The Truth About Cars » Unions The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 17 Jul 2014 11:00:59 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Unions VW Labor Leaders Fight To Establish U.S. Works Council Tue, 25 Feb 2014 15:30:05 +0000 2012-volkswagen-passat-front-three-quarters-chattanooga

While the United Auto Workers take their battle to bring their brand of organization to Volkswagen’s plant in Chattanooga, Tenn. before the National Labor Relations Board, VW’s labor leaders are regrouping in their fight to establish a works council in the U.S. plant.

Automotive News reports two top officials from VW’s global works council, secretary generals Gunnar Kilian and Frank Patta, are in the United States for the next two weeks consulting with labor law experts as to what steps will need to be taken to establish a works council at the automaker’s Tennessee plant, an idea popular with a number of the plant’s workforce, especially those who voted to keep the UAW out of their floor during the three-day election held two weeks ago.

Meanwhile, UAW supporters believe a U.S. works council would need the legal force of a union contract for a council to work at all. A few options would include talking with a different union, moving forward without a union, or — as both U.S. Senator and former mayor of Chattanooga Bob Corker and American University professor Steve Silvia have suggested — establishing their own union.

Whatever the decision, future expansion into the U.S. market depends on a positive outcome; VW works council chairman Bernd Osterloh told German newspaper Sueddeutsche Zeitung that labor leadership would “hardly be able to vote in favor” of expansion by VW executives so long as Chattanooga remains unorganized.

Finally, the UAW has also vowed to fight for organization of the plant, filing a 58-page brief with the NLRB last weekend citing outside interference as reasoning for holding a new election. Dennis Williams, possible successor to the presidency of the UAW when outgoing president Bob King steps down in June, may have to wait a year before attempting to organize the plant again, but he doesn’t mind:

We’re not leaving Chattanooga. It took seven years to organize Ford, and I will be around for at least another five.

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QOTD: How Can the UAW’s Damaged Brand be Fixed? Sun, 23 Feb 2014 14:00:22 +0000

Click here to view the embedded video.

We talk a lot about brands here at TTAC. For example, Porsche comes in for a bit of criticism for moving away from their image as a maker of purist sports cars. We’ve discussed how brands can be burnished and also be diminished. Do today’s Cadillacs live up to “the standard of the world” and is the Lincoln Motor Company a dead brand walking? Back when GM was busy melting down financially and the future of brands like Pontiac were uncertain, I even checked with a businessman who specialized in bringing back old brands, to see how he would go about reviving GM’s distressed brands. Even a badly damaged brand can be revived. Which brings me to today’s topic, is the UAW’s brand damaged and if so, how can it be fixed?

I ask that not just because the autoworkers’ labor union lost an important certification vote at Volkswagen’s Chattanooga, TN assembly plant. You can see negative attitudes towards the UAW by consumers as well, people insisting one reason why they won’t buy a car from the three domestic American car companies is because they question the quality of cars built in UAW shops. Sure, some of the negativity comes from general anti-union attitudes, but I think the UAW would be well served to pay attention to the possibility that their brand is indeed considered damaged by both consumers and potential UAW members, and to consider what the union can do to restore some luster to its brand. Denying that the UAW brand is damaged, or saying that it’s all the fault of anti-union activity is akin to a line worker at GM’s Detroit Hamtramck Assembly Plant whistling Solidarity Forever as he strolls past the folks resting forever at Beth Olem.

One of the more common comments following the UAW’s failing to win the vote at VW was that workers there weren’t rejecting the idea of a union so much as they were rejecting a specific union, the UAW. Certainly a factor in the vote was the involvement of outside groups, like the one headed by Grover Norquist, that bought billboard space in Chattanooga targeting VW employees. Those billboards didn’t really address ideological issues surrounding the labor movement, they attacked the UAW. Those billboards wouldn’t have gotten traction with VW employees if the UAW’s image with those workers was pristine.

My own position on the UAW is that while I have my criticisms, a measurable percentage of the things that I see attacking the UAW are unfair. For example, calling the union “communist” is just silly in light of the history of Walter Reuther fighting hard to keep communist influence out of his union. I’m a small L libertarian and I have my differences with the labor movement but I think that the U.S. Constitution, which protects freedom of association and contract rights, provides a sound basis for saying that Americans have the right to form labor unions and try to negotiate collectively, at least in the private sector. This, however, is not about my political or ideological stances, it’s about consumers and workers looking at the union label and saying, “no, thanks”.

Part of the UAW’s brand image problem is tied to “Detroit”, the city and the industry. At the same time that “Detroit” evokes a symphony of images and feelings, many of which are not exactly warm and fuzzy, there are at least a couple of examples of Detroit brands being turned around. While it still has a long row to hoe, Cadillac today is a much more respected brand than it was in the late 1990s, and under Alan Mulally’s leadership Ford has gained a great deal of credibility with consumers and industry observers alike. If those companies’ brands can go from not even being on consumers’ short lists to now being found on their driveways, there’s no reason why the UAW can’t improve its image.

So if you were Dennis Williams, who is slated to replace Bob King as president of the UAW, what would you do to improve the UAW’s brand?

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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Guest Post: Jamie Kitman On The Battle Of Chattanooga Tue, 18 Feb 2014 14:00:42 +0000 VW-Gesetz-IG-Metall

TTAC welcomes Jamie Kitman, of Automobile Magazine, NPR’s CarTalk and other international outlets, as he presents his analysis of what went wrong at Chattanooga, and the next steps for the labor movement’s efforts in the auto industry.

With all the clamorous back patting and joyous trills of laughter attending the defeat of the UAW’s unionization drive at Volkswagen’s plant in Chattanooga, one has that nagging sensation, increasingly common these days that the whole 20th century never happened.

I am not here to defend everything that has ever been done in the name of the United Auto Workers or any other union, because their list of wrongdoings is long. There has been corruption, laziness and greed, none of which I, or most union members, for that matter, would endorse. But the list of mean, corrupt and otherwise heinous acts committed by manufacturers through the years in the name of unfettered profit is undoubtedly greater. Profits are swell and all that, but the business of manufacturing is most beneficial to communities and society as a whole when all stakeholders have a seat at the table.

Anyone who can remember or has read of the days when a worker without a college education could support a family, buy a house, go on vacation, put three kids through braces and college, ought to think about the good unions have done. Ironically, many who lament the passing of middle class prosperity oppose one of the main instrument s of its creation.

Now there are those whose official position is to go blindly on the side of organized capital, no matter the cost, including apparently enough Republican politicians in Tennessee to fill a basketball arena, and that is their right. Less certain is whether terrifying workers about the parade of horribles that might ensue from a vote to certify the union – based on conversations they claim to have had with VW management – will withstand legal muster; if VW had told workers they’d close down a line on account of a pro-union vote, they’d be in violation of the law. If local politicians with their television pulpits were knowingly doing the company’s bidding, the law may well have been broken, too.

