The Collapse of the Auto Industry – Are Unions to Blame?

Posted on

According to the Indianapolis Star, in the year ending 2007, the average base wage for a GM blue-collar employee, was just under $28 an hour. GM officials say that average reaches $39.68 an hour, when you consider base pay, cost-of-living adjustments, night-shift premiums, overtime, holiday and vacation pay. Health-care, pension and other benefits average another $33.58 an hour. This brings the total average cost of employing a single GM worker to an astounding $73.26 per hour.

Compare these outrageous hourly numbers to those of our Mexican counterparts. In June of 2008, Ford Motor Company announced that their Union had agreed to cut wages for new hires, to about half of the current wage of $4.50 per hour. Starting wages at some plants in Mexico are as paltry as $1.50 per hour with a lot less of the related pension and health care costs of U.S. workers. The total cost to employ a worker in China is even less than the cost in Mexico. There is no need to dissect those numbers, as I believe the point has been made quite clear.

The entire North American auto industry is on the brink of collapse and we wonder how in the world this could happen. The answer is quite obvious. North America can simply not compete with the foreign auto manufacturers. Certainly not at these hourly labor rates. The Unions have been holding a knife at the throat of the manufacturers for far too long. Greed in its purest form has broken the back of the auto industry. The Union is unrepentant as they have already spoken out and declared that they refuse to make any form of concession even during the industries darkest hour.

Leadership on behalf of the Union is largely responsible. The shepherds of the cattle if you will, who advise and direct their herd to fight to the bitter end in order to get what they want. They have no regard for the economics of their demands. Their stance has consistently been, give us what we want or we will take our ball and go home. In other words they will go on strike. Once again, holding the industry hostage.

The talking heads at the Big Three have asked Congress to kindly hand over $25 Billion of taxpayer money to help solve this crisis. Although this is an astounding number, it is certainly not the saving grace, which the auto industry requires. A Band-Aid on a gunshot wound will not stop the bleeding. Without becoming more competitive with foreign markets, the auto sector will gradually regress back into the funk it’s in today.

Congress, it would seem, is negotiating with the wrong people. They need to sit down with the United Autoworkers Union and provide them with a simple ultimatum. Either accept some very deep cuts not only to your wages but to your benefits and pension as well or the Government will break the Union and start anew. Then and only then should the Government consider providing financial aid to this troubled industry. Harsh, Perhaps, necessary absolutely. I am certain there are enough people currently on unemployment and welfare who would be thrilled to work in this industry for $15 an hour with limited benefits and a small pension program. And let’s face it, most of these positions require the intelligence and dexterity of a monkey, so the supply pool should be quite large when you consider we have college graduates and computer programmers currently sitting on the dole.

The repercussions of a North American auto industry collapse are enormous. Imagine hundreds of thousands of workers no longer contributing towards income tax, Health-care, pensions or unemployment insurance. Instead these same workers now become a drain on our society as they all rush to the unemployment line at once.

The U.S. Government just bailed out the financial sector with a $250 Billion payout. The collapse of the auto industry will result in a further collapse of the financial industry. The Government brain trusts need to determine just how many of these auto workers are likely to forfeit on their loans and mortgages should they suddenly find themselves unemployed. Those numbers will be staggering and that bailout money will disappear quicker than a box of donuts at a Policeman’s ball. Of course, those of us that are still employed will be left footing the bill through higher taxes.

Management of these companies cannot escape unscathed either. Although they are a contributing factor towards this financial crisis with their multi million dollar salaries and corporate jets, the Union eats up far more money than management. It is however, time for these so called brilliant CEO’s to lay down their Crackberrys, roll up their sleeves and formulate a viable plan that can save North America from financial disaster. A plan that not only includes drastic company wide cuts but a plan that will make this industry competitive with other world markets.

Our Nation cannot sustain a collapse of the auto industry. The impacts are so vast and the trickle effects so numerous it would be near impossible to evaluate the total devastation. It is essential that we resolve this crisis. The Government must hold the Union Leaders and the CEO’s of these failing companies accountable. Most importantly, we, the people, need to hold our Governments accountable. After all, they are the ones giving our hard-earned money away to these failing businesses.

Leave a Reply

Your email address will not be published. Required fields are marked *