Professor Elam

Jason asked my opinion about the decline of the Big 3 automakers. Good question, but before I launch right into that it is necessary that you ramp up your knowledge of open shop, closed shop,  union shop versus right to work laws and particularly right to work states.

Take a look at the UAW web site. Go there and click on UAW history, skip intro, then click on the Fight for Ford 1937-1941. Read the story and see the pictures of workers beaten up by yes Henry Ford’s thugs, discouraging shall we say, union organizing efforts.  This ended in a strike by 50,000 workers.  IN ten days Ford capitulated and the Unions got everything they wanted including dues checkoff, right to organize and the same wages as Gm and Chrysler.  The thing to grasp is that spirit of us versus them still reigns at the UAW.  Consider Local 249 that built my Escape in St Louis, the fight for Ford was prominent on their site.  Everything is for the union worker to the exclusion of the globalization and movement of capital and now plants to right to work states. OK some definitions are in order.

A closed shop is a workplace in which one must join the union as a condition of employment, period.

A union shop is a workplace in which one must join wthin 30 days.

An agency shop is a work place in which one has to pay the dues but does not have to join the union, no I am not kidding, there is an effort in Iowa toward this very thing.

An open shop is a workplace in which one does not have to join the union.

A right to work law prohibits compulsory union membership.  One does not have to join the union to work there. Needless to say, unions hate this set up, they want everyone in so they have your union dues whether you want to contribute or not.  And they can force you to go on strike regardless of your wishes.  Learn more at National Right to Work Committee Site

So how do I know all this?  In high school we debated the proposition of a national right to work law.  In the process we won a lot of debates and learned a lot about this.  Such was the temper of the country in 1965-66 that this was a serious topic. 

I would say that unions overplayed their hand in the New York City shutdown during Gerald Ford’s short presidency.  AT the time the Mayor of New York was John Lindsay. Lindsay was saying that job was the second toughest in the nation after the president. What he really meant was that he could not deal with the ruinous union contracts that had been negotiated.  Garbage workers were making $40,000  and still going on strike.  NYC finally asked for a federal bailout and kinda sorta got it.  Which is to say they avoided bankruptcy. Read about it at NYC Drop Dead

At virtually the same time, the DFW airport was open for business.  And this proved to be an incredibly fortuitous circumstance. Go back and watch the original Dirty Harry movie as to where law and order, or what was left of it, was in that era.  Corporations started realizing, that with direct air travel via jet to Dallas, there were other alternatives, particularly in Right to Work States.  That started the migration and along the way coined the term Sun Belt as opposed to Rust Belt states.  J C Penny and others moved their headquarters to DFW.

When we were debating the National  R to W law, it was typical to see union leaders on the sunday talk shows. Now there is probably not a student in class that can name a union leader.  But then George Meany would sally forth and declare that if the unions demands were not met in whatever industry, they would shut down the industry. IF they did strike it was a battle as to whether the company had enough inventory and the strikers had enough in the strike fund as to who blinked first. But I don’t remember the companies ever  winning the day.  Read about George Meany, architect of the modern AFL CIO here. The trend these days of course is to hire a gorgeous near fashion model perfect woman to be your company spokesperson.  This was something Meany did not understand. He was short, bald, wore big framed glasses and constantly smoked a cigar, not a pretty picture. And frankly all those threats may have sounded great in the union hall but not in corporate America. But they were a beckoning sound to the south.

Virtually all of the plants were in unionized states and even here in Texas the union held sway through their power in those states.  Today Minnesota has hired actor Jeff Daniels, a MN native, as a public spokesperson asking companies to re locate to MN.  MN has had a net outflow of population and business as everyone continues to head south.  Today my understanding is that union auto workers make about $20-24r hour plus wonderful health benefits, while southern auto workers are making about $16. The difference is that Ford GM and Chrysler have tens of thousands of retired workers still living under the most generous health benefits imaginable.  They experience literally a legacy cost of $1500 a car that the foreign makers locating here do not. 

The result has been the re location of the new factories to right to work states.  A belt of plants and suppliers sweeps from the Carolinas down to now Alabama where the new Hyundai plant is located.  On my last trip to Mississippi, the poorest state in the nation, there were signs in the airport boasting of the new VW and Nissan plants coming or already in MS.  Gee times have changed.

Click on Hyundai Community Relations to see what I mean.

So that was  short history of unions and the UAW. The unions have never won a certifying election at the Ohio Honda plant. This is a result I think of enlightened labor practices in modern day America, and frankly the past reputation on national television of unions going on strike. I recall an interview with single mom in Tennessee. She said she could support herself and the children on what she made at the plant, but that she absolutely positively could not afford a strike.  And that has been the turning point for unions.

And it just gets worse. Realizing how many jobs a plant like Hyundai can create, southern states have upped the ante often beyond what the plant really offers.  Consider that in San Antonio, the city and Texas have fallen all over themselves to do any and everything for Toyota, tax breaks, now roads, you name it. Meanwhile over in Arlington GM gets zip nada since it is not creating any new jobs, only companies doing that get new tax breaks. So not only is GM saddled with legacy costs, Toyota, making billions while GM loses billions, gets tax breaks and incentives to boot! When it rains it pours.

Coming, the Hubris of the Big Three

DLE