The collapse of the auto industry – Are the unions to blame?
According to the Indianapolis Star, in the year ending 2007, the median base wage for a GM blue-collar employee was just under $28 an hour. GM officials say the average hits $39.68 an hour, when you factor in base pay, cost-of-living adjustments, night-shift bonuses, overtime, holidays and vacations. Health care, pension and other benefits average another $33.58 per hour. This brings the total average cost of employing a single GM worker to a staggering $73.26 per hour.
Compare these outrageous hourly numbers to our Mexican counterparts. In June 2008, Ford Motor Company announced that its union had agreed to reduce wages for new hires to approximately half the current wage of $4.50 per hour. Starting wages at some plants in Mexico are as paltry as $1.50 an hour with far less than the related pension and health care costs of US workers. The total cost of employing a worker in China is even less than the cost in Mexico. There’s no need to dissect those numbers, as I think the point has been made quite clear.
The entire North American auto industry is on the brink of collapse, and we wonder how this could possibly happen. The answer is quite obvious. North America simply can’t compete with foreign automakers. Certainly not at these hourly labor rates. Unions have been holding a knife to manufacturers’ throats for far too long. Greed in its purest form has broken the back of the auto industry. The Union has no regrets as they have already spoken out and stated that they refuse to make any kind of concession even during the industry’s darkest hour.
The leadership on behalf of the Union is largely responsible. Cattle herders if you will, who advise and direct their flock to fight to the end to get what they want. They have no regard for the economy of their demands. His stance has been consistently, give us what we want or we’ll take our ball and go home. In other words, they will go on strike. Once again, holding the host of the industry.
The talking heads of the Big Three have called on Congress to graciously hand over $25 billion of taxpayer money to help solve this crisis. While this is a staggering number, it’s certainly not the saving grace the auto industry requires. A Band-Aid on a gunshot wound won’t stop the bleeding. Without becoming more competitive with foreign markets, the auto sector will gradually regress to the funk it is in today.
Congress, it seems, is dealing with the wrong people. They need to sit down with the United Auto Workers Union and give them a simple ultimatum. Either take some very deep cuts to not only your wages but also your benefits and pension or the Government will break up the Union and start over. Then, and only then, should the government consider providing financial aid to this struggling industry. Hard, perhaps, absolutely necessary. I’m sure there are enough people currently on unemployment and welfare who would be happy to work in this industry for $15 an hour with limited benefits and a small pension program. And let’s face it, most of these positions require the smarts and dexterity of a monkey, so the supply pool should be quite large when you consider that we have college graduates and computer programmers currently on the dole.
The repercussions of a collapse of the American auto industry are enormous. Imagine millions upon thousands of workers no longer contributing to income tax, health care, pensions, or unemployment insurance. Instead, these same workers now become a burden on our society as they all rush the unemployment line at once.
The United States government just bailed out the financial sector with a payment of $250 billion. The collapse of the auto industry will result in a further collapse of the financial industry. Government consortia of experts must determine how many of these autoworkers are likely to lose their loans and mortgages if they suddenly find themselves unemployed. Those numbers will be staggering, and the ransom money will disappear faster than a box of donuts at a cops dance. Of course, those of us who are still employed will foot the bill through higher taxes.
The management of these companies cannot escape unscathed either. Although they are a contributing factor to this financial crisis with their multi-million dollar salaries and corporate jets, the Union consumes far more money than the administration. However, it’s time these so-called brilliant CEOs put down their Crackberrys, roll up their sleeves, and formulate a viable plan that could save North America from financial disaster. A plan that not only includes drastic cuts across the company, but a plan that will make this industry competitive with other global markets.
Our Nation cannot withstand a collapse of the auto industry. The impacts are so great and the trickle-down effects so numerous that it would be almost impossible to assess the total devastation. It is critical that we resolve this crisis. The government must hold the union leaders and CEOs of these bankrupt companies accountable. Most importantly, we the people must hold our governments to account. After all, they are the ones giving away our hard-earned money to these bankrupt companies.