"Let Detroit Go Bankrupt" by Mitt Romney

[Ariphaos]

At my previous job there were union people whose sole job was to generate various complaints on engineers.

Since the engineers billed between $120 and $180 an hour (or more), it was cheaper to just concede a $30 complaint rather than spend a half hour debating it.

Or fun stuff like, we weren't actually allowed to handle any hardware. This got absolutely ridiculous - I had to walk people through putting computers together. One lady somehow managed to plug in a D connector upside down. Thankfully the card (worth ~$4k) still worked.

Then the whole bit of needing the RLG's 'visually inspected'. By a smoker.

So they had to be cleaned again after he was done. WTF. There was no possible way for it to be worth it not to fire him.

I wanted to like unions, I really did. But... damn...

[Tsyroc]

The British car industry was pretty badly hurt by the Unions, but that wasn't the whole story. Quality control really hit hardin the 70's and early 80's. Look up the whole history of BMC and British Leyland, and cars such as the Austin Princess, the Maxi, and the Allegro to see what happened.

Are the Unions still as much a pain in the arse over there? I thought their power had been pretty much reduced or is that not applicable in the case of the car industry?

In some areas the unions are still pretty strong, especially in the auto industry. In other places the unions really got smacked around hard back in the 80s but I think even in those areas the unions still tend to exist but have been forced to be a little more realistic. International Harvester, Caterpillar, and J.I. Case all pretty much went belly up or moved overseas in the area I lived in the 1980s. That pretty much left only John Deere still operating. I somewhat got the impression that Deere might have been better run and already had a more realistic relationship with the unions than the others. CAT, on the other hand must have had something extremely fucked up going on since they closed their plants and moved operations to France. Huge ass plant just sitting vacant and it was more cost effective for them to be working out of France. The people I knew who lost their jobs with CAT were definitely overpaid and had incredible benefits.

[Broomstick]

Chapter 11 would be best; many employees can be scooped up by non-union plants run by Toyota, Nissan, BMW, etc that build better cars and can fill the void left by a collapse of Detroit Dinosaurs.

What the hell makes you think Toyota, Nissan, et al are hiring at the moment?

If the Big Three Auto go under there's no way in hell the rest of the industry will be able to absorb more than a fraction of their employees, if any.

[Broomstick]

If the big three fail, the 2 million jobless wont stay jobless for long, as Toyota, Honda, Nissan, etc... who are already over here, will have to expand to meet demand, and hire the workers.

No, they won't be hired. In ordinary times they would, but these aren't ordinary times. Demand has plunged to remarkably low levels. The other companies won't hire any laid off auto workers because to do so would be stupid. In fact, our local Toyota plant is talking layoffs.

People don't have money and/or don't have loans, that's why they're not buying cars.

[Broomstick]

I did mix up Chapter 7 and Chapter 11, I admit-- chapter 11 would be the more likely scenario, since it doesn't shut down the companies. But yeah, Chapter 11 will allow the companies to limp on forever, with government subsidies for health care in perpetua.

Chrysler went through Chapter 11 and come out of it and was in the black for years afterward, so it's not inevitable a company in Chapter 11 sucks on the public tit forever. On the other hand, Chrysler's CEO Lee Iacoco voluntarily dropped his salary to $1/year until his company was out of Chapter 11 and back on its feet - don't hold your breath for that today. In fact, one of the big three CEO's told Congress today he flat out wouldn't do that because he didn't want to indulge in symbolic gestures. (asshole)

[TheKwas]

As for being anti-union, yes I am. Those unions enrich their own members at the expense of everyone else in the entire industry. There are suppliers whose margins have been shaved to nothing because the automakers squeeze their suppliers in order to pay for their labour obligations while trying to remain competitive.

Fuck the unions. What they do is nothing more than extortion. They were necessary once, long ago. That time has passed; the worker protections they fought for are now written into law, and their protection hinges upon political lobbying, not strikes.

I'll go further. An industry-wide union is nothing more than a horizontal monopoly, as well as a vertical monopoly if the union also represents the employees of the companies' suppliers. The only distinction between a union and a monopoly in common parlance is the commodity being monopolized; in this case labor. Under an equitable enforcement of anti-trust law, the UAW, AFL-CIO, and other major unions would be broken up just like any other monopolistic business, because that's exactly what they are.

Umm...no. All unions have to work and negotiate with the employers to some degree to ensure they company remains competitive enough to stay afloat. That automatically means they are not a monopoly and can't set wages as they see fit.


I was replying to that above statement more indepth, but I'm restructing my post into a more general rant about unions:

Most industries in Canada are ran by 2 or 3 big firms selling slightly different products, thus allowing most firms oligarchy power (which is still grants the firm much more power than it would have under perfect competition). Labour markets, without unions, are essentially characterised by perfect competition. In this situation, companies have much more bargaining power than the work force. Combine oligarchy revenue with perfectly competitive labour costs and you get massive profits and salaries for the top echelons of the companies in question, making the gap between the rich and the poor/middle class even bigger.

