#Unions

No war of words, no strikes, no hard feelings: After only two rounds of negotiations, Volkswagen and the metalworkers union IG Metall had a deal late last night. There will be a 3.2 percent increase in base pay effective May 1, 2011, and each employee will also receive a one-time payment corresponding to one percent of his or her annual pay but no less than €500.

Usually, unions take to the streets when their company is supposed to be sold. In Italy, unions demand the sale of their company.

In Milan, union representatives marched to the German consulate and handed the consul a letter in which they demand that Fiat lets Alfa go and that Volkswagen takes over.” With the letter delivered, the demonstrators grabbed megaphones and shouted: “Alfa has no chance with Fiat. We want Volkswagen!” Scusami?

German media calls it the “second economic miracle.” The German industry is hitting on all cylinders, a lot driven by exports. Europe’s biggest economy is officially forecast to expand by 3.4 percent this year, equal to the rate of 2006 and the highest since German reunification in 1990. When the recession/credit crunch hit a couple of years ago, the mantra from management to the unions was quite clear. “We need concessions to keep the company competitive and prevent going under.” Unions gave the concessions and life went on. But now, the climate is different. Volkswagen announced massive profits and Ford are also rolling in it. Well, if things are that good… ?

Fiat could do more if it could cut off Italy

Having been handed a bankruptcy-rinsed Chrysler by the American government, Fiat’s Canadian-born CEO Sergio Marchionne is beginning to see Italy as nothing more than aging, uncompetitive factories and troublesome unions. And now he’s not just telling the Italian media that not only would Fiat be better off without the country that birthed it. According to Reuters

The CEO added that not a single euro of the 2 billion euros ($2.8 billion) of trading profit that Fiat is targeting for 2010 will come from Italy, where all Fiat car passenger plants are loss-making.

The funny part: Chrysler still holds a value of precisely zero dollars on Fiat’s balance book. And with the Fiat and Alfa-Romeo brands headed to the US, Italian-ness is still an important element of Fiat’s identity. But until Marchionne’s Chrysler revival and Italian invasion take hold stateside, and as long as mother Italia is a drain on its resources, Fiat might be best described as a Brazilian company.

Italian speakers can enjoy Marhionne’s interview here.

USA Today reports that Tennessee’s 2 Republican Senators, Bob Corker and Lamar Alexander and GOP congresswoman Marsha Blackburn received a rather frosty reception when they went to Spring Hill on Friday to toast GM bringing jobs back to the Ex-Saturn plant. They got booed and heckled. Why the frosty reception? Well, if you remember, Lamar Alexander and Bob Corker (along with the unnamed Congresswoman) were very vocal opponents against the bailout of GM and Chrysler. So, for 3 politicians to come back to their state and welcome back the very jobs which they would have been quite happy to see lost in the name of free market economics, probably stuck in the craw of the electorate. Namely, the UAW.

When GM went into bankruptcy, people had their money on Saturn going to die. The odds changed a bit when Roger Penske was in talks to buy Saturn. But, in a cruel twist of fate, Saturn was condemned to death by a bunch of executives in France. They vetoed Carlos Ghosn’s idea of supplying Penske with Renault cars for the Saturn brand. The death of Saturn meant that its manufacturing plant in Spring Hill, Tennessee, would join Saturn in the grave. And so it did, along with 800 people who lost their jobs. Suddenly, there is the proverbial glimmer of hope for those 800 workers and the economy of Spring Hill.

Earlier this week, newly-elected UAW President Bob King gave a speech before the Center For Automotive Research Conference, touting the deep changes that have transformed the union. The first half of King’s speech sounded a much-needed note of contrition, and highlighted the new spirit of cooperation between the UAW and Detroit’s management class. But a number of observers noted that the second half of King’s speech represents the flip side of the UAW’s new sense of responsibility for the fate of Detroit: a commitment to targeting the transplant factories that have made life hell for the union and the Detroit automakers alike. After all, nothing brings enemies together like a common adversary. But the UAW’s enemy isn’t just South of the Mason-Dixon line… it’s lurking within its own confused body politic.

The Korea Times reports that the Seoul Central District court has ordered the union of a subcontractor of Hyundai-Kia to remove a picture from the walls of the union headquarters. A court order? To take down a picture? Why?

