Obama risks trade war to help union allies

September 16, 2009

Has President Barack Obama thrown Big Labor under the bus? It sure might seem that way after watching his performance yesterday before two union audiences, G.M. workers in Lordstown, Ohio, and an AFL-CIO convention in Pittsburgh.

Both speeches were fiery, pro-union stem winders. Yet the president barely mentioned the top item on Big Labor’s 2009 political agenda, the Employee Free Choice Act. The legislation would require a company to recognize a union without a secret-ballot election once organizers submitted union cards signed by a majority of its workers. Unions believe it would increase unionization, which is probably a pretty good bet given how hard Corporate America is fighting the bill.

But the card check bill has struggled mightily on Capitol Hill and could clearly use a boost from the White House. Still, the president didn’t speak its name in Lordstown and devoted just a single sentence in Pittsburgh. Is that any way to treat the folks who poured tens of millions of dollars into Democratic campaigns last year?

Maybe not, but you didn’t hear any booing. Heck, there probably wasn’t even a slight grumble given the myriad ways Obama has already helped his union allies. His stimulus package helped prevent layoffs of many government union workers, while key provisions serve to prop up union wages on infrastructure projects. His restructuring of the American auto industry left the United Auto Workers with a majority stake of Chrysler and a fifth of General Motors for the price of relatively minor pay and benefit concessions. And his healthcare reform looks to bolster underfunded union retiree benefit plans, while avoiding taxes that would hit pricey union insurance packages.

Then, of course, there is Obama’s decision to impose a 35 percent tariff on imported tires from China, much applauded by Big Labor. As the AFL-CIO put it, “The trade decision was the president’s first down payment on his promise to more effectively enforce trade laws.”

Not only does the move directly hurt U.S. consumers, but it will certainly encourage more domestic industries, such as steel and apparel, to look to Washington for help. Even more dangerous than copycat protectionism: by blaming China for economic woes here at home, Obama risks rekindling anti-China efforts in Congress, such as pushing China to allow a renewed and rapid escalation in its currency. That is how you could get a full-blown trade war.

Hard truth: When it came time for Obama to choose between his political allies on one hand and America’s economic allies (and consumers) on the other, he chose the former this time.

And who knows, a slightly watered down card-check bill might still get passed by year end and signed by the president. In retrospect, Obama should have dumped his own Pittsburgh speech for that of Labor Secretary Hilda Solis who told the gathering that she “was proud and humbled to be your humble servant.”

Now that’s more like it.

19 comments

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Your ideological haranguing of the USW and Obama neglected to speak to the actual MERIT of the Chinese import case that activated this trade rule. We have laws for a reason and when trade partners flout them then its appropriate to make a measured response.

Posted by Nick | Report as abusive

[...] Pethokoukis: Obama risks trade war to help union allies Frank Fleming wonders Why are the Liberals still so angry?: But now we can see the problem. After [...]

This is nothing more than a necessary show and I am sure China is playing along. The U.S Government every day runs Chinese made desktops and laptop computers, servers, and networks through Chinese made networking equipment. They also are writing on in most cases, Chinese made keyboards, and are looking at Chinese made screens. I bet the video equipment in Congress is made in China or somewhere along the way uses Chinese made equipment. And yes, China lent us the money to buy all these things. And who actually makes the most popular music player, the Chinese. While the US expends time and money on wars, protecting other countries, creating financial products that are nothing more than gambling and in the end causes hardship for all Americans, and of course lying to each other, the Chinese have been spending their time productively, so no one should blame the Chinese for anything. President Obama did not cause this. He needs to respected as our President. What we are doing is complaining about the coffee on a plane that has lost all control and is in a nose dive.

Posted by Hugh Broket | Report as abusive

How utterly awesome that this President just simply stands in front of people and supports the corrupt unions of this great country. He doesn’t even try to hide what he’s doing. The unions gave him the White House and so far he’s given them General Motors. I guess in their eyes that’s just a good start.

Ladies and gentlemen, you are seeing dishonesty and corruption in the White House like none has ever (EVER) been seen before.

