A UAW-free General Motors: the consequences
George Reisman, professor of Economics at
Pepperdine University and author of the book Capitalism: A Treatise on Economics, attempts to answer the
question of where would General Motors* be today without the United Auto Workers. Some of his ten conclusions
include:#1. GM management could fire inefficient employees without worrying about a strike, resulting in higher quality vehicles.
#2. GM would be able to use more efficient, lower-cost methods in building their products instead of negotiating it with the union to the point of creating 'phony' jobs to placate the membership.
#6. GM would not be paying $140,000 per employee to leave.
#10. GM workers, without the union benefits, would be motivated to consider saving for the future instead of threatening for more money from an already financially-strapped company.
Hmmm. A bit harsh but perhaps there are some grains of truth in there. Opinions? Shout out in comments.
*Reisman does state his analysis also applies to Ford Motor Co. and Chrysler. He chose GM for his example since it's the largest automaker.
[Source: Ludwig von Mises Institute]
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Reader Comments (Page 1 of 6)
Antonio Gantus Filho 10:41AM (4/21/2006)
The author is completely right. This UAW thing is dragging GM and other American auto companies down the drain. Absurd to say the least. This is something we only see in developing nations...In America, there should be no such thing. Are you in a comunist state?
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Kevin 10:41AM (4/21/2006)
I'm just glad to hear someone finally say things like this.
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Ben 10:45AM (4/21/2006)
Unions are obsolete.
To keep it around is to not progress. To not progress is to not profit.
Shift the cheap labor to other countries so that people on this continent take care of more important business matters - thus increasing the average wage (in North America) and becoming more competitive globally.
It's about time GM made the change. They cannot ignore the economic shift.
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hj 10:46AM (4/21/2006)
Right on #1. I'm sick of hearing unions whine, bitch, and moan about "evil corporations screwing the working guy" when everyone can look at GM for the last 25 years and see what the unions have done for US industry.
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Vinny 10:48AM (4/21/2006)
(Well this posting will show up on the list for the most comments for sure now.)
This is not new news. It's what I and many others have been saying on here. Unions are a parasite.
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Michael Karesh 10:56AM (4/21/2006)
Most executives are also parasites, or worse.
Seems we're in for another round of union bashing. But let's not forget that unions are not responsible for most of GM's current issues.
Were unions responsible for the G6 GTP's dreadful manual shift feel?
Were unions responsible for the much criticized interior of the CTS?
Were unions responsible for the mushy cloth seats in the Solstice?
Even on quality issues, anyone who has worked on cars knows that parts either go together precisely and easily, or they don't. Design the parts and assembly process well, and manufacture the parts precisely, and assembly quality will be top notch. The engineers are at least as resonsible as the assembly workers.
I'm not a fan of unions, but I cannot stand simplistic, superficial perspectives. Many people want to blame the unions for everything, and it just ain't so.
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Chris 10:59AM (4/21/2006)
I could go on and on, but I'll make it short.
Unions SUCK!
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SEA 11:02AM (4/21/2006)
I think GM, Ford & Chrysler should slowly transfer all their operations to South East Asia where unions arent pigheaded like the UAW.
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James Sonne 11:05AM (4/21/2006)
#6, Those are all cost cutting measures that were taken because of the situation GM is now in; a situation that the UAW definitely helped to create via unfair wages, opportunistic threats, and other such communist endeavours. Poor quality GM products didn't make the unions nasty, but nasty unions made GM products poor in quality.
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dfi 11:08AM (4/21/2006)
Don't korea and japan have unions? Why aren't their auto industries in the crapper?
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Vinny 11:08AM (4/21/2006)
Michael Karesh:
Yes, the unions are responsible. I feel they laid the foundation that started the problems. They eat off of the business so much that money can't be spent on good research and development or put into place efficient processes because the investment capital they need is going to some guy playing domino's in the break room!
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John 11:09AM (4/21/2006)
This phony pieceofcrap has never worked inside of a auto factory or he would not have written such a piece of shit article. Thge uaw workers are not GMs problem it is mismanagement by the boss. The workers have given up several things in the past and present to keep the mismanaged company afloat. All of you non working ass holes need to get a real job and find out what is like to put your life on the line every day to work in one of these factories. I did for over 30 yrs and worked both sides of the so called fence and have seen all sides.
