GENERAL MOTORS STRIKE

Today ( sept 24/07) I learned that 77,000 GM workers had trotted off their jobs to take up pickets around their plants.  I'm including this item on the website although it is early in the event -just happened a few hours ago -because it represents an unusual amount of bullshit not often seen. Its such a big pile of it the entire economy is going to be affected.

Why is it bullshit? you say...

Well lets look at the existing situation in the car market. Correct me if I am wrong but North American builders have been loosing market share for years. They have a monstrous health insurance liability built into the system for hundreds of thousands of retired workers that MAY have been covered had they maintained market share and production levels of the past. The north American auto makers are competing with countries with lower labor and cost structures. And the inventory levels of unsold cars are high right now. Not only that but the weak home market in the USA has resulted in fewer sales because a lot of consumers have run out of money. Delphi the GM owned parts maker recently went bankrupt.   Clearly some structural changes need to be made to save the industry from disaster. 

So what does the auto union workers do? They go on strike saying the company hasn't met their demands for job security and they can't come to an agreement on retired workers benefits.   Now dress me up and call me stupid but how is this going to help?  Isn't this just a case of....bullshit!   I think it is! Nobody is stupid here so what are the rascals up to?

The only logical conclusion one can make from this is that Union is doing a "show of force" to prod the discussions to a conclusion and to show members that all those union dues are worth it because a benefit will be generated for them. Or maybe they absolutely know that they will need to take significant cuts and the strike is an opportunity for them to get off the hook and have the members vote to go back to work with a lesser contract. They already had the pickets printed and paid for anyway. Perhaps this will work. Time will tell. 

But lets just think about this one. Lets say the company allows the strike to go on for two or three months. Now we do have a disaster and an opportunity for the company to make massive job cuts that they otherwise would not be willing to make had a collective agreement been in place. One could argue that as long as the inventory is being sold and production labor costs are being avoided that the situation may represent a net benefit to the company for at least a short period of say up to two months. Ford and Chrysler will be dancing in the street as they see an opportunity to pick up market share and any better deal negotiated to GM will make their negotiations that much easier. There may even be back room deals to that effect -who knows. 

I checked out the average salary for a GM worker in the USA and its $57,000 plus a gold plated health care program and retirement benefits and all you need is a high school education and no criminal record. Not bad for work which is not all that demanding of special skills or abilities. A crazy person might say that an average auto worker is overpaid for what they do in comparison to like work performed by other workers with a like education. I won't say that. But I will say its bullshit to take a salary at that level and decide to walk the picket line instead in this present economic environment. 

This one will be interesting to watch. Wonder how the media will cover it. And how they will dumb down the issues to the level of a slow grade five student. And will we ever really know what is going on behind the headlines? Hmmmmm. And how high is the pile of bullshit here? 

Update Nov 11/07  As suspected the strike was over in a few hours. There is considerable bullshit in the North American auto industry. They make products that ruin the environment, that don't stand up to use on our northern salted roads, that are unsafe to drive, that are extremely complex and difficult and expensive to maintain and that are very very expensive. What people want is basic safe transportation that is affordable and maintainable and environmentally friendlier. Simple eh!

Apparently not! Perhaps a few million of us should get together and boycott the industry until they figure out we are not going to put up with the bullshit anymore! It would take about two weeks for the changes to start occurring. What a wake up call that would be. Will it happen? Absolutely not.

Update March 11/2008  It seems that the very type of car that I was talking about is now being manufactured offshore. I have started a page on the here. Its good reading for anyone considering a car. Since writing this article I watched some industry reps from the Detroit Auto Show downplay the significance of the new low price vehicles. They actually had the nerve to say that North Americans didn't want that type of vehicle because it was too basic and too small.  Knock Knock.  Anybody home? Thats exactly the type of vehicle a lot of us are looking forward to owning. We don't want to go into debt for years owning a vehicle that can't be maintained that is overly complex and ridiculously expensive. They just want basic transportation!  You can see the vested interests coming out. The banks want to keep the big bank loans, the car companies want to keep the high profit margins, Govt wants all those tax dollars. But the golden goose is sick right now and can't make all those payments any more. 

What I find particularly interesting is that some of the economics I learned at the best University in Canada - The University of Guelph still holds true. In fact supply will meet demand. And its just starting to come on line now and in the next few years. So what do you do - when you live in a shoe?