Yes, there were abortive attempts to rename French Fries to Freedom Fries (you want ketchup with your freedom?) There were calls for a boycott of all things French, including French mustard, excluding French’s Mustard (and maybe the Statue of Liberty.) Nevertheless, I think deep down the Americans secretly admire the French. With their lavish welfare system, generous benefits and their willingness to strike if someone so much as asks them to work an hour outside of their contract, who wouldn’t want to be French?

Hell, in the UK we wish we could be like them. If we were we might still have some global companies in our ownership, instead of selling out to the first bidder. But as Peter Schiff ( who I’ve mentioned before) said, the party is over, we have to stop paying ourselves these lavish benefits, allow the free market to function and stop being lazy. In the UK, the government is going on a massive austerity program in order to balance the books, Italy pushed through a huge €24b cost cutting plan and even Spain just managed to push through a €15b budget reduction plan by a majority of just one vote. France hasn’t made a cost cutting plan of their own. It’s almost as if the current economic turmoil doesn’t apply to them. French benefits have survived recessions before and they’ll survive this one, right? Well, don’t be so sure. It seems that the French may be coming around to the rest of the world’s thinking, and the message to change their ways is coming from an unlikely source. General Motors.

A few weeks ago, I wrote about how Sergio Marchionne was successful in getting the majority of the unions at his Naples plant to sign a new work agreement. This was supposed to herald in a new era in Italian work practices and pacem in terris. Well, it seems that Fiat wants to press the issue home to the unions. Reuters reports that Fiat is so determined to teach Italian unions at their Pomigliano plant that their working practices are not sustainable, that they are now going to some extreme lengths. Fiat is now going to set up a new company to manage the plant near Naples. Doesn’t sound extreme, right? Well, there’s more.

Fiat is determined to drag their Italian operations into the 21st century, says The New York Times. Lacksadaisical attitudes produced some novel ways of shirking work. Some examples include calling sick at Fiat (remember, you get paid in full even if you call sick) and using that time to work another job or faking a doctor’s note. The latter is particularly used when a local football team is playing. Well, no more, according to Marchionne. He wants to impose foreign style work standards to encourage more pride in Italian workers’ jobs and improve the competitiveness of Italian factories. Some have an opposite view.

Many of you don’t know this, but during my days at university, I supplemented my meager grant money (in the days when European governments gave grant money to students) by gambling said grant. The extra money came in useful for text books, science equipment, drinking lager till my head span, etc. The fruit machines and betting on horses was fun enough, but where I really excelled was poker. Texas Hold ’em, to be more accurate. I learnt many of life’s lessons that way, but the one which stuck in my mind the most was this little nugget: “When you play a bluff, be prepared to have that bluff called.” Words which certain Italian unions should have heeded.

Sergio Marchionne’s turnaround of Fiat was a weird one. He turned around a company, which most people thought had died already. Sergio’s turnaround was helped by GM’s unwitting “ re-capitalization” of Fiat, too. Recently, worker relations in Italy have been strained, to say the least. If you thought the situation with the UAW in the United States was bad enough, in Italy, things are spicier than Mamma’s Arrabbiata sauce. The Financial Times UK reports that Sergio Marchionne has finally lost patience with unionized Italian workers and has threatened them to change their mindsets or else be out of a job. The end of September is their deadline. Mr Marchionne wants Italy to help drag Fiat (and Chrysler) into one of the top five car companies in the world. But to do that, he needs concessions from his Italian workers. Big ones.

Every day, German auto managers go on their knees and pray that the financial troubles in Greece, Spain and elsewhere continue. Why? The troubles keep the Euro low, and a low Euro is high octane fuel for German car exports. In May, German car exports rose 46 percent. For the first five months, German car exports are up 50 percent. Despite a lackluster home market, the German car industry is hitting on all cylinders: For the first five months, German production is up 26 percent to 2.3m units, driven mostly be strong demand from China and the U.S. However, red flags are going up. Literally.

Ron Gettelfinger retired and Bob King took his place as President of the UAW. Mr King has some pretty big shoes to fill, but the name is a good start. After all, Mr Gettelfinger helped persuade President Obama to bail our GM and Chrysler (can’t say I blame him, quid pro quo, and all that). So what can Mr King do to really show the rank and file that he means business? Better working conditions? Input into designing cars? More job security? Nope. His next step is to make sure that Detroit and the transplants are evenly matched, so to speak.