Tuesday, July 24, 2007

UAW/Detroit labor negotiations

So it seems that the UAW is beginning its bargaining with the Big 3, hoping to walk the fine line between acknowledging that they have to help a troubled industry, and avoiding the face-loss of giving up any benefits.

Seems to me that this is rooted in an unfortunately too-typical short-sighted/self-defeating tactic of winning the battle at the expense of losing the war. If the unions preserve benefits packages that are uncompetitive, they may keep benefits or jobs in the short term, but they will ultimately find themselves with fewer members overall as the industry downsizes.

I suppose I should be up-front here about my general anti-union bias: while I support unionization and the right to collective bargaining, I feel that the vast majority of unions are net-negatives for their workers and for the unionized industries. They all-to-frequently foster an us-vs-them attitude within a company (as opposed to "our company vs. our competitors", which it should be), or a highly inefficient and unhealthy bureaucracy (the NEA and UAW are classic cases of this), or general impediments to innovation and nimbleness.

This time the UAW professes to understand the trouble that the Big-3 are facing. I would propose that the negotiators try to call this bluff. If in fact the union recognizes this, then they should be part of the solution. Instead of negotiating a contract that enshrines certain benefits or jobs, they should negotiate a performance-based contract. If the union improves productivity, provides more flexibility/nimbleness/innovation/quality, and otherwise meets lower costs-per-car or increase efficiency targets, then the automakers should actually promise them a net INCREASE in benefits than they currently receive. But if things remain the same or net efficiency decreases, then the union should see their benefits shrink accordingly.

The same should go for executive pay, frankly: although their performance is, in theory, already tied to performance by being so heavily weighted towards stock/stock-options, it is far too common for them to preserve compensation through other means even when the stock does poorly. If they're going to ask the UAW to have more skin in the game, then the executives should do likewise and truly and unambiguously tie their compensation to specific performance targets.

It's funny what can happen when people's interests become aligned.

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