The UAW's Connundrum

Posted by: David Welch on May 1, 2008

There’s little arguing that American Axle’s initial demand that its union workers take a 50% pay cut is harsh, maybe even excessive. That $14 an hour wage would be less than union workers at some rival parts makers earn. And given the fact that American Axle is pretty healthy and has a nice flow of business from General Motors, undercutting some other parts wages might not be needed.

But here’s the problem facing the United Auto Workers. They have very little leverage. About 80% of the company’s business comes from GM. The auto maker ‘s dealers have plenty of pickups and suvs despite the fact that the two-month strike has idled or reduced production at 10 GM assembly plants, most of which make trucks.

Now the UAW has even less leverage because GM’s move to cut a shift at four truck plants means they don’t need the truck axles that the striking UAW members aren’t making. In fact, an American Axle plant in Mexico can make enough parts to give GM what it needs so long as those shifts are cancelled. Sure, the strike is hurting American Axle. But the company has plenty of cash. And GM won’t intervene to help solve the strike. Unless truck sales take a sharp and very unexpected turn upward, GM won’t need to get involved. And so the picketers will march on, but for what?

Reader Comments

Snoz

May 2, 2008 12:23 PM

This article shows editor's connundrum not UAW connundrum. At $4/gal gas, $14/hr wage is barely living wages after tax deductions. The core problem is GM not selling enough cars to support higher wages/benefits of workers in the auto biz. If GM commands its once-upon-a-time 80% domestic market share, GM would not have any problem paying over $20/hr to workers in the auto supply-assembly-industry sectors. The high wages will be also sustained if Ford's market share increased as GM's decrease. That didn't happen. Instead, the leadership at both auto makers and at the smaller Chrysler failed the American people. The once icons of American industrial power and pride, GM, Ford, are now shadows of their former self. Mismanaged Chrysler went bankrupt under Townsend,later sold to Mercedes and resold in a fire sale to Cerberus. Ford nearly went bankrupt under Nassar and Henry Ford Jr II and the current CEO Mulaney needs a GPS gyroscope; GM's 3 stooges, Wagoner-Lutz-Wellburn, have managed to destroy this once proud American company: Share prices plunged from $70 to $19. Following myopic leadership of Roger Smith of the 80's, for next ten years these 3 clowns have not only destroyed GM and shareholder values, but weaken America industrial base. The harm is more than economic because the American people have lost the prestige, pride, and power to once 2nd rated foreign companies: Toyota, Nissan, Honda and even to lowly Mitsubishi, the Rodney Dangerfield of japanese carmakers. The Cadillac, the once world icon of American success, prowness and dignity is now relegated to some dark corners left to die while Lexus, Mercedes, and Infinite bask in the lime-light. Handicapped from negligent and mismanagment for over 20 years and almost left for dead, Cadillac's current market effort is hoping for a resurrection. Short of a miracle, Mercedes, BMW and Lexus will not offering assistance. Praise the GM leadership for that stroke of genius. Undisturb, the 3 clowns sleep like babies, laugh like comedians, eat like glutons because after nearly ten years at the helm they have sock-in over $300mil in their bank account not including corporate perts. For the auto worker trying to feed his family, his story is not quite so cheerful. During the last 30 years, auto workers faced repeated layoff, wage-cut concession and reduced benefits. The future of GM is cloudy because the same "Old Boy Network" rather go down in flame than remove the 3clowns. Look no further than the appointment of "Fast Talking" Fritz. He is your typical GM big talker but can't walk the walk. While at Ford, its CEO is walking right off the shoulder. Under Mulanely, Ford is tauting voice activated entertainment systems while even the cellphone companies are hanging up that technology. Mulanely's big contribution at Ford, a new slogan: Ford. Drive One. Mulaney's honeymoon at Ford is over. While foreign car makers are moving forward with efficient/economical hydrid/plug-ins, the Big3 have bet heavily on pickup trucks and SUV. No one should be surprised that GM lost $3.3Billion last quarter. Ford and Chrysler won't fair any better next quarters. At GM, the failure is not entire caused by the 3clowns. Some blame rightly goes to their board of directors, while to lesser extent the big institutional and large shareholders. These boards are guilty for not dismissing and scrutinizing the ineptitude of the current batch of actors trying to be businessmen. Unfortunately, most of these board of directors are part of the same "Old Boy" network and hence part of the same old problem. During 1950's, the zenith of American power and prestige, there was a proud saying that what's good for GM is good for America. As a writer, it is painful to acknowledge its corollary today. It should be painful to all Americans to see 3clowns plus one standup comedian jeopardize America's future.

