In these difficult economic times, auto workers “cut to the bone” at $55 an hour

The North American auto industry is in dire straits. The economic situation is so difficult for them that they have been forced to go to their workers unions and ask for reductions in salary and benefits. In fact, these reductions are a condition of the U.S. federal government emergency loans. So it is with great relief that I have found in today’s news an update: Ford has managed to negotiate a reduction in the average hourly wage (including benefits) of their UAW employees down to the barely survivable level of $55 an hour.

Note that this is the *average* wage being earned, and includes benefits- I’m sure that many employees are struggling to make ends meet on little more than $60,000 a year before taxes. I’ve read that the CAW has also had to sacrifice things: for example, they now how to pay a staggering $30 a month towards their health care plans, and their guaranteed benefit pensions no longer have annual cost of living increases built in. With an unemployment level fast approaching 10%, it is astounding how deep these cuts have gone.

I am certainly glad these noble citizens, makers of fine automobiles with amazing levels of demand all over the world, are willing to give up so much to save the industry that employs them. I’m certain their efforts will be rewarded based on the outcome of the struggle for survival that the auto makers face today.

4 thoughts on “In these difficult economic times, auto workers “cut to the bone” at $55 an hour”

  1. “Labor costs represent only about 10 percent of the total cost of producing a vehicle in the United States, ”

    “average wages and benefits for UAW hourly workers to about $55 per hour ”

    From wikipedia: “In the Japanese health care system, healthcare services, including free screening examinations for particular diseases, prenatal care, and infectious disease control, are provided by national and local governments. Payment for personal medical services is offered through a universal health care insurance system that provides relative equality of access, with fees set by a government committee. ”

    I’m pretty damn sure that if you take the cost of providing workers with health care in the US comparable to that in Japan … including through retirement … you will account for most of that $20 / hour difference between Japanese labour costs and US labour costs.

    And even in that case, with “overpaid” us workers the labour+benefits of a car add up to only 3 thousand of a 30 thousand car. Doesn’t seem unreasonable that 10% of the cost of your meal at a restaurant goes to the guys that cooked and served it, or that 10% of you cost for a bit of software went to the guys that wrote it.

    Yes, when you are given the ultimatum, “Take a cut or get another job.” and the economy is crappy, it’s probably not the best time to try and fight it, and the union is certainly not doing good PR.

    But I’ve been on the other end of that “high paid unionized employee that has it so easy” stereotype. I’ve had to take cuts or “get another job.” And I’ve known damn well that the cuts I and others took were a drop in the bucket compared to the real problem. And I’ve watched while others got big perks and bonuses while I never got back the “temporary concessions” made, and still have had to listen to people in private industry, with better benefits, higher pay, bitch about how overpaid I was. And now I have to put up with those same people wanting my job, because theirs is gone.

    So, I don’t share you malice towards the autoworker. I’m sure the average guy works hard for his money, does the best he can, and realizes he is a lot luckier than the people without a job at all. Just like you or me.

    Do I have much use for the UAW and it’s offshoots? No.
    But I have no more or less contempt for them than I do for the senior management that has a lot more say in ( and is paid accordingly ) in how the company does things than does the guy that installs dashboards on the line.

    I’m not exactly sure why you have such a hate on for Auto Workers ( as opposed to their parasitical union, which I can understand.)

  2. I despise the union presumption of entitlement. It irks me when a union has to be consulted before an automaker decides whether to build a new plant or consider a merger, as if the union runs the company. And I particularly disliked the “our grandparents fought and died for our benefits: we’ll never give them up!” malarky they have been spouting in recent months.

    Autoworkers and their union are one and the same thing: they can not be excised from each other. It is impossible to work in the American auto industry without being a member of CAW or UAW. Truly, though, it is the union I find worthy of my contempt. Decades ago the unions served a purpose, but now they are like a bloated lamprey hanging obscenely from the near-dead body of the industry.

    Do I think the unions are the only cause of the impending failure of the U.S. auto manufacturing industry? No, of course not. The customers who convinced themselves they desperately needed a rolling eight person living room instead of a vehicle and the marketing/design/management that kept the development of the American car 20 years behind the rest of the world were a big part of it. But the unions definitely played a part as well: blocking automation, interfering with the shut down of big truck lines, obstructing quality initiatives, and impeding the timely demise of redundant brands all had their impact.

