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The Big Three and the Impact of Unions

February 14th, 2007

Some days a guy can’t enjoy a coffee around here. I no sooner posted Dr. Z. and the St. Vaentines Day Massacre than Ron added:

Let’s not forget about Buzz Lightyear. After all, I should think he had a hand in the makeup of those numbers.

Actually Ron, sorry. Last time, it was Buzz, this time I stand by “extreme mis-management”. However, Buzz has often in the past complained that Canada was losing good auto industry jobs. What he never mentions is, while the unionized automotive sector is getting killed, the non-unionized has constantly been expanding.

Today is not the first time in recent years that we have woken up to duel headlines, plant closings for the big 3, new plants for the off shores:

About 13,000 Chrysler workers, including 2,000 in Canada, will lose their jobs under a plan designed to cut the struggling automaker’s costs and return it to profitability by next year.

The plan was announced Wednesday morning, hours after Chrysler’s parent, DaimlerChrysler AG, said it was considering “far-reaching strategic options with partners” and that “no option is being excluded.” The plan, announced Wednesday, also calls for closing the company’s Newark, Del., assembly plant, and reducing shifts at plants in Warren, Mich., and St. Louis. A parts distribution centre near Cleveland also will be closed.


Toyota Motor Corp. will boost its substantial presence in North America by building two more assembly plants in the next few years, in addition to one already under construction in Woodstock, Ont., says Jeff Schuster, executive director of global forecasting for auto consulting firm J.D. Power and Associates.

An announcement about one of those new plants is imminent, while the other one could come a year or so later, Mr. Schuster told a conference put on yesterday by J.D. Power and Standard & Poor’s Corp.

And there are probably more to come before 2012

By the way, there was some good news for Canadian operations (Brampton specifically) in the Chrysler re-structure:

DaimlerChrysler announced today that the all-new 2008 Dodge Challenger will be built at its Brampton Assembly Plant near Toronto.

And here it is. Maybe they’ll make this one in a standard, and stop excluding us manual guys from their cool cars.


  1. Ron
    February 14th, 2007 at 11:40 | #1

    Is it not true that high wages/benefits earned by the unionized autoworkers contribute to the high cost of the vehicles? Whereas companies like Toyota (and I beleive Honda) who are not unionized are selling like mad and their companies are expanding.
    These are the numbers I was referring to re: Buzz.

  2. Brian
    February 14th, 2007 at 11:55 | #2

    If the problem was strictly wages and benefits the imports would be there too, they pay the same wages the big 3 do. They don’t have the pension, and that is part of the problem. Of course, Chrysler will put more people on pension as a result of this, that’s mis-management.

    In this case, and I cite only this case, I call bad management and not union influence.

    Look, we went through this five years ago, plus one small purge since then. In that time gas prices have nearly doubled, as as the size of the engines we’ve built. Chrysler is the only company without a sub-compact on the market.

    Note in the Toyota article, they say more to come by 2112 so they can keep up with demand. Chrysler has over built in the past year. In fact warning were out a year ago that Chrysler had too much inventory, and the big guys poo-poohed it, and kept building hell bent for leather. We were on six day work weeks, while cars were not selling and everybody knew it except Dr. Z and his band of useless accountants.

    One last thought. I mentioned putting a standard transmission in the Challenger. I won’t buy an automatic, which rules out the Charger for me, a car I like. If your turning away customers that easily, your doing it wrong. Chrysler has been doing it wrong ever since they became a subsidiary of Mercedes.

  3. Ron
    February 14th, 2007 at 13:06 | #3

    According to Lee Iacocca’s book, in 1977 Chrysler was producing cars without orders and sending them to the dealers with orders to “sell them”.

    None of the departments, sales-production-accounting, were talking to each other. Could this be what is happening again?

  4. Brian
    February 14th, 2007 at 13:10 | #4

    I was thinking of that as I wrote this, and thought of looking up the quote.

    Yes, it’s happening.

    Last fall the DC boys decided they had excess inventory, some shut downs where scheduled. Then, according to the Wall St. Journal, they went to their dealers, had a big meeting. Standard auto-industry stuff. They said, we need you guys to take more cars of our hands, fill up your lots. The dealers said, lots are full, there’s no room for more cars. They had more inventory than they thought.

    In 2007, there’s no excuse for not knowing how many cars are on each and every lot, and how many cars that lot can hold. None!

    One of many examples of what’s gone wrong here.

  5. Anonymous
    February 14th, 2007 at 13:17 | #5

    Unions have definitely contributed to the fall of the big automakers. But my past experience in a similar environment showed that big corps that are unionized also promote morons that only profess loyalty to the company and they have no management potential whatsoever. This is partially proven by the Japanese becoming North American automakers and paying the same wages: they can manage their staff and get production from them. We are doomed in the America’s as industry is slowing dying off. The greatest irony is that we pioneered every process in management science now used against us by our competitors and we mass produced grads with the ability to apply them: to no avail as the boomer generation froze them out to protect themselves. Who is going to pay these a-holes pensions 10 or 20 years from now if these companies go down? Don’t cry on my shoulder.
    (real conservative)

  6. Rob R
    February 14th, 2007 at 14:38 | #6

    RC is right. Why would the best and brightest be headed to doomed companies?

    If an average of $1200 per vehicle goes to pay pensions for GM as opposed to an average of $400 for Toyota, then GM has to build cars with the same quality while having $800 less to do so, assuming everyone pays the same wages. I’m sure it’s great to have all the best benefits and a great pension but someone has to pay for it. As taxpayers, we’re forced to pay for it in government and for teachers AND sometimes for the CAW. Consumers, though, will not pay for your easy living, given a choice.

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