Noz

May 2, 2008 5:03 PM

I don't recall that picketers were ever classified as bright people, but rather very much like sheep, the very back spineless bone of unionism. Sooner or later their strike fund will dwindle, hard times will be more clearly in sight. Members may even have to sell their GM-branded gas hogs and opt for a Toyota Tacoma, something well built, reliable, and more affordable in terms of fuel and the entire vehicle-owning experience. Of course they will then have to park out on the street, wear their ball caps really low when behind the wheel, all the usual survival devices forced on them by their fellow 'brothers'. The may also be forced to get their excess body weight under control, but when is all said and done, they may also feel better about themselves.

Shifting all axle the work to Mexico Is an excellent slap in the face of the unrelenting bullies/sheep who make up the UAW. As long as the Titanic is on the way down, no point in not getting them caught up in the vortex. In fact the scramble for the few life boats will be entertaining to watch, bosses first and all that...

Ken in VA.

May 4, 2008 2:10 PM

I don't understand the thinking of the UAW. The call strikes during a sagging market when manufacturing needs to be decreased. The strike at American Axle made GM look around and they have discovered they can manufacture enough vehicles to meet their needs without the striking factories. If it shows they don't need the factories, they may be closed.

Locally here in Virginia, the UAW just settled a strike at the local Volvo truck plant. They were warned of an impending layoff due to the slowdown but they went ahead anyway which may have actually helped the company cut their inventory. They settled the strike and then about 1/3 of the workforce was laid off. They are also currently striking a local defense contractor that has almost closed the factory several times due to low demand. The current strike likely will be the final nail in the coffin and the plant will be closed. They seem not to understand it is between working cheaper or not working at all.

dianne

May 4, 2008 11:29 PM

the uaw, gm and aam all colluded to get this deal. aam gets to pay less wages and reduced benefits; gm gets to reduce their inventories and the uaw gets an inroads to tier 2 and 3 auto parts companies. the workers get the shaft. gee, who's the biggest loser in this one?

EmployerReport.com

May 5, 2008 5:32 AM

Ron Gettlefinger and his cronies miscalculated heavily and are now perpetuating their mistake by allowing this strike to continue.

As every unionist (former or otherwise) knows, the strike is a union's only weapon and for a union to pull the trigger without making sure its gun is fully loaded and correctly aimed is not only irresponsible, but borders on a negligent dereliction of a union leader's duty--to care for his membership first--not to lead them to slaughter.

Oscar Stratten

May 5, 2008 5:38 AM

Healthy? AAM had a net profit of $37M on stockholder's investment of $1B. I don't consider losing 10% of my investment one year, then getting 3% return the next as healthy. I could put my money in a Bank CD and get a better, guaranteed rate. Compared to Delphi, Dura, and Dana, this may be good, but look what anemic returns got those 3 companies. (starts with "B")

Anthony Overfield

May 5, 2008 8:49 AM

The workers will March on to protest the low wage economy. Its pretty sad when Multi-National Corporations force people into poverty for a "Cost Savings" less than most people pay in sales tax. There are many other ways for a company to be competitive, destroying human lives shouldn't be one of them. http://groups.google.com/group/american-axle

Les Hunter

May 5, 2008 11:42 AM

Now that the UAW has struck the plants making the Malibu mybe this work should also go to Mexico? The Automobile industry is going the path of the US Steel industry.

David Sawton

May 7, 2008 12:20 PM

Hey NOZ, come over to the Toyota dealership and see my Tacoma. It's been in the service bay for the last two weeks with a stalling problem. Not to mention in the last year and a half it had to have the u joint replaced, rotors replaced due to warping, brake booster replaed, new condenser, new window motor, and the paint has began to peel. This is a 2006. Toyota's quality is a JOKE!

ballbuster

May 8, 2008 4:28 PM

I would appreciate bloggers who has special and personal interest not to exploit this site. It appears that certain individuals have been using this blog site to complain about the quality of Toyota vehicles to further their personal agenda. I suspect some of them are workers/owner at car dealerships.

jjw

May 15, 2008 1:34 PM

Ballbuster,

Toyota HAS been having some quality problems of late, but it is interesting to see than despite the EVEN WORSE quality problems of the Small-3, there is a disproportionate amount of complaining about Toyota. And by the way, Small-3 shills - INITIAL QUALITY is NOT the same as LONG-TERM Reliability.

After decade of shoddily-made vehicles, American Consumers are no longer fooled by your BS. It will take DECADES of making quality cars to reverse this well-deserved reputation - not a few years of good "Initial Quality".

No one is fooled by your fake posts...

billkennedy

November 25, 2008 11:05 PM

it seems to me that the day of the worker getting a decent
wage is gone

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