May Day worries

By Felix Salmon
May 4, 2009

Today (or Friday, May 1 itself) is a bank holiday in most of Europe to celebrate May Day, a slightly more explicitly socialist version of America’s Labor Day. And it happens with unions increasingly involved in strategic business decisions around the world: the UAW is soon going to control Chrysler and have a very large stake in GM; the German autoworkers effectively have a veto over whether Fiat’s Sergio Marchionne can fulfill his ambition of creating an intercontinental automaker spanning Italy, Germany, the US, and Latin America; and the outcome of tense negotiations with its biggest union will determine whether or not Boston still has its own daily newspaper come next week.

I’m happy that the pendulum is swinging back towards labor and away from capital, after having swung far too far in the direction of the plutocrats. But the pendulum carries a poison tip: as the world sinks deeper into the worst global recession in living memory, unions are going to have to be much less antagonistic and much more helpful and strategic if they’re going to preserve the long-term sustainability of their industries.

What are the chances of that happening? It probably varies from industry to industry; when it comes to autos, it’s almost unthinkable that the UAW could manage things more disastrously than the people who have been in charge until now. But unions in general, and large, powerful unions in particular, tend to be lumbering and conservative beasts at the best of times; there’s precious little evidence these elephants can dance, either alone or in concert with the likes of Marchionne. Governments can try their best to chivvy things along, but ultimately it’s going to have to be up to the unions’ membership and leadership to recognize that radical internal change is required to turn things around. I’m not hopeful.


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Well done, Felix, Unions have been out of it for years. I share your cconcerns; I’m sorry to say that they are a good fit with the current American business illiteracy.

Posted by Andrew Franks | Report as abusive

If “German autoworkers effectively have a veto over whether Fiat’s Sergio Marchionne can fulfill his ambition of creating an intercontinental automaker” then I suppose American businessmen are not the only poor benighted fools in the world. Unions do not sign agreements with themselves. If management can’t figure out a way not to give away the store to unions, whose fault is that really?

Posted by may | Report as abusive

I do think unions should have a new approach and goal, so that it makes it advantageous to have a union shop. I think they should pay for worker training, manage the worker health care, and make sure that they have a full crew on the job when work commences. This would make them a very important part of business and valuable. They would have to share in the profits and losses also.


Posted by f belz | Report as abusive

From what I have read over the years, my impression is that business-oriented people, on the whole, will think unions are \’cooperative\’ when they consent to let their wages approximate those of workers in the third world. Financial executives seem outraged at the idea of that after years of failure and cumulative losses, their bonuses should be decreased. And U.S. executives, of course, would be shocked at the idea of letting their renumeration decrease even to those of executives in the rest of the first world.

And you wonder why unions don’t want to be ‘cooperative’ on your terms. What a miserable bunch of role-taking failures you are.

Posted by mm | Report as abusive

Unions are a parasite entity…they bring nothing to the table except their “representation” of the working man. Which usually involves them putting the employer and employee at ends of each other. Let me refresh everyones memory. Through persisitance and less-than-ethical tactics the unions have been a key factor in the fall of american auto companies. Compare the foreign car builders to the american ones and many things are similar with one aspect in particular being very different…union involvement. Foreign auto workers dont have the constant drag of unions making the profit margin small or non existant. If a worker were to take the money they pay in dues and the the money they pay for union benefits and create their own IRA or retirement fund, the money would be better spent. The unions’(take your pick) track record for money management is horrible. The teamsters have mismanaged the retirement fund so poorly that they want the employers to make up for their mistakes with a thing called “employer compensation”. Without it there will be many hard working teamsters who wont get their retirement because of lack of funds. It will be interesting to see what happens when the uaw are the employers…I think when they are put to the challenge to pay all the rediculous wages and health care fees and keep the company in the green, we wont see the same behavior we’ve seen in the past. In any event I dont have high confidence in american auto companies right now. Only time will tell.

Posted by jonh q public | Report as abusive

Unions threaten and bully companies until they get what they want. If this means the failing of the company, so be it. I watched the uaw slowly erode general motors over the years with demands for this demands for that. I want to know what the union and the employees think a factory line worker ought to make. If you stand on a line and put the hood emblems on an automobile you cant expect to make what a doctor makes…its a fact of life, life is hard sometimes. Many americans have lost track on how economics works. There are so many that are ok with not looking out for themselves and letting a union take care of them. Well our current state of affairs attest to this. Hopefully this economic situation we are in will highlight the inneffective and inefficient ways of business.

