Stmarie’s Weblog

2012 Election Information

Barack Obama and Failed Union Policies. Why not “Employee Stock Ownership Plans” (ESOP) Instead of Unions? January 31, 2009

OK let’s discuss this.  First of all I am a former union teamster and union auto mechanic.

I never benefitted by being in either union. In fact my paycheck was smaller because I had to have union benefits with held from my paycheck against my will. I never received any benefits back. All lost money.

So Barack has some very valid points however they are very, very outdated. Unions have out lived their usefulness. At one time, there was no one watching out for the employee and unions did a lot to correct long hours, unsafe working conditions, very low wages and a host of other problems that were rampant in the labor market.

He mentions 40 hour work week and overtime.  Yes, in the early 1900’s this was a problem. But today it is state law in all states. No union needed.

He mentions safe working conditions.  Yes in the early 1900’s this was a problem.  Now we have  OSHA (http://www.osha.gov/index.html) and we no longer need to have unions for that reason.

He mentions health benefits. Ever since I started working I always viewed health benefits provided by the company as a perk for working for that company. I viewed it as a privilege not a right. After all, this is a big cost to the company.  Even with the companies that I had to pay up to half of the premium I was very happy to have that as I knew how much is would cost to pay for it myself outside of a company policy.  The unions believe that the company should pay for 100% of all healthcare costs.  That is so wrong. When companies can afford it they will help with paying a portion of health care for their employees.

So we have to look at previous years and what Unions have done to various industries like the steel industry. Due to a relentless, crippling union labor strikes, the steel industry has shrunk dramatically as manufacturers can buy higher quality steel at a much lower price from other countries.  It costs less to buy and ship the steel from overseas than it does buy manufacturing here in a union steel plant.

We are now seeing what unions have done to the three big American automakers. The union over head has made the American cars non competitive with foreign automakers. This overhead includes Health for retirees and big pensions that are paid to retirees for life.  Paying for retirees is a huge cost added to american cars. Pensions have been replaced by 401Ks.  When you are done  working at a company, the company owes the worker nothing. He/she is not a beneficial asset to the profitability of the company. The retiree is no longer generating any revenue for the company. I know this sounds cold and harsh but that is the way it has to be. It is the employees responsibility to save for his/her retirement, not the union’s or the companies responsibility. Foreign companies are a lot more profitable building cars here in either non-union assembly plants or much modified union contracts.

An Article in the Wall Street journal by Logan Robinson who is a professor of law at the University of Detroit Mercy. He is former general counsel of Delphi, ITT Automotive and Metaldyne, and former head international and commercial lawyer for Chrysler.

http://online.wsj.com/article/SB123060246925441479.html

So here is the hypocrisy of Barack Obama. Barack tells people that he wants GM, Ford and Chrysler to go back to being successful, profitable and rehiring people. In the mean time he want to empower the bullying United Auto Workers that brought the big three to the brink of extinction. Does this make sense to you?

Barack Obama wants to take away the rights of the owners of ANY company to run a company non-union.

OK let’s look at the effect of that.  Most importantly  it will dramatically drive wages up through union contract negotiations. Keep in mind this is the number one reason for outsourcing manufacturing jobs to other places all over the world.

The next effect that this would have is rampant inflation. When goods are made under union contracts it dramatically raises the purchase price of either labor or the finished product.  When unions were in their strongest days during the 70’s in the Billy Carter administration, the United States was being crushed by 13.5% inflation.

Also keep in mind that all three GM, Ford and Chrysler built the very worst quality automobiles ever to roll off of any assembly line in the world during the 70’s and early 80’s.  It was during that period that the Asian auto manufactures started introducing much better built cars at a much lower price as those cars were built in non-Union shops over seas.

