more jobs to slave wage nations, and possibly pushing the company over the edge. Ford has come a long way since the nightmare days of the 70s when I made notes for my book. Lets hope the UAW does not kill the last chance that Detroit has for a comeback.
Both were economic empires controlled by a handful of super rich white guys who became rich and powerful at the expense of the common people. Both used the same basic methods, called by different names. One system has failed, and the other is failing. Lets take a look at the methods, what they were called, and the results.
The Soviet Union used a system of snitches and spies to make sure everyone stayed in line. Every Red Army unit had a “Political Officer” who was not under the control of the Army officer corps. He reported to the Secret Police. His job was to look, listen, and report. He reported conversations, read memos, and monitored the “correct thinking” of the unit. If there was any “incorrect” thinking or speech, it became a matter for the Secret Police. If an officer was involved, he could get years in prison. If it was an enlisted man, terror tactics were used. I traveled behind the Iron Curtain during the Soviet years. Every apartment complex had a guy whose job was simply to look, listen, and report. Incorrect thinking and speech were immediately addressed.
The Corporate System has HR people. They also have a system of snitches. Recently they have begun to install cameras so people can be watched constantly. If you are in management your personal life is under the microscope. You have to toe the corporate line. People watch what they say, and how they say it, because there are consequences for “incorrect” thinking and speech. I worked at P&G in management right out of college. I learned that there is correct behavior and incorrect behavior for “P&G People.” One of the “correct” behaviors for a P&G manager is to be a regular church goer. My boss explained it to me this way” “You are no longer Bob Dewar. You are an up and coming P&G manager. People in your community have expectations of what a P&G manager is. Now I don’t give a rat’s ass about your religous beliefs. But have enough respect for the company to get up on Sunday morning, get a suit and tie on, get your wife dressed for church, go out to your car, wave to your neighbors, make sure they see you. Then go out and eat someplace, or whatever you want. The important point is that people think you are going to church. P&G people all go to church.” P&G People are so distinct in Cincinnati, their home base, that everyone calls them “Proctoids” because they are contolled like robots, fearful of stepping out of line.
The Soviet Union used fear and terror to control. The corporate system uses money. You want a good job, good benefits, a good salary? Then you have to play our game. If you don’t play our game we will can your butt and you won’t be able to live in a nice house, drive a nice car, and provide well for your family.
The Soviet System promised that “from each according to his abilities, to each according to his needs.” The Corporate System promises that if you get a good education, work hard, and are dedicated, you will get a “good job” and be prosperous. A good “Soviet Man” and a good “Corporate Man” are separated only by terminology.
The old Soviet Union lies in ruins. Most of the people are poverty stricken and have lost faith and trust in the system. A handful of very rich ones learned quickly to adapt to capitalism and exploit the collapsing empire by utilizing their connections to take control of resources and exploit the losers from the system.
The failing Corporate System has left a trail of desolation that stretches from Detroit through the coal and steel towns to the nearly bankrupt state of California. A handful of super rich that have plundered the nation and stolen wealth from the people who produced it live in absolute luxury, much as the “new capitalists” in the failed Soviet System. Millions have lost faith and trust in the Corporate System and cry out for socialism as they lose what they have worked for all their lives and were betrayed by false promises.
Building Socialism in the Soviet Union: Millions were enslaved in communes and forced labor camps to enrich the handful of old white guys that controlled everything.
Building Corporatism in the U.S.: In the late 19th and early 20th centuries millions of immigrants came to the U.S. with the promise of freedom and prosperity. They were stuck in coal camps back in the hills, or industrial towns where they worked their lives away and never received the promised prosperity. In the late 20th century and the early 21st century factories were moved to China, Mexico, India and other slave labor nations, and the American work force was abandoned to further enrich the handful of filthy rich white guys at the top. The common working man steadily loses ground and watches any prosperity achieved by his grandparents, parents, and himself slip away in foreclosed houses, stolen pensions, and no medical benefits.
The promise of Communism: Happy workers, who live in a land of equality, will build quality products in great abundance for the masses. Result – Unhappy, enslaved workers that produce junk and there was shortages of everything.
The promise of Corporatism: Competition will result in the best man winning, and products will get better and better because competition will force steadily improving quality. Result – Products get worse every year, including cars that kill people, merchandise that breaks down immediately after the warranty expires, drugs that are more dangerous than the diseases they are supposed to cure.
Soviet attitude toward human beings: Use up and discard.
Corporate attitude toward human beings: Use up and discard.
Political Power in the failed Soviet System: Free elections, but only one candidate on the ballot, and if you do not vote for that candidate you will get a visit from the Secret Police.
Political Power in the failing Corporate System: Free elections with multiple candidates, but each and every candidate is in the back pocket of Big Money and will say whatever the polls tell him he needs to say to get elected. After the election you will never hear from him again until the next election.