American Axle Strike: Unions Continue to Kill U.S. Manufacturing
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From American Axle strike could be prolonged - UPI.com:
American Axel (sic) made a profit of $37 million last year and wants to cut its wage and benefits package to a total of $20 to $30 per hour. They are currently paying $70 per hour, the News reported.
Is that right? $70 per hour? Who makes that kind of money in the the auto industry? I am confident it is none of the Toyota, Honda or Hyundai employees. Surely it is not the Tokai Rika or Nippondenso employees either.
The fact is that not only is demand down, but American companies are not as competitive as they need to be. One of the key components is the high cost of employees. This is a huge conundrum as for U.S. companies as health benefits are essential and the domestic cost of living is increasing. Not an appetizing recipe.
This can be shown by the ongoing trends that have been in the spotlight lately as US Auto Parts Companies Look Overseas:
American Axle & Manufacturing Holdings Inc., Visteon Corp. and ArvinMeritor Inc. are either closing plants, buying out workers or researching plans to offload health-care costs to halt financial erosion in the U.S. in 2008. Meanwhile, these same companies are building new plants, hiring workers and winning new contracts in Europe and Asia.
The backlash from the American Axle (AXL) strike will ripple through the auto sector potentially putting a stake through the heart at General Motors (GM) and Ford (F). These companies are in no position to withstand a prolonged union stranglehold.
Unions had their place in the development of our country’s manufacturing boom as there was an inequity between company and worker. That inequity has flipped somewhat and now is in favor of worker over company.
And… don’t get me started on my soapbox with my distaste for the modern day union. It appears that early on, unions were created to benefit the working in an effort to bring them a better working environment along with a reasonable pay for the work performed. Now, unions are in an adversarial relationship with companies and appear to exist as profit centers for the union management.
There needs to be a paradigm shift with the realization that unions have been the downfall of the Detroit marketplace and will continue to move jobs overseas. Is it any surprise that we outsource and offshore so much of our labor and manufacturing pool? How long do we allow unions to lose jobs for Americans?
Disclosure: Horowitz & Company clients do not hold positions in stocks mentioned as of the publish date.
- Federal Signal Corporation Q2 2008 Earnings Call Transcript »
- American Axle & Manufacturing Holdings, Inc. Q2 2008 Earnings Call Transcript »
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- Ford Motor Company, Q2 2008 Earnings Call Transcript »




This article has 92 comments:
The idea that unions were somehow a passing fad and aren't needed any more is just rubbish. Employers will always be more powerful than any individual employee and being able to bargain collectively is a fundamental right employees need to have in order to level the playing field. The decline in the quality of life for working people during the "Reagan revolution" years would not have happened had workers been able to bargain collectively. We should be at the point in the evolution of our advanced industrial economy where health care and fair labor costs are already factored in and investors know in advance those things will come off the bottom line.
As for your specific complaints about this company, the decline in the value of the dollar has made internal costs meaningless to foreign buyers and pricing, but the workers have fixed or increasing costs. If you're threatening to close a plant down whether they give back wages or not, what's the incentive to take pay cuts? May as well get the full value while they can...
#1 Unions are like the biggest thing to bring democracy to the common worker - nothing else does so to put a common worker on par with management.
#2 yes some companies understand (in particular IT companies) that their company is the employees so unions are less needed. This however doesn't apply to ALL BUSINESSES.
#3 Okay - $70 an hour is not that high of a wage when you include all benefits - health care, social security, other insurances, vacation, sick time, etc which are normally counted in the figure quoted.
#4 Hmmm...despite all the complaints - the company still made $37MM? Where is the complaint here.
#5 Greed is certainly out of control in this country - CEO and sports figure salaries far out pace anything anyone is is making but gee - the economy is still driven entirely by the consumer so it seems that $70 per hour isn't so bad any more now is it?
Generally a correct assesment, one thing left out however.
How much is management compensation in this company?
He works hard every day (so much so that he has to ice his shoulders and take aleve daily!)
His plant voted in a THIRD tier of wages last contract AND the highest tier took a PAY CUT last time. Dickie D made NINE MILLION last year and all management got HUGE bonuses. My husband still only makes 17 an hour; usually with a 50 hour week (around 2600 hrs/year).
If you divide 9,000,000 by 2600 (hours), old Dickie boy makes roughly $3461.53 an hour. Now tell me WHO'S overpaid??????
My husband worked for GM for 33+ years; never did he make $70 per hour as you say. The unions aren't killing U S Manufacturing; the greedy company CEO's and boards who send all the manufacturing jobs overseas are killing the US manufacturing.
