The U.S.-based auto manufacturers -- once known as The Big Three -- have been running their businesses this way since they entered into contracts with the United Auto Workers between 1937 and 1941. Foreign-based auto manufacturers, in contrast, have run factories in this country for the last 25 years without union contracts. Two of the Big Three, Chrysler and General Motors, are now facing bankruptcy, and the third, Ford, has just reported big losses. The foreign-based companies, though facing difficult times, are economically viable.
This is true even though wages at the U.S. and foreign companies are virtually the same. But lavish fringe benefits -- especially retiree health-care benefits -- have proved ruinous to the U.S.-based companies. And even more damaging, it can be argued, are the thousands of pages of work rules in their UAW contracts.
The Japanese and other companies, unburdened by such contracts, can use flexible management techniques, giving autonomy and responsibility to assembly line workers, eroding the distinction between management and labor, and encouraging employees to take the initiative to improve their products. The U.S.-based companies, tethered by their UAW contracts, can't do this. The result is that for decades the foreign companies produced better quality vehicles and their sales increased at the expense of companies based here.
Detroit executives realized this, and today their companies produce some cars competitive in quality with Japanese and German products. But it has taken years of hard and expensive bargaining and has come too late to save them.
The card check bill's mandatory arbitration provisions are a recipe for doing to very large parts of the private sector what the UAW did to GM, Ford and Chrysler. Imposing this burden on our economy would be folly of the first order. Here's hoping that Arlen Specter keeps his word this time, and that his new colleagues think hard before they inflict such long-term damage on our country.
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