Then again, these are the same politicians who tell their constituents that climate change is a myth, that President Obama is a communist traitor and demand that their children be taught in public schools that the world was formed over a mere 144 hours, 6000 years ago. The people keep electing them, so maybe the non-union South is simply getting what it’s paid for.

What rankles are those who claim to be looking out for working men and women and oppose unions anyway as bad for labor. Where is their proof? That the American auto industry went wrong after 100 years on top? Er, actually, the years of the industry’s greatest prosperity coincided with the years of the UAW’s greatest prominence.

What rankles still more are the so-called journalists covering this story as if somehow the future of capitalism depended on their penning love letters to management. They seem to have forgotten that there were good and honest reasons for autoworkers to unionize in the 1930s. That there were reasons employees tithed a portion of their weekly wage packets to the union, and reasons that laws were enacted to protect the right of workers to organize for the purpose of collective bargaining. And there were reasons that, yes, car companies, like Volkswagen, grew to value their union relationships.

Well, folks, those reasons didn’t all go away. Do you honestly believe that no one at any of the southern car factories wants to be in a union? Would that be because life on the shop floor has gotten so pleasant and they feel like they’re getting paid so much and that their work rules and grievance procedures are now so fair that they have no complaints? If so, ladies and gentlemen of the Fourth Estate, why aren’t you actually reporting that story on the ground, rather than inferring it from the lack of successful union drives in the South? Or perhaps you might have to start reporting the story of how Nissan and other U.S. transplants spy on and thuggishly seek to disrupt the would-be organizers in their midst, as anti-union managements have always done. That is, of course, how unions were kept down in their early days, all across America, all across the world. Other times, when their movements started becoming too successful, workers were killed for their union activity.

But let’s ignore that part of the ugly history and stay in the moment. Assaying the wholesale death of middle-class factory jobs in this increasingly non-union country, the value of union associations to workers seems kind of obvious. And now as union membership dwindles, we see more auto industry jobs that don’t pay enough for people to even approximate what was known for more than half a century as a decent, middle class life. Instead, we increasingly see workers hired in the non-union, transplant carmakers – Nissan, Hyundai, Toyota, BMW and Honda—not only as non-union employees, but as temporary workers, with few if any benefits to go with their new, lower wages. The auto industry is not alone here, but without a viable middle class, one must wonder who exactly is going to be buying all those cars and trucks our factories can make. If people had more money, maybe they wouldn’t need 80-month loans and all that cash back.

Low wages aren’t as bad as no wages because you have no job, it’s true, but they’re not as nice as good wages and that’s not the choice, anyway. Commentators and pundits lashed out at Henry Ford for paying his workers a living $5 a day wage when half that was the national standard but the move, if anything, helped his company. And the unionized American industry proved for much of the 20th century that you could have both jobs and good wages, with the German automobile industry out there still, continuing to prove the same thing. Not too unsuccessful a manufacturing economy last time I looked, Germany pays its autoworkers the world’s highest industrial wages. And indeed Volkswagen’s 61 other factories outside the US are union shops, excluding China.

So what’s that I hear, Sen. Corker? You think the deal the Chinese workers get is good enough for the hardworking people of Tennessee?

Evidently. For those who weren’t paying attention, the senator was so exorcised by the fact that a UAW preliminary card count showing a majority of workers at Chattanooga supporting the union, that he publicly told VW workers that the SUV the company was saying it might build in Tennessee would go elsewhere if the union was certified.

“I’ve had conversations today and based on those am assured that should the workers vote against the UAW, Volkswagen will announce in the coming weeks that it will manufacture its new mid-size SUV here in Chattanooga,” Corker announced, ominously. Of course, his statement also admits of the possibility that they might have also said they’d build it either way, but clearly that was not the impression he meant to give.

And what Volkswagen was thinking isn’t exactly clear, either. Their union at home in Germany is very powerful, but that doesn’t mean they like it.

Of course, Volkswagen Chattanooga’s chairman and CEO Frank Fischer dismissed any linkage between the vote and the decision to build the new SUV in Chattanooga . But there is good reason to believe Corker’s scare tactic was enough to scuttle the UAW’s drive; just 44 additional people would have had to vote in favor of union affiliation for it to have prevailed.

There’s also ample reason for VW’s Chattanooga work force to question the overall sincerity of its employers, which already reneged on a pledge to build Audis there, so long as the launches of the Jetta and New Beetle (built in Mexico) were successful, which they claimed were. So who knows what the truth of VW’s involvement is?

If they really wanted the UAW in place so as to be able to set up their works council, surely they could have countered Corker’s intemperate remarks. Or perhaps they have another way around U.S. labor laws. Who knows?

What we do know is that the company certainly knows how to sweet talk Tennessee politicians, having received the most generous state grant of any American corporation looking to set up shop anywhere ever – a package that included $577 million in tax breaks, over $40 million in training assistance and over 1,500 acres of land, gratis. All for 1,550 jobs, in a city which can’t afford to update a sewage system that is 100 years out of date, causing the town to reek many days of the year. That’s close to half a million dollars per job.

The really upside down part is that Detroit still pays union wages to some of its employees. So actions like Corker’s are in essence a gift to big conglomerates from Japan, Germany and Korea when they come to America. Until, that is, the moment when the low wages paid in transplant factories fully kill decent wages for the home team. At which point they will have sown the seeds for a union fight as ugly as any ever seen.

Because the harder the workers get stomped on, the sooner and clearer the need for unions will be. Because left to its own devices, big money always races to the bottom. It is the nature of the beast.

So the battle of Chattanooga may be lost. But the larger war is hardly over.

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Japan’s Auto Workers Seek Pay Raise Amid Soaring Profits Thu, 13 Feb 2014 15:30:33 +0000 Auto Worker at Japanese Honda Factory

Labor unions across Japan are seeking increases in base salaries and bonuses as local manufacturers pull in record profits for the closing fiscal year.

Bloomberg reports the unions will gather for their annual spring labor negotiations to ask automakers for an increase in bonuses equal to five months’ salary, with Toyota to receive a request for a 4,000 yen increase in monthly wages in addition to a bonus amounting to 6.8 months of salary; only Nissan will fail to post record profits come April 1.

The requests mark the first time in 15 years unions have asked for such increases, according to Confederation of Japan Automobile Workers’ Unions president Yasunobu Aihara:

“The Japanese economy is at a major turning point. To end the prolonged deflation and to ensure the nation’s economy will revive and grow sustainably, all member unions decide to ask for an increase in monthly base pay.”

The turning point is the work of current Japan Prime Minister Shinzo Abe, whose economic reforms — dubbed Abenomics — spurred a 51 percent advance in the Topix index last year while also weakening the yen 18 percent against the dollar in the same period. The PM has urged all Japanese corporations to give some of their windfall profits to their workers in an effort to combat the possibility of a stalled economy as a result of wages failing to keep up with inflation.