This is one, of the many, reasons why highly unionized European countries (especially the Nordic countries) have less inequality than North America. Unions help push the wages down the company pyramid.

As an interesting side-note, if we look beyond North American shores, Norway and Sweden have unionization rates in the 80s, yet Sweden is ranked 4th in competitiveness by the World Economic Forum. If even half of the stuff regarding unions in this thread was true and universal, we would expect Sweden to be a shithole of unproductivity and poverty, rather than one of the richest countries on earth. Perhaps the problem doesn't lie with unions, but with a combination of complex factors including (but obviously not limited to) North American management's approach to Unions, and North American unions' approach to management.

Well good; They already have a far richer pension than they deserve. I'm with Mike on this: Public-sector unions need to be banned outright. Even if private-sector unions continue with heavy restrictions, government employees should not be allowed to unionize at all. The fact that taxpayers are "the company" is the problem: Unlike a private company, the union can foist whatever unreasonable demand they want on the government without fear of putting their employer out of business and themselves out of a job, because no matter what happens the taxpayers will pick up the tab.

The Public-sector RELIES on unions as a major job perk to stay competitive with the private sector. The public sector is completely unable to pay white-collared workers the same amount as the private sector for educated, qualified workers, and it's through reliable employment, reliable hours, generous vacation time, reliable benefits, and an employee-centred workplace that most public institutions manage to attract quality workers.

Despite your hypothetical situation, it's quite hard to argue that white-collared government employees are grossly overpaid. Just about any government employee with a degree (with perhaps the exception of teachers, but that's mostly because their degree is useless outside of teaching) could quit their job and find a higher-paying job in the private sector. That alone indicate that Public Sector unions either can't or don't make unreasonable demands in regards to pay.

Hell, compare the salary of the Clerk of the Privy Coucil to any CEO, and then remind yourself how much more important government institutions are to society than any individual corporation. That alone indicate that Public Sector unions either can't or don't make unreasonable demands in regards to pay.

Oh, they'll expand alright: In their home countries, or in cheap third-world sweatshops. We've already been over this: The only real reason the foreign automakers built plants here at all is because of Detroit. Once Detroit goes out of business they have no reason to expand or even stay, so the laid-off workers will be either left on welfare or stocking shelves at Walmart.

Can I see some evidence for this claim? I've heard that automakers build plants in America because: A) the Automotive industry is still one of the most protectionist industries in the world, and America still requires certain parts of automobiles to be home-made
B) Even with higher labour costs, it's simply cheaper to produce Cars meant for American lots in America than all the logistics of shipping hundreds of thousands of cars from Japan, along with the supply lines of replacement parts and mechanic knowledge.

Most of the government handouts to the Big 3 come in the form of military contracts, which the foreign companies can't take part in anyways.

One of the biggest problems for the Big 3 is that foriegn companies are fairly new to America, and creating a union is alot harder today than it was during the heyday of North American unions. If the foriegn companies choose red-states with laws alot less favourable to unions as major factory locations, they will remain free of the hassles of an unionized workforce. However, to me this produces the question of whether the answer is a race to the bottom or supporting empoyee bargaining rights in the entire industry.

[Guardsman Bass]

Keep in mind, too, that a union is only a horizontal monopoly if "closed shops" are allowed (meaning that only union workers can be hired legally - and by legally I mean encoded in law as opposed to merely being negotiated in contract between the union and company). That's out in quite a few states, which have "Right-to-Work" laws on the books (which don't allow for the above - union employees only hired at a site - even if the company and union reached that agreement by contract).

[Ma Deuce]

Can I see some evidence for this claim? I've heard that automakers build plants in America because: A) the Automotive industry is still one of the most protectionist industries in the world, and America still requires certain parts of automobiles to be home-made
B) Even with higher labour costs, it's simply cheaper to produce Cars meant for American lots in America than all the logistics of shipping hundreds of thousands of cars from Japan, along with the supply lines of replacement parts and mechanic knowledge.

One example: Around 18 months ago, long before this this credit crisis reared it's head and the economy and auto sector still looked to be growing, Toyota announced that they would not be building any further plants in North America beyond what they'd already committed to. They cited that at the time the cheap yen (no longer the case, but declining fuel prices should compensate) made it more favorable to import cars from Japan, and more importantly, the fact that all their Japanese assembly plants are clustered in one city as along with their suppliers, shortens their production supply lines considerably, more than compensating the cost of shipping the finished vehicles overseas. Of course, Toyota MUST outsource some production, given the declining Japanese workforce, but much of this recent outsourcing isn't ending up in North America. Did you know, for example, that many parts in Japanese-assembled Toyotas are actually made in China?

I don't have a link at the moment, but it was in the Wall Street Journal, around June 20, 2007. I'll see if I can find it later.

