I don't think you can find facts on the ground to prove that GM management is particularly incompetent or uncompetitive. Are they geniuses? I doubt it. However, considering Ford and Chrysler were/are just as bad, and every business ever got itself tangled up with unions always turn bad when they no longer have monopolistic power, it's reasonable to estimate that GM management are just average, or if you prefer not to be charitable, mediocre. That would be fine with me.
The performance of GM Brazil and GM China, where UAW is non-existent, however, seem to indicate that GM management is actually a cut above its peer groups. Whether both are co-incidences is perhaps debatable.
Let's drop the barbs being thrown at each other NOW. I'm going to remove some recent posts to help you avoid trying to get the last word in. Any further posts where you take shots at each other are simply going to be taken down. If you can't stop yourself, I'll have to give you an assist.
If you see something you disagree with here, it's time to stop calling it propoganda or lies, or anything else that tends to be more about the poster than the posting. If we can't stay away from the characterizations here, it may be time to shut this one down.
Isn't this entirely consisted of political diatribe and patent lies?
Since when is anyone in America driving a car imported from Argentina? Much less made by workers making 30 cents a day there? Brazilian wage is obviously not 30 cents a day either, not in today's debased dollars anyway.
If none of the items Bob listed is imported, would he like to make shoes, flashlights, tablecloth, betl buckles, cars, silk dress, pearls, dog collar, flower pots, furniture, etc. all by himsef? Someone has to make them or is he giving up on all life's amenities? Or is he proposing the item prices should be so high that only multi-millionairs like himself should be able to enjoy them?
If 30 cents a day (never mind the actual wages are much higher than that in those countries) is slavery, why isn't the removal of that particular choice even worse for the workers who would otherwise be scraping a living with even less? If 30 whatever units a day is too little, why doesn't the the multimillionair singer offer them a better choice, like 60units a day? Guess what, nobody would be willing to work for 60 cents a day; people in Argentian and Brazil are making far more than that. The only way they'd be willing to work for Bob Dylan for 60 cents a day would be if all other opportunities paying more than 60 cents a day had disappeared. That's in essence what the song is advocating: remove all free market opportunities in those countries so that they will be grateful of our handouts. It's the elitism of the worst kind: condemning entire populations to abject poverty so that the elite themselves would be treated like kings and queens when they go and bestow hand-outs, a la Namibia, where the local totalitarian government locked down the whole country for some other members of our cultural elite class.
It's the same old same old lie, wage slavery is bad, so we will give you real slavery in the name of something sounding good. I won't plague the forum with full-text quotations like the previous poster did; here is a simple link to rebutt the nonsense from Dylan http://www.mises.org/story/2179 Written decades ago by someone who was in full posession of his faculties unadulterated by drugs.
Like I said before, as much as I dislike the union as an institution, looking back a few decades from now, if the big domestics have survived, the current union leaders will probably deserve more credit than the current management. They have far more influence on GM and Ford's survival right now than whatever bean-counting or model redesign can be done in the US market. Management may be able to make GM survive as a foreign-based company all on their own, but in the US, I doubt anyone can do it if the union does not cooperate.
Well I'd think we'd all agree the "unions" need to be more flexible and yes be more automated. Maybe someday we can modern automated plants with less autoworkers per plant in them, but more cars and more modern plants built here to off-set a huge decline in autoworkers.
The company and employees can both make good money.
Or better yet, more intrinsicly rewarding jobs than the repeatitive "autoworker" in the traiditional sense, whether it's carmaking related or not. The physical carmaking is actually a pretty "dirty" business, energy intensive and puts out enormous amount of pollutants. What we really need here are conveyances that give individual consumers the freedom to move around as they wish and facilitate commerce (which in turn is again giving individual consumers goods and services that each of us wants). If we can get all that without the sacrifices in tedious back-breaking labor or living with the pollution of heavy industry, so much the better :-)
I've taken down the last couple of posts where a couple of you have insisted on talking about each other.
If you have something to say about the UAW and the domestic automakers, great. But it's time to drop the personal interaction and off topic stuff about who's leaning what way politically and all the other tangents that are coming up.
Sooooo, you mean all those top execs won't be getting those multimillion dollar paychecks plus stock options plus lifetime healthcare at the auto companies expense? That's great to hear.
Well we'll pay close attention and see what Uncle Steve pays himself after the smoke clears. OTOH I do feel the Delphi stock will be a good buy in the near future.
With all this talk of stock options I would be willing to bet that more than half of the readers are in a "fog" to explain the concept. Tell me how IF I give you half of your compensation in a stock and have that issue valued three to four times its current worth is it a bonus ? Stock options are a write off for the company. They do NOT always provide a windfall for those who receive them.
That is for sure. A buddy went to work for a dot.com spin-off from Microsoft, and was given 25,000 shares of stock as a signing bonus. Guess what that stock is worth today? Zero. The only value of stock is when you sell it. Ask the poor souls at Enron forced to keep their 401K in company stock.
Just so that we are clear here, there is a big difference between stock and "stock options". At all of the large companies that I worked for, "stock options" are not accessible to routine workers. You must have a certain management classification level to even be eligilble for "stock options". At large, stable companies, they ALWAYS guarantee a net return in excesss of the stock return (which is what a typical worker can buy). It is a corrupt form of elitism that should be abolished in corporate America.
Instead of abolishing stock options, they should be made available to everyone. There is a current cash value for stock options, even for out-of-money options. Subtract that value out of salaries/wages and offer everyone either cash, stock option or a combination of both, with the understanding that those taking all-cash will be the first ones to be let go in a down turn, is really the fair way for compensation.
