Markets Prevail

... Unless you're a megabank that can get the government to give you free money when you louse up. The rest of the time markets .... soon or later ... call the tune. Witness this from the Times of New York:

... The U.A.W. tried to persuade the Ford Motor Company to build the Fiesta subcompact in the United States. But Ford chose a plant in Mexico, where the combined wages and benefits of a production worker total less than $10 an hour. By contrast, a full-wage union member in the United States costs G.M. close to $60 an hour. Even an entry-level wage employee costs about $30 an hour in wages and benefits.

While it is not the only factor in producing a profitable subcompact, lower employment costs were critical to the decision to build [General Motor's new sub-compact] Sonic in Michigan. In a groundbreaking labor agreement, the union allowed G.M. to pay 40 percent of its union workers at Orion Township an “entry-level” wage that sharply reduces overall production costs.

“The entry-level wage structure was an important enabler, because obviously the smaller the car the less the margin,” said Diana D. Tremblay, G.M.’s head of labor relations. ...

Call this the flip-side of the recent BMW warehoue closing.

In the present case, the union and the car company were motivated to reach an accord for making the Sonic plant happen, so the deal got done.

Unions, like most corporations and normal human beings, have to deal with the realities they find in the actual world. Sometimes reality can be held off for a while (see "Sachs, Goldman") but most times, the cold hands of hard facts drag the borderline delusional back from positions that no longer hold up, much as they would like those positions to prevail.

I recall, two decades ago, the angry debate inside meetings at the IATSE. The IA would present a new, albeit "concessionary" contract to the assembled business agents, many would angrily denounce the "lousy rates," the "lousy conditions" and vote the deal down.

But over time, as more work went non-union, this attitude changed. More contracts that were less than Basic Agreement ideal were approved and came into existence. As a high-placed IA official said to the assembled multitude of union reps (which included me):

"The work's out there. The cable movies are getting done, the cable shows being made. And your members are doing them. They're just doing them without getting any benefits. The question is, you want the work done under a contract, or done non-union?"

It would be nice if everybody could get maximum wages with maximum bennies. But markets, as we say, have heavy influence. Yet unlike BMW in California, here General Motors and the UAW compromised with each other (and the forces of buy and sell) to keep employees working. Kudos to them.