Posted by: David Welch on February 26, 2008
Here we go again. The United Auto Workers walked out on American Axle yesterday amid a dispute over wages and benefits. UAW President Ron Gettelfinger said in a statement that the company wants to cut pay from $23 an hour to $14. The company also wants to cut retirement benefits from a defined pension plan to a 401(K). We’ve seen this play out at parts makers Delphi Corp. and Dana Corp already, not to mention for new hires in certain Big Three auto plant jobs.
In other words, compensation for factory work is headed toward, say, being a barista at Starbucks. I don’t like it any better than anyone else. We’re talking about just one more example where middle class wages are being slashed under the threat of moving the work to Mexico or other low-wage countries. It’s not good for the families getting hit by the cuts, nor does it help the businesses trying to sell them anything.
But here’s the problem. The union has very little leverage. American Axle can move the work to factories in Mexico. Since other parts companies have already won lower wages, some as low as $14 an hour, the union workers can’t make much of an argument for middle ground. Even at, say, $18 an hour they would be a cost burden compared with their American rivals. And what of General Motors? The company buys a lot of the parts firm’s axles for its large pickups and suvs. But with the housing market and gasoline prices hurting demand for both, GM has plenty of inventory to ride out a strike. The UAW may be flexing its muscles with a strike, but don’t expect it to change much.