Monday, March 26, 2007

It’s Been Widely Said

That a company gets the union it deserves. It’s a positive sign that unions are having a difficult time organizing the thriving part of the auto industry.

“Last year, workers at the Toyota plant in Georgetown, Ky., received more in pay and bonuses than UAW members averaged at U.S. automakers' factories for the first time, according to a recent Detroit Free Press analysis.”

Even the rallies can only seem to generate “scores” of activists. “Scores” is a technical term that means between “about 40” but not enough to call a hundred.

Interestingly, the only sector where union employment seems to be stable or growing is government employees. Not terribly shocking, since most government agencies don’t face much cost control pressure, have a built in ideological bias in favor of collective action, and don’t have customers.

Additionally, many government agencies have no well defined measures of output. After all, how clean is clean enough for a city street? Crime rates can never be too low, or children too educated (not that the government schools are in any danger of that one).

For Ford, GM, and Chrysler, there’s more than just the UAW to blame, but they’re a big chunk of the problem, even without the legacy costs associated with retirees:

“Contract issues like work rules, line relief and holiday pay amount to $630 per vehicle - costs that the Japanese don't have. And paying UAW members for not working when plants are shut costs another $350 per vehicle.

Here's one example of how knotty Detroit's labor problem can be:

If an assembly plant with 3,000 workers has no dealer orders, it has two options. One is to close the plant for a week and not build any cars. Then the company still has to give the idled workers 95 percent of their take-home pay plus all benefits for not working. So a one-week shutdown costs $7.7 million or 1,545 for each vehicle it didn't make.”

The companies agreed to all of this, so they are stuck. Essentially, the deal was made to keep the plants open, and push off the cost issues into the future.

Well, that future was 5 years ago.