Sidebar: Stock option is the right but not the obligation to purchase a stock at a pre-determined price up until a certain future date ("Call Options"; obviously "put options," the right but not the obligation to sell at a pre-set price, are hardly ever used explicitly in compensation although pension plans, golden parachutes etc are in effect "put options"). That pre-determined price is call "strike price." If the market price of a stock is higher than the Call Option Strike Price, the option is in-the-money; otherwise it's out-of-money. Even out-of-money options have current cash value until its expiration if it is not tied with continued employment because it gives the right but not the obligation up until a certain future date; it's a form of insurance policy. The money for employee option exercise ultimately comes from the shareholders through dilution and increased number of stocks outstanding when the option holder exercise the option and buy the stock below market price for a quick flip. Restricted stock options that require vestment period is non-marketable, therefore in the accounting rules employee stock options are not expensed because technically it does not cost the operating company anything (the shareholders will pay for it later through dilution if the company does well the stocks rise in price). That's why it's a win-win situation, a very effective way of profit sharing with employees. If company does not do well and the stock tanks or never reaches the strike price, everyone goes home empty-handed (loss for shareholders, nothing beyond salary/wage for employees); none of this compensation nonsense to fight over as in the fixed wage and benefit in down turn scenerio that we are witnessing.
Delphi would be saved instantaneously if all line workers would take $1 (a single dollar) per year pay like CEO Steve Miller does, and take home a whole bunch of stock options instead.
Most CEO pay packages with high figures do not even touch healthcare much less lifetime healthcare.
GM, in past years, has given stock options to most all salaried. Unfortunately they have been worthless for the last 6 years or so. There is no guarantee of a net return.
Sure, the workers can keep their signing bonus and company-paid training back when they joined the company too if they are willing to take $1 per year salary, going forward, zero bonus, zero severance, zero pension plan, and no other similar entitlements whatsoever.
What signing bonus ? Oh the $1,500 they got for signing bonus before taxes they got last contract. Oh the same contract that Delphi doesn't want to honor. :confuse:
Sure the workers will take a $3 million dollar signing bonus each and work for $1 dollar a year over the life of the next contract. :P
What is your point brightness ???? You want the autoworkers to make a dollar a year while the fat cat Steve Miller reinstates the $987 million dollar bonus he wanted to pay his executives during the Bankruptcy filing ?????
Perhaps you obviously see nothing wrong with this picture :confuse: Oh they are college graduates and deserve this right because they have a degree. Most of whom went to college on Moms or Dads bankroll and never worked a real job in there life and don't have the slightest clue on what it takes to run a machine, but are going to manage the company from the high horse. The company-paid training "OJT" is done by fellow UAW members and they are working on the job producing a product. It's not like supervision is showing them how to run machinery and training them. They don't even know where the "on" button is, let alone risk getting grease on there new tie.
But yeah I think it's a great idea to give a each UAW member a $3 million dollar signing bonus and they work for a dollar each year of the contract, and they'd be glad to give up all benefits.
...management asks workers to accept pay cuts, it's usually too late. The company is too far gone for wage cuts to help.
And if wages really are out of line, it's usually symptomatic of larger issues relating to overall poor management.
At GM (and, by extension, Delphi, which was once part of GM), high wages were offered to pacify the blue-collar workforce instead of addressing underlying issues.
Granted, the UAW was happy to take those wages, so it isn't completely innocent in all this. UAW leadership really didn't want to address those underlying issues, because doing so would have weakened the power of the union (workers would have had less to gripe about).
Plus, management wanted the blue-collar workforce to have higher wages, because then management salaries were raised, too (managers should make more than workers).
Not sure what you point is, people getting $3m in signing bonuses have to pay even higer per centage of tax than those getting $1500 signing bonuses. Delphi refusing to honor signing bonus? since when? The money was long spent or saved by the recipient. As to going forward basis, isn't bankruptcy protection the very definition of not having to fulfill a contract? Take a number and wait in line, along with all the other creditors.
What do you mean by training done by fellow UAW members? Do you think fellow UAW members would be the least bit interested in training newbies if they are not paid to do it? The natural of signing bonus is to pay for an employee's experience . . . something that obviously has value. Something that the company therefore can save time and money on. If you want to get a bigger signing bonus, feel free to go to school or otherwise acquire a skill that is valuable, whether production skills or management skills. It's ludicrous to suggest that somehow everyone deserves the same signing bonus too even if he has no specialised skills and not the slightest interested in taking on positions of responsibility. Gee, plenty bums and winos off the street would love to get paid the same as your security job; do you think they deserve that too even if they are not interested in ever having to take the risk of confronting terrorists? or even showing up on time rain or shine?
By the time management asks workers to accept pay cuts, it's usually too late. The company is too far gone for wage cuts to help.
And if wages really are out of line, it's usually symptomatic of larger issues relating to overall poor management.
At GM (and, by extension, Delphi, which was once part of GM), high wages were offered to pacify the blue-collar workforce instead of addressing underlying issues.
Granted, the UAW was happy to take those wages, so it isn't completely innocent in all this. UAW leadership really didn't want to address those underlying issues, because doing so would have weakened the power of the union (workers would have had less to gripe about).
Plus, management wanted the blue-collar workforce to have higher wages, because then management salaries were raised, too (managers should make more than workers).
Excellent post. You, sir, have scored a bullseye with that one.
the folly of unions, right? Would anyone or everyone agree with that summation?