“Japan can’t wait one or two years for salary gains, which are needed sooner for the economy to enter a virtuous cycle of rising profits, wages and growth,” said Deputy Economy Minister Yasutoshi Nishimura late last year while Abe met with business and union leaders to work out wage increases tied to increased profits.

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NYT: Chattanooga is a Lobbyist Battleground Thu, 30 Jan 2014 12:30:27 +0000 volkswagen-chattanooga-solar-park-08

On Tuesday, the New York Times published a look at the ongoing feud between pro- and anti-union forces at Volkswagen’s plant in Chattanooga, Tennessee. It paints a picture of a political battle fought mainly by outside forces, utilizing the deep pockets of some of the nation’s most powerful lobbying groups.

Steven Greenhouse’s story “Outsiders, Not Auto Plant, Battle U.A.W. in Tennessee” is mainly focused on the lobbying efforts of anti-union groups, including the freshly minted Center for Worker Freedom. The CWF is a subsidiary of Americans for Tax Reform, the well-known anti-tax group led by conservative titan Grover Norquist. Conservative commentator Matt Patterson heads the CWF, and has made it clear that he wants the UAW out of Chattanooga, telling the NYT

 “Unions are a big driver of government. Unions are very political, the U.A.W. is one of the most political. If they help elect politicians who pass huge government programs, that requires taxes.”

Mr. Patterson has serious resources to call upon in his crusade. In a piece for conservative blog The Daily Caller, Mr. Patterson lambasted the UAW as a “left-wing ATM machine.” He also criticized the recent rejection by the NLRB of a worker complaint alleging misleading solicitation by the UAW at Chattanooga, labeling it as politically motivated. Mr. Patterson’s CWF is just one of a number of conservative lobbying groups making their presence known in the region. Previous efforts by the UAW to organize the transplant auto factories have widely been dismissed as moribund. However, the level of spending and lobbying action of anti-union groups suggests otherwise, at least in this case.

Greenhouse’s full piece is well worth a read, if only because it shows how high the stakes at Chattanooga have become (or at least are perceived to be). It also demonstrates, perhaps unintentionally, how “pro-union“ and “anti-union“ have been constructed as all-or-nothing categories in post-bailout America. That new politics of exclusion has turned what would originally have been a fairly small-scale regional controversy into a national issue.

The fear of (or hope for) a domino effect of widespread unionization of the Southern auto industry is palpable amongst groups with a national reach.  Even so, the level of concern may be overblown. Every plant is unique, and with manufacturing subdivided between an ever-larger number of OEMs and locations, the chance of unionization automatically spreading is slim. VW’s well-publicized sales difficulties in North America coupled with major layoffs last year have undoubtedly contributed to an exceptional climate at the plant, one unlike the other transplant factories. The future still holds many uncertainties for the friends and foes of organized labor.

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VW’s Labor Leader To Meet With Chattanooga Workers Wed, 02 Oct 2013 15:28:08 +0000 2012-volkswagen-passat-front-three-quarters-chattanooga

The head of Volkswagen’s Works Council may soon be paying a visit to workers at Chattanooga to discuss the prospect of a works council. Reuters reports that Bernd Osterloh will be headed down south for a “dialogue” about representation. The UAW will not be present at the talks, but representatives of both VW and IG Metall, Germany’s largest labor union, will be in attendance.

Despite the UAW’s absence, the union and IG Metall have their respective ties, with UAW head Bob King acting as IG Metall’s labor representative on Opel’s supervisory board. The meeting is also occurring as the anti-union camp digs in its heels with a campaign aimed at thwarting the UAW’s organization drive.

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You Can Only Have Second Thoughts if You Had a Thought to Begin With: A Chattanooga Story Sun, 04 Aug 2013 12:00:21 +0000 VW-11-1786-450x301

This weekend was the end-of-summer graduation at Auburn, and like all such events, it brought an avalanche of rental cars to our Loveliest Village on the Plains™. Amidst the ubiquitous Chryslerbishis and engineering-excellence-cum-fleet-staple Camrys, I spotted a couple of newish Jettas and Passats wandering about town, crooked rental bar stickers applied with obvious indifference. I saw one particular rental Jetta sitting in the parking lot not far from the bookstore when I went to pick up some cut-price tomes. Coated in dust and wearing those ugly DUI-style New York plates, it was a forlorn sight. I couldn’t help but think of it as a reminder that the road to hell can be paved with tax breaks as often as it’s paved with good intentions; at least that’s the case if you happen to be governor of Tennessee.

TTAC has covered the increasingly murky labor situation at Volkswagen’s Chattanooga facility for some time now, but the extent of the looming political crisis didn’t become clear until rather recently. At the end of May, VW shed 500 jobs at Chattanooga in response to the Passat’s disappointing performance in the marketplace; the ripple effect of such a move on the assembly line undoubtedly cost hundreds more their livelihoods. This comes at a time when the future of worker representation in Chattanooga is very much up in the air, much to the consternation of almost all parties involved.
Despite the best efforts of our own TTAC reporters, nobody seems to know what the hell a “works council” actually is or how it would function in a US environment that may or may not explicitly prohibit such arrangements. The only real point of agreement is that, if such a council were implemented, it might be a gateway to *gasp* UNIONS! The invocation of the dreaded (or lauded) u-word is sending all kinds of political groups into a tizzy, with a resulting wave of cash now blanketing Tennessee with pro- and anti-propaganda. The UAW’s presence in the area is well known, but conservative groups of varying stripes have also set up camp around town. Tennesseans are probably already familiar with the billboards at the top of article, funded by the Competitive Enterprise Institute: one of the moneybags “think tanks” that seems to do all the talking for political interests nowadays. However, I couldn’t help but excerpt a little something from an essay on the CEI website:

One hundred and fifty years ago an invading Union army was halted at Chattanooga by the Confederate Army of Tennessee under General Braxton Bragg. The Battle of Chickamauga was one of the bloodiest days of the entire Civil War, and a resounding defeat for the Northern forces. Today Southeastern Tennessee faces invasion from another union— an actual labor union, the United Auto Workers (UAW)… One hundred and fifty years ago, the people of Tennessee routed such a force in the Battle of Chickamauga. Let their descendants go now and do likewise.

