The UAW Will Forever Handicap Ford, GM, and Chrysler

Members of the United Auto Workers (UAW) are not an homogeneous group. Most are conscientious, hard-working, and fine examples of everything that’s right with American manufacturing. This post will discuss unreasonable wage demands and video of UAW members drinking and smoking marijuana during their lunch hour, but it is in no way meant to slander the UAW’s hard-working majority. The issue isn’t the average autoworker – it’s the system that the UAW has created.

UAW Work Rules and Compensation Helped Kill GM and Chrysler

There’s no denying that the UAW had a role in the collapse of GM and Chrysler. While, there’s plenty of blame to go around – most of which resides on the heads of foolish and over-compensated executives – the UAW’s “culture of entitlement” led to 50+ years of ridiculous work rules, wasteful policies like “jobs banks,” and regular wage and benefit increases regardless of the health of the parent company. Ultimately, the UAW’s share of the profits at GM and Chrysler (and to a lesser degree Ford), was a significant contributing factor in the collapse of the US auto industry in 2008.

In 2009, it seemed as if UAW leadership began to recognize the severity of their situation. Members – at the urging of union leadership – agreed to wage and benefit reductions, less onerous work rules, and other significant job changes that helped make GM and Chrysler viable. It seemed as if the UAW’s members and leaders understood that things had gone too far…but then all the goodwill started to unwind.

Despite decades of “pattern bargaining” precedent, in 2009 the UAW refused to grant Ford the same concessions they had given to GM and Chrysler. Analysts viewed this move as an emotional reaction to losing so much power, but I viewed it as a sign that the UAW leaders and members failed to understand the significance of the moment.

Sadly, evidence is mounting that the UAW leaders and members have learned nothing from the last 18 months.

Exhibit A – UAW Leaders Threaten Ford

Ford’s recent success is heartwarming. Sales are up, new products like the Ford Fiesta and the EcoBoost F150 are capturing the interest of automotive journalists, and profits are returning. Ford is still a company deep in debt, mind you – Ford owed $34 billion in debt in the first quarter of 2010 – and Ford CEO Alan Mulally has acknowledged that this debt load is a “competitive disadvantage.”

While Ford isn’t in danger of collapse, the $2.6 billion in profits earned in the 2nd quarter of 2010 should be weighed against their enormous debt. Unfortunately, UAW leaders don’t seem to recognize that Ford’s financial situation is still somewhat compromised. After learning that Ford was earning solid profits, UAW President Bob King began telling members he would request that all the UAW concessions made in 2009 during the industry collapse should be given back in the next bargaining session.

The thing is, characterizing the changes agreed to by UAW members as “concessions” is like calling a triple bypass a “minor procedure.” The UAW didn’t make concessions last year – they agreed to give up ridiculous work rules that hampered growth, exorbitant compensation compared to non-UAW autoworkers, and benefits that were far out of whack when compared to the rest of America. In other words, the UAW agreed to put a stop to the policies that killed GM and Chrysler.

By asking for things to return to the way they were before, UAW leaders (and the members who support them) illustrate just how poorly they grasp their situation. If Ford, GM, and Chrysler can’t find a way to show UAW workers that things can never be the way the used to be, the US auto industry may be doomed to repeat the collapse of 2008.

Exhibit B – Poor UAW Member Accountability

If we polled 100 different managers in 100 different companies, the offenses perpetrated by the UAW members in the video below would likely result in immediate termination.

Before we discuss the drinking and pot-smoking, let’s get a few things straight:

• I realize these UAW workers are the exception to the rule
• I recognize that these actions are symptomatic of a substance abuse problem
• I think the fact that workers will receive substance abuse counseling is excellent
• I think workers of all kinds and all companies do this every day

The point of this video is to illustrate that the UAW has created rules that make firing the worst types of workers impossible.

UPDATE: 13 of the 15 workers seen in the video above have been fired. However, according to comments from self proclaimed UAW members on this news article, this is not a normal UAW response to drinking on the job.

Put yourself in the shoes of a conscientious, hard-working auto worker. If you see the guys down the line get buzzed every day at lunch while you bust your hump, how long until you start feeling a little silly for working so hard? How long until you decide to “mail it in?” How long until you grow to resent your co-workers, your company, and your job?

Union rules makes firing these workers impossible. While I’m not certain that all of these guys deserve to be fired (I think there’s something to the idea of providing counseling first), it’s hard to imagine that this is a first offense for all of the people in the video. The fact that Chrysler can’t fire any of these workers (they are all on suspension pending an “investigation”) is outrageous. What good is a union if it allows people like this to remain employed? How long until other members lose interest in the job?

Some will say that the video above is an isolated incident of workers behaving badly, but that’s simply not true. History is rampant with stories of UAW members behaving poorly – the old GM plant in Fremont California:

“had a reputation for poor quality, poor workplace morale, and excessive absenteeism. Former plant workers recall that alcohol, sex, and drugs were quite common, and the line wouldn’t stop for anything. Engines were put in backwards, and cars made it to the end of the line with the front end from one ‘badge-engineered’ model and the body and trim of another.

Anecdotal evidence is just that – anecdote – but there’s no denying UAW members had a role in producing inferior products for most of the 70’s, 80’s, and 90’s. While things have changed – quality at Ford is on par with Toyota and Honda – the video above shows me that things haven’t changed enough.

Bottom Line

Based on comments made by UAW President Bob King, it seems inevitable that the UAW will demand more and more compensation – regardless of the health of the parent company or the clear lessons of recent history. Combined with the UAW’s inability or unwillingness to hold their members accountable to the same workplace standards as the rest of America, it seems that Ford, GM, and Chrysler-Fiat are faced with three awful truths:

1. When they make a profit, the UAW will demand more.
2. When they lose money, the UAW will refuse to accept less.
3. The UAW will never deliver the quality and/or efficiency of a non-union workforce because they don’t hold workers accountable.

For these reasons, these companies will forever be handicapped.

What do you think?