Thursday, April 16, 2009

CAW May Let GM, Chrysler Die

Autoworkers Union unwilling to save workers' jobs

Without receiving bailout dollars, General Motors and Chrysler may both be in bankruptcy within the next 60 days.

If this happens, both companies would likely halt their operations while they are liquidated.

CAW, the Canadian Autoworkers' Union, could help prevent this by making key wage concessions that would allow Fiat to forge ahead with a merger with Chrysler that could save that company.

At $19 per hour, the concession being asked of CAW seems steep. But not when one considers that, between wages and benefits, the average CAW worker receives $76 in total compensation per hour, for a total of $156,000 per year. Under the proposed restructured labour deal, this average total renumeration would be reduced to $57 per hour, for a total of $112,000 per year.

Without these concessions, according to the judgement of nearly any economist, government bail outs of automakers would accomplish nothing in the end -- the companies would continue to be perpetually unprofitable, as they continue to undercut any potential profits by paying for overpriced labour.

While CAW has agreed to negotiate reductions beyond what has already been agreed to, it's unlikely that they will agree to give up the $19 per hour that Fiat is demanding. This makes it all the more likely that the company will be lost within the next month.

Unless GM receives a similar deal, it will likely be in bankruptcy one month after that.

All the jobs of those working on auto assembly lines for these two companies would be lost -- and all because CAW refuses to admit to the economic realities facing these two countries.

The government cannot afford to continually bail out perpetually unprofitable firms.

Only 13% of CAW's 225,000 members work for automakers.

Thus, the government stepping in with a bailout without CAW making the kind of concessions necessary to allow these companies to operate profitably could only really be for the benefit for those working for these companies -- approximately 29,250.

Canadian tax dollars should be spent for the benefit of all Canadians -- all 30 million of them -- whenever possible. Spending billions of dollars in taxpayers' funds to ensure that 29,250 people can continue to earn more than $150,000 a year is nothing more than spending superfluous amounts of government funds to ensure the extravagant material benefit of a tiny portion of Canadian society. Moreover, the government would be doing this only to have to inevitably have to do it again.

Only to CAW, an organization so chronically self-indulgent that only CUPE really compares, would something like this make sense.

Tony Clement's refusal to ride to the rescue in the absence of any realistica attempt by CAW to restructure its labour agreement so GM and Chrysler can afford to continue operating may not be popular with members of that union or their families, or even those who sympathize with organized labour.

But it is the right decision. To continually bail out less than 30,000 people to the expense of 30 million people is simply not an option for any responsible government.

It isn't Tony Clement, the Conservative party, or the Canadian government that are prepared to allow Chrysler or General Motors to slip into bankruptcy. It's the Canadian Auto Workers union that are allowed to let these companies -- and all the jobs they provide -- simply die.


  1. It's the Canadian Auto Workers union that are allowed to let these companies -- and all the jobs they provide -- simply die.

    ----> Exactly. Canadians need to know this.

  2. They seem to overestimate the amount of patience Canadians have with the litany of bailout demands from various industries.

    It reminds me of Buzz Hargrove strolling into the Dragon's Den with his hands in his pocket and little to no idea of how he was going to try to convince them -- just assuming that people would back him up.

    I think they're finding out very differently.


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