Posted by danny t | Report as abusive

I agree. Any one here who has supported union involvement in business has never had any type of business ownership or personal stake in a business, they are only employees. Support for unions only come from those with no personal interest in a particular company. All the employees and union people forget that without these business owners they would all be jobless on the street pan handling. It would change these peoples’ thinking if they had to run the show and make the books balances jive. Its the “im just looking out for myself” attitude and the ignorance on the topic that make our system weaker.

Posted by BP | Report as abusive

it is known that the unions have destroyed american industry with their outrageous demands. the auto industry has gone to the asians, the steel industry is gone, manufacturing has moved south and overseas. the us has become a consumptive nation as opposed to the day when we were a productive manufacturing nation. the unions, as is well known, have been a source of income for the mob for years. only in the uaw can you receive
all your benefits for not actually working. try that in the real world.

It should be known that union membership in the US has steadily declined since the end of WWII. The auto industry has steadily along with that. The interesting thing to note is that the UAW made increasing demands for benefits as they saw their viability erode. The demands only led to both their own demise as well as that of the automakers. It is simply not possible to manufacture an automobile competitively in the US with union labor….not possible. The public complains that the quality of the cars does not compare to that of foreign competitors. Simply put, it cannot because the quality of materials and parts is comprised for the sake of labor. Its one or the other here. Furthermore, it is frustrating to see the government provide bailout for a manufacturer when it has over produced a product that is in low demand. Sure, billions of dollars will keep the companies afloat for a while, but why pump cash into a company that is producing a product in low demand? Answer is simple…political capital. Union dues do not only go towards benefits, they also go toward electing officials in the form of campaign contributions. There are ample labor laws in place that get us away from the reasons that got us away from why unions were first formed. They formed to create a standardized work week, safe work conditions, sufficient protection for those injured on the job, etc, etc. Laws are well in place to protect employees from the wrongs that happened way back when. Why have unions now? Simply put, a company cannot be competitive and successful without paying its employees well, treating them with favorable benefits and creating a good environment in which to work in. Free markets take care of that. The best asset a company has is its employees and best companies will get the best assets.

Last point, ask an average union employee if they are concerned about their employer’s profitability? I have asked that before, and the typical answer is ‘not my problem, as long as I get mine.’ Maybe majority ownership in Chrysler will force them to rethink that. By the way, that was biggest pay back of political capital I have ever seen. They were gifted 55% ownership. What happens to all of the other American workers that have lost employment because their employer goes belly up?????

Posted by bcd | Report as abusive

bcd you are very confusing…

Posted by korny | Report as abusive

“Why have unions now? Simply put, a company cannot be competitive and successful without paying its employees well, treating them with favorable benefits and creating a good environment in which to work in. Free markets take care of that. The best asset a company has is its employees and best companies will get the best assets.”

No doubt you would like to end the power of workers to bargain collectively. No amount of sophistry on behalf of the plutocrats can obscure the monumental failure of the ideology of liberalism. The mantra of the free market is falling on increasingly deaf ears as you scurry like rats to stave off the inevitable.

Posted by Randolph Matamoros | Report as abusive

which place is ridden with unions? silicon valley or detroit?

which place is more innovative? silicon valley or detroit?

which place do attract the best minds to be in? silicon valley or detroit?

and finally

which place begged for public money and political protection only to stay alive? silicon valley or detroit?

it’s clear that unions are parasites. they always ludicrously complain that their salary is at 3rd world level. indeed, they must kiss their employers ass for the philanthropy. philanthropy? yes! the union workers are paid extorbitantly much higher than their counterparts in 3rd world countries for the same work. not even saying extensive workers safety requirements in developed countries, which translate into even higher cost.

then what? evil capitalistic thought from hell which must be purged? plant your own money tree, then sit idle until you are old, if you think you can earn huge money while doing nothing better than what others can do. hopefully the heavenly socialist angle from heaven will throw coffers of money to your face.

Posted by flying dutchman | Report as abusive