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Wednesday, February 29, 2012
Job Protection is a Racket (Live Bait & Ammo #171)
cheer union busting and the collateral damage to living standards in
the USA like drunken frats, but the long view is both more sober and
2009 Buena Vista Township Board of Trustees granted a twenty year 100
percent tax abatement for Nexteer Automotive, and Michigan officials
approved a tax credit worth $70 million over ten years to keep Nexteer from moving jobs to Europe or China from Saginaw.
euphemistically coined "protection" (in this case job protection), only
works until the extractor, the criminal in a white shirt and tie, finds
an easier mark.
case in point: American Axle and Manufacturing (AAM) originated from
the sale of five General Motors plants to former GM executive, Dick
Dauch, in 1994. In 2012 AAM will close Detroit Gear & Axle, the
fourth of the original five plants to close. All the concessions the
UAW made didn't make a damn bit of difference. Despite the announcement
of the plant closing AAM requested an extension of tax breaks from the city of Detroit.
The quid pro quo of jobs for tax breaks, or wage and benefit concessions for job security, never
stopped Dauch from moving work to Mexico, China, and nonunion plants in
the US. As David Cole, son of a GM president and director of the Center
for Automotive Research, once told the Detroit Free Press, “In
business, lying is one of the things you do all the time.”
protection is a racket and the union wants in on it. Hence, two tier,
three tier, and permanent temps. Workers pay and pay, but only Capital
is protected. Concessions never save jobs. Never. But they prolong the
dues collection and subvert the struggle for economic justice with
promises. Do what we say and you won't get hurt.
An article in the Wall Street Journal about
Chinese investment in US manufacturing featured a picture of an
assembly line at Nexteer in Saginaw, MI. It looked familiar. I worked
on a similar assembly line at a GM-Delphi fuel injector plant in
Coopersville, MI—before they automated and eliminated half the jobs. Literally half. Post automation, we produced the same amount of fuel injectors with half the workers.
that's why all the new production jobs at Nexteer are temporary. If the
new electronic power steering systems prove viable and GM retains
contracts, the Chinese may invest in more automated production
technology. In which case, the temps would not be a liability. Or
perhaps, the demand for a tier of permanent temps simply indicates the
lack of long term commitment toward American workers despite all the
payola—tax abatements, waivers, and wage cuts.
GM-Delphi opened a new fuel injector plant in China, they installed
technology from the Coopersville plant which was obsolete in the US
market. Then, we developed new products and perfected new technology for
production. Once the new production machinery was fined tuned by US
workers, it was shipped to China. The Coopersville plant shut down. The
shell of a sophisticated manufacturing facility built in 1981 is now
used to store cheese.
provides a wide array of auto parts to US manufacturers. Complexity is
not so much an issue as size and just in time delivery. A fuel injector
is about the size of a thumb. Obviously, not a labor intensive item, but
high value and convenient to ship. Nexteer's new "software-driven"
power steering systems are lighter and therefore less costly to ship
than the old fashion hydraulic steering pumps. If the entire steering
apparatus proves too bulky and therefore too expensive to ship from
China, Saginaw Nexteer could be strip mined for technology and high
value components, then reduced to a sub-assembly shop for Midwest
distribution. Nexteer has twenty manufacturing plants around the world,
but Chinese investors, unlike Americans, take the long view. They think
it makes sense to concentrate high value components and engineering
expertise in Beijing.
the WSJ article the authors assert that Chinese investors promised to
honor the existing labor agreement and retain jobs in Saginaw. The UAW
contract in force at the time of sale (2010) wasn't set to expire until
the following year. Nonetheless, GM and the UAW revoked the successor
clause which would have compelled a buyer to honor the existing labor
agreement, broke the national pattern contract with four other GM parts
plants, and renegotiated for the expressed purpose of making the plant
more attractive to prospective buyers. A year after the sale, the UAW
amended the contract and agreed to set up a new tier of temporary
production workers who aren't provided health insurance and who make
fifty cents less than the bottom rate. The Wall Street Journal doesn't
always check their facts. Sometimes, they just trust the guy in the
white shirt and tie. In this case, Nexteer CEO, Robert Remenar.
In Autoworkers Under the Gun I wrote: Asian
and European automakers are setting up shop in the USA where labor
grows cheaper by the day and our reputation for weak unions precedes the
procurement with sycophantic fanfare. A case in point: after UAW
members at a GM plant in Saginaw—formerly Steering Gear, now
Nexteer—voted down a concession contract, union and management teamed up
to coerce compliance.
the concessions were in place, the factory was sold to Tempo, an auto
parts supplier, and Pacific Century Motors, an affiliate of the Beijing
Municipal Government. At first the Chinese were hesitant about
Michigan’s reputation for strong unions. UAW-VP Jimmy Settles
intervened. “Settles convinced them that the union was flexible and
could do what was necessary to deliver the productivity Tempo needed,
at a wages-and-benefits cost that would enable them to compete.”
to the Wall Street Journal, "Mr. Zhao says Nexteer is considering a new
factory in Beijing. He says the ownership group has assured U.S.
employees it doesn't plan to take the jobs and intellectual property to
China and leave a shell in Saginaw." Wall Street authors authors don't
mention that the UAW-Nexteer contract requires workers to train
supervisors and engineers to do their jobs or that Nexteer opened a new
technical center in Beijing in 2011.
I don't trust the guy in the white shirt and tie whether it's Zhao, or
Remenar, or Dauch, but Troy Newberry, president of UAW Local 699 told
the WSJ, "This place went through two different bankruptcies. With the
Chinese owning us, we won't see a third." This is true. The Chinese
investment consortium won't need bankruptcy courts to dump and run. In
fact, they won't have to fake allegiance to anyone other than their
investors in Beijing.
the thrust of the Wall Street Journal article was investment by the
Chinese in a low wage labor market in the USA and how promising it is
for the working community in Saginaw, MI—"The Heart of the Rust Belt"—to
get a little job protection.
Wall Street Journal should have provided a snapshot of the parking lot
which would give foreign investors a glimpse into the future of the US
auto market. If a temp worker making $12.00 per hour owns a car, it is
used, and he or she is bound and determined to drive it into the ground.