Umm, yeah. Somehow I doubt that one is going to make its way into the hands of Chattanooga’s black employees, unless it comes to them from a UAW organizer. But let’s not get too hung up on gung-ho neo-Confederate lunatics; let’s talk about money.
In response to layoffs, the Tennessee legislature passed S.B. 0605, the so-called “clawback” bill. At the core of that lengthy document is a new provision designed to allow Tennessee’s Department of Economic and Community Development to withhold state financial incentives for corporations that fail to materialize their promises of jobs. Presumably, that would include VW, although in typical toothless-regulation fashion left the final discretion on whether or not to implement clawbacks to the DECD itself. Now that the legislature has safely washed its hands of responsibility for managing yet another enormous chunk of taxpayer money, DECD bureaucrats can feel free to shower VW with public money in a desperate bid to keep overpriced jobs in the state. Bud Adams is no doubt cackling with approval somewhere.
And let’s not beat around the Jetta here; we’re talking about some serious cash. Five-hundred-and-seventy-seven million dollars in total incentives. As this Tribune reporter pointed out, that makes what Pennsylvania paid for the privilege of getting a dysfunctional VW factory in New Stanton for ten years look like peanuts. Ah yes, New Stanton! In the interest of full disclosure, let me tell you that I’m planning to do a full book-length dissertation on that plant as the culmination of my graduate-school research, so I’ll avoid ruminating on it too much for now. A few basic historical facts will suffice to make my point. New Stanton was the first of all the modern, foreign-owned auto factories. It came with a package of incentives that caused quite a bit of controversy in its day, mostly because of its size. It opened at a time when VW was on a serious downward swing in the American market, and it needed to start building competitive products, fast, to reverse that decline. Instead, it opened to much fanfare, seemed like it might work out for a few years, and then collapsed under an avalanche of quality problems, labor trouble, and good old fashioned competition just 10 years after it opened. It was the only transplant to ever be unionized, and that legacy has led to furious debates about the impact of unionization on competitiveness in the auto industry ever since the last Jetta rolled off the assembly line.
My point isn’t that unions killed New Stanton, or that VW is a terrible company, or that conservatives have no right to make their opposition to unionization known, or some other partisan and easily-countered nonsense. My point is that Tennessee politicians had the entire legacy of VW in the United States staring them in the face, and they chose to roll the dice anyway. They couldn’t have not known about New Stanton. They couldn’t have not known that VW nearly quit the US market in the mid-90’s after getting their lunch eaten by the Japanese just as badly as the Big 3 had. They couldn’t have not known that despite all the hoopla surrounding the New Beetle and the “resurgence” of the early 2000’s, VW was still but a small fish in a very big ocean. They couldn’t have not known that VW has a long history of building products whose quality and reliability left something to be desired (like window regulators that weren’t made out of used bubble gum, or sunroofs that worked, or head bolts that were actually torqued properly.) Now that VW has been consistently underperforming in an up market, fleet sales are high, and quality problems continue to plague Chattanooga’s products, it should be an easy call to see that history might just be repeating itself yet again. Right, Senator Bob Corker?

“Volkswagen is a good company, and it didn’t make those mistakes” such as were carried out by the Detroit Three, he said.

Guess not. So here we have a man who despises the UAW and blames them for the collapse of the domestic automakers, while at the same time cheerleading for a troubled auto company in his home state that made exactly the same “mistakes” and faced the same obstacles that, in his own opinion, killed Detroit. So either he’s totally ignorant of VW’s record in the US (likely), or simply lying through his teeth to cover his own ass about the feasibility of this deal ever paying off (also likely). Truth be told, it doesn’t matter if the UAW comes to represent the workers at Chattanooga or not. Corker’s already lost, as has Governor Bill Haslam and all the other politicos that pushed this particular bit of corporate welfare to their citizens. The VW dream of a happily expanding company that doles out paychecks to grateful, un-unionized citizens while taking subsidies out of their back pockets has already been shattered. If unions arrive in Chattanooga, Tennessee’s political elite will have nobody to blame but themselves. I have a feeling they could have avoided this mess just by doing a little homework.

Correction: This article incorrectly attributed a quote to Senator Bob Corker, which should have been attributed to Professor Lowell Turner of Cornell University. TTAC apologies for this error.

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GM Daewoo Workers Plan 4th Of July Walkout Thu, 27 Jun 2013 11:35:50 +0000 Korea Strike - Picture courtesy

Workers at GM’s South Korean plant will stage a partial walkout, ominously on Independence Day, July 4th, Reuters heard from a union spokesman. The walkout could turn into a full-fledged strike, union spokespeople said. Reports Reuters:

“Last week, 79 percent of union members at GM Korea voted in favor of strike action. Union leadership decided late on Wednesday to launch a partial strike for six hours on July 4, and to refuse overtime and weekend work for now, said Choi Jong-hak, a union spokesman. He said union leadership would decide whether to continue the partial strike depending on progress in the wage talks.”

This is yet another chapter in the suspense novel titled South Korean wage talks. Workers want more money, and they are upset that the next generation Cruze, and possibly the Mokka, will be produced elsewhere.

Four out of 10 Chevrolet-branded vehicles sold globally, and all Chevys sold in Europe come from South Korea. The Korean GM units is a key hub for CKD kits that are shipped to China and many emerging markets for local assembly. GM Korea makes Opel’s Mokka SUVlet, and the Chevy Spark.

The union says “cost per vehicle” is half of that in Australia and lower than in many other countries, Russia, included.  Workers fear a slow shift of GM’s production base from South Korea to China. The next generation Cruze will be made in China, others could follow.

From July to September  2012, GM Korea suffered its biggest-ever strike since it was created in 2002, resulting in lost production of 40,000 vehicles. In China, automobile production is relatively safe from industrial action. What’s more, street protests in China are known to  shift consumer sentiment away from certain other brands.

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GM May Move Mokka Production From Korea To Europe Mon, 10 Jun 2013 18:20:26 +0000

GM has rocky relations with its Korean unions, and the relations will get a lot rockier if what Germany’s Handelsblatt says is true. According to the report, GM is seriously looking into moving most of the production of the Opel Mokka to Europe.

Currently, the hot selling SUVlet is made in South Korea only.  Says Reuters:

“More than 100,000 Mokkas have been ordered since the market launch a half year ago and demand has been much better than expected, leading to production bottlenecks and long waiting lists for the subcompact SUV.

Producing the Mokka in the factory of General Motors’ Opel unit in Zaragoza would help to fill up that plant’s spare capacity and could lower losses of the division.”

An Opel spokesman told Reuters that “GM was looking for additional capacity to produce subcompact SUVs.”  The Trax, a Chevrolet-badged Mokka sibling, will continue to be built in Korea, a Chevrolet spokesman said. A shift of the Mokka production has been discussed for a while. The next generation Mokka already is scheduled to be produced in Europe.

Three days ago, the Korean unions threatened strike after hearing that the new Aveo/Sonic will be made in China and the United States.  This latest piece of news could cause the already simmering kettle to boil over.

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Selective Solidarity: Ignored By UAW Bosses On A Jaunt To South Africa, Korean Union Threatens Strike Against GM Fri, 07 Jun 2013 06:55:14 +0000

When there was labor unrest in South Africa, the UAW was quick to spend union dues for a long trip to the scenic South African locale, ostensibly to show  their solidarity with South African union brothers who, coincidentally, fought against Mercedes and Volkswagen. Back home, the UAW pulled a whole packet of race cards. It headlines, a bit strenuously: “South Africans have more rights than workers in Mississippi.”

