Sunday, March 26, 2006

As Truth of Detroit's Plight Becomes Clearer Even Some in the UAW Are Beginning to Get It

Excellent piece in today's edition of The Washington Post focusing on the GM-Delphia agreement and how it is being received by long-time members of the United Auto Workers union.

The UAW has been the driving force for the past five decades in determining the economic equation under which Detroit has been forced to compete with the onslaught of Japanese and European competitors. The Post story by reporter Dale Russakoff that aptly summarizes what the UAW has wrought:

"Even as the UAW's ranks are shrinking, foreign automakers such as Kia and Toyota - whose U.S. plants are non-union - have vastly expanded. The foreign automakers pay comparable wages and benefits for active workers, in part to ward off unions, but they do not have the staggering retiree benefits of the Big Three. GM, for instance, has 2.5 retirees for every active worker."

Yes, management at all three of the major U.S. automakers have made countless stupid mistake after bumbling goof over the years in marketing, design, public policy and customer relations. Their arrogance and narrow-mindedness in the face of foreign challenges often bordered on the legendary.

But the bottomline for any business, (but especially one as capital intensive as making and selling vehicles) is most influenced by the cost of the workforce. Personnel is virtually always the biggest item in the budget of a mass-production manufacturing operation. And that is where the arrogance and narrow-mindedness of union leaders made everything infinitely more difficult.

Sooner or later reality had to catch up with the UAW's blind demands for massive wage hikes, lavish health care and pension benefits, virtual lifetime employment security through job banks that pay 90% of the unemployed's previous wages and decades of spending hundreds of millions of dollars in members' dues to support politicians whose public policy agendas were equally out of touch with economic reality.

There just isn't anything like a free lunch.

Go here for the full Post piece.