Saturday, September 15, 2007

UAW Considers Suicide

When a parasite attaches to a host, it's in the best interest of the parasite that the host survive. If the host survives, the parasite survives. If the host dies, well....

The United Auto Workers are considering a strike against General Motors. Can't the UAW look around Michigan, with its real estate and employment markets in shambles, and see that perhaps that times have changed? The time to be a leech is over.

It always turns out this way with socialism.

If the UAW strikes, it could sound the death knell for GM. And that could sound the death knell for UAW.

This year's contract talks are considered crucial to the survival of GM and its U.S.-based counterparts, Ford Motor Co. and Chrysler LLC.

All three companies want to cut or eliminate what they say is about a $25-per-hour labor cost gap with their Japanese competitors.

The gap, the companies say, is one reason why the Detroit Three collectively lost about $15 billion last year, forcing them to restructure by shedding workers and closing factories.

It's hard to compete with a $25/hr wage difference. Some of that is the benefits package that the UAW has bargained.

1 comment:

allen said...

> It always turns out this way with socialism.

Well, to be disagreeably picky, it always turns out this way with a *monopoly*.

Eventually, they all price themselves out of the market. That's why just about every monopoly, at some point, tries to make use of the power of government to make sure the citizenry is burdened by too many choices.

The car companies have done it before with the "voluntary" import quotas but the foreign car makers nipped adroitly around that barrier by opening plants here in the good, old, U.S. of A. Of course, they don't put those plants where the UAW has sufficient clout to force unions on the workers.

That means they're paid what they're worth not what rotting monopoly of the UAW was able to extort a couple of decades ago. But a $12/hour real job beats a non-existent $32/hour UAW job any day of the week.

It's not the wage rate that's killing the car companies. They've managed to get out from under a lot of that by selling off their parts divisions.

What's killing the car companies is the long-term fallout of the "golden age" of UAW contracts - medical benefits.

At $1500/car cost for medical benefits alone, GM can't price cars competitively and remain in business. All those GM retirees will drag the company to bankruptcy and there's no way around that eventuality as long as benefits stay where they are.

I've got a bunch of relatives, GM retirees, and they're all scared to death. They know something is going to happen. They know it won't make them happy and they know there's nothing they can do to stop it.

That's part of the reason why there's such widespread support for socialized medicine among labor. Having gotten used to the idea of sticking your employer, and by extension the car-buying public, with the bill it's not much of a stretch to rationalize sticking the tax-payer for the bill.

Even without a rationalization, they're a scared bunch of people. Anything that looks remotely like it might keep the benefits flowing is OK by them. Too bad. Their own fear prevents them from looking at the sorry state of socialized medicine systems where ever they operate. If they get their socialized medicine system by the time they realize how expensive "free" can be, it'll be too late.