It would have been more a propos if the UAW would have flown to South Korea to show solidarity with workers  who are about to go on strike against GM, the company, ooops, that is partially owned by the UAW.

“General Motors Corp has told its South Korean labor union it has no plans to produce the next-generation Aveo small car at its key Asian base for the time being, prompting the union to threaten strike action,” Reuters writes today.

Workers were told by Sergio Rocha, head of GM Korea, that the new Aveo/Sonic will be made  in China and the United States, and that South Korea could possibly produce the model two years after its launch.

GM and its South Korean unions are in wage talks, and GM has made many not so subtle hints  that it might reduce its South Korean presence if workers don’t fall in line. Instead, the Korean unions now threaten strike:

“Should there be no change in the company’s stance, the labor union will be able to launch strike action – our biggest legal weapon.”

The acrimonious, and often militant labor disputes in South Korea  are being steadfastly ignored by the UAW. In the last month, the UAW’s website  did not mention “Korea” once, if Google is to be believed. It’s easy to show solidarity with “our brothers and sisters in South Africa.” It seems to come a bit harder when the union brothers and sisters threaten strike against a company you partially own.

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TTAC’s Headline Decoder: Pay Raise At Volkswagen A Non-Event Tue, 28 May 2013 13:11:32 +0000 Picture courtesy VWPLANET.DE

According to media reports, Volkswagen workers received a hefty, inflation-busting pay rise today, giving the impression that VW workers are being especially coddled. Not true. Metal workers in  all of Germany received a 5.6 percent raise in May (3.4 percent more from July on, followed by 2.2 percent starting in May 2014, to be exact.) Volkswagen workers received more or less the same.

Volkswagen workers have their own “Haustarif” which has to be separately negotiated. Today, nearly 100,000 Volkswagen employees in Germany received their own deal. It mirrors the pay hike negotiated by the Metal Worker Union in May, plus €300 to be paid into the pension plan. In exchange for the €300, Volkswagen workers have to wait two months longer for a raise, which kicks in in September. No big shakes, never mind the headlines.

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Who Will Get Opel’s Zafira When Bochum Closes? Mon, 13 May 2013 11:21:25 +0000

Now that Opel workers in Bochum refused a plan to keep the factory open, now that an intervention by UAW’s Bob King went exactly nowhere, the question is where to move production of the Opel Zafira when Bochum closes its doors by end of 2014.

In the running: Rüsselsheim, Germany, and Ellesmere Port, UK.

Both locations are top options on the lists of GM and Opel managers, Automobilwoche [sub] says.  Opel’s board of management will make a decision by June, which the supervisory board will have to approve.  A member of the supervisory board told Automobilwoche that  “business aspects” speak for Ellesmere Port, however, he hopes  that the Zafira will remain in Germany.  The union has half the seats of Opel’s supervisory board, and we know what the unions hope.

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Korean Unions Mad At Akerson Tue, 07 May 2013 13:26:50 +0000

Last month, GM CEO Dan Akerson said that GM might move production away from South Korea if tensions with North Korea escalate. Korea labor unions were not amused, saying that Akerson was using the crisis as a pretext to gain the upper hand in upcoming labor talks.

Last week in Detroit, Akerson told GM’s South Korean union leader that he won’t pull GM out of South Korea. He also said he is unhappy with the Korean union, and that he will bring up the matter this week with South Korea’s President Park Geun-hye, when the “Iron Lady” will visit the U.S. this week.

Now, the union is fuming.

“We are upset by his remarks. We did not go all the way to the U.S. to hear that,” union spokesman Choi Jong-hak told Reuters.

More than four out of 10 Chevrolet vehicles sold globally, are made in South Korea.

In January, rumors about GM  shifting production to underutilized European factories made the union threaten “war” if GM does that. Knowing the militant Korean unions, this is not just a figure of speech.

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German Autoworkers Go On Strike Thu, 02 May 2013 14:48:14 +0000

German autoworkers want their share of the record profits announced by German carmakers last year. IG Metall labor union demanded 5.5 percent. Employers countered with 2.3 percent. Today, workers went on strike.

500 employees on the night shift at Daimler’s Mercedes  plant in Stuttgart- Sindelfingen walked off the job this morning. More walkouts are planned here and in the Porsche factory nearby, Bloomberg reports. According to IG Metall, “several thousand employees” are expected to join the warning strikes in Germany’s southern state of Baden-Wuerttemberg.

More walkouts are planned for tomorrow in Berlin, affecting a Mercedes component plant an factories of suppliers,

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Opel Abandons Bochum Completely Mon, 29 Apr 2013 10:44:01 +0000

Bob King’s attempts to ingratiate himself with German unions, and to make Opel’s Bochum workers reconsider their decision to turn down Opel’s restructuring plan, are being ignored. Actually, it appears as if they had the opposite effect. Days after King’s comment, Bochum plant manager Manfred Gellrich rejected new discussions, saying Opel does not want to “waste precious time,” Reuters says. Over the weekend, Opel dropped another bomb: Bochum will be closed completely. A parts depot that was supposed to stay open, will also close its doors.

With the shuttered logistics center, another 420 jobs will be lost, raising the number of redundancies to 3,700, says Der Spiegel. “It does not make sense to leave the distribution center in Bochum,” once manufacture of cars stops, an Opel spokesman told the magazine. Bochum’s works council had not put much faith in the plan in the first place – one of its reasons for rejecting the plan. Opel has another parts center in Rüsselsheim.

The Bochum plant is scheduled to close by the end of next year. Opel will move the production of its Zafira MPVs elsewhere, two years before a planned model changeover.

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Bob King Intervenes In Bochum, Receives Cold Shoulder Wed, 24 Apr 2013 13:54:46 +0000

UAW boss Bob King told Opel’s Bochum workers to vote again, and to this time accept a deal that had been worked out between the German metal worker union IG Metall and GM.

According to Reuters, “UAW President Bob King, who is a member of Opel’s supervisory board, said on Tuesday that workers at GM’s Opel plant in Bochum, Germany should ask to vote again on the restructuring deal they rejected last month that would have kept the plant open through the end of 2016 and retained 1,200 of the more than 3,000 employees.”

The plan had been overwhelmingly rejected by Bochum’s workers. The plant is now scheduled to close by the end of 2014.

King, who oddly sits on Opel’s Supervisory Board as a representative of the union despite being the chief of one of GM’s biggest shareholders, said he “would really hate to see that plant closed when so much effort was put in by IG Metall and the works council to save it.”

