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Solidarity forever?
Michael Hlinka
I’m dusting off my crystal ball and predicting by the time you read this column, neither the group led by Magna nor Kirk Kerkorian’s Tracinda has purchased the Chrysler part of DaimlerChrysler.
To go out a bit further on that limb, I’m also going to predict talks are as good as dead, and DaimlerChrysler has resigned itself to the fact that the two companies, Daimler and Chrysler, are in this together, hand-in-hand, and if one goes down, it will take the other with it.
The reason negotiations were doomed from the start is the unique power granted to North American labour unions. However, were it not for those powers, it’s unlikely discussions would have commenced in the first place.
If we look at the (once) Big Three automakers, there’s one reason they can’t compete with foreign-based competitors. Union wages, and almost as importantly, union rules, make it impossible.
Magna and Tracinda thought they could make Chrysler work where current management could not because they believed there was the possibility of sweet-talking the UAW and CAW into concessions that those unions were not willing to give DaimlerChrysler. Talk about a pipe-dream!
But when the rubber hit the road, the principals realized the hourly workers couldn’t be convinced to give something back for the good of the investor class.
Why should they? This gets me back to the monopoly-power idea introduced earlier. If DaimlerChrysler is not happy with the price or service it’s given by steel suppliers, it can work with someone else. If DaimlerChrysler (at least in the US) doesn’t think the medi
cal plan from its current supplier is cost-justified, it can take alternative bids.
But for the most important input— labour—DaimlerChrysler does not have the ability to negotiate with anyone else but the certified, collective bargaining unit, which is great if you’re a union member, but not so great if you’re not.
It’s time to change the laws around collective bargaining in North America. Should workers have the right to unionize? Absolutely. However, companies should equally have the right to bargain with the union, or with individuals outside of the union.
Would this depress wages? No question that’s what competitive markets do. They lower prices and promote efficiency. Instead, we have a system which means the privileged few who belong to an organization like the UAW earn (with benefits) in excess of $125,000 per year—more than double the income of the average North American household.
Someone’s interests are certainly being served by this arrangement, but not the public’s!
Toronto-based Michael Hlinka provides daily business commentary to CBC Radio One and a column syndicated across the CBC network. He also conducts financial planning courses.
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