How many raises can a company afford to give faithful union members who hang in there through thick and thin? If it's a company like GM, which has lost face with much of the American people and is offering slop for cars, it can't afford to give raises when stock prices are not rising and profits are not being made.
Is the union at fault? The monster was created decades ago. Is it really fair to blame today's modern union member for this shortfall?
Unions aren't necessary. If pay isn't satisfactory then go look for work elsewhere where you can make what you feel you are worth. Unions start a snowball of pain that slowly grows out of control. All you need to do is look at the UAW and GM for a nice example. Sit back, crack open a nice Diet Coke with lime and watch what happens the next few years at the big 'ole General.
Medical care for one and for all? Healthcare may be more of GM's pain than the UAW. Must drugs cost so much? It's all adds up to a situation that is oppressive and out of control and evil. Very evil. :surprise:
The time sequence is a bit backwards. The management at GM (under Afred Sloan), Ford (under Henry) and Chrysler (under Walter)all fought vehemently against unions. The federal government under FDR simply refused to enforce property rights because the union was its political client. The result is that, ever since 1933, the carmakers are no longer owned exclusively by the shareholders (who would otherwise give the management duties to the management) but in effect owned and operated for the benefit of the union workers. Once that was clear, it doesn't take a genius to figure out that the small fry management after the aforementioned titans would make lemonade with lemon, for their own narrow interest . . . everyone profiting from the monopoly ripping off the consumers . . . until imports offered the consumers more choice.
It is a common perception (almost a cliche) that unions were born of necessity because the hardship workers suffered. That is not actually the case, at least in American history. Unions in America were not born in industries that were hurting but industries that were at the leading edge of profitability. Yes, we all know the sensational news coverage of Reuther (the elder) being beaten by overzealous Ford security personnel, but the truth remains that it was not at all representative of how autoworkers were treated. Reuther was not even an employee of Ford at the time; the Ford security beat them because they were outside union leaders trying to organize union and strike at Ford. Not saying the Ford security had the right to beat them bloody even if they were trespassing on Ford property. It was quite a bit of theater as Reuther and his colleagues brought the news crew along, who eventually produced the expected footage that launched the political careers of Reuther and his colleagues. Unionization of the industry at the time had already been more or less accomplished anyway because half a year earlier, the union successfully organized an entirely illegal sit-down strike at the most profitable plant at the most profitable and biggest carmaker: GM plant in Flint. The government failed to enforce law, and the rest is history. Autoworkers were the most highly paid workers in any industry at the time. High profitability was the reason why the management could settle at all.
Union movement, at least that of the American history, is about dividing the spoils of monopoly. Once it was clear that big automakers were no longer owned by shareholders (ownership becomes quite meaningless if property right is not enforced), monopoly was strengthened as no new investment became available for start-ups in the industry. After WWI, the number of carmakers mushroomed in response to consumer demand; by contrast, after WWII, despite a more propsperous economy, no major carmaker was ever founded because would-be investors knew clearly that if their company ever achieve any degree success it would cease to be their property.
Once it was clear that shareholders were merely pretending to own their companies and management were mearly pretending to be managing, and workers pretended that they had to work, poor product quality became inevitable. Shortsightedness is human nature.
In the end, when we look back decades from now, I hope neither union nor management bear the brunt the blame. It's the government's failure to enforce laws that led to the sorry outcome.
IMHO, if not for the living/dying examples of how unionization can drag down even the erstwhile most successful companies in the world (Ford, GM, PanAM, TWA, US-Steel etc.), Microsoft and Walmart would have unionized in the past few years. Both have the ingredients of financial success and growing monopolistic power. It may yet happen to Toyota North America. It's about the spoils.
It's the government's failure to enforce laws that led to the sorry outcome.
So now we can blame the government for the design of the Cavalier? I believe that Reagan was president at the time, so the culprits must be Republicans!
Then again, they continued to sell them while Clinton was president, so perhaps we should blame the Dems...Or maybe it was Ross Perot's wacky charts and graphs, except he was never elected....
The design of a particular vehicle is nowhere nearly as important as the process that leads that design or the personnel and facility that have to turn design into real cars. Until the latest generation, Camry had been as boring as can be as far as designs are concerned . . . it's the execution that matters. A cool design like the Audi of the mid-90's could give the company a dead-cat bounce for a few years after consumers forgot just how horrible the previous rounds of cools cars from VW were; eventually the consumers catch on the game.
Obviously, you can't blame Reagan, Clinton, Bush, Nader, Perot or even Harry Browne for the Cavalier (unless these guys had jobs at GM that I didn't know about.)
You can blame GM management that decided years ago to dedicate its business model to selling the same second-rate rental car at a discount under several different names. Uncle Sam had nothing to do with it.
Yeah, what am I thinking...there was no mistreatment of workers. It's all a lie...no, a conspiracy really, where the evil labor organizers slander the reputations of honest and benevolent corporate leaders. My mistake.
Please go back the re-read my earlier post. The government failure to enforce law was committed in the 1930's, quite a long time before Reagan, clinton or Bush, much less Nader, Perot or Browne. Rome is not built in one night. The institutional dynamics (and failure) was in place long before the Cavalier was designed.
The institutional dynamics (and failure) was in place long before the Cavalier was designed.
So Franklin Roosevelt was responsible for the Cavalier? Thanks for the insight, I had no idea that he played such a pivotal role in 1980's automaking...