Anyway, The fact that efficiency-obsessed Toyota has deliberately allowed certain inefficiencies into their North American operations is ample evidence they are not building cars here because it's more efficient: Consider how Toyota spread their US plants in as many states as possible, quite obviously for political reasons, or making plants less flexible than their Japanese counterparts so they can be run by the unskilled workers they'd find in the small towns they set up shop in. Toyota has long considered it's North American plants insurance against protectionist backlash, and they've already served that purpose. Once Detroit is gone, they'll have no more reason to exist; efficiency will once again reign supreme, and the work will eventually be farmed out to places like China. Don't believe me? Look at the concerns Toyota has had about it's US labour costs lately:
http://www.apics.org/APICS/Resources/Vi ... tsEDIT.xml

On final reflection, I have come to the conclusion that J's cramdown may be the best solution, but I'll take it one step further: Since the US now has a surplus of automotive production capacity that will never be filled without a return to insane lending practices, it's clear a lot of plants will have to close regardless of the heath of the companies: so who's going to bear the brunt of that? Why the foreign automakers of course! First nationalize every foreign owned plant in the US, divide what's needed to meet demand among Detroit, and either re-purpose (government-owned military ammunition plants, anyone? Nice opportunity to reverse McNamara's decision to close them all) or shut down the rest, and raise tariffs to a point that imported vehicles can never be competitive. Hey, as much sense as it makes, a cramdown ain't gonna happen anyway, so I can dream too, can't I?

[Ma Deuce]

Ghetto Edit: I forgot to mention one other factor that would encourage Toyota and the other "transplants" to pack up and leave if Detroit went under: If the suppliers they share with Detroit also went under (Detroit going under would quite certainly kill Magna International, for example, who've also become a major supplier Toyota and Honda's Canadian plants).

[JCady]

Keep in mind, too, that a union is only a horizontal monopoly if "closed shops" are allowed (meaning that only union workers can be hired legally - and by legally I mean encoded in law as opposed to merely being negotiated in contract between the union and company). That's out in quite a few states, which have "Right-to-Work" laws on the books (which don't allow for the above - union employees only hired at a site - even if the company and union reached that agreement by contract).

The problem with "Right To Work" laws is that they typically force employers to give non-union employees the exact same pay and benefits as union workers; they allow nonmembers to get full union perks without paying dues.

[Jade Falcon]

In some areas the unions are still pretty strong, especially in the auto industry. In other places the unions really got smacked around hard back in the 80s but I think even in those areas the unions still tend to exist but have been forced to be a little more realistic. International Harvester, Caterpillar, and J.I. Case all pretty much went belly up or moved overseas in the area I lived in the 1980s. That pretty much left only John Deere still operating. I somewhat got the impression that Deere might have been better run and already had a more realistic relationship with the unions than the others. CAT, on the other hand must have had something extremely fucked up going on since they closed their plants and moved operations to France. Huge ass plant just sitting vacant and it was more cost effective for them to be working out of France. The people I knew who lost their jobs with CAT were definitely overpaid and had incredible benefits.

That happened over here as well, Massey Ferguson had a sizeable plant in Kilmarnock in Scotland and the Unions acted like such dicks they moved operations to France.

Then of course you had Linwood which was notorious for striking. Love him or hate him, Clarkson certainly never lets the British car industry off the hook when he talks about their demise calling the Union leaders names like "Red Robbo".

[Knife]

Keep in mind, too, that a union is only a horizontal monopoly if "closed shops" are allowed (meaning that only union workers can be hired legally - and by legally I mean encoded in law as opposed to merely being negotiated in contract between the union and company). That's out in quite a few states, which have "Right-to-Work" laws on the books (which don't allow for the above - union employees only hired at a site - even if the company and union reached that agreement by contract).

The problem with "Right To Work" laws is that they typically force employers to give non-union employees the exact same pay and benefits as union workers; they allow nonmembers to get full union perks without paying dues.

Of course, they have to be competitive.

[Boyish-Tigerlilly]

There is also a problem with just relying on government laws and protections, and the government can easily change, switch hands, or undo what other governments do. We see this often in other government agencies and their "regulations" in the FDA and the EPA. One government can faithfully observe and protect what it's charged to protect (EPA) and in another, it can hire cronies, ignore laws, and stock the organization with people who are antagonistic toward what they are supposed to do. There's shit you can do about it. We've just had 8 years of it.

Historically, protections were given, and then taken away. It's one of the reasons why the original AFL didn't support government legislation. It's unreliable.

[Knife]

Same argument could be said of the law and the unions itself where government could easily say unions are illegal just as much as they could say any worker related rights are illegal.

[Ekiqa]

If you work for the federal government in Canada, the union isn't all the effective.

Whenever the contract is signed, and the government doesn't like it, they pass legislation that gets rid of the contract and institutes what they want.

Plus, the pension fund doesn't really exist, it gets raided all the time by the government.