When is it ever right that a GM president makes a million and a half dollars per year, then gets a six million dollar bonus when the workers get $600.00 bonus.
My husband was telling people 20 years ago that the US was going to become a service industry country, instead of a manufacturing company. Well, guess what, it is coming to pass.
Also, they are not being "paid" $70 per hour. Their pay and benefits add up to that number.
Whatever you are being paid, it's way too much.
this out
you recieve good pay and put in less effort
If the move is overseas, the heartless company also rids itself of the medical and retirement costs. Sadly, the Personal Retirement Account which our corrupt politicians refuse to consider as an alternative to SS is probably years away.
The segment of our medical insurance dollar that goes to lawyers, administrators, and non-covered beneficiaries begs for correction and there are many who are ready to jump in with a single payer solution that will let all of these heartless corporations off the hook but leave us with lousy medical care.
Sorry about the rant.
It seems people like you are ready to jump the gun and sit in judgement and help decide a wage for those who work hard and are trying to make a living and support thier family and community. You are allowed to make such a wage-can't we all? When you go for a drive, are you supporting overseas production on low wages? Or solid American wages-where you actually support those you live next door to?
We should all be writing letter after letter to our Congress men and women to step up and stick up for us, the American worker, and protect our health care (LOWER the cost!), protect our children's education, etc. I hope my children are strong enough to handle working 40 + hours a week without health care..........
I am striking with you all tomorrow evening......Solidarit... Forever!
(PS, check out how much $ Republicans give those abortion clinics, the anti-gun agendas, and all that "buddy-buddy"... protection, and more)
the u.s. manufacturing base has been and continues to be destroyed by the priunting press of the Fed and the mind-boggling deficit of the government. inflating , borrowing beyond any reasonable limit is the order of the day. buit hey, america is a "service economy", right>?> low wages, low value added, little to be exported. c# on, the cure for all this is to lower manufacturing wages to service sector levels, right?
ever heard about education? europe and asia invest a lot here - while the u.s. is obsessed with fighting wars in regions the president doesn't even know where they are.
LMAO, unions can destroy a business if they make demands that are out of whack. however, the malaise of the us. economy, especuiall manufacturing has little to do with unionized labour and everything to do with the fraudulent federal reserve and the governments who have run america into the closet over the past decades
As has been stated here plenty of times the $70 is a bogus number based on precieved benefits which continually degrade.
Your assumption that the Union is in an adversarial relationship with the companies show your total lack of knowledge.
The Union is becoming the company and doing what is in its interest not the interest of its members. With the establishment of the VEBA the UAW will be the largest single shareholder in GM. So who's interest do they have in mind. The company's and the share price or the hourly employees?
This strike is a farce and will not Bring GM to its knees. We have over a 4 month supply of Trucks of which we need parts from American Axle. What is happening here is the UAW is helping GM reduce some inventory and idle some plants. I'm sure GM can write off the lost production time.
The demands from American Axle are extreme by design and it will be some time before they settle because the Union must be made to look like they won something. My guess is the workers will settle for a $5 to $6 an hour paycut which is what American Axle really wants anyway but by working in cohorts with the UAW the Union saves face by saying they at least didn't let them have the $14 per hour paycut they were asking for.
It must be nice to have your own little article to spew your personal thoughts. What would be nice is if you did some research first so you didn't sound so ignorant.
The reason companies are moving overseas has little to do with hourly workers compensation and alot to do with taxation and regulation. You want jobs to stay in the USA then those items need to be fixed.
future?
I would for a company that is a supplier into the automotive industry. We have seen our sales continue to errode as the traditional big 3 have continued to source product to low cost countries. (We price our product in four decimal places, $0.000X and have lost business to LCC's for tenths of a cent. When I see a fully loaded rate of $70/hr, I compare this to our fully loaded rate of $23/hr and I questions how you can make $17/hr and have $53/hr in vacation, benefit, medical, etc. Our average paid wage is $17.50/hr.
I would suggest that greed is our biggest issue, CEO's greed drawing salaries that boggle the mind, lawyer's greed when suing on medical malpractice lawsuits, employee's greed, the union's greed.
If you look at recent changes in the automotive industry, there is a general recognition by top union management that changes need to happen. I only hope our politicians, industry leaders and fellow citizens change before we completely destroy manufacturing in the United States. What are we leaving for our kids?
