The Milwaukee Journal Sentinel (MJS) is nothing but consistent when it comes to editorializing on labor relations. While it expresses regret over the loss of family supporting jobs and Milwaukee's nationally high and very stubborn poverty rate, it has never missed an opportunity to push for wage or benefit concessions for unionized workers.
A year and one half ago, when the economy was expanding with corporate profits the highest since the Gilded Age and labors’ take the lowest, the editorial board urged three separate groups of local employees to agree to concessions.
First, County employees were urged to be “realistic”and praised for accepting higher health care premiums and scaled back pension and sick leave benefits.
Then Milwaukee’s Harley Davidson workers were urged to accept lower wages for new employees and changes in their health and pension plans even as Harley generated record revenues and rewarded its executives with huge compensation increases.
Shortly afterwords, the editorial board urged Kenosha’s Chrysler Engine Plant employees, members of UAW Local 72, to "be realistic" and accept “painful concessions” from the company's new owner, the private equity firm, Cerberus, even though Cerberus hadn't even asked for them.
More recently, it has supported eliminating firefighter and Milwaukee County jobs and opposed requiring employers to provide their employees with paid sick days. But its recent editorial that advocates letting the U.S. auto industry with its 3 million middle class jobs go out of business takes the cake. It blithely ignores that the U.S automobile industry is:
- the backbone of America's manufacturing sector
- responsible for 1 out of every 10 private sectors jobs and $150.7 billion in personal income
- critical to America's national defense
The editorial also ignores that failure would cost $156.4 billion in government revenues over just three years at a time when the economy is reeling, unemployment soaring and the deficit approaching one trillion dollars.
Not only does the MJS editorial advocate allowing the Big Three to go bankrupt, but it targets the United Auto Workers Union (UAW) and its middle class members for unjust criticism. It is so loaded with tired, inaccurate and anti-labor rhetoric it could have easily have been cut and pasted from a 1970s' Heritage Foundation report.Here's what the MJS editorial writers alleged about the UAW and its members and the facts:
A second bailout won't make up for decades of mismanagement and union intransigence...
The U.S automobile industry has been mismanaged. Congress has responded by appropriating $25 billion to assist the industry in developing a new generation of energy efficient vehicles and green technologies. But the industry's current crisis is driven by the credit markets collapse and the resulting recession. One million three hundred thousand (1.3 million) private sector jobs have been lost causing consumer spending to decline for the first time since the early 1970s. As a result, car sales for all auto companies including Toyota have plummeted.
The Big Three are seeking a bridge loan to help it deal with the most severe economic downturn since the Great Depression.
The UAW has been anything but intransigent. The 2003 and 2007 contracts cut billions of dollars in costs for the Detroit 3. In 2007, new hire wage rates were halved to $14 per hour, new hires got reduced health care benefits and were not included in the existing defined benefit health plan. In addition the creation of the VEBA for retiree health care saved the companies $33 billion in future health care obligations.
The UAW has also allowed many sub assembly operations traditionally done in-house to be outsourced to suppliers and has agreed that certain non-core functions like housekeeping could be contracted out to lower paid workers.
The Detroit 3 and the UAW have been operating as if they were in bankruptcy for the last several years. One hundred thousand (100,000) autoworkers have lost their jobs in just the last two years as auto companies have closed plants and reduced capacity.
The overhaul should include severe cost reductions and the end of onerous union rules that hamper productivity.
The UAW long ago recognized that world class quality and high levels of productivity are essential. The UAW at plants like the Chyrsler Engine Plant in Kenosha and the GM Assembly Plant in Janesville have worked in partnership with management to improve quality and productivity. The Chrysler Kenosha Engine plant has been recognized as an industry leader in team based manufacturing techniques modeled on the same operating systems used by Toyota.
But bankruptcy is a system for reorganization - companies continue to operate in Chapter 11. Jobs would be lost, lots of jobs, and a bankruptcy for any of the three companies would be painful. But all 3 million jobs tied to the industry would not vanish. Other companies have emerged from bankruptcy stronger. The airlines repeatedly have foundered only to re-emerge.
The truth is, the Big Three would most likely face a Chapter 7 liquidation not a Chapter 11 reorganization. It is highly unlikely that the Detroit 3 could get debtor in possession financing to continue operating or that consumers would buy cars, the 2nd largest consumer purchase, from bankrupt companies.
It's astounding that the MJS would suggest that the U.S. airline industry is a model. That industry has been a basketcase for almost thirty years. It is currently hemorrhaging billions of dollars and tens of thousands of middle class jobs while reducing routes and capital investment and increasing fares. It is a model for the failure of deregulation.
The truth is, the government has delayed this day of reckoning for years. It bailed out Chrysler in the late 1970s, imposed quotas on Japanese imports in the 1980s, and for decades let the Detroit automakers build gas guzzlers under sham federal fuel-efficiency standards. For its part, the UAW kept fighting for expensive benefits and embracing a 1950s worldview even as the automakers were crashing
The Chrysler bail out was an unmitigated success story. When the federal government offered its help, Chrysler was responsible for one out every one hundred private sector jobs, most located in urban areas. The loans were repaid in full ahead of schedule. A viable Chrysler continued to exist providing family supporting jobs, health care and pensions to tens of thousands of workers and retirees around the nation and in Wisconsin.
Quotas were never imposed on foreign automobile competitors, although Japanese companies adopted voluntary trade restraints in the early 1980s.
Perhaps the MJS editors are confusing the Big Three with Harley Davidson which successfully restructured under the protection of actual quotas.
It is also untruthful and irresponsible to maintain that the UAW embraced a 1950’s mentality as the automakers were crashing. As a result of the 2003 and 2007 contracts the cost gap between the Detroit 3 and Toyota will be eliminated.
Anyone who has been inside a UAW represented Ford, GM or Chrysler plant recently will attest to the strong union commitment to streamlined work rules designed to build high quality vehicles at low cost.
According to the authoritative Harbour Report, the UAW represented Chrysler Belvidere assembly plant was the most productive car assembly plant in the United States in 2007 topping every foreign owned plant. Another UAW plant, a Chrysler joint venture engine plant in Dundee, Michigan was the most productive engine plant in this country last year.
Wisconsin is the home to hundreds of automotive supplier firms such as Johnson Controls, Dana Holding Company, Charter Wire, and Stratech. Tens of thousands are employed at these companies. We have begun to see the impact of GM's shutdown in Janesville which now has the highest unemployment rate in the state. We simply cannot afford to allow this critical industry to go bankrupt. Congress should provide the Big Three with a bridge loan to help it survive the current recession and retool for the next generation of green vehicles and middle class jobs. The MJS should listen to our new President. It needs to reexamine its blind faith in market fundamentalism with its anti-labor animus and support policies that actually promote the middle class and family supporting jobs.
John Drew, UAW Local 72 President (1996-2004), UAW International Representative Region 4
Michael Rosen, Professor of Economics, MATC