The plan is likely to fall on deaf ears. “We gave the employee a clear choice,” spokesman Harald Hamprecht told Reuters. “We respect the outcome. The Opel supervisory board acted accordingly and we are moving on.”

Bochum’s workers have not been heard of, but it is unlikely that they are sympathetic to the plan. They had accused their unions of throwing them under the bus, and they probably won’t listen to a major shareholder of GM.

King is trying to curry favors with IG Metall, and to enlist its help for the UAW’s efforts to organize the U.S. plants of German transplants.


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GM Closes Bochum, Opens Itself To Costly Fight Over Severance Pay Wed, 17 Apr 2013 14:24:35 +0000

Opel’s Supervisory Board, with half of its members delegates of the labor union, decided today the first closure of a German car factory in decades. According to Reuters, “Opel will end producing Zafira MPVs at its 50-year old Bochum plant by the end of next year, a move that has triggered a rare and public split within union ranks following months of tough negotiations.”

The closure will lead to the loss of 3,000 jobs in Bochum, as part of Opel’s attempt to put an end to 15 straight years of losses in Europe. It will be a while.

The Bochum plant makes the Zafira, and the current model will be produced through 2016.  Where that will happen after 2014 is anybody’s guess. Opel’s works council in Bochum was betting that GM would not want to shift production before the model change and voted against a compromise deal that would have kept the plant running through the end of the model’s life-cycle. Workers in other Opel plants supported the deal that had been worked out between unions and management.

According to Reuters, “labor leaders in Bochum, a former coal mining town in the economically depressed Ruhr region, believe colleagues at Opel’s other three German plants were all too willing to sacrifice Bochum in order to save their own factories.”

The board decision was pre-ordained. According to German rules, if the board is split, the Chairman can cast a tie-breaker vote. The Chairman of Opel’s Supervisory Board is Steve Girsky. By casting two votes, he sealed the fate of the Bochum factory.

However, Girsky’s tough line will become very costly for GM. Under normal circumstances, closing a European plant even with the cooperation of the unions does not come cheap. As the examples of Antwerp and Genk  show, average severance payments of $200,000 and higher are normal, depending on the age of the workforce. “There won’t be a deal for less than $200,000 per head,” the CEO of a company in the region told Wirtschaftswoche.

In the case of Bochum, the works council opposes the closure, which could mean a drawn-out and costly legal battle and even higher severance payments. Works council chief Walter Einenkel; already threatened “a multi-year, politically and financially expensive affair, which will dominate the public discussion for years to come,” and damage the Opel brand even more.

It will be a very long time until the savings from closing Opel will be realized. Or, as Einenkel predicted, “for Opel the most expensive closure of all times.”

There is one way around it: Bankruptcy. Opel AG is a standalone company that just happens to be majority-owned by GM.  If someone issues a Do Not Resuscitate order and takes Opel off GM’s money drip, bankruptcy would follow in due course.  Word has gotten around in Europe that there is too much capacity, and shedding it via a GM-owned Opel would not be entirely unwelcome. Except among the Opel workers.

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Renault and French Unions Agree: No Plant Closures, 7,500 Jobs Cut Thu, 14 Mar 2013 18:56:18 +0000 Renault photo

In what Renault CEO Carlos Ghosn described as a “historic” event, the automaker has come to an agreement with the three unions representing its French workers that will keep five Renault factories in France running until at least 2016 while using attrition and retirements to reduce their workforce by 7,500 employees.

To keep all of the company’s French assembly plants open, the unions,  Force Ouvriere, CFE-CGC and CFDT, appear to have agreed to what amounts to a wage cut, at least to begin with. There is a salary freeze for the first year of the agreement, but workers will have to put in 6.5% more hours in their workweek and increase production by a third. It’s interesting that Ghosn got the French unions to agree to a longer workweek not long after the recent dust up between Titan tire CEO Maurice Taylor and French finance minister Arnaud Montebourg over how lazy or productive French workers are or aren’t.

Ghosn said that the contract is a “balanced agreement” and will allow Renault to “renew its competitiveness in France”. The agreement follows a pattern set earlier between Renault and Spanish unions, pressuring its French workers. Ghosn is using a different strategy to cope with the problem overcapacity in a stagnant European car market than other automakers. Ford, PSA and Opel have all announced planned factory closings. The Wall Street Journal reports that there are as many as 20 auto assembly facilities in western Europe that are running at less than 50% capacity. Ghosn’s plan is apparently to boost productivity and lower the company’s break-even point with its French operations. The company says that the increase in working hours will lower costs by an average of €300 ($390) a car. I guess Renault is dealing with the overcapacity situation by actually using more of that capacity. Before the global financial crisis, Renault assembled 1.2 million cars in France in 2007.  That figure dropped to 532,000 for 2012. The company says that planned production of 710,000 cars in France by 2016 will improve utilization to 85% of capacity.

Some of that increased production will involve building 80,000 Nissans a year for Renault’s strategic partner. Though Ghosn predicted that a “promising” line of new cars will change Renault’s fortunes on the continent, since he only recently said that the European market won’t experience any growth for years, I think that making cars for Nissan and Renaults for export is going to be what that increased production is for. Renault’s international sales have indeed been up and despite the doldrums in Europe, Renault did make $2.3 billion in profits for 2012. At home, though, things aren’t good. Overall car sales in France in 2012 were down 14% and in the European market in general, Renault has not been competitive. Last year Renault lost more than a percentage point of market share in Europe as its sales fell 19% in that region.

Ghosn may not have a choice about lowering per-car assembly costs. His competitors have been waging a price war as they lower prices in their own way of keeping assembly lines running and capacity utilization high.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS




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Trying To Sort Through The Opel Mess: It’s A Pre-Programmed Crash Fri, 01 Mar 2013 19:28:40 +0000


I have been trying to make heads or tails out of yesterday’s contradicting news about the big deal between Opel and the unions, and so does German media. So much is clear: The truth and GM’s press release about a “successful conclusion” of the negotiations with the Opel works council are miles apart. There is no deal. Unions and Management are still in negotiations, the negotiations will continue this coming week. Then, the workers have to vote. It does not look good: Bochum’s works council is dead set against the deal. It gets worse.

Bochum’s works council chief Rainer Einenkel tells Handelsblatt that he “does not agree” to the deal. He characterizes his negotiations with management as “very brief.” He says that management told him that there is “nothing to discuss,” and that Bochum either says yes, or jobs will be imperiled from 2015 on.

Einenkel did not want to sign on to what appears to be on the table:

  • Opel continues building cars in Bochum, at least through 2016
  • The Bochum auto plant will be converted into a component and logistic hub for a total of 1,200 jobs or more.
  • Opel attempts to settle new companies and technologies in Bochum, and expects ”a four-digit number of high-quality, new industrial jobs.”
  • Bochum goes from three shifts to two, at the expense of 700 jobs, starting in the second quarter of 2913. Affected workers will receive “attractive severance packages and partial retirement programs.”
  • Production and jobs at the other three German plants in Eisenach, Kaiserslautern and Rüsselsheim are safe.