Plant Canada
rocker
Really, you who write to this editorial ought to reflect on what went wrong with your dream, goal, wants and how YOU are going to remedy the situation. Racial slurs against the messenger aren't the answer. Holding your hopes for Hillary is preordained to get you more of what you got already. Expecting your union gurus to lead you to the promised land is like Jim Jones exhortation to slurp the cool-aid to refresh yourself during negotiations. You have the responsibility for you families future, work for it or accept what is offered.
As a direct manager of those walking the picket lines I feel for each and every one of them and their families. Most of them are good people with a decent work ethic. However, the UAW has protected thieves and troublemakers for so long that it is difficult to support their efforts. In one plant the UAW Local 235 has protected a 3-time convicted SEX OFFENDER who was recently caught again is out on bail and back at work. He has been up for discharge on several occasions and the UAW has bargained with management to keep him on despite the "piece of sh*t" that they claim he is.
AAM has resisted the fight to discharge this associate as they fear legal backlash and getting dragged into his legal proceedings dealing with his inability to keep his dick in his pants at the local high school playground.
Back to the issue at hand. AAM's direct competition, Dana, pays their people $14/hr. How can AAM compete with their costs? Each striker should put themselves in GM's shoes and ask yourself why you would pay AAM for axles that you can cheaper at Dana?
This is what will dictate AAM's future. As for Dauch making $9Million last year. People need to understand what $9M is made up of. His base salary is around $250-300K which is a lot, however, he made AAM and has earned it. The rest is the exercising of his stock options. People need to understand the investments and sacrifices made by Dauch to get AAM going 14 years ago. Last year he chose to cash in some of his investments. Why should someone fault him for that? Had each striker wisely invested some of their wages in AAM stock 14 years ago they would be able to reap some of those rewards as well. The sad truth is that very few hourly workers take advantage of the AAM 401K matching plan. THAT IS FREE MONEY FOLKS! But hey, I guess the Escalade needs gas first.
One great thing about the UAW, AAM and life in the U.S. is the fact that it is a democracy. People are free to protest, vote and do a lot of things. One of those rights is to QUIT. If you don't like your job and think you are getting screwed then QUIT and get a new job. Not easy? GET AN EDUCATION. Too old? Thats a lame excuse. One sad belief is that people think AAM is in business to employ them and give them a paycheck. The truth is that AAM is in business to make money. So many of the AAM hourly got in early and got in young. All they saw was the $$$. As wages and OT increased so did their spending. Now what?
Just a quick point on AAM profits in 2007. AAM made around $30 million in profits in 2007 on $3.2 BILLION in sales. That is not even 1%. Does anyone understand that is peanuts??? That is a baby step away from losing money. Does AAM need to be in bankruptcy for the UAW to conceded to the Dana wages? They aren't far away if they keep paying hourly $60-70 fully loaded per hour.
Again, on a personal level I wish those on the picket lines well. This sucks for everyone. Hopefully we can all get back to work soon.
It is true a lot of that American Axle's labor cost is due to health care increases and something needs to be done about that. Americans and Amercian companies pay way to much for something that is so subpar in quality. (I don't even want to get started on the subject of health care and what people in this industry make)
Unions are a thing of the past. Just ask any former Detroit News employee on what good being in a union ever did for them. It does promote laziness and swell the cost of a company. It is a different world today. Competition it so tough overseas. There is no room for excess fat. Until these unions go away we will continue to get are asses kicked and handed to us in Detroit. Unfortunately these automotive jobs were million $ jobs for our parents. We just need to realize this is not the case no more and there are people in this world who will do more for far less. It sucks, I know!
Horowitz
Now, I have just about had it with the uneducated and the insulting banter that is freely allowed to be written without a shred of knowledge of the real information. Not that it is of any consequence, but for your info, I drive and American car and I work 80+hour weeks. So do me a favor and stick to the topic as anything less make you look even more foolish than you already are.
AND...READ PEOPLE...READ! I never...NEVER, would put down a hard working individual and would never wish to take a job away from anyone. BUT..... the truth is the the middleman..the UNION costs us ALL dearly!
Stop putting your own personal matters in front of everyone else! That is why we are in this predicament to begin with. Everyone wants what is good for them, the unions, the management and the workers. None care about the other, and let's all face this basic fact. That can also be proven by the comments here.
More Proof??? 1 word.. DETROIT
Look at my history and comments. I have been screaming for over 2 years that we have problems and credit liquidity will dry . Am I 100%... NO. But have been much more right than wrong since last May...
Comments accepted...but slurs, insults, stupidity and other reckless idiocy not required.
