By on October 4, 2010


Another day, another story on the ever-growing conflict between the UAW’s ownership stake in GM and responsibility to its members. Pre-bankruptcy, GM didn’t have to deal with the fact that the UAW is incapable of building fuel-efficient subcompact cars profitably. As a result, the outgoing Aveo was built and designed in Korea as the Daewoo Kalos, before being fitted with a bowtie and shipped to the US. But now that the General has promised to build the next-gen Aveo in Michigan’s Orion Township plant in exchange for nearly $800m in local tax credits (not to mention the political benefits of “saving or creating” hundreds of union jobs), it’s up to the UAW to square the circle and make the damn thing profitable. Which, according to Automotive News [sub] is just what they’ve done… by bumping 40 percent of the plant’s previous workers to the new “tier two” wages. Which is a nice way of saying “cutting their wages in half.” How is that possible?

The UAW’s 2009 amended contract with GM just before bankruptcy called for “innovative labor agreement provisions” that would allow GM to make a small car profitably in the United States.

Under those “innovative provisions” (which just happened to be conjured up when the government task force was elbow-deep in GM), Orion workers can neither appeal the decision nor go on strike over it. Either the UAW wants to be a union capable of building small cars profitably, or it doesn’t. Screwing less-senior “brothers” so politicians and union bosses can crow over the “green jobs” at Orion is cowardly and despicable.

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70 Comments on “UAW Saves Aveo Profitability By Pushing Workers Into Tier Two...”


  • avatar
    psarhjinian

    It should be fun to watch the spin in the commentary on this post.
     
    One one hand, this is exactly what many posters have demanded the UAW do: participate in a race to the bottom such that they can be a low-cost producer as competition demands.  On the other, since they’re demoting people in order to meet a cost target, they’re hypocrites.
     
    I look forward to seeing how this is all reconciled.  I’m also expecting at least one comment about the quality of public education.

  • avatar
    mikey

    Yeah,  of course just more evidence of those nasty unions that won’t give an inch. Oh wait! I must of miss read it.{public school education,don’t you know} The UAW did make concessions.  I’m so confused. Your right Psar,this should be good.

  • avatar

    Steps for taking over America

    Step #1   BUY AMERICAN DEBT.
    Step#2   call in Debts…
    Step #3  force America to de-industrialize to repay the debts they can’t repay
    Step #4  build items Americans need and sell them at low prices to keep the dummies quiet
    Step #5  when Americans wake up and realize they are jobless because they produce nothing, blame immigrants and the unions
    Step $6 attack the unions
    Step #7  break the unions.
    Step #8 pay American laborers less money for more work
    Step #9  transfer wealth of America to your own country to fuel your own economic growth.
    Step #10 LAUGH ALL THE WAY TO THE BANK.

  • avatar
    tiredoldmechanic

    I’m no fan of big unions, but I can’t agree that this is cowardly or despicable. In fact, it probably took a lot of guts for someone in the union executive to get this one done. Union intransagence has cost many thousands of jobs over the years and this looks more like the local accepting the facts of life rather than singing “solidarity forever” while the tooling is removed from the shop floor. I’m sure it sucks if you are one of the workers who just got a wage slash, but considering the employment prospects of laid off auto workers these days it could be worse.
     I deal with union issues daily, and believe me you can bet whoever negotiated this one will need asbestos underwear. The members won’t be a happy bunch. I would not be surprised if Orion becames a modern day Lordstown but at least the UAW tried to compromise.
     They’re not always in the wrong. My .02 anyway.

    • 0 avatar
      daga

      I agree that is doesn’t seem so despicable and cowardly.  Seems gutsy to me.  The reality is that cutting some executives and cutting some salaries is not going to make a GM compact profitable in the current times.  Honda’s Civic in Ontario may be profitable, but they are building on years of consumer equity and continuous improvement (predominantly by salaried engineers).  Otherwise, the value competitors like the Kia and even Ford’s move of the Fiesta to Mexico show that to make a buck on small cars sold in the US, you need to be cutting any ‘waste’.  Waste can be uncompetitive wages to hourly workers, bureaucratic ineffeciencies, uncompetitive wages to executives and thousands of other things.

      I certainly don’t know many people eager to work for GM or Chrysler’s mid-upper management ranks judging by the number of friends that have turned down jobs there.  The sad part is that upper execs are a pretty fluid market that hirers consider the value add of those types to grossly exceed the salary cost to the point that adding 20% to the package is immaterial.  Adding 20% to the cost of 3,000 people in a plant is both material to that car and difficult to defend as value adding to the company.  I don’t know how much fat is in GM’s middle layer, but it would seem logical that a bunch got cut in the bankruptcy and that they are looking at all ways to reduce the total costs.  I can’t imagine their Catbert to be any more salaried-friendly than average.

      It sucks to have your pay cut 10% so 50% is a horrible situation, but to pretend that the alternative is the prior wage seem unrealistic.  When and if GM starts making more than 10% operating profit sustainably, there will be clear needs to increase hourly rewards.  I assume (hope) it will be in variable pay and not defined benefits or salary so that it doesn’t trap the company, but to expect the benefits before succeeding with the Aveo is unreasonable to me.