And what would the concessions of the unions be? What would Opel get in return?

  • The payout of salary increases under the collective bargaining system is deferred until the next salary increase goes in effect.

The last “concession” makes you wonder how bad the situation really is at Opel. Management had tied its hands before and agreed to keep plants open through 2014. Now it puts itself into handcuffs and agrees to keep the doors open and the lights on in Germany through pretty much the end of the decade? And the price for that is what? A contractual pay raise on credit? How much are we talking about? Let’s check.

Last October Opel owed its German workers some $15 million due to a 4.3 percent pay hike negotiated for all IG Metall workers in May. That money was paid in November. The next contractual pay hike is due this May. Then, another $15 million are due. After that, the workers will get their extra 4.5 percent monthly, and whatever the next raise is will be loaned to Opel for another year. Let’s call that $30 million, or three years of Akerson’s salary. Is Opel so hard up for money that it has to bargain away its ability to make serious adjustments of its capacity for what looks like a payday loan? Remember: These are not salary concessions. Instead of getting paid monthly, it’s paid by the end of the year.

And it’s not that the bleeding will stop. Those 700 jobs of the third shift? They will be very expensive to make go away.

Let me again kill a myth. It is not impossible to close a factory in Europe. Not at all, if you have the money. You can close factories to your heart’s content. You can’t fire the people. If you do, it costs you. A lot.

The closure of Ford’s Genk factory was estimated at $1.4 billion, or $332,000 per worker. Ford allocated money, the matter went down with a minimum of fuss. When GM closed its Antwerp facility, it did cost GM around $532 million in termination benefits. Divided by 2,600 workers, it came out to a little bit over $200,000 per worker.

How much do you think those “attractive severance packages” for the third Bochum shift will be if there is a contract that says that their jobs are safe through 2014?

How much will it cost to shift 1,000 workers into those mythical “high-quality, new industrial jobs?” The workers aren’t stupid. Every year they worked at Opel is worth serious money in severance when they get fired. Close to retirement, very serious money. They won’t give it up for nothing. You will have to pay them – a lot – to take those high quality jobs.

Ford did the right thing. It bit the bullet, paid, and moves on. GM on the other hand …

Opel and GM strike me at someone who refinances to a few bucks of a lower payment, but with a much bigger balloon a few years down the road. There is only one way to escape the inevitable: Take Opel bankrupt. The more problems are being kicked down the road, the more attractive and likely a bankruptcy will get.

 Today is Karl-Thomas Neumann’s first day on the job as Opel CEO and chief of GM Europe. Germany’s news channel N-TV greets him with the headline:

“The Opel Adventure Begins: Neumann Takes The Ejection Seat.”

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GM’s Euro-Trash: All Agree On Opel Deal, Except For The Union Boss Thu, 28 Feb 2013 17:51:31 +0000

I shall not be moved: Opel union chief Einenkel

Messy, messy, messy: Can’t even close a proper deal with the unions. GM and the unions have an agreement. It is basically as reported this morning. The deal has the signatures of management and unions. One signature is missing, reports Die Welt: That of Bochum works council chief Rainer Einenkel.

With the missing signature, there are doubts whether the deal is legally binding. Says Die Welt: “The courts may have to decide.”

Both GM and the metal worker union IG Metall are interested in bringing the matter behind them. Steve Girsky needs to report mission accomplished to Detroit (even if the result is dubious). The metal worker union already has its eyes on a much bigger prize: The new round of collective bargaining.

The unions want a raise for all 3.7 million German metalworkers, and the chances are good. Volkswagen reported record earnings, BMW and Daimler also have solid profits. The unions want 5.5 percent more this year. They would have bargained for more, would Ford and Opel not be in the poorhouse in Europe. GM wants to pay its workers zero percent more, “but the Americans don’t know the German system well enough,” Opel-union boss Schäfer-Klug told Focus. “Germany has a collective bargaining system, and Opel can’t undermine it. Neither IG Metall nor the other automakers will accept that.”

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Armistice Confusion At Opel: Unions 2, Girsky Nil – Wait, Game Not Over? Never Mind … Thu, 28 Feb 2013 11:26:34 +0000  

If you think that GM will get a handle on its abundant capacity problems in Europe – abandon all hope. Or rather: Postpone hope for until after 2016, or maybe later. Also, write off any  expectations that Steve Girksy would successfully play hardball with German Metalworker Unions. Deadball is more likely. With the decision to move the production of Opel’s Astra volume model from Rüsselsheim to Ellesmere Port, and to shift production from Bochum to Rüsselsheim, the fate of the Bochum plant appeared to be sealed.

German unions declared war. Minutes ago, Opel works council chief Wolfgang Schäfer-Klug announced “an armistice” (Das Handelsblatt) and told German media that Opel will continue making cars in Bochum through 2016. Nobody can be fired, no plants can be closed at Opel until January 1, 2017. Even then, Bochum will remain open.

Currently, there is a firm contract with Opel unions that rules out plant closures and lay-offs through the end of 2014. Apparently, GM management decided to have its hands tied for at least two more years. Once car production ends, Bochum workers will find job security for another two years. Even after 2016, Bochum will not be closed, it will continue making components. Opel will have to pay salaries pretty much through the end of the decade.

According to the reports, this is an “agreement in principle.” It  is unknown what the unions offered in return. Girsky had set a deadline  for today and threatened, he would close Bochum by the end of 2014. He lost.

While Opel workers have gained a few years, they could do better: Volkswagen announced yesterday that each of its more than 100,000 workers in Germany will receive a bonus of nearly $10,000. While GM is scraping the bottom in Europe, VW writes a billion dollar “thank you” check to its workers.


Hours after the news made the rounds, Bochum works council Walter Einenkel said they are bogus: “There is no agreements, simply because our side did not have the opportunity to discuss this among ourselves, not to mention to clear the matter with management,” Einenkel  told Die Welt.  “In the meantime, we have received a so-called master agreement – I could only skim it. Neither me nor the other members of our committee are able to evaluate this in such a short time.”

Einenkel told the paper that he “had seen a lot” in his 40 years at Opel, but “this is matchless.”


Now, unions are “just about to reach an agreement,” says Reuters. IG Metall expects to strike a deal this week.

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Girksy To Opel Workers: Allow Me To Rip Out Your Heart, Or Else Mon, 25 Feb 2013 14:10:09 +0000

By Thursday, GM wants to have a definite deal with the Opel unions  at least that’s the deadline Steve Girsky has set. The parties are further apart than Dems and Reps over the sequester. Steve Girsky wanted the unions to agree that Opel’s toolmaking, prototype building and central production planning will be outsourced, or moved to GM’s plant in Gliwice, Poland, Der Spiegel says.  The unions are rightly horrified.

