2008 December 20 Saturday
Ford Brazil Plant Shows What UAW Blocks

Watch this video. Such a highly efficient plant would be impossible to set up in the US - at least by Chrysler, Ford, or GM. Of course, Toyota, Honda, and other companies in the anti-union Old South could do it. Have they already?

Megan McArdle paints a great picture of why customer satisfaction dropped down in the list of things that Big Three managers worried about.

During those years of oligopoly, the Big Three's first loyalty (after their loyalty to management) was loyalty to the union.  The worst thing that could happen to a Big Three manager was a strike.  Making a car that is reliable is only partly a matter of engineering; it's mostly a matter of extremely tight control over the assembly process.  That tight control is necessarily less pleasing to the workers than looser rules.  The unions could severely hurt a company with a strike.  Whereas the customers?  The customers could only go to another company where the same union was negotiating the same loose work rules.

(Yes, yes, I know that Toyota does it differently, with group responsibility.  But Toyota's system was developed in the absence of a strong union; the adversarial model that the UAW had developed along, however historically necessary, made the Toyota example completely unworkable in a Detroit plant.)

After the unions, for the Big Three, the government was the next most worrisome constituent, followed by the dealers, then the suppliers.  The customers were somewhere down there with the mayor of Youngstown, Ohio, in emotional importance to Detroit managers.  It's not that the managers in Detroit had anything against their customers, and I've no doubt that they had lots of meetings in which moving testimonials to the gosh-darned swellness of Chevy or Buick or Mercury buyers.  But the buyers had little power to punish them, and their other constituencies could make their lives miserable.

My fear is that anything less than bankruptcy won't break through the pull that other interests have on how the car companies function.

Share |      By Randall Parker at 2008 December 20 04:09 PM  Economics Labor


Comments
Ned said at December 21, 2008 11:08 AM:

Michael Barone has a nice article on "Taylorism" vs. "Wagnerism" as they apply to the Detroit auto industry:

http://www.usnews.com/blogs/barone/2008/12/15/who-is-at-fault-for-the-decline-of-the-big-three.html

Basically, Taylorism refers to Frederick Taylor, the father of time-and-motion studies. The auto companies used these to improve the efficiency of their factories back in the 1930's. These practices were effective, but the workers hated them and, as a result, their jobs. Wagnerism refers to the Wagner Act of 1935, which improved the labor rules for the UAW and other unions. The unions attempted, largely successfully, to improve the workers' lot by abolishing the time-and-motion stuff. The result was lots of very detailed job descriptions and an adversarial relationship between labor and management. This goes to the heart of the uncompetitive nature of the Big Three. When a line goes down at a Honda, Toyota or Nissan plant, everyone pitches in to get it back up. At a Ford, Chrysler or GM plant, on the other hand, everyone is controlled by rigid work rules. When a line goes down, well, it goes down, and heaven help anyone who violates work rules to get it back up.

I don't have a whole lot of use for the UAW, but incompetent management shares in the blame for the crash of the Big Three. The Bush bailouts will do nothing but postpone the inevitable bankruptcy of these companies. Congress (controlled by Democrats, no less) will use its clout to promote all sorts of secondary political agendas, such as producing "green" cars that no one wants to buy and protecting the UAW. The results will be sadly predictable - lots of cars that no one wants to buy, billions of dollars of taxpayer funds squandered, and and bankruptcy only postponed, not prevented.

I laugh when I here people such as GM CEO Rick Wagoner say that this time Detroit has "gotten the message." Baloney! Here's what "getting the message" would involve:

1. Dump the UAW
2, Dump the incompetent managers and boards
3. Write down debt and convert most of it to equity in the new companies
4. Set wages and benefits to be competitive with foreign-owned automakers
5. Move at least some production to the non-union South
5. And, oh yes, start putting customers first (not the UAW or Congress)

Until these changes take place, the Big Three won't have a chance.

Some wordy bastard said at December 21, 2008 11:42 AM:

"Until these changes take place, the Big Three won't have a chance. "

I think the Chinese want a big piece of the world car industry. I suspect that the big three have problems.

Randall Parker said at December 21, 2008 12:42 PM:

Ned,

The Big Three really have gotten the message. They are just blocked from acting on some key pieces of it.

Look at Ford's plant in Brazil. It shows what Ford would do if it could.

Bob Badour said at December 21, 2008 8:10 PM:

Those of us condemned to dial-up might appreciate a few words describing what we were supposed to take away from the video we didn't watch.

James Bowery said at December 22, 2008 8:59 AM:

Financial system bailout: Jewish political clout

Foreclosure moratorium: Black and Hispanic clout

Detroit bailout: Black political clout

The rest can wait for Obama to get around to doing something for them in his own sweet time while the IRS and other creditors continue to breath down their necks.


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