The U.S. economy depends a great deal on auto manufacturing for its strength. But in 2008, two of America’s largest car companies, General Motors and Chrysler were in the tank. The U.S. government stepped in and taxpayers became temporary and unwilling owners of both GM and Chrysler. Ford, the third major American carmaker, bailed itself out in the old fashioned bootstrap method of mortgaging their own property and making a narrow escape.
The “Big Three” of American carmakers became the “Big Two” since, as the result of the deep recession of 2008-2009, the government handed Chrysler off to Italian carmaker Fiat. Fiat currently owns all of the former Chrysler brand but still banks on successful former American brand names like Jeep.
The United Auto Workers delivered a lot of swag to American auto workers-higher than average wages, fantastic pensions, empowerment in the workplace-but the one thing it could not deliver was continued success for GM and Chrysler. When revenue outflow becomes greater than revenue inflow, the worker eventually loses as the companies go bankrupt as GM and Chrysler did.
The power of the giant auto worker’s union is being tested in Tennessee now where workers in the Chattanooga Volkswagen plan are voting this week on whether or not to join the United Auto Workers Union. Automotive News reports that 1500 workers at the Chattanooga plant will be affected, but that the vote could affect U.S. plants of BMW, Daimler, plus Japanese and Korean manufacturers who also make cars in the South.
We are not in the early days of the industrial revolution. Modern manufacturers have recognized that worker input is necessary to higher efficiencies in manufacturing and to employee loyalty. Wages In the non-union foreign owned auto manufacturing plants in the South are higher than average and benefits are generous.
It is not coincidental that car companies, foreign or domestic, do not establish new plants in states like heavily unionized New York. In fact, gravity pulls car companies to the South where right-to-work laws give workers a full menu of choice.
The irony in the upcoming Volkswagen vote is that Volkswagen is in favor of creating a worker’s council where both union and management will decide together on the best practices and happiest outcomes for the manufacturing of successful marques like Volkswagen Passat.
One would think a worker-management council could be easily built. But anyone who thinks that doesn’t know American labor law. U. S. labor law, written mainly by the auto worker’s union and their champions in congress, forbids the establishment of such councils unless it is under the auspices of an contract made with the UAW.