Thursday, January 26, 2012

Guest Post: Stupid Union Tricks:  The UAW's Grievance Against Ford

Stupid Union Tricks:  The UAW's Grievance Against Ford
By Anthony McCourt
​Old habits die hard. The United Auto Workers union is pressing a grievance against Ford Motor Co., arguing this month in continued arbitration proceedings that assembly workers are owed some money.  It seems that in 2010--Ford's second profitable year after losing almost $30 billion in the three prior years combined--the automaker reinstated raises, tuition assistance and 401(K) matches for white-collar workers. Since the company didn't give back concessions made by the union during the lean years, the UAW filed an "equity of sacrifice" grievance. The union is complaining that they didn't get any of the spoils of Ford's recovery until the new labor contract was ratified this past September.

​After three years of finally acting like they were living in a crisis, the union is sending exactly the wrong message. Last fall, UAW workers at Ford got the best four-year labor deal in Detroit. Each union worker will get about $10,000 in bonuses and profit sharing this year. Workers at GM will get about $9,000 over the life of the four-year labor deal. Chrysler workers get considerably less. Ford also promised to hire 12,000 more UAW workers and they raised entry level workers pay by between $2 and $3 an hour to get them above $16 for new hires. That's pretty good considering today's unemployment rate. Oh, let's not forget that the UAW represents about one-quarter the 1.5 million workers it had in its ranks in 1979.

​Let's hope that this isn't a return to the senselessness of years past for the union. To be fair, there was plenty of stupidity that led to Detroit's demise, and it can't be all laid at the feet of labor. Executives invested money and resources in non-automotive business at all of the Big Three. Then they sold those other businesses years later and uses the cash to buyout workers as they downsized the car business that they were ignoring. They let quality slip and fell behind in technology. The list of sins is long.

​The union demanded unsustainable benefits like indefinite paid layoffs which made labor a fixed cost. That made managing a cyclical business like making and selling cars almost impossible. They got to retire after 30 years, sending a generation of 50-somethings on the pension rolls with free healthcare for life. Those retiree costs were a loadstone on Detroit balance sheets for years and a nasty hit to the income statement. Retiree benefits played a big role in sending GM and Chrysler into bankruptcy.

​Over the past few years, the UAW has come to its senses. A healthcare deal in 2007 unloaded healthcare costs into a Voluntary Employee Benefits Association that pays medical costs the way pension funds pay retiree benefits. That stripped the costs off the income statement. GM used to pay some $1,600 a car in healthcare costs. That's all gone.

​New hires on the assembly line start in about $16 an hour. That was a big concession by the UAW. The starting pay was $14 an hour until the new labor contract was ratified. In inflation adjusted dollars, that $14 an hour the same as Henry Ford's $5 a day. Talk about America moving in reverse. With that concession in 2007, the UAW set manufacturing wages by a century.

That's where the union needs to focus. Forget about duking it out in arbitration just to get a check for veteran workers who already make $28 an hour, which is almost all of Ford's union workforce. Those workers will still retire after 30 years with a defined benefit pension and a better medical plan than most people have. It's the new laborers, the ones starting at $16 an hour with much weaker benefits that the union can help. If they are at loggerheads with management over another check for the well-aid old guard of union workers, the UAW will have wasted political capital that could have been spent giving a new generation of factory workers a hand up.


Monday, January 02, 2012

Do you wonder why the US can't compete anymore?

Do you wonder why most US businesses can't compete in the global markets (unless they have moved everything except their headquarters overseas?)  

I hope not.  

We are being stomped like a narc at a biker rally by most of the rest of the world because their costs are lower. You get it. But why? In large part because employers in the rest of the world don't have to deal with nonsense like this:  the EEOC in what amounts to a private letter ruling has just said that an employer requiring a high school diploma to get a job might violate the Americans With Disabilities Act on the theory that fewer mentally challenged people actually graduate from high school.  No, this is not a joke.

The story is here:

What's next?  I would bet even money that the government will soon take the position that requiring a high school diploma discriminates against blacks and other minorities who don't graduate from high school in the same percentages as caucasians.  We shall see.

In the meantime, some advice:  Get out now while you still can.  Move your production to Singapore or Hong Kong if you're high tech and to Mexico or Brazil if you're not.  If you are in a service industry who can't leave, bend over.  The federal agencies under Obama don't even pretend to be fair anymore and if you have to hire illiterates, so be it.



Sunday, January 01, 2012

Debt and Unemployment: Government Cuts Numbers From Whole Cloth

As we have pointed out in this blog throughout 2011, the government's numbers, whether GDP, debt, growth, inflation, or unemployment, are pure fiction. Perhaps the most perplexing are the debt and unemployment figures released by the federal government regularly which bear no relationship to reality and on which businesses rely to make critical decisions. Even more disturbing is the blind acceptance by mainstream media and the people of these fabrications.

Thanks to WorldNetDaily for the following summary rarely reported by mainstream media. The story can be found at:

"The true rate of unemployment and inflation and the real state of the U.S. economy . . . is far worse than reported.

"When the Obama administration prepared to finance a 2011 budget deficit expected to top $1.6 trillion, the American public was largely unaware that the true negative net worth of the federal government reached $76.3 trillion last year.

"The figure was five times the 2010 gross domestic product of the United States and exceeded the estimated gross domestic product for the world by approximately $14.4 trillion, according to economist John Williams.

"Statistics compiled by Williams, based on the 2010 Financial Report of the United States Government, demonstrate the real 2010 federal budget deficit was $5.3 trillion, not the $1.3 trillion reported by the Congressional Budget Office.

"The difference between the $1.3 trillion "official" 2010 federal budget deficit numbers and the $5.3 trillion budget deficit is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.

"The government cannot raise taxes high enough to bring the budget into balance," Williams said. "You could tax 100 percent of everyone's income and 100 percent of corporate profits and the U.S. government would still be showing a federal budget deficit on a GAAP accounting basis."

"Meanwhile, the government's own statistics showed in December that if the same number of people were seeking work today as in 2007, the jobless rate would be 11 percent.

"While the Obama administration touted a November unemployment rate of 8 percent, much of it was a result of people leaving the labor force, not because they've become sick or too old, but because they have been unable to find a job and have stopped trying.

"What's more, the seasonally-adjusted rate adjusted for long-term discouraged workers – who were defined out of official existence in 1994 – was more than 22 percent in November.

"The Bureau of Labor Statistics broadest measure of unemployment, which includes the short-term discouraged and other marginally attached works, along with part-time workers who can't find full-time employment is more than 15 percent.

"Methodological shifts in government reporting also have depressed reported inflation. If inflation were calculated the way it was in 1990, the annual rate would be nearly 7 percent."

Read more of the most ignored stories of 2011?