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How the Unions Killed Detroit
What’s actually to blame for the deep debt plaguing Detroit? Peter S. Boyer writes in this week’s New Yorker that it was the long-held arrangements with unions and workers, which began in 1937, when the U.A.W. became the sole bargaining agent for the nation’s autoworkers. While foreign car manufacturers might not have matched General Motors, Chrysler, and Ford in wages in the early 1980s, they played it smarter—specifically, Nissan built its first plant in a place with fewer union workers, whom they also paid less. “The fact that the Big Three couldn’t run a factory the way Nissan did in Smyrna [Tennessee] partly explains why, in the current crash of auto sales, Detroit finds itself in starkly more dire condition than the transplants,” writes Boyer. The pensions and benefits were what caused “the labor costs of a G.M. vehicle [to be] roughly fifteen hundred dollars more than what it cost to produce a car in the transplant factories.” As G.M. hinges its hopes on the all-electric Chevy Volt, Boyer writes, “If the Volt redeems even a portion of its promise, it will be a remarkable, and most unlikely, achievement.”
wolverine1987
I worked for the US companies for years, and this is unambiguously true.
squiggy
Amen! The market not the union sets wages and worth. The unions were a great thing when sweatshops and child labor was the thing but the unions have become just another big business that sucks up resources which should go to those who produce with them.
maser2002
Labor costs need to be cut, but $1500 should not kill a car deal. I think it is all about design and meeting consumer needs. Where have the Detroit designers been? How come the attractive concept and cutting edge designs rarely make it to the showroom? When was something as innovative from a design perspective like the Mustang launched. PT Cruiser? HA - what a waste. Come on, Detroit keeps making SUV's and has forgotten about the pride and passion of car ownership.
Truthseeker
Playing the blame game isn't going to help solve the crisis; besides there's more than enough to go around. Yes unions contributed to the auto debacle, but let's not forget that the CEO of GM KILLED THE ELECTRIC CAR. Management also shifted away from popular sub/compacts towards gas-guzzling SUVs because they were more profitable, in the short run.
phileobak1972
spoken like a true union apologist!
Ritarita
Well
Truth
I completely
Agree with you
On all points
Guess
That makes me a
Union apologist
Who
Knew
?
sonofloud
Gee, I thought it was when GM closed most of it's auto plants and moved out......guess I imagined the 80s.
ldcreo
I am so tired of this nonsense. It's not the unions that hurt Detroit. It was short-sighted management that refused to create products that people wanted to buy. I pay more for my foreign-made car becaust I know it will start every day when I put the key in; because it is safe and reliable; and because the service is always stellar. I would gladly pay more for an American-made car if these things were true about them. But they haven't been. Stop blaming the working guy!
squiggy
We aren't blaming the working guy. We are blaming the unions for making cars too expensive to afford for the working guy. We are also blaming the unions for setting up benefits they can't pay and the tax payer is paying it. We are blaming the unions for growing themselves like government, wasting money like government and then screaming like government when they have no hand in production beyond collecting dues. They serve only the function of raising wages and benefits beyond capacity and expecting everyone else to pay for it! Useless entity in this economy.
luelue
The fact remains, regardless of the union question, that focus on short term profit rather than long term benefit, as well as outlandish executive compensation, and a shortsighted energy efficiency policy, lousy product design, dealership saturation, have all conspired to contribute to the failure of the U.S. auto industry. To focus on the union question alone is to put blinders on and cover ones ears, shouting, "I'm not listening, I'm not listening."
xlntcat
This is an uninformed skewed point of view. The Japanese auto makers in the U S are heavily subsidized by Japan and by whatever state they located in. Whereas it is true that they aren't old enough to have the heavy legacy cost that the American auto makers have, if you took away all of the cost associated with labor, the U S auto makers would still be in trouble.
Years ago when GM was the biggest corporation in the world I worked for their finance division. It was white collar and wasn't unionized, but as such we got the benefits without the down side of unions. It was a high stress job and the expectation was that every employee would produce 10 hours work in 8 hours. Misstakes weren't tolerated. Well over 50% of my coworkers used uppers or valium to get through the day.