  • avatar
    cheezeweggie

    1/2 union wage?  The alternative is Wal-mart.  Learn to live with it.

    • 0 avatar
      mikey

      “Learn to live with it” Really whats so hard about that? Cutting your wages in half shoudn’t impact your life that bad.

    • 0 avatar
      psarhjinian

      Should we?  Really?  With executive compensation skyrocketing regardless of performance and real earnings seeing a spread unheard of since the start of the last century?
       
      We should just “live with it”?
       
      I’m amazed at how many people have swallowed this message.  Don’t ask big questions, just be happy with your pittance.  Oh, and don’t think about who’s really behind the curtain: the real problem is the unionized guy who’s making 10% more than you.
       
      That we’re having to adjust to a “new normal” doesn’t bother me; the post-WWII era was very much a socio-econonomic exception.  What gets me is the people who are actively cheering the winner of this race to the bottom and not, for one second, wondering who fired the starter’s pistol, nor who owns the track.

    • 0 avatar
      Steven02

      It is either they work for less wages or lose their jobs.  I guess they can always leave the job and go find another one if they want to.  They aren’t tied to these jobs.

    • 0 avatar
      OldandSlow

      It’s a difficult reality.  The men in suits peering over spread sheets will not operate a plant that produces an affordable car in the US or Canada, while paying Tier 1 UAW wages to everyone.
       
      Keep in mind that the Aveo was formally built in Korea.
       
      The sad truth is the men and women behind the curtain set the rules of the game.  I don’t know how many of the 7.5 million newly unemployed are seeking manufacturing jobs – but my guess is there will be plenty of takers at $14.00 an hour and no, they won’t be a content group of workers.
       
      There is no doubt about that Joe SixPack is seeing his or her purchasing power reduced in this weak economy.  Many higher skilled employees are getting skewered as well, such as my youngest brother who is a high-level IT worker.

  • avatar
    toxicroach

    I like it.  The only benefit to a recession is that it tolerates no bullshit.  Those who deal with reality survive.  Those who don’t, even if they get bailed out, eventually face the reaper.

    I’m slightly annoyed that the UAW had to wait until this point to rationalize its wages.  1/2 cuts to be profitable?  Really?  That’s how out of whack it was?  Jesus.  It’s a miracle it took this long for GM to collapse.

  • avatar
    vww12

    «Screwing less-senior “brothers” so politicians and union bosses can crow over the “green jobs” at Orion is cowardly and despicable.»
    No honor among thieves.
    I’m laughing.  :-)

    • 0 avatar

      Amen. It’s fun watching liars and thieves — well, petty thugs — turn against themselves. History tells us that’s when the gang is not long for this world. This is the funniest damn thing I’ve read in a long time.
       
      Well, this, and mikey’s attempt to spin this as something noble on the part of the UAW. (By the way, mikey… you meant ‘must have,” not must of. That darn public school education, indeed.)

    • 0 avatar
      mikey

      @ Rob Finfrock ”….. Your questioning and correcting my grammer ? Your shooting fish in a barrel, dude. Maybe you could give me a shot on my spelling. Go ahead give the best you got.

      Oh never mind I’ve read it…..not worth the bother.

  • avatar
    forraymond

    So, now you are not Okay with cut rate pay for Union Members?  Le me go back a few months and see how hypocritical that is.

    Let make our trade agreements fair and we will not have this conversation again.

    • 0 avatar

      Apparently I didn’t make myself clear enough: lower wages aren’t the problem, the union screwing its own to protect the uncompetitive wages of its old guard is the problem. Laid-off workers will/should be happy to take a job whether at $14 or $28… so why does the union bring back 60% of Orion’s workers at $28 and the other 40% at $14/hr? If a union wants to make changes that allow it to survive, isn’t the point of the union to share that responsibility among its members?
      Two Tier is bad enough when it applies to screwing new hires so the old guys get to keep it cushy. When you’re talking about bringing back a plant’s established workforce and then arbitrarily give 40% a 50% paycut, it’s even worse. And not just on principle… these situations make for nasty work environments. Imagine being the first guy on the wrong side of that arbitrary line: some “brother” with a day more experience than you is getting the wage you used to make, while you take the half-off cramdown with no chance of appeal or strike. This dynamic creates workplace resentment and conflict, which hurts quality.
      And yes, worst of all is the fact that this is all being done so the UAW (and countless politicians) can claim to have made the UAW competitive at building small cars, bringing “green-ish jobs” to the economy and “helping working families.” Meanwhile, if this were put to a local vote (the way all UAW agreements are supposed to be, unless authorized by a vague pre-bankruptcy contract change, as in this case) does anyone think this would have passed? Creating a Potemkin factory at Orion in which the UAW can magically build small cars competitively does NOT mean the UAW has changed… just that it’s fine with screwing as many of its members as is necessary to make it seem alive and relevant (rather than collectively committing to competitiveness). That’s not how a union works, that’s how management or owners work (funny, that). And I still believe it’s cowardly. And despicable.
      At this point, what’s the point of the union at all?
       