Posted by rdavid | Report as abusive

the tariff on the chinese tires can be debated but one thing that sticks out is that the timing of this tariff is terrible, just weeks before the G20 conference and any high ground the US has on anti-protectionism is now gone not to mention if they really pissed of our creditor how are we suppose to get more loans for the soon-to-be $13000000000000.00 debt? he really should have maybe waited a month or so to do this.

Posted by Applesauce | Report as abusive

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Feel free to leave a comment. I especially want to know what this crowd thinks. Any constructive criticism is greatly appreciated.

Posted by Crumb | Report as abusive

Dear USA

A Flint area resident for over 50 years, born in a house just down the street from the Buick plant, I, like many of you, have seen the rise and fall of General Motors in Flint. As a 12-year old, I remember so well touring the plants and seeing the parade with Dinah Shore. What a thrilling time! GM and Flint: bonded forever, it seemed.

In my early college days I knew many guys that worked at GM. One was proud of putting his cigarette out on the hood of freshly painted Buick from time to time; another carried out a set of valve lifters every day in the false bottom of his lunch box, and still another routinely took sets of engine bearings by taping them to his legs. Some played an assembly line game where they tossed nuts and bolts into the tops of carburetors as cars moved down the assembly line. They routinely bragged about how little work they did. A frequently heard comment was, “I wouldn’t buy a GM car; I see how they are made.” I wonder what a Toyota worker says about their cars?

During the glory years each labor contract meant big pay increases, thanks to the Union. Over time, however, prices rose, diminishing the gains. My mother learned quickly that the price of milk went up overnight at contract time. Unions continued to get the power they wished for from Democratic law makers that passed rules making it almost impossible for GM not to give into Union demands. Today $300 a month is good money in China; it’s hardly enough to buy cigarettes and beer in Flint. Perhaps if in those negotiations with the auto makers the Unions were not given the upper hand, US workers could buy more with less money, and US labor costs would not be so high compared to the rest of the world now.

In the 1980’s a GM training director told me that about 45% of hourly workers did not have high school diplomas. At this same time the Japanese were importing very high quality cars that were manufactured using Statistical Process Control. This is a quality-assuring manufacturing method requiring some fairly sophisticated math skills, techniques most GM hourly workers weren’t educated well enough to use. The Japanese also employed teamwork methods with their workers. When GM tried to apply teamwork methods, the Union successfully blocked their use, claiming that teamwork would weaken the Union.

The Union over the years has lobbied against employment tests, educational requirements, teamwork, and other worker standards. The Union has lobbied for workers rights, civil rights, chemical Right-to-know laws, and labor laws. These ideas have added burdensome restrictions and huge costs to GM for recordkeeping, employee training, legal fees, and allocations of people and time that have nothing directly to do with the manufacturing of cars. Imagine trying to manage the building of a high quality automobile and at the same time having to spend time and money handling the thousands of grievances and production slow-downs created by the Union each year.

One of my friends, a GM line supervisor, complained regularly about struggling to find enough workers to start the assembly line, especially on hangover Mondays. Everyone knew not to buy a car built on a Monday. A good friend and a skilled trade worker at GM said the first thing they did each day was to get a cup coffee and do the crossword puzzle in the Detroit News. In contrast to this, a GM executive told me that at a plant in Poland, the workers, on their own time, arrived early to clean, service, and paint their machines, a practice that would not be allowed in the USA. Needless to say, those workers are ready to work when the starting alarm rings.

In Detroit, I once had a chance to observe an assembly line in operation. Two people sat across from each other listening to the radio, drinking coffee, and reading the newspaper. As the cars neared, each one got up and installed a windshield wiper and then returned to the paper, radio, and coffee. I wondered how a company can pay someone so much money for such little work. The answer, that plant has been leveled to the ground with many jobs lost.

It is well known that Wal-Mart discourages unionization in the US. Recently, however, Wal-Mart agreed to unionize all of their stores in China. Why did this happen? Unions in China support the company. Workers who fail to work effectively, come in late, steal, or commit other violations can be fired. In China the Union lobbies against crippling rules and regulations—the opposite approach of unions in the US. Current thinking is that US labor unions will lobby the government for rules to make it easier to unionize retailers like Wal-mart. Will that be the end of discount stores? Labor unions have a great amount of power in the US. How this power is used is an important question for the new administration.

