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.