GM Moves American Axle Contract to Dana
GM may have hit their breaking point in the UAW-American Axle strike. Automotive News [sub] reports The General is moving "a small but important parts contract" from American Axle (AA) to Dana Holding Corp. The contract is for 30k prop shafts for light trucks which Dana says they can start supplying "in a matter of weeks." Given the volume of parts GM needs to keep their factories running, a contract for 30k items doesn't sound like much and in the grand scheme of things, it isn't. But it does represent a warning shot across AA's bow, letting them know their biggest customer isn't happy and they aren't the only parts supplier in town. Now that AA stands to lose contracts because of the strike, you can bet CEO Dick Dauch will take action, most likely shifting more production to Mexican plants.
I actually respect BW for this move. Sends a message to the UAW.
So where does all this lead us? Back in the days when the UAW ruled the roost, we had poor productivity, lousy workmanship and unreliable cars. Those problems are largely behind the American producers, but what about the fate of America's work force? Manufacturing jobs are going the way of the dodo. As more work ends up offshore, the standard of living declines and the disparity between the upper wage earners and the "middle" class opens wide. The loss of a real middle class is the beginning of the loss of the America that offered opportunity to everybody. The present administration only cares about the top .5% of the population - the haves and the have mores as stated by George Bush. So, if government policy only cares about the wealthy (and some scraps tossed to the truly poor) and union representation becomes meaningless, what becomes of the "masses"? Education, often batted about as the cure-all, alone is not going to do it. Remember those kids who grew up in union households who saw Dad lose his job and dignity? They trained for the future - typically some computer related career. Trained just in time to see their jobs outsourced to India. I am afraid that we best prepare for a decline in our standard of living.
@golden2husky: A decline in the standard of living could actually be a much-needed correction in the market. After years of Bush pushing everyone into owning a house (especially minorities) whether they could afford it or not...people signing contracts they didn't understand...the explosion of adjustable rate mortgages...the constant raiding of equity to buy TVs, cars, boats and other things, the middle class has finally stopped overreaching (and overspending). Maybe in the future a more natural course of growth can be sustained. And it's not up to the government to prop the middle class up, either. This isn't a communist country...yet. I've spoken my piece about the manufacturing sector more than once before, but it bears repeating: It's just not that important anymore. It's too volatile. Rather than whining about it and possibly adding some disastrous protectionist legislation, people should just let the market work. (What a concept!) The falling dollar has made American labor cheap, and all the Euro manufacturers are considering adding capacity here in the good ol' USA, since labor there is so expensive. If they build American plants with American labor to sell to Americans, they may very well want to use American suppliers (probably not American Axle, though) so they aren't shipping everything across the Atlantic. Education can't create job security alone, you're right. Flexibility can help. This will probably (not) set Farago off, but I think expanding your focus is a good idea. A lot of people I know (especially men) are taking their degrees and staying a bit longer to get teaching certification.
So everyone there woke up one day and found themselves in a tough spot with AA and their jobs. Maybe if they were paying attention the past few years they would have squirreled away a few dollars, learned a new skill, and started working on a plan B. GM is working on plan B,C and D. While we may watch them make dumb mistakes constantly, they do take evasive action when needed. AA is a test balloon for the rest of it, the next deals will be quicker and bigger, involving more outside suppliers. In 3 years most of GM's content will come from non union shops. I bet 75% of all the parts and anything critical to building vehicles will NOT be in the hands of the UAW.