SmallGovTimes.com

By: Lance Thompson | Published on 03/06/07    

United Auto Workers are making some concessions to auto makers in recognition of the shrinking market for domestic cars. Never has the description "too little, too late" been more appropriate.

In a front-page story in the 2 March 2007 Wall Street Journal, Jeffrey McCracken reports that United Auto Worker members at individual Ford manufacturing plants are voting to make concessions in order to help their employer weather tough times, including hiring non-union workers to fill lower-skilled jobs and forgoing overtime for some weekend shifts.

In the same article, McCracken points out that labor costs add between $1,080 and $1335 to the price of a car built by an American company compared to similar offerings by Toyota, Honda or Nissan. The greatest portion of that handicap is due to UAW retiree’s health care costs. The Japanese car companies also build cars in the United States, but their workers are not UAW members.

American car companies’ market share has dropped steadily as that of Japanese car makers continue to increase. Many of the Japanese cars and trucks supplanting American models are built in America, by American workers. The difference in the manufacturing process is that the Japanese companies aren’t dealing with a decades-old adversarial and parasitic relationship with their workers.

Daimler Chrysler is rumored to be searching for a possible buyer for its Chrysler division, which is now losing money only a short time after finding success with innovative designs and new engines. But the reason Daimler wants to sell is the same reason few want to buy–Chrysler’s staggering legacy costs due to extremely generous pay and benefits for its union workers.

When American cars dominated the domestic market, and a considerable portion of the world market, the Big Three could afford to accede to union demands that made American automobile workers the highest-paid in the world. But now, as American companies lose market share to the Japanese and other foreign brands, they are bound by union contracts that restrict adaptability and agility. Regulations preventing lay-offs result in insane institutions like the "job bank," where workers are paid almost full wages for performing no work. The domestic companies’ solution is to employ job bank workers to build more cars than the market demands, further reducing the value of every car built as well as weakening the auto companies.

Unions are among the most outspoken critics of outsourcing–displacing American jobs to offshore sites where the cost of labor is much cheaper. More than being critics, unions are a principal cause of outsourcing. Demands for higher wages, improved conditions and greater benefits are unceasing, so the only relief from spiraling labor costs is to move manufacturing overseas where labor costs are lower. Union work rules and demands make every company with union members less competitive, less adaptable to changing conditions, and less profitable. Strikes and work slowdowns make outsourcing seem even more desirable to the employer. And as each company succumbs to foreign competition, or shifts jobs to offshore sites, more union jobs are irrevocably lost.

Unions have crippled American industry, even as the percentage of union workers has declined. Currently, only 7.4% of the private-sector work force is unionized, down from 20% as recently as the 1980's. (The public sector is the only area where union membership is growing–public employees are four times more likely to be unionized than private sector workers.) Nonetheless, unions’ vast and largely unregulated pension funds and available manpower are irresistible to politicians seeking campaign cash and personnel. On 1 March 2007, Democrats in the House passed the misleadingly-named Employee Free Choice Act. The legislation removes the right of workers to vote for or against union organization by secret ballot. Instead, unions will be able to conduct elections by card, with representatives obtaining signatures from workers by persuasion, coercion or threat. The secret ballot is a cornerstone of our democracy, but it’s not good enough for unions desperate to reverse dwindling membership.

In the late 19th and early 20th Century, American workers were exploited by large corporations. Unions served a useful purpose by organizing laborers and establishing work rules that ensured the safety and fairness of work environments. But union work rules, and the laws that shield unions from the sort of scrutiny and oversight that is demanded of every other American company and organization, have gone too far.

We have laws prohibiting monopolies in any one industry–automobiles, computers, utilities, broadcasting. But there are no rules prohibiting a monopoly of labor, which is exactly what a union is. When one company employs unfair practices to impair another company’s ability to compete in the marketplace, it is called restraint of trade, and is punishable by law. When a union impairs an employer with a strike, work slowdown, or demonstrations, those actions are legally protected. Most labor law favors unions rather than union members. Unions can contribute union funds and manpower to political campaigns, even if some members object. Union books are not open to public scrutiny, as those of a publicly-held corporation would be.

Unions don’t always limit themselves to legal methods in labor representation. The Office of Labor-Management Standards reports for Fiscal Year 2005 114 indictments and 97 convictions for violations of labor law by union officials. Crimes included embezzlement, filing false reports, keeping false records, destruction of records, extortionate picketing and deprivation of rights by violence. In 2005, court-ordered restitution by unions who victimized union members, employers and non-union workers totaled over $23 million.

From 2001 to 2005, the Labor Department’s Inspector General issued over 1100 indictments against union leaders on federal racketeering charges. Over 700 convictions were obtained. Nearly half of those cases involve pensions and employee welfare benefit plans.

The new cooperation shown by UAW members at selected Ford plants is an encouraging sign that unions realize that their adversarial tactics are self-defeating. But concessions are not industry-wide, nor even company-wide. Unions may have already done irreparable damage to the American automobile industry, devouring the hand that feeds them. Dwindling union membership in the private sector shows that Americans are wise to the union racket, and workers are voting with their feet. At least, until the Democrats pass legislation that surrenders even that basic right to union bosses.

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