My point was that you wanted the UAW members to work for a dollar a year. Well you were referring to Steve Miller, who is working for a dollar this year. Well he is for salary, but that $3 million dollar bonus he didn't give back either. So basically he is making more money than Rick Wagoner, this yr. and Rick isn't BK yet. Steve agreed to make $1 dollar a yr. until they came out of BK. The rumor is by September theie will be a new agreement with the UAW which means Delphi will come out of BK sometime next yr. if not sooner.
Delphi stock should then shoot through the roof since it only filed on it's North American Operations and will shut down 21 out of 29 plants. I wouldn't be suprised at all if Delphi becomes a 100% foreign firm with only having offices in Troy. It's very sad. :sick:
I think brightness04's point is that there are other factors at work. Union workers point at GM management and GM management points at union workers for their problems. In reality, government, GM workers, GM management, US society and world society has led GM to their current crisis. Clearly, GM could have redirected at various times, but why, and have you ever tried to steer a boat with 100,000 hands on the wheel?
Unions might not be necessary now...but they were at one time, and old habits die hard.
Then again they may be needed. Without the UAW breathing down the necks of Toyota would they pay as well as they do? I don't think so. UAW will need to make compromises to survive. So will GM & Ford. The future of Detroit is not real bright.
Looking at the salaries of top executives is not relevant. That is for the stockholders & board of directors to be concerned with. The Union needs to look at the overall health of the company. Executive pay is not an indicator of corporate health.
question for ya here: What was the Federal government supposed to do in that situation? Pull a Ronald Reagan and force air controllers back to work, or, as, IIRC, fire them from their jobs?
I have a sneaking suspicion that the Feds didn't know what to do in that situation. After all, it had never occurred before, as far as we know, that a union had an illegal sitdown strike, eh? Add some more news to this reporting if you would for us. I'd really like to know.
I'm not saying that they should have been allowed to sit down and force a resolve. Isn't that robbery, not necessarily at gunpoint to grab part of the big 'ole spoil? Isn't that what was going down? I mean, why should Henry Ford and family and close friends get all the take, right?
Glad you agree that it was quite a dirty fight between the paternalistic industrial bosses and the union bosses, each trying to turn the workers into their own feudal vassals. Both sides resorted to organized crime elements; what's a little media manipulation? Who said anything about honesty or benvalence on either side? It was quite a different world back then in the industrial towns, while the east coast was in the process of being gentrified, in the industrial midwest it was not many years after old Henry Ford could recruit workers by tossing a quarter into the street and pick the winner from the ensueing fist fight. A little muscle and blood was very much considered the right price to pay for financial and political gains. More importantly, there was internal union politics going on. Reuther had been trying to organize a massive strike at the biggest carmaker GM for over a year; his thunder was stolen by a local union shop at Flint that struck on their own before he gave the world for striking(more details below). Industry-wide unionization proceeded rapidly in the following months, with little leadership from UAW top-echelon necessary. Reuther desperately needed an incident to refocus media attention onto himself, and Ford was the only non-union carmaker left; Ford was actually relatively small potato by then despite Henry's bigger than life personal image, the company having been out-competed by GM and Chrysler for nearly a decade. The tactless company security/thugs made Reuther's Reuther's career, and his offsprings, thanks to Reuther's smart planning in bringing the newspaper cameramen itching for a story. Few realized that he was not even a worker at Ford but an outside union organizer treaspassing on Ford property despite his dressing up to look like a Ford worker.
Of course mistreatment of workers took place in some industries and some countries, just not nearly prevalent in the US auto industry or relevant to the alleged necessity/success of unions. Otherwise, we'd see agro-workers and sweatshop unions far bigger and far more successful than auto industry unions as those were industries where workers were really exploited. If you examine the UAW history closely, you'd notice that the seminal event that led to the successful unionization of American autoworkers was the GM Flint plant sitdown strike of December 1936. The point of contention was pay scale, not treatment at all. It took place at the Flint plant and was successful because GM was the most successful carmaker at the time and the Flint plant made the carbody for the volume sales leader from the company. An illegal strike by less than 2000 workers held up production by hundreds of thousands of workers for 44 days. Eventually the management gave in because the FDR administration had made clear to Sloan/Knudsen that the feds were not going to enforce laws against their union clients.
The extraordinarily high union pay really came after WWII, when Reuther pushed through a 17.5% wage increase, the largest single-increase ever. Once again, no mistreatment was cited, not even a provocation of outrage necessary. It was simply pushed through on the ground that the companies could afford it, and Reuther's anticipation that GM would not want its books open to public examination.
Like I said, unions, especially successful ones like UAW, are about slicing and dicing the monopolistic profits, at the ultimate expense of the consumers. Mistreatment and "necessity" is just a fig leaf for the soft ears. It's like towns raising taxes in order to pay for teachers and police; in reality, the revenue hardly ever goes to the sectors really need them. Workers in industries most heavily exploited, like agricultural workers and sweatshop workers, hardly ever had successful unions. It's the industries with monopolistic profits where workers that are already being paid way above average, like steelworkers, autoworkers and airline pilots that historically had successful unions.
In the real world, few are really honest or benevolent on their own accord (except for short moments of magnanimity at gallas). That's why competitive market place is necessary to enforce the best interest of the consumers.
No, I do not want UAW members to work for a dollar a year; it was a rhetoric question, as in "any takers?" The $3mil is signing bonus, completely irrelevent to the discussion on salary. Miller could have taken other jobs with just as much signing bonus. Reducing his own salary to $1 a year just completely blows all the nonsense about multi-million pay for management out of water.
