Recent negotiations with Chrysler have given the impression that their major economic problem is the cost of labour and the solution is to cut salaries. Although this tactic seems to have been successful, the real problem is that North American companies have not been selling vehicles.
This is the result of Chrysler deciding to focus on selling expensive gas guzzlers, while Toyota brought in a fuel-efficient hybrid 10 years ago and sells a number of other fuel-efficient vehicles.
Also, Chrysler and other North American manufacturers have not produced vehicles as dependable as Asian makes, even when some of those Asian models are produced in Canada and the U. S.!
The crisis is the result of inept and failed management and the discussion of how to correct this and outrageous CEO salaries and bonuses should have come before the pressure to cut the wages of those who actually produce the goods.
Auto workers are very productive and have actually increased their productivity much faster than every other major sector of the economy, with value-added per worker averaging $300,000 – the world’s best.
In fact, direct labour accounts for only seven per cent of total auto production costs. This is less than capital, less than materials, and less than dealer margins. Cutting wages won’t sell more cars or affect the other more major cost factors.
Auto industries in other countries are also in trouble, but nowhere else are governments and countries cutting wages and benefits of auto workers – not in Germany or Japan, where they make more, and not in Brazil or Korea.
This crisis is being used as an excuse to roll back wages and benefits gained over many years. If the economy turns around, years of increases in the standard of living of these workers will be lost.
The model being pushed is to use the lower salaries of non-unionized workers as the standard for the industry.
Everyone has others at work or in the same business who make less money? Who would want their own wages cut to match the lower earners?
Canadian non-union plants account for just four per cent of North American sales. Such a small minority should not be used to set the wage standard.
The federal government seems to resent workers who have achieved a decent standard of living, and has joined in the rant against them.
By taking sides in this negotiation, the government loaded the deck against the workers. And this seems to feed on what has become a regular theme of anti-unionism.
Why have they joined in the attack on these workers who’ve managed to earn a better standard of living, and suggested that they should be more like those who have yet to do so?
They will likely be using this as an example to ask other workers to lower their standards for the good of other companies, while continuing to reward the management who are truly responsible for the woes of the auto sector.
K. J. Challoner