    • 0 avatar
      JeremyR

      Ed, what you just wrote above is probably what you should have written originally. It’s certainly much more clear what your objections are.

  • avatar
    Sundowner


    This might be the worst piece of op-ed bile I’ve seen spewed, and I”m including commentary from Fox News. Here’s the reality: have A job or have NO job. Yes it sucks, but at least these people have jobs. The alternative was for these partiular jobs to end up in Asia, and go away completely, and that doesn’t help anyone.

    • 0 avatar
      marjanmm

      As psar said above that sounds as the alternatives presented to the public. Who says in reality there can’t be other alternatives like slashing top managers’ compensations and redistributing it more fairly? It is the unions and the horror of communism that has historically made the wealthiest distribute a bit more.
      The irony of the age is that the fall of communism created the environment where the ordinary people in the countries who won in the cold war are (or will be) paid less.
       

    • 0 avatar
      picard234

      @marjanmm
       
      Ahh, yes, that’s just what we need – to spread the wealth around a little bit.  How’s that hope and change working for ya?

    • 0 avatar
      psarhjinian

      Ahh, yes, that’s just what we need – to spread the wealth around a little bit.
       
      Ok, let’s hear explanations on why you think that hyper-concentration of wealth and the removal of the spending power of the middle and lower class is a good thing.  I’ll accept arguments about trickle-down economics, but you’ll need to back that up with stats that show how middle/lower class earnings have trended up along with them.
       
      Those stats are not easy to find.
       
      Wealth redistribution has been happening for decades: most people just don’t realize it because it’s been happening upwards, and the people who control the message—and who, just by chance, happen to benefit from it—like that situation.  Wealth redistribution in the other way, mind you, get’s branded as evil and immoral.  Have you ever wondered why that is?

    • 0 avatar
      windswords

      The less economic freedom, the more government control and regulation, the more labor monopoly (unions), and the more lopsided trade agreements, then the more wealth that will be concentrated in a few hands. Who are these people? The politicians, the union bosses, the CEO’s, the politically well connected. In other words the elites. The average guy loses his purchasing power. But wait! We will give you “free” health care (but we will take half your pay to provide it). Government cheese for everyone!  (sub standard) Housing for everyone! It’s your “right” after all. Me? I’m gonna apply for the “escalator watcher” job. That was a great position in the former workers paradise of the Soviet Union.

    • 0 avatar
      picard234

      @psarhjinian
       
      Trickle-down is easily demonstrated.  If you accept that trickle-down was practiced in the 80′s, then check out http://tinyurl.com/2fzk226

      In a nutshell, between 1979 and 1988, 85 percent of those in the poorest quintile moved into a higher quintile.

      Just in principle it makes sense: would you ask a poor person for a job?

      Smearing the executive class amounts to a class warfare, us vs. them kind of attitude (which really seems to have escalated in the last couple of years, don’t you think?).  Who’s to say that a wal-mart worker doesn’t resent you or me making a middle-class living?   (assuming you do)

      And it just doesn’t add up.  Let’s assume there are 2,000 workers at this plant.  If the top executives at GM make $20 million (under these salary caps), and you confiscated ALL of it and distributed it among the workers at this plant, it would give them $10,000 per year more, or about $5 an hour.  Now that’s not bad.  But, are we talking about distributing it amongst all of GM’s approximately 55,000 hourly workers?  $363 per year, or $0.18 an hour.  Suddenly the “spread the wealth” philosophy loses a lot of steam.

      This is not to say I particularly love the idea of some of these boneheads raking in millions.  I think the money spent on them would be better plowed back into the company (R&D, what have you).  What Home Depot paid Nardelli to parachute away was disgusting.  But this class warfare populism has to stop.

  • avatar
    craiger

    I hope I’m not hijacking the thread here, but protectionism is like a very powerful and dangerous drug.  It does have its uses.  However, different patients react unpredictably.  The patient has to be monitored constantly and carefully.  The dosage has to be adjusted precisely, quickly, and frequently.  The side effects can be toxic.  It can be addictive.  It can kill.  But, it can work.

  • avatar
    Jimal

    Two questions:
    1. Did these “Tier 2″ have their pay cut, or did they start at a lower wage? There is a huge difference between the two. I would be pretty pissed off with a 50% pay cut, but if I’m starting at a rate that is half what others are making I don’t really have much of a leg to stand on.
    2. What are we willing to give up in order to have products built in this country that we can afford? Is protectionism the answer? Do we tell China to piss off on our debt? Or do we go the route of Great Britain and allow our auto industry (and much of our manufacturing for that matter) to become niche industries?

  • avatar
    FleetofWheel

    Since GM and the UAW are acknowledging cost realities, pro competition folks are not the ones in the awkward position here.
    The contradictions and conflicted ideals are occurring on the left labor side of the spectrum.
    Ed called these issues out nicely.
    So far, no posters for the solidarity of collective car workers have reconciled these incongruities.
    Maybe time for another Camry manual burning in front of a domestic Toyota plant?
     
