Obama Stabs UAW in the Back
Posted by Bill Dupray
on May 14 2009 Filed under Politics.
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The new CEO of General Motors, Barack Obama, is union-man through and through. After all, he took over GM and Chrysler by screwing the creditors (at least Chrysler’s creditors, so far) and gave the companies to the unions. Now everything is peachy keen, right? No so much.
General Motors has manufacturing plants all over the world, precisely because labor is cheaper in places like Mexico and China. Not having to pay confiscatory American union wages enables the company to produce, wait for it . . . cheaper cars. But GM is right behind Chrysler in bankruptcy court and they need to cut costs. So somebody had the novel idea of perhaps ramping up a little more production GM plants in China and importing them to the American market, bypassing the union altogether. The union is pissed.
As thousands of General Motors workers await word on more U.S. plant closures, reports that the company plans to import Chinese-made vehicles to the U.S. have created a political problem for the automaker and the White House. . . .
The United Auto Workers charged last week that the Detroit automaker intends to almost double over the next five years the number of vehicles it imports to the U.S. from Mexico, South Korea, China and Japan.
“GM should not be taking taxpayers’ money simply to finance the outsourcing of jobs to other countries,” Alan Reuther, the union’s Washington lobbyist, wrote in a letter to U.S. lawmakers. . . .
On Wednesday, Shanghai Securities News and other Chinese media reported that GM plans to begin exporting vehicles from China to the U.S. within two years, ramping up sales to more than 50,000 by 2014.
The following is the dilemma in a nutshell. Keep in mind that publicly traded companies in a free market never have to worry about such things – only government-run companies do.
Harley Shaiken, a professor at the University of California at Berkley who specializes in labor issues, said increased overseas production and imports could prove politically tricky for GM.
“The reason is simple — production location is a corporate decision, but when it’s on the taxpayer dime, there are different sensitivities, so the notion of billions for a rescue package and offshore production, I think, could be politically combustible,” he said.
These political concerns, of course, have absolutely nothing to do with making or selling cars. In fact, the political concerns would push the company into making exactly the wrong business decisions. After all, the company’s stock and bondholders don’t care a whit whether something is politically combustible, they only care about whether the company is making money for them. To the extent that the political hydra influences business decisions, the less the investors can predict the future of the company. That political volatility, untethered from the car business, will drive investors away.
[T]he UAW generally opposes importing vehicles into the U.S. According to its figures, the percentage of GM’s U.S. sales from Mexico, South Korea, Japan and China will increase from 15.5 percent now to 23.5 percent in 2014.
Reuther wrote that GM’s increased imports would be equal to the output of four U.S. assembly plants, “the same number that GM plans to close.” . . .
GM millwright Ron Bear of Belleville, Mich., who attended the meeting, said the rank-and-file would be unhappy with any more imports.
“As far as importing cars, what is that going to do for our jobs? I guess that’s the question,” he said.
Well, Mr. Bear, importing cars may save your job, how about that?
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