The United Auto Workers: Conventional Wisdom

the united auto workers conventional wisdom

While the United Auto Workers (UAW) were busy plotting their future, The Detroit News ran a Cyber Survey. “Have UAW members given up enough or should auto makers expect more concessions?” As of the time I’m putting electrons to pixels, only 26 percent of the respondents agreed with the ungrammatical assertion “there’s been enough concessions.” The other 74 percent voted that the “UAW needs to make more concessions.” It’s not too promising when the home town crowd starts turning against you. But does it really matter?

Admittedly, on-line surveys are far from statistically significant. However, the “put your hands up for Detroit” results are a clarion call to the UAW. The days when the union could demand the sun and get the moon are gone. Even a brief look at the automakers’ balance sheets indicates that they can no longer afford to keep idle workers on the payroll, or pay for full time employees who work on a part-time basis, or carry enormous “legacy costs,” or even keep pace with rising health care costs.

Yet the UAW is like Oliver Twist on an endless loop; they keep asking for more. The speeches and 103-page Resolution approved at their collective bargaining convention all indicate they’re not willing to give many (any?) concessions to their employers. In fact, the UAW wants MORE benefits and job guarantees.

Saber rattling? Don’t be so sure. The UAW doesn’t seem to grasp the simple concept that they’re on the verge of pricing themselves out of a job. The organization is deeply infused with a sense of entitlement, a “Don’t mess with us, we ARE the company” credo that informs everything they do– even if it threatens to take them all the way to the unemployment line.

UAW President Ron Gettelfinger signalled that his union brothers and sisters are ready, willing and able ($847m strike fund and counting) to down tools should their employers get stroppy. Even though Big Ron’s got a look at the automakers' books, he doesn’t believe The Big 2.5 are on the ropes. The fact that Ford and GM have recently topped-up their checking accounts, that investment bankers are clamoring to buy Chrysler, merely reaffirms the UAW's bottom line: where there’s a contract, there’s a way.

Bankruptcy? Fuhgeddaboutit. Gettelfinger vehemently denounced Delphi for trying to use bankruptcy to break their union contracts. Yet Chapter 11 awaits any of the The Big 2.5, should their unionized work force choose to strike. Make that all. If any one of the domestics collapses, it will cause a chain reaction that will end the American auto industry as we know it.

Of course, the automakers aren’t innocent victims in any of this. No matter what you’ve heard, the paradigm has not changed. The automakers still threaten to close plants or withhold new cars from particular plants, using new models and continued employment as hostages to get what they want from the UAW. The workers at GM’s Lordstown, Ohio plant are sweating bullets right now.

What's more, auto company executives are equally mired in the entitlement mentality. According to Ron Tadross at Banc of America Securities, the base salary of the average GM, Ford, or Chrysler vice president is about the same as the total compensation for the CEO of Toyota (just under $1M). Add in the bonuses and stock packages (regardless of how well the company did) and Detroit’s top dogs are making 40 to 50 times as much as the workers they say they can no longer afford.

When was the last time you heard any of these executives offering to take a pay cut or refusing a bonus to preserve their company’s future?

You want to know why the Cadillac DTS, Lincoln Town Car and Chrysler Aspen’s interiors look and feel cheaper than a $17K Honda? Why Motown’s motors lag behind in fuel economy and alternative propulsion? Detroit’s overheads are so high, their bureaucracy so stratified and stultified, that they simply can’t afford to produce what the market demands at a price that the market expects. That’s why the American auto industry, once known for technological innovation and trend setting, is playing a perpetual game of follow-the-leader.

And so the UAW and the Detroit-based automakers continue to squabble like a couple of four-year-olds, each threatening to knock down the other’s blocks and go home. The first concession both sides should make is to reality. The reality is that the old ways no longer work. Those of us on the outside realize this, from top-flight industry analysts all the way down to the poor sap on the dealer floor, trying to sell lackluster domestics against the class leading transplants. But there is no indication whatsoever that the UAW, GM, Ford and Chrysler “get it.”

A wake-up call is on its way, and it ain’t gonna be pretty.

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2 of 61 comments
  • Terry Parkhurst Terry Parkhurst on Apr 01, 2007

    I meant to write, at the end of the last post, as for the Buick plant now being idle in Flint, Michigan, I give you two words: Roger Smith.

  • Frank Williams Frank Williams on Apr 05, 2007

    When was the last time you heard any of these executives offering to take a pay cut or refusing a bonus to preserve their company’s future?

    On this topic, FoMoCo released information about executives' 2006 earnings today:

    CEO Alan Mulally: $28.18 million compensation in 2006, including an $18.5 million bonus. This includes a $7.5 million hiring bonus and $11 million to offset the compensation he gave up when he left Boeing. Other compensations totaled $334,433, which included $172,974 for use of the corporate aircraft, and $55,469 for relocation costs and temporary housing. And that was just for three months in 2006, folks!

    El Presidente de los Americas Mark Fields: $5.57 million total compensation

    CFO Don Leclair: $4.4 million

    Bill Ford: $0 as per his agreement to work for nothing until the company turned around. The company took an expense of $9.95 million, however, related to his previous stock and option awards. At least Little Billy won't have to end up living on beans and cornbread.

  • Islander800 That is the best 20-year-on update of the Honda Element that I've ever seen. Strip out the extraneous modern electronic crap that adds tens of thousands to the price and the completely unnecessary 400 pd/ft torque and horse power, and you have a 2022 Honda Element - right down to the neoprene interior "elements" of the Element - minus the very useful rear-hinged rear doors. The proportions and dimensions are identical.Call me biased, but I still drive my west coast 2004 Element, at 65K miles. Properly maintained, it will last another 20 years....Great job, Range Rover!
  • Dennis Howerton Nice article, Corey. Makes me wish I had bought Festivas when they were being produced. Kia made them until the line was discontinued, but Kia evidently used some of the technology to make the Rio. Pictures of the interior look a lot like my Rio's interior, and the 1.5 liter engine is from Mazda while Ford made the automatic transmission in the used 2002 Rio I've been driving since 2006. I might add the Rio is also an excellent subcompact people mover.
  • Sgeffe Bronco looks with JLR “reliability!”What’s not to like?!
  • FreedMike Back in the '70s, the one thing keeping consumers from buying more Datsuns was styling - these guys were bringing over some of the ugliest product imaginable. Remember the F10? As hard as I try to blot that rolling aberration from my memory, it comes back. So the name change to Nissan made sense, and happened right as they started bringing over good-looking product (like the Maxima that will be featured in this series). They made a pretty clean break.
  • Flowerplough Liability - Autonomous vehicles must be programmed to make life-ending decisions, and who wants to risk that? Hit the moose or dive into the steep grassy ditch? Ram the sudden pile up that is occurring mere feet in front of the bumper or scan the oncoming lane and swing left? Ram the rogue machine that suddenly swung into my lane, head on, or hop up onto the sidewalk and maybe bump a pedestrian? With no driver involved, Ford/Volkswagen or GM or whomever will bear full responsibility and, in America, be ambulance-chaser sued into bankruptcy and extinction in well under a decade. Or maybe the yuge corporations will get special, good-faith, immunity laws, nation-wide? Yeah, that's the ticket.