Deja vu, Concessions and John Mellencamp

The UAW and the big three Detroit automakers sit down tomorrow (now Monday, thanks to an agreed on delay) to begin negotiations of a new collective bargaining agreement, and the superlatives are already being tossed around left and right. The big three automakers are losing money hand over fist, and want to re-negotiate the promises they made to many now-elderly lifelong employees. The NYT summarizes it well:

The union is trying to protect a signature feature of the middle-class lifestyle that its blue-collar members have enjoyed. The retirees, roughly 600,000 of them, risk seeing an erosion of benefits that they had assumed would be secure when their working days ended.

“This is what we were promised,” said Jim Ziomek, who retired in 2002 from a Ford Motor parts distribution center in Livonia, Mich., after working for the company for 34 years. “You’re going to have a pension, you’re going to have health care. Well, now all of a sudden things have changed and they want to take it away.” G.M., Ford Motor and the Chrysler Group say these so-called legacy costs have hampered their fight against surging foreign competitors. Health care and pension benefits cost them $1,000 for each vehicle they sell, they say, compared with a few hundred dollars for companies like Toyota, Honda and Nissan.

No doubt, the big three are struggling; combined, they lost over $16 billion last year. And right now the UAW has more retirees than active employees, and those retirees are receiving good benefits. So, to try to make up for some of the losses, the companies target their employees, especially the retirees.

But here's the thing. It's not that simple. In the last 20 years, the American market share for the big three has gone from 70 to just about 50 percent, thanks to the rise of Japanese and Korean automakers... Japanese and Korean automakers that have, for a long time now, made lighter, more fuel efficient and affordable cars, while American automakers have constantly pushed big, clunky SUV's and trucks.

For a while, those were pretty popular, but companies like Toyota, Honda and Hyundai were smart: they anticipated the shift in consumer interest and demand, and geared production and development towards the vastly superior product they put on the road today. This had nothing to do with any inherent advantage; they just planned better.

The writing was on the wall for years, and anyone who has ever had to suffer through the car buying process could see why these new Asian cars were so much more appealing. So, one would think, the big three would see this and start shifting their development and production towards these types of fuel efficient cars. In the face of a public that was obviously demanding a different product, wouldn't it be fucking clear as day that something would have to change?

Instead, GM, Chrysler and Ford all decided that it'd be a much better idea to keep pumping out the gas guzzling behemoths that have marked the last two decades of their fleet. In the face of a shifting market, they decided to dress up their shittier product in an American flag, film it with some burly men at construction sites and running through wheat fields, track in some John Mellencamp songs and hope people are suddenly compelled to buy their productive despite its relative shittiness.

Sure, they've introduced hybrid and E-85 vehicles, but they've barely marketed them, and, in addition, cars don't have to be hybrid or E-85 to get better gas mileage and thus be more popular; "regular" cars all over the world have higher fuel standards, and that more than anything is what Americans are clamoring for right now.

Now, they're $16 billion in the red this year, and using their massive PR teams to put pressure on the unions to take huge hits to clean up their mess. But, wait, haven't we seen this before, when it came to job cuts?

An unprecedented program of buyouts and early retirements has slashed 34,000 jobs at GM since last year, and Ford is in the process of cutting 38,000 positions. Chrysler, which went through a major restructuring in 2001, is trimming another 9,000 UAW jobs.

A steady erosion of market share has also forced the shutdowns of some of the domestic auto industry's most productive assembly plants, such as GM's Oklahoma City factory and Ford's midsize car plant in Atlanta.

Company insiders said this round of talks won't focus on job cuts simply because the tidal wave of buyouts has already pared staffing levels to the bone. "We can't cut any more because we still need to run the plants," said one executive.

Instead, the 2007 negotiations are expected to target health care, the single biggest component of the growing disparity in labor costs between the domestic automakers and foreign manufacturers.

And it's not like those employees that still have jobs haven't felt the pain, especially on healthcare, which is the next target:

In 2003, Gettelfinger took a hard stance against any givebacks on health care.
"Make no mistake about this: We are not going to shift health care costs in negotiations with the Big Three," he told reporters before the talks opened.

But two years later, the UAW agreed to rare, mid-contract changes in health care coverage at GM and Ford. The decision came after Gettelfinger and other UAW leaders were given access to confidential data on the precarious financial conditions of the two automakers.

So, four years later, the automakers, having made no changes or adjustments, are coming back to the trough of workers' hard earned benefits, trying to take the healthcare of the people who did the back breaking work for them for 40+ years.

And let's get another thing straight. I understand that it hampers the bottomline a bit when you're paying out (promised and well-earned) retiree benefits, but it doesn't change whether or not your car is viable in the market and if people want to buy it. I'm not gonna compare a Toyota and a GM and say, shit, GM has to pay out a few hundred more dollars per car, no way am I purchasing that one. Yes, less of a benefit burden could free up R&D costs, but given their relative naivety and stubbornness and love for huge executive pay packages, does anything think that'll be the case?

But I'm pragmatic; there's no way that the union is going to come away from this without giving up something. But like I've advocated before, it can't just be another drastic cut that allows the big three to go along their merry way and embrace ol glory in their ads without making any actual changes to their product.

There has to be some acknowledgment from the big three that yes, what we've been doing sucks, and we're going to change as you make these sacrifices, so that our sales will go up and we don't have to come to you again (at that point, they'd be asking for slave labor because without, they just couldn't survive). One solution could be insisting that some of the money the companies would save would have to be invested in R&D on hybrid vehicles and raising CAFE standards; they prattle on to Congress about how expensive that would be, and now here's their chance to show they are dedicated to making the change if they just get the help they need to do it.