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Ed 11:09AM (4/21/2006)
I agree with his points from the perspective of basic economics, but I disagree strongly that GM would be building fantastic, high-quality vehicles if not for the Unions.
A moron is a moron. Roger Smith without the UAW to deal with is still Roger Smith. Penny-pinching, talentless, greedy executives are what they are, and the fact that they could have paid their workers less without the UAW doesn't mean they wouldn't have continued to cut every corner and thrown one shoddy product after another on the market.
So the author is correct in his _factual_ points but the point about vehicle quality is absolutely ridiculous and conjectural. The Cadillac Cimmaron was not the UAW's idea. Nor was the last three decades of badge-engineered crap. It's really easy for the GM management to sit there and say "Gee, if we could cut costs we'd be spending so much more on product development" but you have to be brain-damaged to believe it. How much money does it take to put a Pontiac GTO badge on a Holden?
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dave 11:10AM (4/21/2006)
I'm with Karesh ... the product has been sub-par for too long. The $500 or whatever added to each vehicle for legacy pension costs isn't enough of a price hike to keep most buyers away. While the unions are certainly to blame for their part--after all, they're responsible for a lot of the extra cost, not to mention holding their ability to strike over the execs--but the designers and engineers are equally to blame. To add to Karesh's list of GM issues ...
The unions didn't add plastic body cladding to evry Pontiac imaginable
The unions aren't responsible for the GM's worst-offender badge engineering (Cadillac Cimmaron, anyone? No? How about the Saab 9-2x? 9-7x?)
Shall we continue?
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Ian 11:11AM (4/21/2006)
#6 I would maintain that the unions are in fact responsible for those decisions. Think about it like this:
If GM weren't paying union extortion rates they could have hired more/better designers and engineers to rectify the quality issues you point out.
If GM weren't paying union extortion rates the labour price per car would be reduced and more luxurious materials could be fitted while keeping the price of the car constant.
But to be fair it does take two to tango so GM's management is just as much to blame for caving to the unions.
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Ed 11:13AM (4/21/2006)
But hey, why let "reality" or "logic" get in the way of a good union-bash?
Sometimes this comment board feels like a Rush Limbaugh call-in. So many angry, dumpy middle-aged white guys just dying to go off about how greedy blue-collar people are and how smart and hard working they are in comparison.
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Lawrence Phoenix 11:13AM (4/21/2006)
Gee, all that GM needs to return to greatness is turn the clock back to a 1904 Robber Baron era where employees were seifs to be worked until maimed or dead with no health,safety,retirement or wage requirements. Prof Reisman's brillantly insightful with his Life-time tenure and perks to dream about at Pepperdine..SHEESE!
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eVox 11:13AM (4/21/2006)
While I agree with #6 about poor engineering leading to poor quality I also have to say this:
With unionized workers dragging companies like GM down with large benefit packages and such, GM must cut costs to stay competitive. This may be in the form of paying or hiring less qualified engineers,using inferior materials, and reusing the same parts for many cars (chassis, interiors). These are what I believe causes the poor quality of american cars.
However, it isn't just the unions causing this, it also has a lot to do with things like supply.Example: it is much more expensive to ship steel to the US than to Japan.
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Ryan S. 11:14AM (4/21/2006)
Hey!
GM singed the contracts also, was it the chicken or the egg?
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snap 11:14AM (4/21/2006)
General Comment: In my mind, unions are the most non-capitalistic entity in existence. Yet, in America we seem to love being hypocrites. Unions falsely inflate the cost of doing business in industries that they reside. I could go on, but this is my belief, and felt it important to note before respondin to Michael's comment.
To #6:
To answer your rhetorical questions, no the unions were not directly responsible for the manual shift feel in the G6, nor the interior of the CTS, nor the mushy cloth seats in the Solstice. They were indirectly responsible for those problems due to the fact that GM's cost of producing cars are inflated due to the absurdly high costs unions place on their operations. As such, GM was diverting too many resources to its "labor" force rather than its design force and quality control force.
The bottom line, in my opinion, is that the UAW, and unions in general are hurting the industries they're in. Greed benefited the union workers in the short term, but look at what it's done in the long term. Airlines are bankrupt, automakers are hemorrhaging money and losing market share to foreign manufacturers. The unions are nothing but a leach in this picture, and they need to be cut off immediately.
-snap-
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