Should the unions say yes to that move, which would cost 700 jobs at home in Rüsselsheim, GM was ready to continue making cars in Bochum until 2016, and possibly provide a few parts making jobs after that. If there is a nein, Bochum will be closed by the end of 2014, or so the ultimatum goes. Opel workers are meeting as we speak in Bochum.

The interesting part is that toolmaking, prototype building and central production planning are centerpieces in the auto business. The engineering of a car and production engineering are more and more part of one big system. Moving toolmaking and prototype building to Poland would shift Opel’s center of gravity – into a Gliwice plant that just has been shifted back to the mothership and that would be safe in case of an Opel bankruptcy.

PS: The meeting in Bochum ended with the workers being told that there is no deal. Girsky wants a deal by Thursday. The unions say no to GM’s offers. It’s a one-sided negotiation: All jobs are safe through 2014 …

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Dr. Z Nearly Lost His Job Mon, 25 Feb 2013 11:22:56 +0000

“Dieter Zetsche is lucky that he can stay for three more years,” writes Der Spiegel in Germany. The labor side of Daimler’s Supervisory Board had demanded Dr. Z’s head, the magazine writes. After long debates with Daimler’s Supervisory Board Chairman Manfred Bischoff, a compromise was found.

Says Der Spiegel:

“Early in the year, Daimler Works Council chief Erich Klemm and metalworker union boss Thomas Klebe approached Bischoff. They announced that the labor side of the Supervisory Board will unanimously vote against an extension of CEO Zetsches’ contract.”

Labor, but also management criticized Zetsche’s style, or rather the lack thereof. Bischoff threatened that he could veto the decision. In a large German corporation, the Supervisory Board consists of 50 percent representatives of labor, the other half represent the capital. If votes are tied, the Chairman can break the tie.

Instead, a compromise was reached. Zetsche’s contract was extended only for three years instead of five. Wolfgang Bernhard, unloved by the unions for his gruff style, was sent to manage trucks.

For everybody’s edification, a German Supervisory Board  is not a Board of Management. The Supervisory Board supervises, it does not manage. The Supervisory Board cannot tell management what to do. All it can is approve or disapprove management’s proposals.

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Titan Tire CEO: French Workers Are Lazy. France: Not Even, We Aren’t Thu, 21 Feb 2013 13:30:57 +0000 Click here to view the embedded video.

Titan is the one with the money and the talent to produce tires. What does the crazy union have? It has the French government.

Okay, that’s direct, but it’s not the most direct thing Maurice Taylor said regarding the possibility of investing in a France-based tire manufacturer.

France’s finance minister, Arnaud Montebourg, recently received and then presumably leaked a letter from Taylor in which he repeatedly slams French industry and declares that he has no interest in hiring French workers.

“Titan is going to buy a Chinese tire company or an Indian one, pay less than one Euro per hour wage and ship all the tires France needs… You can keep the so-called workers.” In response, Montebourg compared Titan unfavorably to the Maginot Line, which would stand against any German tank assault.

No wait, that’s wrong, he compared Titan unfavorably to Michelin. Given that Titan’s been around for twenty years, that’s probably just as silly a comparison.

It’s hard to find someone to root for in this exchange, which seems to combine the worst red-meat stereotypes of insanely greedy corporate adventurists willing to have tires made by slave labor if necessary and complacent glass-tower mandarins cheerfully bleeding a country dry to protect their union voters until the very last possible minute. The enthusiast driver in me is on the side of the French, insofar as Michelin makes a number of outstanding performance tires and I have yet to see a Chinese tire worth entering in a demolition derby. It’s easy to forget that tires like the Pilot Sport PS2 are in part subsidized by the research and industrial capacity that come along with having a big chunk of the plain-vanilla transport industry. I also sleep better at night knowing that Chinese tires are fairly rare on the roads of the United States, since I have to drive on those roads.

We’ll continue to monitor the spat to see if anyone eats his words, but I wouldn’t look for that to happen. Titan will make its tires as cheaply as possible, and the French government won’t consider anything but token protectionist efforts. Now might be a good time to stock up on Pilot Cups, and don’t forget to store them away from sunlight and fresh air.

For your reference, here is the full text of the communication:


Dear Mr. Montebourg:

I have just returned to the United States from Australia where I have been for the past few weeks on business; therefore, my apologies for answering your letter dated 31 January 2013.

I appreciate your thinking that your Ministry is protecting industrial activities and jobs in France.  I and Titan have a 40-year history of buying closed factories and companies, losing millions of dollars and turning them around to create a good business, paying good wages. Goodyear tried for over four years to save part of the Amiens jobs that are some of the highest paid, but the French unions and French government did nothing but talk.

I have visited the factory a couple of times. The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three, and work for three. I told this to the French union workers to their faces. They told me that’s the French way!

The Chinese are shipping tires into France – really all over Europe – and yet you do nothing. In five years, Michelin won’t be able to produce tire in France. France will lose its industrial business because government is more government.

Sir, your letter states you want Titan to start a discussion. How stupid do you think we are? Titan is the one with money and talent to produce tires. What does the crazy union have? It has the French government. The French farmer wants cheap tire. He does not care if the tires are from China or India and governments are subsidizing them. Your government doesn’t care either. “We’re French!”

The US government is not much better than the French. Titan had to pay millions to Washington lawyers to sue the Chinese tire companies because of their subsidizing. Titan won. The government collects the duties. We don’t get the duties, the government does.

Titan is going to buy a Chinese tire company or an Indian one, pay less than one Euro per hour and ship all the tires France needs. You can keep the so-called workers. Titan has no interest in the Amien North factory.

Best regards,  Maurice M. Taylor, Jr. Chairman and CEO




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Carmaking To Get More Expensive In Deutschland Thu, 31 Jan 2013 14:56:57 +0000


Uh-oh: The price of doing car business in Germany is heading up, increasing pressure especially on Opel. “Germany’s IG Metall union may push a pay claim between 5 and 6.5 percent for about 100,000 workers at VW’s six western German factories” Bernd Osterloh, head of VW’s works council told  Reuters today. What does this have to do with Opel, you say?

Metalworker pay is negotiated largely on a union-wide basis, not on a company basis.  If IG Metall gets a 6.5 percent pay raise, then this applies to everybody, including Opel. Osterloh, who also sits on IG Metall’s board, confirmed that “demands for VW workers will be broadly in line with claims the IG Metall will be pushing for about 3.7 million German metal and engineering staff.”

Until October 2012, GM had not paid the 4.3 percent payhike negotiated for all IG Metall workers in May.  Late October, it was decided to cover the deferred raise with a lump sum payment, and to defer the salary raise again for the time after that. This in return for keeping Opel’s plants open through 2016. A week ago, Steve Girsky reneged. I don’t think he will get a similar deal when pay goes up again this year.

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