Sunday, March 29

Could we please fire the UAW, too?

(meme) GM CEO resigns at Obama's behest

Everything I've read from economists (as well as everyone's favorite or most hated MBA blogger) points to the UAW stifling innovation at GM, Ford, Chrysler vis a vis other companies with plants in right to work states.

In principle I'm fine with workers organizing, but the sad reality is that they often do so very poorly. Instead of pitting management vs. labor, why not give all employees equity options? Then they can have some ownership in the company and work hard to make it better, instead of just seeking to leech ever-costlier health benefits off it once they retire.

The saddest thing about unions like the UAW is that they allow retired workers to vote in contract negotiations, thus turning once stellar companies like GM into giant health care and pension providers with a side business in building crappy cars.

By contrast, you simply can't blame auto executives for much if any of their problems. Do you think they wanted to run the company into the ground? Bollocks, their hands have long been tied by forced unionization contracts.

For instance smaller fuel-efficient cards like the Ford Focus are actually built and sold at a loss. These small cars are more labor-intensive than larger vehicles, which places these unionized companies at a serious competitive disadvantage. That's why the Big 3's most profitable business has been building SUVs and trucks like the F-150 — these models use relatively more parts than labor.

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