Friday, November 28, 2008

The Auto-Union working elite! Annointed workers united.

Society's privileged superiors need to join the real world.

by Lego Acies



Guarantees for life. At least guarantees of the good life. So the auto-union working elite screams. Union workers in the sick and uncompetitive North American car industry are apparently a superior species to the rest of us. They have an innate natural right to cost $80 per hour; work 30 hour work weeks; have all non-work expenses like education paid for; and be guaranteed a risk free existence. They are so much smarter, better, more important and more vital to the world and the economy than everyone else. They are simply – the elite of our world. These union fakirs are like the tribal priests of the ancient world – untouchably divine and unmistakeably and arrogantly superior.

The North American auto manufacturing has been bankrupt by unions and bad management and has been insolvent for at least a decade. Approximately 400.000 union workers still exist in the 'Big 3' auto sector and associated supply chain, in an industry which has received approximately $50 billion in direct bailouts and handouts since 1970 and which has lost $100 billion in the past 3 years collectively. Why would anyone put their money into such a disastrously managed set of firms?

In the past 30 years this inefficient North American auto industry has been surpassed by Japanese and South Korean products in price and quality – much to the delight of consumers. Yet the North American union-elites, so arrogantly inflamed by their own importance, are demanding a doubling of the $50 billion they have received over thirty years to 'save North American industry'. It is revolting.

NAFTA – the regional trade agreement – grew out of the US–Canada auto pact of 1965. That agreement was a political compromise in which Canadians would send troops to pacify Cyprus and the Americans would allow Canadian autos and auto parts to flow tariff free into the US. NAFTA discriminates openly against non-North American produced product by demanding that all auto's and auto part's be 30% sourced in North America. This trade distortion and cross border boom in the auto trade had some beneficial short term consequences – new products; better cars and more supply of cars – but it also produced rigidity and excess. Unions bidded up the cost of labor and health care and made it impossible for auto companies to close plants and rationalise the workforce as demand and consumer tastes changed.

Then of course we have big government. US corporate tax rates – the real rate – is close to 40% and is the 2nd worst in the developed world after Japan. Michigan home of much of the unionized elite of the US auto sector, is regularly ranked by business magazines as the worst state in the United States to do business. High taxes; out of control spending and ridiculous regulation has destroyed Michigan's economy. For 2 generations Michigan and Ohio governments have fed off the auto sector and institutionalised massive socialist governance which has perversely in turn assured the demise of the auto industry. But you will never hear the media blame government as part of the problem facing the auto sector.




Unions of course support big government and left wing politics. But it is not always to the union's benefit to be so enamoured of the nanny state. US auto regulations, rules, environmental protection standards, taxes and sur-taxes on vehicle size ensure that all US manufacturers are at a cost disadvantage if they employ a union workforce. Unionized plants simply can't fire workers to displace excess governmental costs. So the great game begins. Governments impose high taxes and regulatory costs on auto firms, so they give this 'back' in the form of susbidies and political protection to union workers – one of their key voting blocs. All this does is distort the market, increase prices to the consumer, and cover-up the many problems inside car companies which need to be addressed.

Since 1970 the auto industry has been second to agriculture as the greatest recipient of governmental money and concern in North America. But it has not helped. Chrylser went bankrupt in the 1970s and yet 30 years later the story is again repeating itself with Chrysler, GM and Ford all facing insolvency. If governments in North America bail out the auto industry yet again – it will only be a temporary respite. In 6 months the car makers will be back asking for more. Until there is a massive reformation of these firms and of this industry, and the destruction of union power, there will not be a competitive North American auto manufacturing sector.

The surest way to kill a good company of course is to put in a union and couple it with bad management. Walmart knows this, which is why the world's best run company is union and idiot free and operates in a contractually open environment with its workers.

Bankruptcy, restructuring and new management is what the auto industry needs. The 'little 3' need a Steve Jobs to develop the i-Car or a Lou Gerstner to come in and completely remake the business processes – without union labor. Let GM go bankrupt, let a smart manager take the assets, resurrect some of the plants and hire non-union workers at $25 a hour. Let smart, entrepreneurial people get busy to make the next generation of cars.

Union workers are not a superior caste. They are not our betters. And they are not some annointed, divine inspired elite. They should lose their jobs like anyone else. The world will not end. The sea levels will not rise. Polar Bears will not die and the great Messiah may yet return. Union workers need retraining and they need to join the real world, like anyone else, where real people at line jobs earn $25 a hour and work at least 40 hours a week and yes they even pay a large part of their own health care and education costs. Imagine that. Union workers get over yourselves and join reality.

===
Why the auto bailout does not make sense:
http://pajamasmedia.com/blog/now-were-bailing-out-the-auto-companies-whos-next/2/