A short comment about that as I was a GM trained mechanic from 1968 through 1973 when I had to quit as the poor quality of the Chevys and Olds that I was working on was just disgusting. As I took a trip through the now closed Janesville plant  in Wisconsin. I could see that the workers were there just for the money.  I didn’t see a lot of PRIDE going into the cars. That is where the Asian, especially the Japanese, had it all over the US manufacturers.  For the Asian worker they took a lot of personal pride in what they were building.  How do I know that?  Very simple. When I would look around in the American Cars that I was working on. I’d see a round dot saying “inspected by #45.”

When I bought my first new Toyota Supra that was made in Japan. I noticed Inspected by stickers also.  But guess what?  The people that manufactured my car were so proud of their work, there was no #45.  There was a person’s name…. yes the person who built the car and inspected it along the way put their name on it. They knew that they had built the finest automobile that they could and would put their name on it.  I guarantee that would never happen in a UAW plant.  OK, enough about work ethic.

The next thing Unions do is take away the ability of the worker to negotiate their own wages.  Basically the Unions turn employees in to mass non desrcript numbers. All people get paid the same no mater what their productivity level is.  The only way a person can make more money for better, more competent work is through a new Union contract. Here is the problem with that:

One of the things that is making our education system in K-12 a disaster are the unions.  First of all. I will  be the very very first one to say and admit that that most important people in out education system are very, very underpaid.  I mean that. Teachers should get payed a lot more than they do…. but there is a clause here. It must be based on performance in the grades of the children that they are teaching just like any other job.  The teacher unions prevent that.

Here is an example: Four teachers in two schools in the same district.  John and Mary in one school and Bill and Ann in another school.

John and Mary’s students are all getting A’s, B’s and C’s and Bill and Ann’s Students are getting C’s D’s and F’s.  Yet because they are all in the same contract they all get paid the same.  Tell me what incentive does Bill and Ann have to do any better because they will get paid the same as John and Mary anyway.

If the teachers that were turning out better educated students got paid more then the underperforming teachers would either have to get better and get a raise or they will be terminated.  Union contracts prevent that from ever happening. So out education system with Union teachers will continue to be a disaster. There are many examples of this.

Here is another example of the industry that I am involved with now and that is the entertainment industry.  California has a huge problem with “Runaway Production” Why? Well it is very simple.  A producer and shoot a theatrical movie off shore or even in another state that is a “Right to work State.”  Shooting in a non-union environment can get a producer very hight quality people without the huge over head of Unions like IATSE and IBEW.

OK so what do I think is the answer if not unions: It is so easy my friend.  Employee owned companies that are called ESOPs. That stands for “Employee Stock Ownership Plan.”

Here is a PDF file that was written by Judy Waggoner explaining what an ESOP is.

https://www.principal.com/allweb/docs/ris/marketing_materials/pq/pq_5361.pdf

Here is an article by Mark Miller at Kent State University pertaining to Airline ESOPs.

http://dept.kent.edu/oeoc/PublicationsResearch/Winter1999-2000/EmployeeOwnershipInTheAirlines.htm

Here is an example of a plastic manufacturing plant in Elgin, Il that is an ESOP.

http://www.hansenplastics.com/site/epage/15544_441.htm

I can guarantee you that Hansen Plastics has no use or desire to have a union on it premises as they know that the company will not be profitable with a union.

When a company is employee owned every one of the employees from the CEO on down has a stake in the well being of the company. There is no reason why the Unions can not be booted out of the big three American Auto Manufacturers and the companies become employee owned (ESOP). I think you would see much more efficient companies and better automobiles because the employees would all benefit by the operational efficiency of the company. Employees often complain about not sharing in the profit that the companies are making and that is why they need unions. Well if the companies were employee owned they would all get a “Profit Sharing Check” at the end of the year or quarterly.  Not practical to dole out profit checks every pay period. So if the company is run right then everyone makes money. If the company has any screw ups for employees then the other employees will want to get rid of them so that the company is efficient and profitable.

OK again Barack Obama just does not get it. His “Change” is what we had in the Carter administration. There is absolutely nothing new that Barack Obama is doing.  NOTHING.

ST

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