    Am I being unfair? No more so than the people who claim that the only ones at fault in the death of the American car are the “fat cat” executives. I think the unions deserve as much if not more blame than the management for the current situation. The one possible good that might come out of the collapse of GM and Chrysler might be the disruption of the unions: but something tells me they’ll figure out some way to screw that up too.

  3. As someone in one, I can tell you that the the average worker has no more say about his union that he has bout his management. And if you are critical of the union you can be sure you won’t be the ones seen on TV at union sponsored news events.

    I don’t like the CAW / UAW. But I have nothing against the average autoworker. He may have a cushy deal, I can’t say for sure as I have never done his job, but even if he does … well good for him. I’m pretty sure most people would like a cushy deal of they could get it.

    About 1/3 of them working for the big 3 in Canada have already been laid off. And having been laid off for cost cutting reasons even though my performance was exemplary, with little prospect of other good employment, I sympathize. I sympathize for their families, and the businesses in their communities that depend on them.

    Not enough to bankrupt myself on their behalf, but I do sympathize.

    As to their union, I have long said that organized labour is like organized religion, government, corporations or any other big organisation; they soon enough evolve to serve the organization itself, not the members.

    I think the UAW / CAW is bad, ultimately, because of the disservice it has done it’s members, not what it has done to me:

    It could have invested in the auto makers and taken a seat at the management table, but has repeatedly refused to do so.

    It could have taken control of the workers pension plan, or at least partial control, but refused to do so.

    It has repeatedly engaged in mainstream politics only remotely connected if at all to teh working conditions of it’s members.

    And in doing all of the above, it has harmed the image off all unions and union members, and particularly in the case of its own membership, given the autoworkers the image of lazy spoiled brats unwilling to put in an honest days work. I don’t believe that stereotype is any more accurate than that of the “drunken indian”, but it is just as harmful, and the union itself created it.

    As a final aside: Any claim that the contracts with the unions are bad deals and ruinous to the companies is simply an admission that the companies management is incompetent. After all, they are paid a considerable amount for their skill and education in business matters and their ability to see to the future consequences of business decisions. They were not deceived by fraud. They signed these agreements willingly knowing full well what was in them.

    Yes, the worker has the “renegotiate or loose your job” option, but management has always had the “if you can’t get a decent contract, change your business” option.

    They have even been able to get concessions from the UAW, as was the case when Saturn was originally formed. They had a much more flexible and some might say favourable, labour agreement, one that was terminated at the instigation of GM, not the union

    Your primary source of labour has a near monopoly on the market and is correspondingly difficult to bargain with. But that is the nature of business and is what those MBA’a are for. Dealing with problems like that is your job as management, and if you don’t like that, well you should take up a different line of work.

    No … the UAW is a pain in the ass full of parasitic blowhards, and they have done much to harm north American industry and even more to damage its own membership. But one can hardly paint it as a bully that forced management to do anything it didn’t want to.

  4. Perhaps the Unions are not “bullying” (although I’d argue that point), but I bet you dollars to donuts that executive discussion of any decision involving significant change had a big roadblock right at the start: can we sell this to the Union. Stop making Pontiacs and shut those plants down- will the Union fight us on this one? Switch from metal bodies to plastic panels created offsite- can the Union metal workers be mollified first? Have “truck wheel attachment laborer Class 3” perform some new task that doesn’t involve traditional wheels, trucks, or “class 3” labor? That could be a job action waiting to happen… and so on.

    In any moderately large company, the path of least resistance is the one most commonly taken, and I am certain that the Unions and their structure are a big impediment to change. Sure, the Executives with a bright idea to significantly change something *could* make it happen, but instead of making the change they’d be spending weeks and months negotiating to mollify the unions- committees, reviews, compromises. It is hard enough to imagine bright ideas in big U.S. automakers, but the rare ones that came along had this big uphill battle to fight with people who see their main job as “sticking it to the man”.

    You are right, though- I get more angry than the situation deserves, and I’m not telling a fully-rounded story here. But I direct your attention to the fact that this is in the “Rants” category (rant: to speak or declaim extravagantly or violently; talk in a wild or vehement way). Some things bug me, and if, within my own limited vision, I repeatedly see something I disagree with (E.G.: all the problems with the U.S. auto industry are caused by the executives, the unions are run by a bunch of poor, downtrodden, hardworking guys and gals), I use this category to say something. And I say it knowing full well that it might be unbalanced in exactly the opposite (and equally wrong) way: despite that, it satisfies some deep need I have to get the frustration publicly off my chest.

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