The late and renowned economic thinker Peter Drucker pointed out that there is always a need for big companies that make huge profits. He admitted that some of this profit may be wasted, but it requires huge sums of money to make the advances that benefit mankind. The advances foreign manufacturers have brought to market–like hybrid cars for example–have cost billions in research and development. It has been common practice that the Union speaks out against GM when they have made billions of dollars. Those billions keep GM competitive and in business. This should be remembered if GM returns to profitability.

Also, I find it interesting that the Union attacks executive pay. Supply and demand drives executive pay. Executives that manage large companies have special skills and experiences that make them valuable. Few people are willing to make the sacrifices that are required of top corporate executives. If you were to cut top executive pay by 50%, you might give each employee an additional 100 bucks, or so. It doesn’t seem as though an extra $100 is worth the risk of not having the best people run the company. Imagine how many extra billions GM would have if it didn’t have to deal with the Union. Recently, I read that a baseball player was making 18 million a year. It seems ridiculously high, but it’s the same reasoning: more teams and fewer top players– supply and demand. Al Kaline, eat your heart out.

In Flint you got the feeling GM’s purpose was to build the Union not automobiles. I knew many GM workers whose loyalties were stronger towards the Union than to GM. They would wear jackets with great-big Union logos instead of great-big GM logos. That was baffling to me since, it was GM that was signing their pay checks. One can only wonder how things in Flint would be today if the Union had not played such a major role in GM’s history. I wonder what affect it would have if everybody in Flint wore Jackets with great-big GM logos–a little late maybe — but worth a try?

Many have complained that GM has not changed to keep up with the new technologies. Competitive companies must move quickly and make rapid changes like a speed boat. The Union makes it hard for GM to move quickly and make changes. It’s like turning an aircraft carrier. I am always amazed at the claims that the Union knows best about how to run the business.

I realize that most remaining GM workers don’t steal from or hate the Company and are willing to put in a hard day’s work. The facts are that over 300,000 workers, many of whom exhibited a disregard for General Motors, lost their high-paying, middle-class jobs during the Union’s on going war with GM. Little wonder that a wounded GM is struggling to stay alive during this economic crisis.

Born there-seen that

Posted by newstogod | Report as abusive

And who knows, a slightly watered down card-check bill might still get passed by year end and signed by the president. In retrospect, Obama should have dumped his own Pittsburgh speech for that of Labor Secretary Hilda Solis who told the gathering that she “was proud and humbled to be your humble servant.”

Now that’s more like it.

Amazing that this is actually being palmed off as “journalism.”

Posted by Darrell Hitchens | Report as abusive

Well said Hugh.
It is time to focus on education of the next generation to face the enormous challenges of the future. No longer will the US be the dominant economic force we now have serious competitors who are years ahead of us. To catch up and be a net positive economy we need to provide free education to our youngsters and gear that education towards math and sciences. We need to make hero’s of our engineers and scientists as they once were and not the crooks of Wall Street whose financial “wizardry” is akin to snake oil salesmanship. I think our president understands that and plays his political cards close to his chest. He is intelligent not to reveal his position completely but still gives clues towards the direction he is heading.
I can hear all the conservatives shrieking about free education, it once was. I remember not having to pay a dime for a NY state University. It should go back to that no one was complaining then.

To put it in simple terms…government imposed tariffs help our industry in bringing back the domestics mfg sector. We need to increase our tariffs across the board to make it more competitive for our national jobs. This would force companies to grow within vs. abroad.

Posted by MCW | Report as abusive

There are a lot of pro-Chinese posters here.

It’s almost strange to me that many folks who profess their patriotism would never buy an American car. They only buy Chinese made goods (even the American flag pin they wear was made in China) at Walmart.

I am not a union member but I certainly would rather support an American company than to send my money to communist China. But that’s just me.

Posted by Ken Baily | Report as abusive

REMEMBER….watch what he does, not what he says!

