By John Horner
May 11, 2008 -
The Associate Press reports [via Yahoo] that UAW leader Gettelfinger was "insulted" to learn that American Axle's plant closure plans include the shut-down of the Cheektowaga, N.Y factory– in addition to the two plants (Detroit and Tonawanda) already sacrificed at the altar of, dare I say it, profit. And get this: King Ron says "he hadn't wanted GM involved." Say what? Big Ron didn't want GM to kick in $200m in extra wages for the guys? "Many of its U.S. competitors won deals from the United Auto Workers to pay newly hired workers about $14 per hour. But American Axle workers say they won't take that big of a pay cut from a company that made $37m last year." So let me get this straight. As long as the company is making any profits the UAW isn't willing to negotiate competitive deals? By my count, American Axle has six US factories (including the three on the chopping block), two in Mexico plus one each in Brazil, China, England, Scotland and Poland. The longer the strike oontinues, the more likely it is that American Axle will ship tooling from its US factories to the others around the world– if it hasn't done so already. Sure there would be disruption, but strikes are plenty disruptive. Seen any Mexican or Chinese auto parts factories go on strike lately?
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May 11th, 2008 at 7:17 pm
I think if the Chinese or Mexican factories went on strike, the workers would be executed.
May 11th, 2008 at 7:47 pm
quasimondo:
You thinking that doesn’t make it true.
May 11th, 2008 at 7:52 pm
He will find out how hard it is to run a business when the UAW starts running out of health care money…..
May 11th, 2008 at 8:58 pm
What’s a union to do when a company has “options”. It’s an interesting twist.
The UAW (not to pick on the UAW as I think that the observation is applicable to most North American unions) they just can’t bring themselves to ‘value sell’ their labor to the businesses that they work with. Simply put, the UAW is a supplier, just like all the other suppliers a company buys from - albeit a pretty important one.
In todays market, it is normal to for a supplier/producer to try and sell themselves as providing a service that makes the customer better off then if they went with a competitor. In the UAW’s case it would be Mexico/China/etc……
Granted, it’s a sea change in perspective, but it offers a long term strategy (not a tactic - which is what we are seeing today) that a union can thrive in.
May 11th, 2008 at 9:40 pm
The inescapable problem is that no matter how large the pay cut, the services the UAW, and anyone else living in the US, has to sell will necessarily cost more than what Mexican, Chinese, etc. labor has to offer. So it’s a losing proposition. Given that, what’s the point of playing the game? Might as well kick over the table now and pass on some of the pain as a means of delaying the inevitable.
There seems to be a dearth of empathy in this country for people whose jobs and lives are essentially wiped out by what’s going on. Attitudes might change when it’s their turn. An article in the Washington Post today points out that outsourcing of legal work to India is growing 60% annually. They can do the work at a savings of about 80%. This is not paralegal work either; it’s law school grad type stuff. So what’s safe?
May 11th, 2008 at 9:59 pm
I agree with MikeinCanada. Im in Canada too, and it strikes me as a real tragedy the CAW cant think long term either. if only they would show some initiative and lower their rate just a bit i think they would all have much more secure jobs in the future. the way it is now however, they are about to price themselves out of a job, and will drag Windsor and other cities down with them. its already happened to the tool and die sector. If GM and Chrysler somehow once again settle on the terms the CAW extorted from Ford who cant afford glitch in the launch of oakvilles vehicles then i would expect them to significantly wind down operations during the contract period. Or maybe they will do it now, and we’ll have American Axle Part Two. Somebody has to say no to these unions, and im glad AA is for once standing up. Trouble is, its a day late and a dollar short.
May 11th, 2008 at 10:15 pm
The problem mel23 is not the Chinese or Mexican wages. No one is asking American Axle workers to compete against Chinese or Mexican wages. The problem is other American non union wages or even other American UAW supplier wages. You don’t have to have a 2 dollar a day workforce but if their other American competitors are paying 14 dollars an hour then that is the wage you must meet. Pattern negotiations work both ways.
May 11th, 2008 at 10:19 pm
The best thing that can happen to the big 2.7 is to break the UAW.
May 11th, 2008 at 10:31 pm
mel23 -
Experience is already showing us that paying domestic labor rates are not necessarily a “losing proposition’.
Go to Google and enter “Caterpillar Case Study” for starters. Heavy industry, unionized workforce, besieged by foreign, low cost competitors…. sound familiar? The result, not only are they still in the US, but they are in fact a world leader in the products that they make - union made at that.
My world (aerospace) our unions and high cost structures make Detroit look like Delhi. Making airplanes in Pugot Sound or Toulouse now that’s high cost! So it’s not all about labor costs - rather labor productivity and the ability to deliver a product (labor) that a competitor can’t do.
Unions in North America, have been typically ‘unproductive’ in their supply of labor. Just think of all the arcane work rules that are really only backhanded ways to force the company to hire more workers…..
I’ve worked in India and China and I can say first hand the only thing that these counties can offer is a lower hourly rate - that’s it. Everything else (and I mean EVERYTHING else) is in fact equal or more expense.
If you look at an event horizon of 5 - 10 years, yes, it is going to be tough for unions and blue collar labor in general, however it you look farther out, say 10-25 years - then things don’t look as bleak.
May 11th, 2008 at 11:31 pm
The problem with the union has always been the astronomical pay for the type of work being done. It just doesn’t equal out. Making an insane wage for a simple task.
I suppose though, if the company was profitable enough, the payroll would be a non issue. And it’s only an issue because of the companies involved financial situations.
If the payroll is reduced or cut back, does that save the company or make the company profitable? Reminds me of the hack and slash their way to profit. It may reduce the bleeding, but it’s not enough to stop the bleeding. The money from a one time sale gets spent.
The products should be the main concern. Continuing to build items that don’t sell doesn’t make any sense. At the least, revise, refresh, and revitalized these items and make them attractive, appealing, and desirable.
Some of the restyled `08 models I’ve seen on the streets look very nice compared to years past. But under the hood it’s the same old story and at the same old price. They shined it all up, but it’s still the same old car. Just not enough to make a difference.
Can they turn a profit if they sold or leased their vehicles at $99/month? No set amount of months, no deposit, no closing cost. You want it; take it, don’t want it; fine. No strings attached. That’s how it needs to be.
No one would be scared to drive a Cobalt or Focus if they didn’t have any investment in it. Affordability is what’s needed in today’s economy.
Can a business case be made at having such low monthly prices? That would be playing hardball with the Asian makes. Could they hang with those numbers? That’s what they should just to push their buttons and make things interesting and exciting. Aveo’s at $99/month, no strings attached. Or offer the entire GM lineup(sans Corvette) at that price. Their dealer lots would empty in one day. They could never build enough vehicles to meet demand.
Who in their right mind would buy a Honda at three or four hundred a month when they could have a Chevy at ninety nine?