Tuesday, November 18, 2008

Evidence that unions are crushing Detroit

Nice to get the data to show what we all know to be true: Unions are crushing the US auto makers with high labor costs.

This is apples to apples, folks: All plants are in the USA.

And in the thread, folks are arguing that both sides agreed to the contracts, so they're fair. Two points on this:

  1. It may have been a fair deal, but it may also have been a bad decision. And companies that make bad decisions deserve to go under. Agreeing to supplier contracts that give you a higher cost basis than your competition is a bad decision. It also shows you may be a poor negotiator, as others seemed able to get a better deal than you did for the same input to production.
  2. Unions are labor monopolies. They become the sole provider of labor in a geography, usually after you've invested millions in building a plant in that geography, and you can't easily move your plant, so you have to negotiate with a monopoly. Think cable broadband in the US: Only one provider in your geography, you're not going to move house, so you accept the cable company's terms. Doesn't mean it was equitable, just the best you could do under the thumb of a monopoly.
So I still think we should offer the firms no bailout.