The New Industrial Relations in the Automobile Industry

George Orwell · Oct 10, 2007

The recent negotiations in the automobile industry mark a radical

departure in labor relations. The once powerful, militant and innovative
United Automobile Workers has seen its membership decline dramatically by
at least two-thirds over the past two decades and has been unable to
unionize the transplant companies (the Toyota, Honda and Nissan plants in
the US) or much of the auto parts industry. The so-called Big Three
Automakers (Honda, Ford and Chrysler) are under now severe economic
pressures because of the low-cost transplant companies.

Collective bargaining in the Auto industry now means taking a step back
for the union. Gains are rare; rather the union seeks to protect past
gains. The traditional form of collective bargaining--patterns
bargaining--in which the UAW settled with one company and then, under
threat of a strike, imposed that settlement on the other companies, has
become largely outmoded. GM, Chrysler and Ford are now quite different
companies in their products, profitability, workforces and plans to turn
around. GM has a plan for revival that entails growing by narrowing the
hourly compensation between it and its main competitor, Toyota (a gap of
about $30 per hour). Ford, with huge recent losses, merely seeks to become
more efficient by closing plants and maintaining a smaller share of the
auto market. Chrysler, the true wild card in all this, is controlled by a
private equity firm, Cerebus, and is focused more in a short term return
on in investment. The union has threatened a strike against Chrysler but
the company will not be willing to make a long term investment in
protecting job security (indeed it plans to cut jobs) or investing in a
union operated fund to continue the health care benefits of retirees (GM
agreed to such a plan).

The result of the change in auto industrial relations is great
uncertainty; what plants will remain open? Which companies can get the UAW
to agree to terms that will ensure its survival in the short and the
long-run. A strike of more than a week's duration could easily drive Ford
into bankruptcy and Chrysler might chose a similar route and divest itself
of more profitable divisions, closing others, and become profitably
quickly. Seventy years of labor history at the Bid Three has been turned
on its head. These negotiations are three distinct confrontations and
their outcomes will determine which companies can stay afloat in this sea
of international competition, which workers will keep their jobs and which
retirees will keep their benefits. There are no happy endings.
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Joe · Oct 14, 2007

quickly. Seventy years of labor history at the Bid Three has been turned
Oh, that's not true. Just the fact that you can have a $30 an hour
discrepancy with domestic competition shows that the union workers still
make way too much. The mismatch alone is more money than 95% of the world
makes. They were paid 5 times too much back in the 70's, and now they're
only paid 3 times to much. No problem. Anybody with a manufacturing job in
the USA should be very happy.

The happy endings were for everybody who got out back when the pensions were
still good, and also for everybody who's too smart to spend all his money on
shiny stuff.

That's true in every industry, not just the auto industry. It's bad that
they're losing market share, but the problem exists for everybody, whether
you're losing share or not. People used to have 10 children, now they have
1.8. We're selling products into a shrinking market, with a shrinking work
force.

The New Industrial Relations in the Automobile Industry

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