     

  • avatar
    Adamatari

    I think we need to lay it all out on the table, before we can have a rational discussion of worker wages.
     
    The way I see it, there are several factors involved here. In common with many goods, cars are often built in places where the wages can be very low (and sometimes in a very explotative way – I’ve read some less than glowing stories about Ford wages and working conditions in Mexico). This is competitive advantage 101, but it’s still a major issue, also on the ethics front though not as much for cars (go read about chocolate and slavery and see if that Hershey’s bar is so appealing). So that’s issue 1. Mixed in with this is labor costs in relation to competitors.
     
    Issue 2 is labor costs as a proportion of the whole cost of the vehicle. Obviously, at some point you make the vehicle uncompetitive to build or unprofitable – if you pay everybody on the line $250k a year, I would guess your cars have to be really expensive or you have to sell them below cost, and either way you lose. This is what everybody that hates on unions is complaining about – they believe the unions are forcing companies to overpay and be uncompetitive.
     
    Issue 3 is the relationship between pay within the company; in my opinion this has been perhaps the most talked about but least researched part of the equation. There IS a severe and ridiculous pay gap. The two questions here are, “what CAN people be paid (at the extreme, this is if everyone in the company made the same amount while maintaining the company’s profits or whatever)”, and “what SHOULD people be paid”. Union supporters contend that companies will become very top-heavy without unions, and will drive down the pay of employees outside of the boardroom to the absolute minimum, and then cheat on that amount. History has shown that this did and does occur (for example, farm laborers are often exploited), but once again this hasn’t been the case in the auto industry in the US for a long time.
     
    At this point, with the vast, vast majority of America’s total wealth concentrated in the top 10% and 49% of income going to the top 20%, I think something is wrong. At the same time, I’ve never heard any breakdown of what COULD be paid to workers in ANY industry while maintaining the life of the company, not Starbucks and of course not GM. If anyone could bring up a concrete analysis of this, I would love to read it.
     
    Ultimately, I don’t care about “tier one” or “tier two” as much as I care about a) the worker’s getting a true living wage and b) the company paying it’s lowest workers a fair proportion of what it pays it’s C-leve workers.

  • avatar
    BuzzDog

    So the UAW is making concessions so that a GM vehicle can be built profitably…as stated in the article, no surprise there, as the union owns part of GM.
     
    But I’m mighty curious. Will Ford ever benefit from similar “Tier Two” concessions, given that there is no ownership incentive that would encourage the UAW to do so?
     
    I think I know the answer, and I hope I’m wrong…

    • 0 avatar
      John Horner

      The 2007 UAW agreement with Ford already sets up provisions for Ford to have a two-tier pay structure. However, those provisions only cover new hires and Ford hasn’t been doing much new hiring since 2007. So far Ford hasn’t been able to take advantage of the lower $14/hour base wage rate. Even so, Ford recently said that it brought over a thousand people back from layoffs in order to in-source some work it had been buying out.
      http://www.workforce.com/section/news/article/ford-still-waiting-hire-lower-wage-uaw-workers.php
      http://www.cbsnews.com/stories/2010/08/04/business/main6742448.shtml

    • 0 avatar
      BuzzDog

      Thanks, John. I get the Workforce Management at the office, but somehow missed that article.

  • avatar
    obbop

    Daewoo Kalos
     
    Sounds Klingonish, to me

  • avatar
    John Horner

    This article could have been entitled: “No Matter What They Do, GM and the UAW are Always Wrong!”
    The UAW is making pay concessions in order to bring Chevrolet sub-compact production back from Korea to the US. This improves the US’ trade deficit and keeps a number of people in Michigan off the unemployment lines. Yes, doing so meant that many of said workers had to give up wages compared to their historical norms, but they will be working, paying taxes and wake up each day with something useful to do. As far as the notion that these workers have no say in the matter: Bull. They don’t have to take the job if they can find something better somewhere else.
    Somewhere there is an alternate universe where the UAW hangs tough for “Solidarity” and GM builds the Cruze outside the US. I wonder what the TTAC blog writers are saying in that universe?
     

    • 0 avatar
      OldandSlow

      Thank you, John.  You hit the nail fair and square on the head.

    • 0 avatar
      Toad

      Very rational and well thought out.  Ultimately most of us get paid what we are worth, and unskilled assembly work does not pay well in most of the world.  If we are going to continue to do basic assembly work in the US this reality will have to be accepted; if not, the assembly work will go elsewhere.
       
      The simple fact is that anybody, anywhere can do assembly line work.  It is boring, but it takes little or no skill and most people throughout the rest of the world would rather do this work than labor in mines or fields.  This is the same decision our ancestors made a hundred years ago, and now the rest of the world wants the same opportunity.

    • 0 avatar
      PeriSoft

      Bingo. I was going to say something similar, but now I don’t have to figure out how to word it so people who reflexively hate anything a union does can comprehend it.

