Another touching story from the American heartland crosses our desk this morning, dealing with the dedicated efforts of labor unions to care for their workers and ensure the prosperity of the working class. The United Auto Workers have been in a long series of negotiations with the nation’s auto manufacturers in the latest round of contract wrangling. The result was a deal which should make everyone happy, if by “everyone” you mean the people running the unions. At the heart of the debate was the issue of outsourcing, where American companies ship their facilities (and all of the associated jobs) to other countries in search of cheaper labor and less regulation. Unions, of course, oppose this practice vehemently because it deprives their members (and potential members) of their livelihood.
Unless, that is, you’re running the UAW. (Washington Post)
Does the labor movement favor or oppose outsourcing? It seems a silly question, given the AFL-CIO’s vociferous opposition to the free-trade agreements and tax breaks that, the labor federation argues, abet the flight of good-paying manufacturing jobs abroad.
What makes the question non-silly is this: The United Auto Workers has just negotiated and ratified collective bargaining agreements with U.S. automakers, the foreseeable and, to some extent, intended effect of which is to facilitate shifting jobs to Mexico.
It’s a case study in the difference between labor’s political rhetoric, which is all about working-class solidarity, and collective bargaining, which is all about self-interest.
This is quite the sordid tale and it all seems to revolve around the last agreement they reached when the auto industry in Detroit collapsed. In order to get the factories back up and running after massive layoffs the unions agreed to a widely despised “two tier” pay system, wherein older, established union members who somehow managed to avoid the ax were able to keep their very good paying jobs and benefits, while new workers came in at far more “normal” pay rates and perks. This, of course, has led to a lot of grousing among the ranks, particularly when new workers were put alongside colleagues who were doing essentially the same jobs but making as much as three times the pay.
How will it be solved now? Under the new deal, the top auto makers will continue to produce trucks and SUVs here in the United States, but will shift production of smaller, more fuel efficient cars to Mexico. They’re not really making any money on the econoboxes anyway, so it’s an obvious plus for the manufacturers. So what do the unions get out of it?
To cut a long and complicated story short, the companies essentially agreed to solve that problem for the union, in return for which the union, which has a say on investment plans, helped the carmakers solve their problem: gaining access to cheaper labor somewhere in the world.
Ford and Fiat Chrysler have the most aggressive plans to shift smaller-car production to Mexico, where labor costs less than $10 per hour; the new contracts let the companies pursue those plans. Vehicles will enter the United States tariff-free under the North American Free Trade Agreement.
The first Ford factory affected may be the Michigan plant that once underwent a $550 million retooling for small-car production, as part of a $5.9 billion Energy Department loan. Announcing the loan in 2009, then-Energy Secretary Steven Chu declared “the most fuel-efficient cars in the world must be made right here in America.” Alas, low gas prices undercut demand for such cars and Ford couldn’t make money building them, at least not at UAW wages.
You don’t need any help reading between the lines there. If the automakers could have moved their facilities to right to work states where labor costs are lower, pretty much all of the jobs could have stayed in the U.S. But that won’t do for the UAW, so they’ll get rid of the lower tier workers who were doing the complaining by shipping their jobs to Mexico. The old, loyal union hands can then stay on in Detroit and keep on collecting the big dollars. It’s a beautiful thing, isn’t it?
The UAW is being blatantly callous and self-centered here. The only workers to benefit from this deal are the ones funding the unions. Everyone else can pretty much go pound sand. And after all the taxpayer money that went into “saving” the industry, this is apparently the thanks that we get. Well done, boys.