In reality, multi-million dollar pay for CEO's is merely a fig leaf for the faithful. If we reduced Rick's salary to Zero, the savings would mean less than $10/yr for each GM worker. What difference does it make? If you are really critical of how the management is doing, perhaps more pay is necessary to attract better talent.
FDR played a pivotal role in many things that affect our lives today. The institution of union-run domestic automakers is only one of them, not even the largest of his legacies. Social Security and constant inflation that has reduced the value of dollar by 96% since the day he took office is a far greater one. Yes, that's 96% reduction; i.e. a dollar today is worth only 4 cents when FDR took office. Gold was about $20/oz in 1933, and today it's $500+; don't tell me today's gold is better and improved (hedonistic adjustment) compared to gold from 1933. That has enormous consequences for the society in general and the sorry state of industrial giants like GM with legacy labor cost. SS + massive inflation means individuals could no longer save for their own retirement yet could rely on "equality of results" through SS. Medicare was only a logical extension of SS. Those are what have driven up retirement cost sky high and made it impossible for companies like GM to carry the weight of legacy cost.
brightness04: Reuther desperately needed an incident to refocus media attention onto himself, and Ford was the only non-union carmaker left; Ford was actually relatively small potato by then despite Henry's bigger than life personal image, the company having been out-competed by GM and Chrysler for nearly a decade.
Ford was more than a "small potato" in the years prior to World War II. It was still the third largest car maker in the country, and well ahead of the "great independents" - Studebaker, Nash, Hudson and Packard. (And it may have still been the second largest car maker in the world, as its international holdings were much larger than Chrysler's at that time, although I don't have exact figures.)
brightness04: The extraordinarily high union pay really came after WWII, when Reuther pushed through a 17.5% wage increase, the largest single-increase ever. Once again, no mistreatment was cited, not even a provocation of outrage necessary. It was simply pushed through on the ground that the companies could afford it, and Reuther's anticipation that GM would not want its books open to public examination.
Are you referring to the Treaty of Detroit, agreed to by the UAW and GM in 1950? GM agreed to that contract in exchange for a multi-year (five, if I recall correctly) time span, and labor peace. At the time it was hailed by a wide spectrum of liberals and conservatives as a bold, visionary move by GM and the UAW.
The simple fact is that both the UAW and management (best personified by GM, which ruled the roost from 1940-1980 in the automobile market) were actually quite happy to keep paying high wages and allowing restrictive work rules to remain.
Why not? GM had over half the market. There was no real competition except for Ford, which wasn't inclined to rock the boat. The high wages and work rules seriously weakened Chrysler and AMC (and drove Studebaker out of business). They also hobbled the small-car efforts of GM and Ford, but let's face it - their hearts weren't really into it (and still aren't).
I hate to get in the middle of an argument here, but I just believe that both sides share a fair amount of blame. I'm "union neutral" - if the UAW and GM (or Ford) can build a car that I like, I'll buy it. I don't care if the workers make $200,000 a year for four days of work, with the entire month of August off as a vacation.
On the other hand, if they don't make something I like, I won't. UAW members have to stop acting as though I (and other car buyers) have some sort of obligation to support them in the style to which they have become accustomed. Spare me the "buy American" nonsense - these are global companies with manufacturing and engineering facilities around the world.
That really has nothing to do with the subject at hand. It's just another excuse to offer generic political commentary, rather than deal with the reality.
It's pretty simple:
-If the company doesn't offer products that people want, it will have a hard time selling them.
-When you make cars that are more suited for a rental fleet operator than a regular customer, then you end up with bland products that earn low prices and with dying brands. -Products sold to discount buyers generate lower revenues.
All of these elements impact the Big 2.5, particularly GM. These circumstances are caused by short-term thinking led by management.
I don't particularly like the union, but it didn't create the bad designs or branding. You can spin it as you like, but that's the basic reason why GM can't sell cars.
Industrial strikes were not new. Strikes took place even before the industrial age, even in Roman time. The first industrial workers' strike took place in the 1700's, and became quite common in the late 1800's America. What usually happens is that during a business cycle, it eventually gets to a point where over-investment takes place thanks to fractional banking (investment "bubble"). Large number of products that suited yesterday's consumer taste find it hard to fetch buyers. Prices start to come down. So companies, especially those a moment ago at the leading edge of profitability, start to see their margins coming down. So they ask workers for wage concessions to commesurate with product price drop. That usually would be fine because the reduced wage would stil buy the same number of products with reduced price, no drop in standard of living for workers, and any savings that they have would actually be worth more in purchasing power terms. The ones really getting screwed were the capitalists who borrowed fixed amount of money to build the plants and their bankers too if the borrowers default.
People do feel emotionally about their reduced nominal income even if purchasing power of income does not change. Unions capitalize on that.
FDR administration, being beholden to both unions and bankers, simply refused to enforce property rights. Workers work in a factory by contract; they have no more right to occupy the stations and refusing to work and preventing anyone else from working than tenants have the right to occupy an apartment while refusing to pay rent.
BTW, Ford was a relatively small player in 1936, being out-competed by GM and Chrysler for nearly a decade; Henry as a person however had a larger-than-life figure in the public imagination.
Comments
The performance of GM Brazil and GM China, where UAW is non-existent, however, seem to indicate that GM management is actually a cut above its peer groups. Whether both are co-incidences is perhaps debatable.