  • avatar
    mcs

    How long of a career will these Tier Two guys have anyway. I’m assuming most these guys are younger. Even if manufacturing stays here in the US, how far will automation progress in 15 to 20 years and how many of these guys will see retirement?

    The good news is that I think the US will take back its manufacturing through innovation without having to resort to protectionism. The bad news is that traditional manufacturing jobs will be almost extinct.

  • avatar
    Steven02

    I really don’t get this commentary.  The UAW is making concessions to have GM be able to build cars locally so that they don’t lose jobs.  What is wrong with this picture?  Sounds like GM and the UAW are working together on this one so this is the best for these employees.
     
    On the side note, people talking about executive pay and pointing to GM… it really doesn’t make any sense.  GM’s executives were paid far too much for doing a bad job, but it wasn’t like the UAW employees were doing and a great job, and part of the executives problems were over paying the UAW employees to work.  Just because the last executives screwed up the pay scale for the current employees doesn’t mean that a new executives should find another way to cut the costs in an already razor thin margin small vehicle.

  • avatar
    CJinSD

    More people should have read ‘Animal Farm.’ The pigs always end up walking on their hind legs, and the heros of the revolution become so much glue.

  • avatar
    jacob_coulter

    I’m loving the irony of this whole situation.  How are they going to strike their own Union?
    Really, the best thing in the world was when GM and Chrysler were basically given to the UAW by Obama.  Now it’s their problem to deal with the ridiculous salary demands.
    “Six figures to screw in bolts?  Any idiot can do that, We’ll get “lesser” workers to take care of that.  Who’s ready for a round of golf on our UAW course?”
    Make no mistake, the UAW will find a way to destroy the Big 3 once again, even if they’re now calling all the shots.  They want have anyone else to blame, and the taxpayer WON’T bail them out again.
     
     
     

  • avatar
    gslippy

    Quite a conundrum: The UAW must resort to cannibalism in order to survive, but such behavior thins the existing ranks and hurts recruiting.  What to do?
     
    This isn’t a question for the union bosses; it is a question for the members.  If you want broad group representation, then reforming the union with more broadly competitive policies is the only way to go.

  • avatar
    shaker

    “Cowardly and despicable”
     
    Funny, in this case, I’d have chosen “Unfortunate, but pragmatic”.
     
    Look where the Aveo has been built, look where the Fiesta *is* built.
     
    A practical solution involving government, business and the unions. How disgusting.
     
    Meanwhile, people will work, cars will get built and sold (hopefully), taxes will get paid, etc. etc.
     
    Other “enlightened souls” would rather have an abandoned building and a bankrupt company, with the execs spread to the four winds (working for companies who already have profited from overseas labor), and chuckling while the former auto workers offer them meat samples at the local supermarket.
     
    This actually could be a success, a minor win, in an economy inured to so many losses But there are forces out there (you know who you are) that would love for it to fail. So much for “love of country”.

  • avatar
    Omnifan

    It is more like reality hitting the union leadership.  They can’t look like they’re caving in, so they camouflage it behind cryptic PR statements and an unknown contract.  The union militants will bluster mightily, but then reality sets in.  Of course, the guys with the most seniority “got theirs”, so the hell with everyone else.  Truly a race to the bottom.  Just wait until the benefits trust goes tango uniform and all those retirees start to carp.

  • avatar
    Jimal

    Something occurred to me while watching a little TV yesterday. The show was “Ultimate Factories” and they were featuring the Corvette plant in Bowling Green. Apart from the people hand building the engines how does the average “legacy” UAW worker rate $28/hour? The entire assembly process seemed rather idiot proof with very little opportunity for what I call “ownership” on the part of the line worker.
    I know comparing Aveo production to Corvette production is a bit apples to oranges, so I’ll ask another question. How much does your average worker for Ferrari or Bentley/Rolls Royce, where the cars are far more handmade and the individual line worker needs to be more highly skilled, make per hour?

    • 0 avatar
      psarhjinian

      The entire assembly process seemed rather idiot proof with very little opportunity for what I call “ownership” on the part of the line worker.
       
      It’s hard work.
       
      There is an interesting disrespect for manual labour in North America, and yet a curious resentment of the people who do it.  On one hand, we don’t think people who work forty hours a week in a really awful job (and it is awful, much worse than, say, police work, or office work, or farming) are worth compensating.  On the other hand, when compensation is where we’re comfortable with it, the jobs are only being taken by, eg, illegal immigrants or outsourced foreigners, at which point the same people are screaming “Dey tuk er jerbs!”

    • 0 avatar
      geeber

      Compensation for any job generally isn’t based on how “awful” it is or the amount of manual labor required. Cleaning a port-a-john isn’t considered a pleasant job by any means, but the people doing it aren’t making $100,000 a year. Digging ditches is very hard work, but, again, people doing it don’t earn $100,000 a year. One exception might be coal miners – no one wants to work in the dark all day, and risk a mine collapse or explosion. But coal miners are still expected to operate heavy equipment in a skilled manner.