Finally... AAA, I do not believe you about the "name" comment. It was obviously not in good taste. Though, I do forgive you and hope the best for you. I realize you are in a tough spot. best of luck..
If you do want to hear what I am talking about with some great industry guests, have a listen to my podcast (which is clearly on the mark as it is one of the top independent podcasts available)
phobos.apple.com/WebOb...
Andrew Horowitz
People complain about, well who is going to have the money to buy these cars. Well, is it possible with less cost going into the car the cheaper the car might be at the dealership. Thus the more our auto manufacturers might sell, increasing the need for our workers to build more cars. Who knows with a cheaper car Americans might start buying American again.
The Unions played their role and now they can go overseas to China if they really care about unfair labor practices. Hey, without unions you don't have to loose an hour during the day for mandatory lunch break and take stupid 15 minute breaks every two hours. Or is that something that union employees get paid for also? I read most of these messages above and haven't heard from any of the union supporters what good the union has done for them (Well, I retract that.....besides keeping an inflated hourly wage for unskilled labor) since our grandparents generation. Unions don't let the door hit you in the ass!
People complain about, well who is going to have the money to buy these cars. Well, is it possible with less cost going into the car the cheaper the car might be at the dealership. Thus the more our auto manufacturers might sell, increasing the need for our workers to build more cars. Who knows with a cheaper car Americans might start buying American again.
The Unions played their role and now they can go overseas to China if they really care about unfair labor practices. Hey, without unions you don't have to loose an hour during the day for mandatory lunch break and take stupid 15 minute breaks every two hours. Or is that something that union employees get paid for also? I read most of these messages above and haven't heard from any of the union supporters what good the union has done for them (Well, I retract that.....besides keeping an inflated hourly wage for unskilled labor) since our grandparents generation. Unions don't let the door hit you in the ass!
People complain about, well who is going to have the money to buy these cars. Well, is it possible with less cost going into the car the cheaper the car might be at the dealership. Thus the more our auto manufacturers might sell, increasing the need for our workers to build more cars. Who knows with a cheaper car Americans might start buying American again.
The Unions played their role and now they can go overseas to China if they really care about unfair labor practices. Hey, without unions you don't have to loose an hour during the day for mandatory lunch break and take stupid 15 minute breaks every two hours. Or is that something that union employees get paid for also? I read most of these messages above and haven't heard from any of the union supporters what good the union has done for them (Well, I retract that.....besides keeping an inflated hourly wage for unskilled labor) since our grandparents generation. Unions don't let the door hit you in the ass!
People complain about, well who is going to have the money to buy these cars. Well, is it possible with less cost going into the car the cheaper the car might be at the dealership. Thus the more our auto manufacturers might sell, increasing the need for our workers to build more cars. Who knows with a cheaper car Americans might start buying American again.
The Unions played their role and now they can go overseas to China if they really care about unfair labor practices. Hey, without unions you don't have to loose an hour during the day for mandatory lunch break and take stupid 15 minute breaks every two hours. Or is that something that union employees get paid for also? I read most of these messages above and haven't heard from any of the union supporters what good the union has done for them (Well, I retract that.....besides keeping an inflated hourly wage for unskilled labor) since our grandparents generation. Unions don't let the door hit you in the ass!
work losers
Ford awarded Mr. Mulally and several other executives a total of two million stock units valued at nearly $15 million, and more than 6 million stock options, for their performance in 2007. The company reported a lost of $2.7 billion in 2007, down from a loss of $12.6 billion in 2006.
The compensation disclosure comes a day after General Motors Corp. revealed in regulatory filings that it gave Chairman and Chief Executive Rick Wagoner a 33% raise in his 2008 salary, to $2.2 million, and awarded him stock worth at least $1.68 million for his performance in 2007. GM reported a loss of $38.7 billion last year.
Earlier this week, Mr. Mulally announced all Ford hourly and salaried employees in the U.S. and Canada would get bonuses. Hourly workers will receive $1,000 lump-sum bonuses, he said.
If that $1,000 is not a slap in the face after reading the above, I don't know what is.
I know there are thousands of families living throughout America barely getting by and "believe" the unions are a good thing. They're not. You probably think minimum wage is a good thing. It isn't. When minimum wage increases, you overall net take home pay (how much you have to spend) decreases.
As I mentioned previously, the only way to stop CEO greed (which is definitely true and disgusting), is to start your own company. Instead of banding together with other workers to stop your current company, band together to start a new company. Put it in your doctrine and mission statement that the new company CEO will not make more than n times the lowest paid worker (aka Japanese model) and your new company will be more competitive than your old employer. By having a more competitive company your price will be better and you will put your old boss out of business. Its capitalism, its supply and demand, it works.