If you see something you disagree with here, it's time to stop calling it propoganda or lies, or anything else that tends to be more about the poster than the posting. If we can't stay away from the characterizations here, it may be time to shut this one down.
http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20060612/AUTO01/606120399
A good read....
Rocky
Since when is anyone in America driving a car imported from Argentina? Much less made by workers making 30 cents a day there? Brazilian wage is obviously not 30 cents a day either, not in today's debased dollars anyway.
If none of the items Bob listed is imported, would he like to make shoes, flashlights, tablecloth, betl buckles, cars, silk dress, pearls, dog collar, flower pots, furniture, etc. all by himsef? Someone has to make them or is he giving up on all life's amenities? Or is he proposing the item prices should be so high that only multi-millionairs like himself should be able to enjoy them?
If 30 cents a day (never mind the actual wages are much higher than that in those countries) is slavery, why isn't the removal of that particular choice even worse for the workers who would otherwise be scraping a living with even less? If 30 whatever units a day is too little, why doesn't the the multimillionair singer offer them a better choice, like 60units a day? Guess what, nobody would be willing to work for 60 cents a day; people in Argentian and Brazil are making far more than that. The only way they'd be willing to work for Bob Dylan for 60 cents a day would be if all other opportunities paying more than 60 cents a day had disappeared. That's in essence what the song is advocating: remove all free market opportunities in those countries so that they will be grateful of our handouts. It's the elitism of the worst kind: condemning entire populations to abject poverty so that the elite themselves would be treated like kings and queens when they go and bestow hand-outs, a la Namibia, where the local totalitarian government locked down the whole country for some other members of our cultural elite class.
It's the same old same old lie, wage slavery is bad, so we will give you real slavery in the name of something sounding good. I won't plague the forum with full-text quotations like the previous poster did; here is a simple link to rebutt the nonsense from Dylan http://www.mises.org/story/2179
Written decades ago by someone who was in full posession of his faculties unadulterated by drugs.
The company and employees can both make good money.
Rocky
If you have something to say about the UAW and the domestic automakers, great. But it's time to drop the personal interaction and off topic stuff about who's leaning what way politically and all the other tangents that are coming up.
http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20060613/AUTO01/606130374
Rocky
P.S.
Gettelfinger quote in article.
"As we've said many times, these companies cannot downsize their way to profitability,"
Socala, even he gets it.
http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20060613/BIZ/606130347
Rocky
http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20060613/OPINION01/6061303- 07/1148
Rocky
Sooooo, you mean all those top execs won't be getting those multimillion dollar paychecks plus stock options plus lifetime healthcare at the auto companies expense? That's great to hear.
2014 Malibu 2LT, 2015 Cruze 2LT,
Rocky
With all this talk of stock options I would be willing to bet that more than half of the readers are in a "fog" to explain the concept. Tell me how IF I give you half of your compensation in a stock and have that issue valued three to four times its current worth is it a bonus ?
Stock options are a write off for the company. They do NOT always provide a windfall for those who receive them.
Sidebar: Stock option is the right but not the obligation to purchase a stock at a pre-determined price up until a certain future date ("Call Options"; obviously "put options," the right but not the obligation to sell at a pre-set price, are hardly ever used explicitly in compensation although pension plans, golden parachutes etc are in effect "put options"). That pre-determined price is call "strike price." If the market price of a stock is higher than the Call Option Strike Price, the option is in-the-money; otherwise it's out-of-money. Even out-of-money options have current cash value until its expiration if it is not tied with continued employment because it gives the right but not the obligation up until a certain future date; it's a form of insurance policy. The money for employee option exercise ultimately comes from the shareholders through dilution and increased number of stocks outstanding when the option holder exercise the option and buy the stock below market price for a quick flip. Restricted stock options that require vestment period is non-marketable, therefore in the accounting rules employee stock options are not expensed because technically it does not cost the operating company anything (the shareholders will pay for it later through dilution if the company does well the stocks rise in price). That's why it's a win-win situation, a very effective way of profit sharing with employees. If company does not do well and the stock tanks or never reaches the strike price, everyone goes home empty-handed (loss for shareholders, nothing beyond salary/wage for employees); none of this compensation nonsense to fight over as in the fixed wage and benefit in down turn scenerio that we are witnessing.
Most CEO pay packages with high figures do not even touch healthcare much less lifetime healthcare.
Rocky
Sure, the workers can keep their signing bonus and company-paid training back when they joined the company too if they are willing to take $1 per year salary, going forward, zero bonus, zero severance, zero pension plan, and no other similar entitlements whatsoever.
Sure the workers will take a $3 million dollar signing bonus each and work for $1 dollar a year over the life of the next contract. :P
What is your point brightness ???? You want the autoworkers to make a dollar a year while the fat cat Steve Miller reinstates the $987 million dollar bonus he wanted to pay his executives during the Bankruptcy filing ?????
Perhaps you obviously see nothing wrong with this picture :confuse: Oh they are college graduates and deserve this right because they have a degree. Most of whom went to college on Moms or Dads bankroll and never worked a real job in there life and don't have the slightest clue on what it takes to run a machine, but are going to manage the company from the high horse. The company-paid training "OJT" is done by fellow UAW members and they are working on the job producing a product. It's not like supervision is showing them how to run machinery and training them. They don't even know where the "on" button is, let alone risk getting grease on there new tie.
But yeah I think it's a great idea to give a each UAW member a $3 million dollar signing bonus and they work for a dollar each year of the contract, and they'd be glad to give up all benefits.
Rocky
And if wages really are out of line, it's usually symptomatic of larger issues relating to overall poor management.
