I was struck by a paraphrase that I heard recently from a reporter on one of the Sunday morning shows, describing a statement made by the head of the UAW regarding their position on “givebacks” to GM to assist in restructuring the company financially.
As I heard it, and I don’t remember the quote exactly, it was something like “we have given enough.”
I was honestly dumbstruck. And it made me revisit my thoughts about unions in recent American history.
There is no question that there have been times and circumstances where unions have been necessary, even critical to supporting fairness to workers. And though I am no expert on unions, I am sure there are industries where unions are still important and valuable.
But in modern times, more often than not – at least in the high profile scenarios of which I am aware, unions are a cancer on the American economy and, bizarrely, on themselves.
What else could explain the fact that unions are a major catalyst for the entire destruction of the American auto industry? Certainly there is plenty of blame to go around including corporate management, but unions were right there at the table – partners in the destruction of GM, Ford, and Chrysler.
But while their part in the destruction of the industry – through work rules and pensions and all kinds of structures that guaranteed Detroit would lose money – is troubling, what is shocking is that on the eve of the first of “the big three” going bankrupt, they think they have “given enough.” In other words, the way things are now is great. We see no reason to fix anything.
And in a month they will all be out of work.
They are willing to defend their ill-gotten gains while the union-free Japanese automakers, with their happy, fully employed American autoworkers eat America’s lunch.
Certainly, if Detroit goes down, as it looks like the Republican Party is insisting, The UAW will be a full partner in the industry’s demise.
Monday, November 17, 2008
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11 comments:
..."The UAW will be a full partner in the industry's demise"
Amen!
The Unions are the reason why people are not scared to retire from there and be sure they will NOT need additional job to keep paying the bills or medical expenses. The workers are happy with it and they work hard for their money!!!
This is a suicidal dynamic I see in our biz practices nowadays that I refer to as "The 'Screw You' Economy". I define it as the condition where you don't care about the survival of the partner you NEED to survive yourself.
Mea,
I am sure that workers that have retired with no repercussions from Detroit's demise are fine with things just as they are. For those that lose their jobs, and for the impact on the economy at large to lose the auto industry, the results may not be so happy.
I usually look up to your posts because they do not over simplify for the sake of a striking argument. Well... not this time...
Employees are not share holders or banks : they don't get to pay first hand for the mistakes of the management. When GM and others will have gone through Chapter 11 and that other stake holders that benefited from the good times will have paid for their lack of judgement, then will be time to see what employees can do...
If it was because of social benefits that company crash, Europe would be probably a no man's land (even though some cynical ones might argue it is actualy the case)
By the way : I'm not a union guy. Just nuance calls nuance and the other way around...
Anyway I will still highly regard your contributions.
Joss
"Employees are not share holders or banks : they don't get to pay first hand for the mistakes of the management. "
Yes they do. They lose their Jobs. Oh and by the way, essentially GM has no shareholders. When companies go bankrupt the creditors and the employees essentially become the only relevant stakeholders.
Also, when one of the biggest mistakes management makes (but certainly not by any stretch the only one) is conceding to unreasonable demands from unions, the unions most certainly share responsibility for that and will indeed pay, one way or another as they are about to.
I don't think the unions are the primary responsible parties for any business's failure. It's always management's fault in the end.
Employees are always in a subordinate position, and organized groups of employees are likewise still just subordinates, albeit somewhat less prone to being stepped on. Of course they are greedy; in capitalist society, the motto is "all the market will bear".
Every employee, whether organized or not, should always attempt to negotiate the best possible compensation, and there should be no shame about it, considering that all the other parties involved in the corporation are doing the same thing.
Management wants to make as much executive compensation as possible themselves. The shareholders and board likewise want the stock price to go up as much as possible. And as far as each of these three parties care, the other two can go to the devil if only their own share would increase.
So it's up to management to negotiate firmly and correctly with unions just as with non-union employees, just as it's their responsibility to manage the company with long-term goals in sight, and not be focused on appeasing shareholders in the next quarter or for the next general meeting. Of course with ridiculous executive compensation bonuses based on stock prices in the current year, that's not going to happen, but that's not the union's fault, that's the board's fault.
So I will certainly concede that the unions bear some responsibility for Detroit's downfall, but they were just negotiating as hard as they could for benefits, which it is their right and duty to do.
If management couldn't do the right thing by controlling all costs (including labor costs through better negotiations), by designing and building and selling quality vehicles, and being flexible enough to deal with changing conditions, it's really their fault more than anyone else's when things go badly.
Thank you Laurence, I could not have exposed my point of view more clearly.
GM is like a big cake that is shrinking fast, and there will be not much left whatever is going to happen. Union are right to try to kick other stakeholders off of the table. Employees tend to see their share of the cake diminish (relatively, not absolutely) when the cake is growing, it would only be justice that it grows (relatively again) when the cake shrinks...
And that does not make them irresponsible because anyway in the end the cake is certainly not gonna be big enough for all of them. But they would be crazy to give away some of it to let have shareholders and banks have a share...
And that's the golden rule of negociating : how to go far enough so that others are not going to follow, but not so far that you crash down the cliff.
"And that's the golden rule of negociating : how to go far enough so that others are not going to follow, but not so far that you crash down the cliff."
They failed the golden rule.
Yeah, what you want for the various interested groups -- unions, management, shareholders, creditors, suppliers, etc. -- is a large scale multiplayer equivalent of the "you cut the cake and I choose the slice" sort of model. That way enlightened self-interest is the same as greedy self-interest is the same as utilitarian philanthropy. But it's hard to set things up that way in an antagonistic environment.
The only thing that comes to mind for the unions themselves considered in isolation is employee ownership -- that way they have to decide for themselves about pay scales, employment levels, benefits, and competitiveness -- but I doubt that's feasible for GM.
Unions will do to the Automobile industry what they did for the Steel industry. No More No Less.
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