O is great a slight-of-hand.

Posted by General Liggum | Report as abusive

In response to Ken Baily’s comment, the most patriotic thing an American can do is buy the best goods and the lowest price.

Buying American junk just because its made in America is like enabling an alcoholic.

America will not manufacture as long as unions are permitted to exist.

The rallying cry for unions should not be “Union Yes,” it should be “Plant Closed. Operations Moved Overseas.”

Posted by GinRummy | Report as abusive

[...] original here: James Pethokoukis » Blog Archive » Obama risks trade war to help … google_ad_client = “pub-3658190228035086″; google_ad_slot = “1112917537″; google_ad_width = [...]

[...] See the original post here: James Pethokoukis » Blog Archive » Obama risks trade war to help … [...]

I don’t know enough about the specifics of the tariff to make a judgment there. I do know that China uses slave or near-slave labor in some of its industries to stay competitive with the West so in general I approve of sticking it to that particular country.

Posted by Orion | Report as abusive

The union angle of Obamacare needs to be talked about more. The reason the Democrats are so eager to foist government controlled healthcare on us is because they see how many government employee union members they could create.

This is all part of President Obama’s attempt to use California’s “economic miracle” as a model for the whole country. You know the model: it’s the one where Democrats enable government employee unions to play the vampires and the taxpayers get to play the lady with the pretty neck. When they are done, they leave us – not dead or undead – but fiscally F’d in the A.

Posted by RezkoRezkoRezko | Report as abusive

I’m 55 and I bought my first Japanese car in July. It was sad. I drove nothing but American cars all my life. I hope the big three can make a comeback.

Posted by Arty | Report as abusive

If you think china is our economic ally, then you are sadly mistaken. They are the #1 enemy to the USA, far beyond any terrorist organization.

Posted by Robert | Report as abusive

[...] call me stupid or naive for this, particularly when, in terms of policy Obama really has lost my trust and has contributed to my nurturing of a garden of cynicism I would rather not [...]

My first experience with unions was at a trade show with my father. I tried to plug an electrical cord into an outlet and was chastised for it… we had to call the ‘union’.
Two guys showed up and one plugged in the cord , the other stood guard was my guess.
Even as a small child I knew there was something very wrong with this picture.
My father explained that the unions were a necessary force…workers who banded together for higher pay, benefits , and better working conditions, and that without unions , they wouldn’t get any of those things.
I asked ” So then why does it take two guys to plug a cord into the wall? ”
His answer still rings in my ears…

” Politicians can ruin pretty much anything if people don’t pay attention “

Posted by LaMont | Report as abusive

I have lots of Chinese products. They have improved dramatically in quality over the last decade or so. If there were comparable American products, I would buy them too.

It’s true that most Americans will not work for the same wage that the Chinese will, though, so I don’t expect to see much improvement there. Realistically, America needs to become a service economy, as the Swiss have done over the last 50 years or so.

The last American car that I bought was a K-car, many years ago, and it was a POS. Since then, I’ve bought Audis and only Audis.

And I don’t care where my toilet paper comes from.

Posted by Pink Pig | Report as abusive

[...] Read the rest here: James Pethokoukis » Blog Archive » Obama risks trade war to help … [...]

Obama risks trade war to help union allies…

I present products at trade shows all the time. I found that many small businesses are resentful when having to do a trade show where unions are involved.
Once I had to hook up the power to the lights on the booth. I called the electrical guy. He came down and called a rigger to come and tie the cable to the overhead beam. When the rigger arrived all these guys where standing around. I asked them, what is going on? The one guy told me that a supervisor had to be present before they could go ahead and do the job. So then a supervisor turns up after 55 minutes and within less than one minute the electrician pushes in the plug, the rigor ties the cable with a cable tie to the beam and I get charged three hundred Dollars for the job. It took three unions guys and one hour to plug in a electrical extension cable.
When complaining about the price to the show organizers response was that it is union labor and they have no control on the costs.
I suddenly realized why GM and many other American companies are in so much trouble.

Posted by Charles Hibberd | Report as abusive