When someone in power says something totally ridiculous I think it’s our duty as bloggers to point it out.
The CEO of Chrysler, Robert Nardelli, recently called the labor contract workers signed under duress “revolutionary” and “a major step forward for us”.
It’s odd that now the top dogs at companies don’t even look at these concessions workers make as sacrifices. CEOs of days gone by used to have their tails between their legs, thanking employees for making painful cuts, even though they may not have felt it. It was the civilized thing to do, no?
The deal, narrowly signed into life by about 56 percent of assembly line workers, creates a new pay structure that basically translates into as much as a 50 percent cut in pay for new hires. Many auto veterans balked at signing such an agreement because they saw it as turning back the clock on all the advances the union and workers made.
Believe it or not, many of these men and women see the job as a great way to live the American dream. Many of their own children may decide to follow in their footsteps. Some have chosen that route. But cuts in wages, many say, was a slap in the face.
Nardelli seems to brush aside the workers’ concerns. The New York Times quoted him today about whether he was worried that so many employees didn’t sign the agreement:
“I would suspect some of it is just an uneasiness about change.”
Indeed, there’s an uneasiness. But it’s not about change Bob. It’s about going backwards economically in America. That’s revolutionary.
October 30th, 2007 at 9:08 am
I live in Detroit and see the foundations of the American automotive industry crumbling. More and more Americans are buying foreign made cars. This shift, which hurts many from coast to coast, is due partly to the exorbitantly high wages paid to Detroit’s autoworkers. Laborers with little education and alot of overtime are making professional salaries - often in the 6 figures - for tightening a bolt or driving a forklift.
Certainly quality issues of the past, poor management and hard-to-die impressions by consumers are part of the reason why Detroit’s Big Three are in trouble, but there is no denying that the wildly generous salary and benefit packages paid to autoworkers are out of step with their skills.
Detroit has one of the highest unemployment rates in the country. Jobs are moving out of the country where wages are much lower. Unless more Americans start buying more American made products, we will see the ripple effect of this exportation of our dollars affecting more than just the millions of autoworkers and their suppliers. One way to stem this tide, is to keep costs for new American cars competitive - one significant way to manage this is to pay more realistic wages for automotive factory jobs.
October 30th, 2007 at 9:33 am
Hey Greg,
I’m all for people buying American goods. My family has been on a mission to buy no products made in China. A very difficult mission I might add, especially with birthdays and Christmas coming. 90 percent of toys are made in China.
On your point about wages, I don’t know about you, but $29 an hour in wages for a veteran auto worker doesn’t sound like a lot to me. I’m sure you’ve been in an auto plant and know the jobs these men and women do is tough.
What do you think is a “realistic” wage in today’s economy?
Here’s an interesting story:
http://www.usatoday.com/money/autos/2007-10-28-uaw-middleclass_N.htm#uslPageReturn
October 30th, 2007 at 9:39 am
Well, I risk being the villian here during my first day visiting your blog. The simple truth is that employee-related costs are the biggest expense in nearly every enterprise. The auto makers are now facing market conditions that make the writing on the wall very clear: cut costs and long term obligations immediately if you hope to survive to rebuild. Unfortunately, most unions today operate under the assumption that they can negotiate more and more with each successive contract, without realizing that those actions may end up shuttering the businesses that provide them employment.
That said, the auto industry bears fault for not anticipating the market forces that came to bear, and for not being proactive about re-examining their focus and choosing to do only what they can do best. In that way, the industry executives are at fault, but so too are shareholders and investors. There is, all too often, a focus on producing short-term results for the benefit of the shareholders without much consideration for the long-term sustainability of the company. That’s not even considering the executive compensation quandry–starting cuts at the top would go a long way to ensure workers that executives are negotiating with the best interest of the company in mind, rather than just fattening their own wallets.
October 30th, 2007 at 9:50 am
You are right HikingStick…employee costs are one of the biggest chunks but they are a fact of life for employers. Many unions have realized they have to give away a lot at the bargaining table. It’s been a long time since any union walked away with more than they had going in. It is a sign of the times. But what I’ve noticed is a disregard for the sacrifices workers make, not just in the auto industry. Look at what happened with Northwest airlines. The union handed over huge concession and then, when profits started to come it, nothing was given back to the workers, but the top executives made out with sweet packages.
There should be a spreading of the pain. No?
October 30th, 2007 at 11:18 am
I agree. That’s why I think cuts should start at the top. If a company is in such a tight spot, executive compensation should be radically altered. Companies will cry “Foul!” and claim they need to pay competitive salaries to attract the “right” execuctives. I believe that’s a myth. The problem is that we, as a nation, have developed an “executive class” that has established its own standard of living and expectations for salrary, benefits, and other perks. The ones who need to make the changes are the ones who would lose the most (the same problem we see in Congress–gee, how I would love to have their retirement plan!), decreasing the chance that change will ever be made.
October 30th, 2007 at 11:24 am
Very good point!