UAW: What side of the fence are you on?

This article will inevitably open up a passionate debate about the pros and cons of Unions, but that is okay, because good debate is the point. Free speech is what America is all about, so keep it clean and civil, and voice your opinions in a well written manner.

During the past several weeks the United Auto Workers union has methodically walked off the job at GM, then Chrysler, and soon Ford. Their beef is quite simple – they believe that auto-workers should have it good when times are good in the automotive industry, and that they should also have it good when times aren’t so good – such as presently, where Ford has just lost a record $12.6 billion dollars.

In no other private industry are there such feelings of entitlement by the workers as in the US auto industry. When the ‘dot-com’ bubble burst in the late 90’s a flood of skilled laborers were forced jobless with nothing more than a coffee mug and pens bearing the names and logos of companies once holding tremendous promise. In the current economy, where financial institutions such as CountryWide are laying off 10,000 workers due to the sub-prime mortgage crisis, again these workers are not left with the security of life-long pensions and health care. So why should members of the UAW, or any other union, be treated any differently?

Unions were created back during the labor movement of the ’20s. The concept was valid, and necessary, in order to ensure worker safety and rights in a time where our government was immature in this regard. There weren’t the laws, regulations, and government agencies (such as OSHA) as today, actively protecting the rights of all workers.

Unions have quite frankly evolved into labor cartels – manipulating the supply of labor in order to drive up its cost. Just read some of the comments from UAW president Gettelfinger last week:

“…solidarity in the ranks has produced an agreement that protects jobs for our communities and also protects wages, pensions, and health care for our active and retired members.”

“…UAW workers made it clear to Chrysler that we needed an agreement that rewards the contributions they have made to the success of this company.”

And look at these terms, “the agreement delivers substantial economic gains to active workers, including a $3,000 signing bonus, two 3 percent lump sums and a 4 percent lump sum.”

There aren’t too many companies in America that don’t reward its workers when the company is successful? Goldman-Sachs, the investment and finance company, after a tremendous 2006 fiscal year, gave out $16 billion in bonuses, with ‘bottom of the rung’ employees earning at least $100k.

The employees of places like Goldman-Sachs also share in the potential downside. They accept that if next year is a bad year, they may not get any bonus. If the company goes under, they are out on the streets with no lucrative pension or salary guarantee.

Regardless of which side of the fence you choose to be on regarding the UAW, one thing is for certain. No matter how much collective bargaining the UAW puts auto-makers through, it will have no impact on the top-line, and no impact on the demand for US automobiles. It will, however, continue to impact the bottom line for these companies. When a publicly traded company like Ford continues to hemorrhage stock holder equity, there eventually comes a day when the company is forced to shut-down and cease operation. Who wins then?

I hold the strong opinion that it is time the government limit trade unions to very basic, non-wage and benefit, functions such as safety, standardization, arbitration, etc. So long as unions exist, unionized workers will be viewed as commodities, whose pricing is set as a whole and not on individual merits or the normal market forces of supply and demand. Their earning will be averaged and capped, and this rewards mediocrity. It prevents workers from differentiating themselves, and creating higher demand for the individual – thereby increasing ones own chances of greater reward.

Think about it. Why is it that all factory-line autoworkers, whether they work at GM, Ford, or Chrysler all make relatively the same wage? Shouldn’t you have the opportunity to earn more if your company is doing better than the competitors? Shouldn’t you earn more if you are a more skilled and valued worker than your co-workers? Shouldn’t you have the freedom to take your experience to another company that needs it, and thereby earn a much higher salary for your skills?

We’re at a significant turning point in the US automotive industry. Time will soon tell if the industry is to recover and make it, or if it will dwindle away. One thing is undeniable, the cost of labor is a significant cause for the current turmoil, and that cost is controlled by the unions.