The collapse of the auto industry: are unions to blame?
According to the Indianapolis Star, in the year ending 2007, the median base wage for a GM blue-collar employee was just under $ 28 an hour. GM officials say the average is $ 39.68 an hour, when you consider base pay, cost-of-living adjustments, night shift premiums, overtime, vacation 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 a staggering $ 73.26 per hour.
Compare these outrageous hourly numbers with those of our Mexican counterparts. In June 2008, Ford Motor Company announced that its union had agreed to cut the wages of new hires to about half the current wage of $ 4.50 per hour. Starting wages at some plants in Mexico are as insignificant as $ 1.50 per hour with far less related pension and health care costs for US workers. The total cost of employing a worker in China is even less than the cost in Mexico. It is not necessary to analyze those numbers, as I think the point has been made quite clear.
The entire North American auto industry is on the brink of collapse and we wonder how the heck could this happen. The answer is pretty obvious. North America simply cannot compete with foreign automakers. Certainly not at these hourly labor rates. Unions carry a knife to the manufacturers’ necks for too long. Greed in its purest form has broken the back of the auto industry. The Union does not regret it because they have already spoken and declared that they refuse to make any kind of concession, even during the darkest hour of the industry.
Leadership on behalf of the Union is largely responsible. Cattle herders, if you will, who advise and lead their herd to fight to the end to get what they want. They do not take into account the economics of your demands. His stance has always been, give us what we want or we’ll take our ball and go home. In other words, they will go on strike. Once again, holding the industry hostage.
The talking heads of the Big Three have asked Congress to kindly hand over $ 25 billion of taxpayer money to help solve this crisis. Although this is a staggering number, it is certainly not the saving grace that 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 towards the funk it is in today.
Congress, it seems, is negotiating with the wrong people. They need to sit down with the United Autoworkers Union and give them a simple ultimatum. Either take some very deep cuts not only in your salary, but also in your benefits and pension, or the Government will break the Union and start again. Then, and only then, should the government consider providing financial assistance to this troubled industry. Hard, perhaps, absolutely necessary. I’m sure there are enough people currently on unemployment and welfare who would be happy 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 considering that we have college graduates and computer programmers currently unemployed.
The repercussions of a collapse in the North American auto industry are enormous. Imagine hundreds of thousands of workers no longer contributing to 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 United States government has just bailed out the financial sector with a payment of $ 250 billion. The collapse of the auto industry will result in a further collapse of the financial industry. Government brain trusts must determine how many of these auto workers are likely to lose their loans and mortgages if they suddenly find themselves unemployed. Those numbers will be staggering, and the ransom money will disappear faster than a box of donuts at a police ball. Of course, those of us who are still employed will be left to pay the bill through higher taxes.
The management of these companies cannot escape unscathed either. Although they are a contributing factor to this financial crisis with their multi-million dollar salaries and corporate jets, the Union consumes far more money than the administration. However, it’s time for these brilliant would-be CEOs to drop their Crackberrys, roll up their sleeves, and formulate a workable plan that can save North America from financial disaster. A plan that not only includes drastic cuts across the company, but also a plan that will make this industry competitive with other world markets.
Our nation cannot withstand a collapse of the auto industry. The impacts are so vast and the effects of the trickle so numerous that it would be almost impossible to assess the total devastation. It is essential that we resolve this crisis. The government must hold the union leaders and CEOs of these bankrupt companies accountable. Most importantly, we the people must hold our governments to account. After all, they are the ones giving our hard earned money to these bankrupt businesses.