GM still sold more vehicles than any other auto maker domestic or foreign in 2007. You can't say that they weren't making autos that people would buy. It just isn't true. Somewhere along the line there had to be extremely poor management and bad business decision to get them in the position they are in.
mburgh
Typical business nonsense. Unions formed to combat exploitation and GM spent time, effort and money to combat workers and enrich top executives. Their cars, which ought to have been the first thing on GM execs minds, were the last. Blame the UAW all you want, but who in their right minds wants a GM vehicle? They haven't built a solid car in years, while Japanese and German manufacturers have paid attention to quality. Also, please remember that Japanese and German workers have a national safety net and so do not require a local (and therefore deeply expensive) safety net.
Auto plants in right to work states pay too few taxes, and take resources out of the economy, a devil's bargain made by Southern economies devested of their manufactories though export to 3rd World nations. The result? A whole in America that is dragging us all down. Blame the UAW? Blame Reagan, Bush, Rove, Milton Friedman and others who conspired to sell off the assets of our nation like they were bankruptcy shisters.
squiggy
Honda plants are slowing down as well but they have managed to keep the unions out and they are not folding like GM. Go figure! Yes they are subsidized by their governements, for R&D, not labor costs!!!!!!!!!! What does that teach us?
connie47
I can't pronounce this a fact because I'm not inside management at a Japanese auto manufacturer, but I've read from a number of credible reporting sources that these plants that opened in the '80s hired primarily young people and have not yet hit the retirement/pension problem. If true, I'd like to see how they're doing after that date.
paconportola
So the unions got a contract. Well, so did the auto makers. The contract needed both parties to agree. Management signed and that makes the unions the bad guys. What's that about responsibility?
woodnut
The headline should read, "How greedy CEOs Killed Detroit."
jprieto75
Thank you... everyone blames the unions who fought to keep their jobs and no one blames the multi-millionaires who actually had the deciding power to run their own companies into the ground. The unions negotiate wages, benefits, job security. The execs decide quality-cutting short cuts so they can make a cheap car, charge a lot of money, and keep their high-priced lifestyle. Fine, cut the worker's pay to match a foreign car worker's pay... let's cut the CEO pay to match the foreign maker's CEO's pay as well... I doubt that would ever happen
mskitee
GM management and the UAW killed Detroit. The billions the UAW paid lobbyists and made in campaign contributions to crooked politicians would have been better spent investing in research and partnering with GM to keep the company viable. The UAW lined their pockets and did nothing for the employees they were supposed to represent (sounds like congress). None of those union dues ever go back to the employees.
Radicalmoderate
PLEASE!!!
What a bunch of TIRED GOP TALKING POINTS!!!
Why doesn't somebody do a calculation on how much the fat and worthless Upper and middle management of these auto makers add to each car. And then compare that to the Japanese.Oh, and remember who it is that is "managing" these corporations that are tanking.
larry1541
Detroit became a mecca for automobile production in 1915 when Henry Ford offers workers $5 a day to work in his factories. He worked them hard for this wage and even controled their social life. 1927 was the high point for the city. We have two auto industries, one in the North and one in the South. One is union and one is non-union. Chrysler produced more cars in the province of Ontario than in Michigan and the reason was free health care provided by the government. There is blame to go around, with unions and management. I was told by oldtimers in the fifties to stay out of the auto industry. It was numbing work. I watched workers head to bars after their shifts to do their shot and a beer routine. Some took drugs just to get through the numbing work. Finally, after using American brand names for most of my life, I brought foreign name plates and have never looked back. Many of us left the area in the sixties and know we will never return.
roger37
I remember Roger Smith, CEO of GM back in the 80's, saying, "Real Americans will never buy many cars made in Japan or other foreign country." And about 4 years later, the Honda Accord was the largest selling model in the US.
Bonehead marketing and product planning, but also bonehead "legacy" costs forced by the unions. Big Three are forced to pay not only pension payments for retirees, but also health care costs, correct? That's crazy.
I worked at the management level in another manufacturing industry for 40 years, and other than pensions that evolved into 401k's, I had to take care of my own retirement (along with my Social Security which is about $30K per year, with my wife's). Why couldn't the UAW have expected the same?
I agree with the concept of unions, because I know how greedy little businessmen will screw their own people if given the chance. But somewhere the unions have to practice restraint and keep themselves free of corruption.
connie47
Well said. I hate to get all biblical on you, so I'll just say good luck with human nature abandoning greed in favor of common sense.
Thank you.
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