At GM (and, by extension, Delphi, which was once part of GM), high wages were offered to pacify the blue-collar workforce instead of addressing underlying issues.
Granted, the UAW was happy to take those wages, so it isn't completely innocent in all this. UAW leadership really didn't want to address those underlying issues, because doing so would have weakened the power of the union (workers would have had less to gripe about).
Plus, management wanted the blue-collar workforce to have higher wages, because then management salaries were raised, too (managers should make more than workers).
What do you mean by training done by fellow UAW members? Do you think fellow UAW members would be the least bit interested in training newbies if they are not paid to do it? The natural of signing bonus is to pay for an employee's experience . . . something that obviously has value. Something that the company therefore can save time and money on. If you want to get a bigger signing bonus, feel free to go to school or otherwise acquire a skill that is valuable, whether production skills or management skills. It's ludicrous to suggest that somehow everyone deserves the same signing bonus too even if he has no specialised skills and not the slightest interested in taking on positions of responsibility. Gee, plenty bums and winos off the street would love to get paid the same as your security job; do you think they deserve that too even if they are not interested in ever having to take the risk of confronting terrorists? or even showing up on time rain or shine?
And if wages really are out of line, it's usually symptomatic of larger issues relating to overall poor management.
At GM (and, by extension, Delphi, which was once part of GM), high wages were offered to pacify the blue-collar workforce instead of addressing underlying issues.
Granted, the UAW was happy to take those wages, so it isn't completely innocent in all this. UAW leadership really didn't want to address those underlying issues, because doing so would have weakened the power of the union (workers would have had less to gripe about).
Plus, management wanted the blue-collar workforce to have higher wages, because then management salaries were raised, too (managers should make more than workers).
Excellent post. You, sir, have scored a bullseye with that one.
How many raises can a company afford to give faithful union members who hang in there through thick and thin? If it's a company like GM, which has lost face with much of the American people and is offering slop for cars, it can't afford to give raises when stock prices are not rising and profits are not being made.
Is the union at fault? The monster was created decades ago. Is it really fair to blame today's modern union member for this shortfall?
Unions aren't necessary. If pay isn't satisfactory then go look for work elsewhere where you can make what you feel you are worth. Unions start a snowball of pain that slowly grows out of control. All you need to do is look at the UAW and GM for a nice example. Sit back, crack open a nice Diet Coke with lime and watch what happens the next few years at the big 'ole General.
Medical care for one and for all? Healthcare may be more of GM's pain than the UAW. Must drugs cost so much? It's all adds up to a situation that is oppressive and out of control and evil. Very evil. :surprise:
2021 Kia Soul LX 6-speed stick
Shortsighted unions combined with shortsighted management (Detroit has plenty of both) spells doom. The collapse really has been fascinating.
And in the end, one side will bear the brunt of all the blame.
Union movement, at least that of the American history, is about dividing the spoils of monopoly. Once it was clear that big automakers were no longer owned by shareholders (ownership becomes quite meaningless if property right is not enforced), monopoly was strengthened as no new investment became available for start-ups in the industry. After WWI, the number of carmakers mushroomed in response to consumer demand; by contrast, after WWII, despite a more propsperous economy, no major carmaker was ever founded because would-be investors knew clearly that if their company ever achieve any degree success it would cease to be their property.
Once it was clear that shareholders were merely pretending to own their companies and management were mearly pretending to be managing, and workers pretended that they had to work, poor product quality became inevitable. Shortsightedness is human nature.
In the end, when we look back decades from now, I hope neither union nor management bear the brunt the blame. It's the government's failure to enforce laws that led to the sorry outcome.
IMHO, if not for the living/dying examples of how unionization can drag down even the erstwhile most successful companies in the world (Ford, GM, PanAM, TWA, US-Steel etc.), Microsoft and Walmart would have unionized in the past few years. Both have the ingredients of financial success and growing monopolistic power. It may yet happen to Toyota North America. It's about the spoils.
So now we can blame the government for the design of the Cavalier? I believe that Reagan was president at the time, so the culprits must be Republicans!
Then again, they continued to sell them while Clinton was president, so perhaps we should blame the Dems...Or maybe it was Ross Perot's wacky charts and graphs, except he was never elected....
Obviously, you can't blame Reagan, Clinton, Bush, Nader, Perot or even Harry Browne for the Cavalier (unless these guys had jobs at GM that I didn't know about.)
You can blame GM management that decided years ago to dedicate its business model to selling the same second-rate rental car at a discount under several different names. Uncle Sam had nothing to do with it.
Quite the obsession there.
So Franklin Roosevelt was responsible for the Cavalier? Thanks for the insight, I had no idea that he played such a pivotal role in 1980's automaking...
Delphi stock should then shoot through the roof since it only filed on it's North American Operations and will shut down 21 out of 29 plants. I wouldn't be suprised at all if Delphi becomes a 100% foreign firm with only having offices in Troy. It's very sad. :sick:
Rocky
Those 100,000 hands are all steering the ship right into the iceberg.
Then again they may be needed. Without the UAW breathing down the necks of Toyota would they pay as well as they do? I don't think so. UAW will need to make compromises to survive. So will GM & Ford. The future of Detroit is not real bright.
Looking at the salaries of top executives is not relevant. That is for the stockholders & board of directors to be concerned with. The Union needs to look at the overall health of the company. Executive pay is not an indicator of corporate health.
