Let’s Stop Pretending: U.S Auto-Manufactures Suffer because of The UAW – October 11, 2019,
I was never fortunate to work at GM, I was never fortunate enough to receive the level of pay GM workers received. I’ve never been fortunate enough to find another company as generous as GM or other U.S auto manufacturers willing to pay me what the average GM employee makes right now. So, for someone like me, it’s hard to understand the entitlement mentality of many of GM’s UAW employees.
What I do understand is investing, and whenever I Invest I follow the little things, who is making the GM or Chrysler engine, whose making the automatic transmition, who is supplying the electronic parts to the GM vehicle. When I’m able to learn about this little intricacies I’m able to understand see how GM is cutting loses for over-paying its bloated, entitled workforce.
If you’re wondering why U.S auto-manufacturing has been declining, well consider researching UAW. When GM gives into Union demands, they have to make cuts or find cheaper alternatives. Those GM manufacturing plants aren’t going to pay for themselves. One of the main reasons why GM is structured the way it revolves around UAW. GM is a profit-driven company, I’m not invested in GM personally because of UAW.
With all of Donald Trump’s faults, you have to give him credit for the economy, unfortunately for GM, their entitled workforce and their labor union stays on top of GM’s profit margins. Sure GM’s debts and liabilities aren’t talked about when UAW makes their pitch to GM workers on why now is a good time to strike, what most protectionist/socialist derived institutions focus on is how much money is being made and this is of course why a lot of quality-related problems occur at U.S auto manufacturers.
So as of today, GM has lost over $1 billion dollars because of the strike, but the reality is, it’s probably a lot more than that, because, the current losses don’t account for any potential momentum that would have occurred leading into the holiday season. These losses are production-related. I tend to also look at the human factor, being that I’ve worked in a factory, disgruntled employees, tend to find ways not to be as productive as they can be, in some instances doing just enough not to get fired. Being that GM via UAW already has job protections in place that make it very expensive to fire unproductive employees, the working atmosphere could be challenging and one would expect that more unexpected problems may arise after this entire ordeal is over.
The Labor union era could be coming to an end, Toyota a Japanese company has, for the most part, avoided the same labor union problems GM has suffered and because of this Toyota hasn’t had to outsource in the same manner GM has. If people wonder why Toyota cars are usually made better than GM or American made cars, if you ask an investor like me I’d tell you it’s because they don’t have a UAW problem and their workforce doesn’t come to work with an entitlement attitude.
Now, this is not to say that in the future Japanese auto manufacturers won’t end up in the same pickle as U.S auto-manufacturers, but, maybe Henry Ford was right to fight against the Unions? Ford unlike GM, in my view intentionally kept itself small because of their relationship with UAW. By the way, Ford negotiation talks with UAW will be happening soon. It shouldn’t be a secret anymore as to why U.S cars have low quality. It should be noted that European auto manufacturers have similar problems, protectionism has it’s flaws and the major flaw to socialism, collective bargaining and protectionism is the quality, because, in the end, the customer is always right and if customers are having to go into debt to purchase a low-quality car, usually the customer isn’t going to go into debt for it for a second time.
If you’re saying to yourself what’s the big deal? Well, fewer sales equate to fewer people willing to invest in GM, which equates for GM having to find lower quality alternatives for parts. Look how many cars GM has had to phase out? Why? Because of quality-related issues, if I had a horrible experience with a Chevy Cruze, I won’t buy it again and I’ll tell my friends not to buy it again. That’s how the market works and don’t assume nationalizing GM will solve the problem either, lots of countries nationalized industries and consumers still found ways not to buy.
There needs to be a rethink in the Private Sector union culture! No offense but for many UAW workers U.S Auto-manufacturing has been a godsend and if you don’t believe I challenge you to find another company willing to pay you what GM is currently paying you!
Interesting times ahead