Potential Union Interest In Non-US Automotive Manufacturers Bad For Consumer

Op-Ed By Rick Carlton

Dark denizens of the "Union Label" are at it again. With the UAW's recent statement announcing the targeting of off-shore automotive manufacturers in 2011, those of us reporting on the industry, along with our consumer constituents, are preparing for yet another round of bumpy rides.

What is it with these guys anyway? One would think that with today's new car average MSRP hovering around $28,400 per unit, at some point the UAW might consider its role in creating a sense that, (and with a respectful nod to former political candidate Jimmy McMillan) prices of new US cars have become "too damn high" for the average domestic consumer. This is additionally irritating, since a fair proportion of each year's automotive price increase (10% - 14%) is caused by the in-direct costs of union legacy/current pension-servicing, on top of creating a direct average automotive wage hour cost of $28 segment-wide.

Now, in the midst of the most difficult economic recovery in history, and because BMW, Honda, Hyundai, Kia, Mitsubishi, Nissan, Subaru, and Toyota have done a better job of providing Americans with reasonably priced vehicles for better then 20 years, while employing thousands of American workers consistently and fairly, these manufacturers should be targeted? Talking about eating one's young.

Someone at the UAW's offices in DC should re-visit the declining history of the US auto business and the union's cost role in that decline, followed by a refresher course in basic cost accounting, because the in-direct burden of a product, impacts on its direct selling price. There's no way to alter this essential math, unless we decide to convert today's cost/sell formulas to some version of a 6th century barter model. Of course, the subsequent need to deliver a family's sheep herd to the local Chevy dealership just to buy a new Volt would create new issues, but I digress.

To be blunt, the UAW is no longer an honest broker for the little guy, but an invasive, (some say criminal), bureaucratic cost center, that adds nothing to support the industry's overall growth. Cost will always be cost. And presumably, profit will always be profit, (for the time-being at least). However, the gotcha that's lost on the UAW, is that business growth is generated by profit, not the other way around. And with the economy continuing to be difficult, the auto industry doesn't need new union involvement simply because they want to reenforce their rationale pour être by creating an equivalent of the “fairness doctrine,” simply because a manufacturer isn't headquartered in the United States.

What is patently stupid about the situation as a practical matter, along with being obvious from a economic perspective, is that there will be no automotive industry unless union cost overheads are reduced drastically, if not eliminated entirely. Ford figured that out better than 15 years ago, and began re-working its collective bargaining agreements to see if it could get better terms with the UAW's “thugocracy.” The result of the effort was that Ford was able to weather the last four years better than its US competitors, and by the way, kept most of the company's employees at work, not on the soup line. But, it took years and millions in legal fees, to secure union agreements that allowed Ford to continue to grow.

So, if you fancy a new Kia Sonata, Subaru Impreza, Honda CR-V, Mitsubishi Eclipse, Nissan Nizmo, or Toyota Prius look back on the Ford experience, and lobby your representatives to block any union involvement in off-shore auto companies. Certainly the companies will appreciate the support, but your pocketbook will like it even better.

About the Author

Rick Carlton has authored more than 150 feature articles for automotive and motorsports publications since 1984 including: The Auto Channel, Automobile Magazine, On-Track Magazine, AllRace Magazine, The Austin Business Journal, and the Highland Lakes Business Journal.