April
24, 2009
RE:
Automotive Bailout & CAW
The
present perilous condition of the North American based automotive industry was
predictable thirty years ago. The automotive companies, the Big Three, have
many challenges but, now, none are as serious as those stemming from the
stranglehold imposed by the autoworker unions on both sides of the
border. The domestic based auto producers remained viable through the
sixties and into the nineties only because they were operating against little
or no Asian competition while at the same time being compelled to use the same
uncompetitive unionized labour force which has lost its place, purpose, and
direction in the real world of global free market competitive economics.
UAW and CAW members are among the highest paid trade workers on the continent but their excessive demands accumulated over many years have resulted in the gross lack of competitiveness of their employers. The government, however, is not blameless in all of this as it is the government which legitimized non-competitive collective bargaining.
UAW and CAW members are among the highest paid trade workers on the continent but their excessive demands accumulated over many years have resulted in the gross lack of competitiveness of their employers. The government, however, is not blameless in all of this as it is the government which legitimized non-competitive collective bargaining.
Because
of the huge disparity in wages, benefits, and legacy costs, the average fully
allocated labour cost for the Big Three is now $74 per hour which is nearly 60%
higher than it is for Toyota’s North American manufacturing at $47 per hour.
(In the United States, the average fully distributed annual cost is $151,720
for a Chrysler worker and yet only $96,000 for a Toyota worker.) No company can
survive when its labour and related costs are so grossly out of line with its
competitors. It is an economic impossibility and yet the CAW either doesn’t care
or chooses to ignore it.
Sadly, the autoworkers, through Mr. Lewenza, CAW President, don’t seem to understand the gravity of the situation. The CAW and their bosses boast that their wages and benefits have been instrumental in building a middle class in this country. That may be the case, but the class that they have built has largely been at the expense of lesser paid workers in the country who purchase the excessive cost automobiles.
Sadly, the autoworkers, through Mr. Lewenza, CAW President, don’t seem to understand the gravity of the situation. The CAW and their bosses boast that their wages and benefits have been instrumental in building a middle class in this country. That may be the case, but the class that they have built has largely been at the expense of lesser paid workers in the country who purchase the excessive cost automobiles.
CAW
have been the recipients of the most lucrative wages and benefits known to
workers anywhere in the world and without even jeopardizing direct wages,
during these very desperate times, a reduction in benefits equating to $22 per
hour in both Canada and the United States for 160,000 hourly workers would
result in $7.3 billion in annual savings for the Big Three. These savings,
coupled with other major changes, are necessary to have any hope of industry
survivability. The autoworkers don’t seem to realize that when their employers
disappear, their so-called entrenched “rights” and “entitlement” will become no
more than a distant memory.
If
the autoworkers and their union bosses had genuinely cared about the long term
wellbeing of workers, instead of decimating the industry, they would have
accepted compensation over the years that permitted the North American based
auto companies to grow, thrive, and prosper in the midst of competition,
instead of being stifled, threatened, and left at the precipice of oblivion.
Quite astonishingly, even now, amidst the most dire conditions, Mr. Lewenza,
has made it clear that there will be scant concessions at best. Mr. Lewenza and
Mr. Gettelfinger, UAW President, apparently would rather jeopardize every one
of the 1.7 million manufacturers’ jobs and retirees, the multi-millions of related
jobs, and the long term viability of the industry than be a constructive part
of the solution. The union leadership would apparently prefer to have no
workers employed at an unsupportable wage than all the workers employed at a
reduced wage. Such a position is intellectually absurd. Such intransigence at
this late stage serves no fruitful purpose.
It is no longer relevant what any worker was paid in the past; it only really matters what can be sustained going forward. Bargaining at this eleventh hour should not even be part of the pertinent process but regardless, if so, with Mr. Lewenza’s insistence on "pattern bargaining" any bargaining should be patterned after the real competitors, Toyota and Honda. Instead and astonishingly, Mr. Lewenza and his autoworkers continue to hold on to the outmoded belief that they can be paid whatever they desire. In fact, in these very dire circumstances, a very real, genuine, and necessary concession might be one whereby autoworkers would be paid even less than the workers at the transplanted foreign auto companies, at least until the companies are set right again.
There is a major flaw in the system when one person, Mr. Lewenza, possibly having his own ego and personal agenda, can control the fate of an entire industry. Mr. Lewenza argues that his union has a track record of making Canadian auto plants competitive. Few others believe such a preposterous notion.
With no more time to waste, the union needs to assist in rectifying the gross inequities and lopsided costs which are impaling the industry, cannot be sustained, and which, if not promptly addressed, will lead to the demise of the domestic based portion of the industry.
None of this is to minimize other inherent problems in the industry but no taxpayer or government funded assistance should be provided until the autoworkers first volunteer the necessary, significant, and transformational wage and benefit reductions and unless they do, the Big Three will soon become the Big Zero.
It is no longer relevant what any worker was paid in the past; it only really matters what can be sustained going forward. Bargaining at this eleventh hour should not even be part of the pertinent process but regardless, if so, with Mr. Lewenza’s insistence on "pattern bargaining" any bargaining should be patterned after the real competitors, Toyota and Honda. Instead and astonishingly, Mr. Lewenza and his autoworkers continue to hold on to the outmoded belief that they can be paid whatever they desire. In fact, in these very dire circumstances, a very real, genuine, and necessary concession might be one whereby autoworkers would be paid even less than the workers at the transplanted foreign auto companies, at least until the companies are set right again.
There is a major flaw in the system when one person, Mr. Lewenza, possibly having his own ego and personal agenda, can control the fate of an entire industry. Mr. Lewenza argues that his union has a track record of making Canadian auto plants competitive. Few others believe such a preposterous notion.
With no more time to waste, the union needs to assist in rectifying the gross inequities and lopsided costs which are impaling the industry, cannot be sustained, and which, if not promptly addressed, will lead to the demise of the domestic based portion of the industry.
None of this is to minimize other inherent problems in the industry but no taxpayer or government funded assistance should be provided until the autoworkers first volunteer the necessary, significant, and transformational wage and benefit reductions and unless they do, the Big Three will soon become the Big Zero.
