The recent automotive strike raises concerns about the long-term viability of the U.S. auto industry. Teamwork is needed to maximize the supply chain surplus so everyone can have more, including labor. High morale is needed to foster cooperation required to increase productivity that increases the surplus. Blue collar workers proudly built this country and deserve a good wage, but as one of my superiors once said, “Every year everyone wants a raise. Every year our health care costs go up. Where is it going to come from? Productivity.”
Management is responsible for making productivity happen, but union bosses often oppose it because they view increased productivity as a vehicle for losing dues paying members: logic that is shortsighted. Productivity makes higher wages possible, increases competitiveness and raises our standard of living. Reduced competitiveness has been costing the Big Three automakers market share for decades.
After the recent, bitter strike, how much damage has been done to needed morale and labor/management cooperation at these organizations?
I’ve witnessed this before. The summer after my freshman year of college, 1978, was a time of stagflation and lowered expectations. I worked in McKeesport’s underground economy as a roofer for 15 cents an hour less than minimum wage. McKeesport was an impoverished mill town in the Monongahela Valley, then the largest steel producing area in the world. Powerful unions controlled a not insignificant portion of the above the table labor market. It offered few opportunities for low skilled, unconnected young people like myself. One day looking down from the roof I saw Andy, a former classmate, driving a brand-new Dodge Charger. I assumed Andy knew someone, because somehow, he got into the mill. Envious, I immediately questioned my own career decisions.
Over 5,000 people worked at US Steel’s National Tube Works in McKeesport, at one time the largest mill in the world. Unions were influential and controlled much of the Pittsburgh area’s political machine. They were also militant, often going on strike. My stepfather had left the mill because he was exhausted from constant strikes and lay-offs. He made less, but preferred the steady paycheck.
Unions kept member wages and benefits artificially high — higher wages without increased productivity — by limiting the labor pool, but also demanded restrictive work rules, created supply chain disruptions and shepherded legislation that reduced and restricted employment throughout the area. Nevertheless, there were benefits for those who could gain coveted membership in the union rank and file — especially the union bosses — until the mills began to close. Artificially high wages are sustainable in good times, but not during economic downturns. This made mills less competitive, while walkouts and restrictive work rules made them unprofitable. After 115 years National Tube closed permanently in 1987 following a crippling strike.
Recent UAW tactics, directed by activists who have never worked a day on an assembly line, took me back to McKeesport. The more than $10 billion lost during the strike, some of which could have gone to better wages, is forever lost. But union bosses think it was worth it because management capitulated and gave into the union’s demands. The new agreement makes wages, already 22 percent higher at the Big Three than their transplant counterparts and 47 percent higher than Tesla, even less competitive. Higher wages would be wonderful, and perfectly justified, if they were more productive, but they are not. It takes GM 29 hours to assemble a vehicle, while Toyota needs only 21. What’s worse, the cooperative environment needed to increase productivity has been poisoned by brutal strike tactics and trash talk.
It is easy to vilify employees and unions, but most quality problems and non-value-added work — waste — are the result of poorly designed processes, not worker behavior. Management is responsible for implementing good production processes that increase productivity, and improve working conditions and safety, and need employee expertise and input to improve them. Management is also responsible for fostering a respectful work environment conducive to high morale needed to induce cooperation. If there is a union that is making process improvement more difficult, management needs to ask what they had done to cause workers to feel they need union protections in the first place. Union bosses cannot be blamed for employees wanting representation, but unions add another layer of non-value-added costs because union bosses take a cut, but don’t produce any products. Management must create an environment where everyone is free to express ideas and make mistakes — and not feel they need a union to protect them from bad management.
Union reps regularly say their companies can’t close, that any suggestion that they could is just fearmongering. We used to say that in McKeesport too, but National Tube proved otherwise. The Dec. 18 announcement of the acquisition of US Steel by Nippon Steel, a competitor that didn’t even exist until US Steel had been around for seven decades, underscores the long fall of what in 1901 became the world’s first billion-dollar company, to world’s 24th largest steel producer.
I moved on from that roofing job, graduated college and did well, so my career decisions weren’t that bad after all. Nevertheless, I’ve often wondered what happened to Andy after the mill closed. This summer I bought my own Dodge, a “Last Call” Challenger. Sadly, I fear Dodge’s marketers never considered the strike and didn’t recognize the ominous irony of that name. I hope I’m wrong.
Phillip S. Coles is Decision and Technology Analytics professor at Lehigh University.
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