Friday, July 27, 2007

Automakers blaming the wrong people

The United Auto Workers (UAW) and the big automakers in the U.S. have begun negotiating a new labor contract. Two of the biggest points of contention will be workers' pay and health benefits.

There is a two-tiered pay scale. Employees with high seniority get paid on average about $28.00 per hour and relatively new employees get paid half that. The companies will want to reduce the pay for the high seniority employees at least and maybe the lower seniority employees also.

Members of the UAW have among the best health care benefits anywhere. For the first time more members are retired than currently working. Health care benefits have been estimated to cost companies about $1500.00 per car sold. So the companies will want to roll back health benefits for workers and maybe retirees also.

The companies will claim that lower pay and reduced health benefits are necessary to remain solvent. Implicit in this claim is that the workers are to blame for the poor economic situation of the companies. This clearly is not the case.

The most basic reason that the companies are in trouble is that they don't sell enough cars either in the U.S. or abroad. The workers don't decide which cars to make. Executives decide which designs to put into production and in what numbers and what markets to target and how to market to them. The workers make what and how many they are told to make. When executives stumble workers tumble.

1 comment:

big buddha cheese said...

I think the combination of unions and the obvious superiority complex of these companies’ executives contributed to the downfall.

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