      Compensation is based on the amount of skill and training required to do the job in question. Brain surgeons make a lot of money because they must undergo very extensive training to successfully perform their jobs. That training, from the first day of undergrad school, is designed to weed out those candidates who just don’t have what it takes. 

      In some respects, the complaints over auto worker pay and benefits ARE unfair. They days when workers were expected tighten lug nuts all day - and nothing else – are pretty much gone, from what I understand. Workers are expected to be more flexible, and take more responsibility for the final product. This is the way it works in the transplant operations, and I doubt that Honda and Toyota would have been able to get qualified workers if they were only offering the minimum wage (which makes the UAW’s claim that, if the union disappears, lineworkers will be receiving third-world pay more than a little disingenuous). 

      The main problem with the UAW has been its insistence on maintaining stultifying work rules, and its continued protection of workers who drink, do drugs, etc. (which often is the result of a worker having pull with leadership of a local). 

      The UAW could charitably be described as boneheaded when it comes to public relations. The union leadership is easily as insular as the GM management team. When anyone questions the union on an issue, the response is either: a. working conditions were bad in the 1930s; or b. without the union, autoworkers would be working for the minimum wage. 

      Well, regarding the first one, it’s the 1930s anymore, and everyone knows that. The second one has been proven incorrect by the transplant operations. The union desperately needs to show that it cares about car buyers, and that its members add some value to the process, and that the days of members standing on the assembly line tightening bolts, and doing no other jobs, are over. But the current leadership is simply too parochial and short-sighted to do that.   

    • 0 avatar
      Toad

      psarhjinian, have you been to a US factory in the last couple of decades?  I have (including a UAW plant) and the ones I have been in are very clean, well lit, and the pace of work is not that demanding.  Most lifting or repetitive motion is done by machines so injuries/workman’s comp claims can be avoided, and safety is a top priority.   Plus the work is fairly idiot proof to ensure consistent quality control, and quiet honestly the attitudes and intellect of some workers required the jobs be stupidity resistant.  If you have worked in a factory, you understand.  This may be why so many college grads stay away from manufacturing.
       
      I’m sure there are some hell hole factories (meat and poultry processing?), but OSHA and insurance company requirements eliminated the vast majority a long time ago.  Assembly jobs are a hell of a lot less demanding than farm work or construction, and safer as well.
       
      BTW, as someone who paid for college doing construction and factory work I have a lot of respect for manual labor.  But having been in the trenches I also saw the ugly side (drug use, gross stupidity, sabotaging production, etc) and had to take off my rose colored glassed a long time ago.

    • 0 avatar
      charly

      Compensation is based on the amount of skill and training required to do the job in question.
       
      Can you stop your anti-capitalistic propaganda. Compensation is based on supply and demand not on how much you needed to study for it

    • 0 avatar
      geeber

      The difficulty of the course of study, and the length of time needed to complete it, will restrict supply. Even some people who have the ability to become a brain surgeon choose not to do so, given the amount of schooling it takes to be certified for the job.

      Stiff educational or certification requirements will restrict the supply of available workers in certain occupations, which will drive up the compensation of those who do complete the course of study.

    • 0 avatar
      charly

      But the same is true of the joy, status and dirtiness of the job. They all influence the supply for a job. And often certification isn’t used for the job but as a gatekeeper to restrict supply

  • avatar
    jpcavanaugh

    The angle that I am not seeing discussed here is how the UAW can take Tier 1 workers who are paying dues and make them Tier 2 workers without their consent, without a vote and without a right to appeal or transfer to another facility.  We may or may not be working with all of the facts here, but if this is what really happened, this is a MAJOR screwing of members by their union.

    An Indianapolis plant went through a similar issue recently.  GM is closing the plant.  A prospective buyer came in and offered to buy the plant and keep the workers IF they agreed to a pay cut.  Workers would keep their seniority and would get a lump sum compensation bonus and the right to transfer to another plant at full Tier 1 wage.  The local would not even permit a vote.  The international tried to do an end run around the local and was run out of the union hall.  There was an eventual vote, and the proposal was defeated badly.  So the plant is closing.

    I think that the members made a bad call in Indianapolis, but it was their right to vote on the proposal.  Was there a vote on the Orion Township proposal?   If so, then fine – the members weighed in and made a decision based on some tough circumstances.  But this is not how the article conveys what happened.
    When the UAW can turn you into an involuntary Tier 2 worker (and does so) it is either time to get a new union or go without and at least avoid the dues.  It’s easy for the union employees to envision getting screwed by the company, but this is one screwing that they can have some say over.

    • 0 avatar
      Jimal

      I read elsewhere that the Tier 1 workers have the option of either taking the Tier 2 deal or request a transfer to a Tier 1 position elsewhere. The question becomes how many of those Tier 1 jobs remain?

  • avatar
    200k-min

    I am no fan of collective bargaining.  If the UAW folk don’t like their new wages they can vote with their feet and QUIT.  Here’s a newsflash, my wages have been reduced since 2008 so my employer could remain in the black.  This has been very common in the private sector during this “great recession.”  Only unions and gov’t employees seem immune to any kind of austerity in bad times. 

