Labor's Dark Days

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.

Reader Comments

Chris

February 26, 2008 2:54 PM

I'm all for the working man, but I am also for the best price on products - so I really could care less where it's made. So if the GM car I see for sale can come down $5,000 simply by adjusting manufacturing costs, isn't that BETTER for the consumer? I can't imagine getting paid $65 an hour in wages and benefits, when I know some sucker is laughing about it. My own doctor doesn't make that much and he saves lives! How much is life worth again? Not much...

Noz

February 26, 2008 9:10 PM

Mr. Ficklefinger is playing with fire again, and I predict he will get burned--again. Times are a-changing. Is he not fully aware of this? America is now buying from the world, not just our over-priced union shops. Perhaps he should check the labels on his tee shirt and shorts, pants as well, not to mention his outer shirt and tie if he wears one. And curiously enough, if he is fair minded and good at assess-ing quality, he will find them better made and less costly than what the Women's Garment Workers Union 'slaves' used to cobble together. Needless to say, the retailers are doing OK selling things for less, their margins have not suffered all that much. And when they lag, they do the American thing and tin back the low-cost staff. Again!

I rather imagine that the factory associates with HONDA, Toyota, even BMV, are surviving. doing rather well, in fact--when compared with their alternatives--or not. Certainly the quality of their output continues to beat that of of the Failing Three. The sad fact is that the UAW and others dug themselves a hole over the decades. This, while we the buyers were over their barrel. Now the straps have rusted, the staves are caving in and we hear nothing but bitching and moaning when we turn elsewhere for locally made and imported products of superior quality.

I have to add that the executives of GM, 'Chrysler', and Ford, GM's Wagoner and Lutz to name just two abusers, are not particularly hurting. Nor are they leading. In fact they are not even following the world-class leaders very well.

Pete Kusnick

February 27, 2008 9:05 AM

Is this a first strike,a preemptive preventative measure against a factory closing?

Christy Gavagan

February 28, 2008 2:18 PM

If wages are cut -THE PRICE OF CARS WILL NOT GO DOWN!!!! - WAKE UP!!!

Christy Gavagan

February 28, 2008 2:19 PM

If wages are cut -THE PRICE OF CARS WILL NOT GO DOWN!!!! - WAKE UP!!!

minWageWorkerCensor

March 2, 2008 4:35 AM

Don't talk too loud because the idiot censor are afraid of losing his $7.50/hr job. Idiot censor wants you to say that the leaderships at the Big3 are doing a fantastic job. It's called advertisement dollars wagging the tails of the idiot censor. Free trade favors the big corporation who pays 8 digit figure salary to their directors while they send your manufacturing job out of the country because you need a raise to pay for the higher gas price. But the idiot censor are controlled by the big corporations so no one dare to say anything, else they lose their medical coverage and parking space. We have all become a nation of willing slaves who oppress other slaves thinking it will gets us better lives. It's zero sum; going nowhere for the workingperson. When there is no hope of moving ahead in life, slaves will gamble with housing speculation(flipping), oil speculation(current frenzy), stocks of dot.com(past frenzy), lottery (buy your hope), and Indian casinos (diversion from despair). Rome probably ended the same way.

Thepeople

March 14, 2008 9:28 PM

Dear Chris, labor is on average 8% of the cost of a new U.S. union made vehicle. As a result the minimal savings to be had by destroying the manufacturing base of this country will be very expensive indeed! Good luck job hunting and feeding your family.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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