A Fish Story
Give a man a fish and he’ll eat for a day. But give a man a 33% stake in a major American automaker and he’ll eat really well for a very long time.
Quietly, almost imperceptibly, the news hit the wires that two more United Auto Workers locals overwhelmingly rejected proposed changes to their labor contracts with Ford. The reports which came out late in October were shuffled way down the priority list of the major news organizations in favor of stories pertaining to the ObamaCare bill making its way through Congress.
The stories of the nationalized healthcare plan have dominated the headlines, but this story of the autoworkers union rejecting needed concessions with the one “Big Three” carmaker that refused to sell its soul to the government is a perfect example of how government intrusion into the workings of private industry can destroy the industry it purports to be saving.
Ford has been seeking to bring its labor contract into parity with the revised labor contracts of its major competitors, the now nationalized General Motors and Chrysler corporations. On October 29th the Associated Press reported a 75 percent no vote by the UAW members at Ford’s Saline, Michigan parts plant and a 90% no vote by its members at Ford’s Dearborn, Michigan research and engineering facility. Ford currently employs 41,000 UAW members in the United States. The votes in Michigan have been mostly negative while votes in other parts of the country, like the Louisville facility, have been much closer. Overall the concessions requested by Ford have been voted down by almost a two to one margin.
The concessions Ford is requesting would freeze entry level wages and require some higher skilled workers to perform more than one job. The union would also have to agree to a no-strike clause on issues relating to wages and benefits but would still be able to strike for other issues. In return Ford has agreed to give each member a $1000.00 bonus if the concessions are approved and guarantees of future work with new product commitments at several facilities. Even the union president has stated that the concessions would save some 7000 union jobs. But the rank and file has been quick to reject any compromise.
And why should they?
When General Motors and Chrysler finally succumb under the weight of years of unrealistic labor contracts the government stepped in and took over. In an unprecedented act of unconstitutional power, Barack Obama fired General Motors CEO Rick Wagoner and developed a settlement that allowed the government to take control of these longtime American icon companies, giving a 33% ownership stake to the unions. Ford CEO Allan Mulally who was all too familiar with government intrusion from his 37 years with Boeing chose to reject government support and saved Ford from a similar fate.
In order to remain competitive Ford must now bring their cost structure in line with its major competitors. But where is the incentive for union workers to come to a realistic agreement if they know that failure to do so will simply allow the government to step in and give them the same stock incentives as GM and Chrysler workers?
With the continued death spiral of new car sales after the completion of the Cash for Clunkers program it doesn’t take a degree in economics to see the peril American carmakers are in. Barack Obama and his incredibly shortsighted and unrealistic view of American business and organized labor has guaranteed failure, first with future union negotiations and finally with the companies themselves.
This scenario of nationalizing industry and redistributing its wealth to the workers may have sounded reasonable coming from a community activist but will prove to be fatal to American business coming from a president with no concept of business or a world marketplace.
