Wednesday, March 01, 2006

What Happens When Unions Take Over

What happens when unions take over? Very little. Just take a look at the front page article in today's Wall Street Journal on General Motors and the UAW "Jobs Bank". Here is a short excerpt:
This is the "Jobs Bank," a two-decade-old program under which nearly 15,000 auto workers continue to get paid after their companies stop needing them. To earn wages and benefits that often top $100,000 a year, the workers must perform some company-approved activity. Many do volunteer jobs or go back to school. The rest must clock time in the rubber room or something like it.

It is called the rubber room, Mr. [Jerry] Mellon says, because "a few days in there makes you go crazy."

There's quite a lot wrong with this situation. First of all we are hearing news come out of General Motors that they're going bankrupt because car sales are down and the company is going to have to lay off thousands of workers and close a plant or two. But to hear that some of the most inefficient automakers are paying employees to sit around and do nothing is simply outrageous. What happened to the days when the likes of Carnegie and Rockefeller would go to any length to cut costs? Cost-cutting must be archaic in today's automobile industry.

As you can see in the graphic to the right, the number of workers in the "Jobs Bank" has increased by a large margin since this time last year, 47% in fact. Just sit down for a minute and think about why this institution is even out there. Now let me tell you why; the unions that represent a large portion of the American automobile industry employees will not allow these workers to be out of a job unless the plant they work in is shut down. As long as there's a plant, there is something for these workers to do. And by something, I mean sitting in the "rubber room" or any number of other "company-approved" activity.

The best thing for the automobile industry to do if it wants to remain competitive is to file for bankruptcy and void their union contracts. With the unions no longer calling the shots, General Motors and Ford will no longer have to allow thousands of workers to soak up salaries while taking classes on crossword puzzles and Trivial Pursuit. Costs will fall and workers will be forced to do their jobs more efficiently. Vehicle prices will subsequently drop and American automakers will pick up the chunk of market share that has been lost in the past few decades to hyper-efficient Japanese automakers who are building increasing numbers of factories here in America.

If America's automakers don't become more competitive in a hurry, they'll find their old factories rebuilt with a foreign name on the walls ...

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