I have a sneaking suspicion that the Feds didn't know what to do in that situation. After all, it had never occurred before, as far as we know, that a union had an illegal sitdown strike, eh? Add some more news to this reporting if you would for us. I'd really like to know.
I'm not saying that they should have been allowed to sit down and force a resolve. Isn't that robbery, not necessarily at gunpoint to grab part of the big 'ole spoil? Isn't that what was going down? I mean, why should Henry Ford and family and close friends get all the take, right?
2021 Kia Soul LX 6-speed stick
Of course mistreatment of workers took place in some industries and some countries, just not nearly prevalent in the US auto industry or relevant to the alleged necessity/success of unions. Otherwise, we'd see agro-workers and sweatshop unions far bigger and far more successful than auto industry unions as those were industries where workers were really exploited. If you examine the UAW history closely, you'd notice that the seminal event that led to the successful unionization of American autoworkers was the GM Flint plant sitdown strike of December 1936. The point of contention was pay scale, not treatment at all. It took place at the Flint plant and was successful because GM was the most successful carmaker at the time and the Flint plant made the carbody for the volume sales leader from the company. An illegal strike by less than 2000 workers held up production by hundreds of thousands of workers for 44 days. Eventually the management gave in because the FDR administration had made clear to Sloan/Knudsen that the feds were not going to enforce laws against their union clients.
The extraordinarily high union pay really came after WWII, when Reuther pushed through a 17.5% wage increase, the largest single-increase ever. Once again, no mistreatment was cited, not even a provocation of outrage necessary. It was simply pushed through on the ground that the companies could afford it, and Reuther's anticipation that GM would not want its books open to public examination.
Like I said, unions, especially successful ones like UAW, are about slicing and dicing the monopolistic profits, at the ultimate expense of the consumers. Mistreatment and "necessity" is just a fig leaf for the soft ears. It's like towns raising taxes in order to pay for teachers and police; in reality, the revenue hardly ever goes to the sectors really need them. Workers in industries most heavily exploited, like agricultural workers and sweatshop workers, hardly ever had successful unions. It's the industries with monopolistic profits where workers that are already being paid way above average, like steelworkers, autoworkers and airline pilots that historically had successful unions.
In the real world, few are really honest or benevolent on their own accord (except for short moments of magnanimity at gallas). That's why competitive market place is necessary to enforce the best interest of the consumers.
In reality, multi-million dollar pay for CEO's is merely a fig leaf for the faithful. If we reduced Rick's salary to Zero, the savings would mean less than $10/yr for each GM worker. What difference does it make? If you are really critical of how the management is doing, perhaps more pay is necessary to attract better talent.
Ford was more than a "small potato" in the years prior to World War II. It was still the third largest car maker in the country, and well ahead of the "great independents" - Studebaker, Nash, Hudson and Packard. (And it may have still been the second largest car maker in the world, as its international holdings were much larger than Chrysler's at that time, although I don't have exact figures.)
brightness04: The extraordinarily high union pay really came after WWII, when Reuther pushed through a 17.5% wage increase, the largest single-increase ever. Once again, no mistreatment was cited, not even a provocation of outrage necessary. It was simply pushed through on the ground that the companies could afford it, and Reuther's anticipation that GM would not want its books open to public examination.
Are you referring to the Treaty of Detroit, agreed to by the UAW and GM in 1950? GM agreed to that contract in exchange for a multi-year (five, if I recall correctly) time span, and labor peace. At the time it was hailed by a wide spectrum of liberals and conservatives as a bold, visionary move by GM and the UAW.
The simple fact is that both the UAW and management (best personified by GM, which ruled the roost from 1940-1980 in the automobile market) were actually quite happy to keep paying high wages and allowing restrictive work rules to remain.
Why not? GM had over half the market. There was no real competition except for Ford, which wasn't inclined to rock the boat. The high wages and work rules seriously weakened Chrysler and AMC (and drove Studebaker out of business). They also hobbled the small-car efforts of GM and Ford, but let's face it - their hearts weren't really into it (and still aren't).
I hate to get in the middle of an argument here, but I just believe that both sides share a fair amount of blame. I'm "union neutral" - if the UAW and GM (or Ford) can build a car that I like, I'll buy it. I don't care if the workers make $200,000 a year for four days of work, with the entire month of August off as a vacation.
On the other hand, if they don't make something I like, I won't. UAW members have to stop acting as though I (and other car buyers) have some sort of obligation to support them in the style to which they have become accustomed. Spare me the "buy American" nonsense - these are global companies with manufacturing and engineering facilities around the world.
It's pretty simple:
-If the company doesn't offer products that people want, it will have a hard time selling them.
-When you make cars that are more suited for a rental fleet operator than a regular customer, then you end up with bland products that earn low prices and with dying brands.
-Products sold to discount buyers generate lower revenues.
All of these elements impact the Big 2.5, particularly GM. These circumstances are caused by short-term thinking led by management.
I don't particularly like the union, but it didn't create the bad designs or branding. You can spin it as you like, but that's the basic reason why GM can't sell cars.
People do feel emotionally about their reduced nominal income even if purchasing power of income does not change. Unions capitalize on that.
FDR administration, being beholden to both unions and bankers, simply refused to enforce property rights.
Workers work in a factory by contract; they have no more right to occupy the stations and refusing to work and preventing anyone else from working than tenants have the right to occupy an apartment while refusing to pay rent.
BTW, Ford was a relatively small player in 1936, being out-competed by GM and Chrysler for nearly a decade; Henry as a person however had a larger-than-life figure in the public imagination.