As for those shopping at WalMart - you are killing yourself! You support a company that ships jobs and money overseas. I know the first argument will be that they have cheaply priced goods that you can afford. You can afford American made goods too - you only do not need to buy 10 of everything. Your kids do not need 1000 toys. You do not need a flat screen TV. We need to learn to live within our means, and to live like our grandparents. Try NOT buying something for a change, see how it feels. Try cooking instead of going out. Goto a bank once a week and put money in. Stop taking out loans to pay for frivolous expenses. With a national savings rate of -.05% (meaning collectively America spends more than it saves), we are killing ourselves. When it boils down to it you have to look out for number one, and your line buddy or friend from the job has to worry about his family more than he worries about you.
In conclusion, people need to stop whining and go back to work. I know I could be fired any day, so I continually try to make myself better. I learn new tools in my spare time, I work late and come in early. I don't expect paid vacation or double/triple time. I keep myself competitive, something that unions don't seem to grasp.
work losers
work losers
stiff
i work for a union company that sends GM supplies all over the place to canada, mexico and everywhere in between. we are one of MI biggest crossdock facilities for GM. recently, i have had to bid my shift over and over again due to our company laying off workers. it kinda sucks man. ive been bounced around all over my hours and then i find out im next in line to be laid off if AAM does not go back to work soon. i dont know about you, but i would love to make the money you guys make. i am barely getting by as is and if im forced to collect unemployment with no definite return to work date, im going to fall behind and be in pretty bad shape. im only 25 and ive already had to swallow my pride several times. ive lived in my car in the middle of winter, sleeping in kroger parking lots and ive had to beg people to let me shower or do my laundry at their house. when i got my job at my compnay i didnt go to work for my union. i went to work for myself. no one else. i have to support myself. we are all hurting and i know things are tough right now... believe me. i want nothing more than for this problem to sort itself out, but it might not happen like that. and it might not happen soon enough. if i am forced to be laid off ill have to start looking for another job. i dont care if i have to work at mcdonalds or somewhere like that. so what if im not making $11.80 p/hr. at least ill be making something. no matter what happens i have to survive. i MUST keep eating and sleeping indoors. i wish this mess was over so i could keep my job. i want to see some familiar faces back at work with me. these people are going to be hurting sooner than i am and i feel so bad for them. my seniority is the only thing that saved me. as for the unions... i dont know anymore. too many people at my company seem to get a "get out of jail free" card. they can be fired for falling asleep at work but be right back the next day. isnt that like the most unproductive, lazy thing one could possibly do at work? whatever, that same dude is a convisted rapist and stuff. it sucks. people need to learn some personal responsiblitiy and quit depending on their "brothers" to bail them out when they mess up at work.
we recently had a meeting with our co-owner, in which he asked us to keep our productivity up. i cant blame him. i run a lot of GM frieght everynight. in the freezing cold on an open crossdock and sometimes for 12 hours at a time (without a choice). i dont mind the overtime, but its bittersweet knowing its due to my coworkers poor performance. there is nothing my comppany can dot to remedy this siuation. people come in and milk out their work til the end of their shift and thats it! no more... it sucks because myself and a few others a left to pick up the slack, the dead weight... so i guess the union is keeping some lazy assaes at work which tends to actually make my job harder than it needs to be. other than that. they have their hands in my wallet too much. i dotn need to be protected because i come to work for that very reason.. to work and earn money for myself to pay bills and eat and be happy. what do people need to be happy in this world? a big car? a big house? what? i guess you need what makes you happy and stuff. i need very little. food, smokes, a place to live, and money to save in case of events such as this. i need to get real and start looking into college. youre never too old. im tired of my moniquer... the working stiff!
The typical pay for CEOs at big U.S. companies now tops $10 million, or roughly 200 times the average American household's income. So you might think top executives could resist charging the company for treats like German cars, elite club memberships and the private use of jets.
Nope.
A review of contracts and severance agreements from the past few months shows companies continue to treat execs to a potpourri of goodies like these:
A Mercedes-Benz given to the departing chief executive of a bank.
Use of a jet for regular commutes to work.
Exclusive club memberships.
A discount card giving a departing Wal-Mart Stores (WMT, news, msgs) honcho -- a multimillionaire -- 10% off on toasters and other stuff.
"It's ridiculous what these people do," laments Don Hodges, who believes his Hodges Fund (HDPMX) outperforms partly because it avoids companies where there are signs of a weak board -- including excessive executi