    From what I’ve heard the Tier II pay is $14/hr + benefits.  First of all, UAW members get a very generous benefit package.  Secondly $14/hr is a base pay of almost $30k and with OT can easily meet or exceed $50k annually.  Another newsflash, that’s above the median pay in the USA.  There are plenty of people with college degrees that aren’t making what unskilled Tier II UAW workers are earning.  Arguments about executive compensation are just attempts to change the subject and create class warfare.  Simple fact of the matter is, the UAW workers have little to complain about in this economy.

    • 0 avatar
      psarhjinian

      Only unions and gov’t employees seem immune to any kind of austerity in bad times.
       
      And in good times, private-sector, white-collar compensation packages significantly exceed those of public workers, or at least they used to up until we started seeing jobless recoveries.
       
      If you’re not reaping those benefits in good times, whose fault is that?

    • 0 avatar
      jkross22

      And in good times, private-sector, white-collar compensation packages significantly exceed those of public workers, or at least they used to up until we started seeing jobless recoveries.

      This is no longer the case where I live in So. Cal.  When gardeners who work for the local cities make 45k/yr plus benefits, this far exceeds what they would make working for property management companies.  If you compare the same job in the public and private sector, you’ll see those in the public sector make more.

      Sorry to burst your bubble.

    • 0 avatar
      geeber

      If I recall correctly, studies have shown that top management in the private sector greatly outearns equivalent employees in the public sector.

      But middle management and support staff (clerks, administrative assistants, etc.) in government easily outearn their private sector counterparts. And government benefits and retirement plans are MUCH better than what is offered in the private sector for those positions.

      To give an example, here in Pennsylvania, the state controls the sale of hard liquor and wine. These products are sold through state stores, and all employees of these stores are state employees. They serve the same function as a sales clerk at other retail outlets, but, as state employees, they receive very good health care benefits and full retirement plans. Target or Wal-Mart employees can only dream of those benefits.

  • avatar
    Jeff Waingrow

    It’s sad to see the good guys fighting over the crumbs while the fat cats look down on this with undisguised glee. Until the wealth of society is distributed on a more equitable basis, we’ll always be fighting among ourselves. Instead, we should be fighting THEM. But, of course, that would destroy people’s fantasies of one day being one of them, wouldn’t it?

    • 0 avatar
      MidLifeCelica

      Have you actually done the math on this? I played with some numbers…and re-distribution doesn’t make everyone wealthy. Say you have 2000 executives pulling down 400 million dollars a year in total compensation, and 150,000 line workers making $14/hour, or about $29,000 a year. That’s just plain wrong, you say. So take ALL of the executive salaries away and distribute the windfall to the line workers. Guess what – now they are making $32,000 a year. Big ****ing deal…plus the IRS will claw back a chunk of that increase! To pay 150,000 people $28/hour instead of $14, you need to find more than 4 BILLION DOLLARS from somewhere else . There just aren’t enough ‘fat cats’ making enough money to cover that gap.

    • 0 avatar
      psarhjinian

      Have you actually done the math on this? I played with some numbers…and re-distribution doesn’t make everyone wealthy
       
      I don’t think it’s so much a case of “makes everyone wealthy” as it’s “why are the lineworkers’ salaries the only ones getting scape-goated”?  Rick Wagoner’s salary was an impressive fourteen million dollars the year before bankruptcy, and the other top five execs brought the total to forty million.  Was he, or the people before him, more or less at fault than the union lineworkers he was making 250 times more money than?
       
      If GM claims that it’s problem is cost due to labour (it isn’t, but let’s play that game) that forty million pays for a fairly number of engineers, designers, QA people and such.  That forty million is also more than halfway to the seventy million that this move would save.
       
      If the salary cap imposed upon GM during it’s government stewardship did nothing else, it’s shown us that perhaps you don’t need forty million dollars of “leadership” to run this company, while the same millions of dollars spent, or not spent, on the lineworkers really doesn’t address the real problem.  I’ll credit that TTAC was pretty much on-point with this and didn’t, historically, fall into the kind of union baiting that other sites did: it didn’t let the union off the hook for it’s own idiocy, but it didn’t generally say that everything was all sunshine and roses in GM’s C-suite, either.

    • 0 avatar
      Lokki

      I would also suggest that you do a little reading about the French Revolution and take a look at how equitable distribution of wealth worked out when it was triedin practice.

      Hint: It damn near destroyed the French economy.

    • 0 avatar
      psarhjinian

      I would also suggest that you do a little reading about the French Revolution and take a look at how equitable distribution of wealth worked out when it was triedin practice.
       
      Things like the French and Russian Revolutions happen when you have highly unequal distributions of wealth.  It behoves the wealthy to narrow the gap and re-enable the middle class before things get too far gone.
       
      You’re seeing rumblings of this in the US now.  Currently, it’s restricted to Tea Party nonsense, and it’s being used as a kind of populist wedge.  That’s all well and good, but populism of that nature is fickle, and just as likely to bite you as your opponent, and were I the American ultra-right I would be very, very careful about trying to proxy that populism into power.

    • 0 avatar
      geeber

      Both the French and Russian Revolutions followed periods when the respective governments overextended themselves by spending too much. The French government spent had spent lavishly at home, and basically financed the American Revolution. It enacted high taxes to pay for this.

      The Russian government could not afford the cost of fighting World War I.

      So there is a lesson to be learned, but not the one you think…

  • avatar
    thebeelzebubtrigger

    ” Pre-bankruptcy, GM didn’t have to deal with the fact that the UAW is incapable of building fuel-efficient subcompact cars profitably”
     
    Edward, why the constant trolling of the UAW? We should fix it, not destroy it!
    Oh and Edward, why do you and your “tea party” friends hate America?

  • avatar
    SkiD666

    If 60% are Tier 1 now, in 5 years, 10 years, etc. will this percentage drop even more as workers retire or does the UAW have the right to ‘promote’ tier 2 workers to tier 1?

    If the UAW can’t replace tier 1 workers, I see GM’s pension woes slowly going away as the average worker’s salary goes down.

  • avatar
    Conslaw

    I’m glad that I’m not the only one who saw the “damned if you do, damned if you don’t” tone in this article.   The UAW Haters blast the union when they stand up for good wages and blast them when they make concessions to keep people employed, especially when (as with the Aveo) they bring in a new product line that wasn’t previously built in the USA.  Everybody is trying to make their way in the new world reality of post-industrial America.  The UAW and other unions are right there with everybody else.
    Is the US really a stronger country with Wal-Mart and McDonalds leading the employment parade?  Quite a few Wal-mart employees are on Medicaid.  McDonalds is planning to cancel its crappy insurance because the government has the nerve to tell them that the employees should expect to receive in benefits at least 80% of what is paid in.  To say that employees don’t need unions because they can vote with their feet ignores economic reality.  If you think that way, work in a non-union chicken processing plant for a day.  Go work in the sugar cane fields of Florida.  If you don’t like the work, try finding some other job in those communities. If you’re lucky you can be a sugar baron’s maid.

  • avatar
    Robert.Walter

    The action of the union appears to be Realpolitik-Pur.

    I do wonder, however, whether there is any kind of “equal represention or compensation” clause in the UAW’s charter. For instance, if a guy B with B seniority in plant 2 gets cut to Tier-II wages (supposing that is what happened at Orion), wouldn’t that, shouldn’t that, mean that any guy A, with A senority, in plant 1, where senority A < senority B (and every low-seniority member throught the system) should also be forced to take a Tier-I to Tier-II wage downgrade? Or, if not, then if B decides, in order to continue to get Tier-I wages, to transfer to plant 1, where he would have more senority then A, then A is out of a job, or would have to transfer to plant 2 and accept Tier-II wages?

    Taken to an extreme would mean a lot of movement, and would, of course, have the benefit of moving high-wage employees to the high margin plants – but reducing margin there, and moving low-wage employees to the low-margin plants – and increasing margin there. It would get messy.

  • avatar
    cwp

    I applaud the UAW for their willingness to pare back wages in tough times, but I can’t say I care for the way they’ve gone about it.  It would seem more equitable for everybody to take a more modest pay cut.

    Which, now that I think about it, sounds familiar.  Isn’t this really the Union – Management conflict writ somewhat smaller?  If we wouldn’t expect the UAW to take pay cuts when management isn’t, shouldn’t we feel the same way here?  And if we’re okay with that, what’s to object to here?

  • avatar

    bottom line is GM is run by self serving, lying, dishonest pretenders that occupy executive offices and would sell their own souls in a New York minute. of course that is only my opinion and I could be wrong (disclaimer provided in self defense) I know this to be true from first hand personal experience. they are crooks, dishonest, immoral, and not to be trusted. they take very advantage possible regardless of their own fellow employees. it is a corrupt and divisive group that is destined to fail. I don’t believe anything they say and neither should you. take it from the top GM salespesron in history….until such time as there is a wholesale housecleaning, do yourself a favor and buy a Ford…America’s car company.

  • avatar
    jkross22

    While this is a short term gain, I’m guessing it will ultimately be a long term loss to both GM and the UAW.  What will this do to morale of the new guys coming in?  I guess the senior guys don’t really care, as it doesn’t affect them.  Or maybe I’m misunderstanding – it seems like only the new hires get the Tier 2 pay and work alongside those that are more senior but doing the same job for more money… regardless if the new guy is better than the old guy at the job.
     
    Give the union props, though.  They’re making lemonade out of this… rational thing to do… for now.
     
     

  • avatar
    musiccitymafia

    I wasn’t at the UAW meeting to hear the reasons, but it strikes me that it would be “fairer” to have given everyone a haircut instead of selecting the 50% with lesser tenure and chopping them in half?

    Maybe some would get a larger haircut than others, but at least everyone shares the
    pain involved with bringing jobs back to the US.

    Again, there must have been reasons.


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