Friday, September 30, 2005

Labor and Management, Mutual Destroyers

Big article in the papers today about Ford, reorganizing its relationship with suppliers to get back in the black.  Re-organizing, in this case means wrecking the fortunes and careers of a whole bunch of people Ford encouraged into cut-throat competition with one another, for its own leverage and profitability. 

Sorry guys, didn’t work.
Bill Ford can explain a lot, but there's no way to sugar-coat this decision.


WilliamclayfordBankrupt your companies, sell the house, lay off your workers so they will have to sell their houses as well.  Smaller houses perhaps, but with equal or even worse consequences.  Social engineers would put the case that Ford (and GM and Chrysler) have a responsibility to reverse the process they insisted upon, through a less destabilizing series of mergers and acquisitions that would decrease the field of players while softening the blow.


Detroit’s Big Three have never worked in any interest other than their own and in the past three decades they haven't even done that.  They will probably not any of them survive as companies, certainly not without dumping their collective pension and health plans (these were a plan?) on the taxpayer.  Automakers blindly followed America’s steel industry in the mutually-destructive and ultimately destroying, embittered relationship between Labor and Management. 


You can add to that list as your local dying or dead industry dictates, but Steel and Auto led the way.


Paradoxically, Management made its worst blunders in good times.  Within the narrow confines of periodic profitability, when cars were selling, Management was too self-interested to recognize the monster it was inviting into its corporate broom closet. And it was the broom closet. Unions were never recognized as anything other than the ungrateful grease monkeys, holding a gun to Management's head.


For its part, Labor hadn’t a lot more to ask for financially.  Wages were great, but the union bosses needed re-election and discontent was the surest way to get it.  Thus began the years of crippling focus on work-rules, retirement and health benefits.  Plenty of blame for both sides, greed instead of need for the unions and anything-to-keep-the-lines-moving on the part of Management.


During these years, the Japanese, who would soon arrive to bash Detroit’s brains out, had invited labor organizations into their board-rooms. It’s a simplification to say that the Japanese system of lifetime employment and union integration into corporate decision-making is universal or without problems. But it recognizes what we fail to see in the American confrontational paradigm, that the health and welfare of corporations is tied irrevocably and systematically to the health and welfare of its employees.  Thus one cannot possibly prosper in the long-term without the other.


The crime of the 20th century in America was not the Lindbergh kidnapping or the O.J. Simpson murder trial, but the failure of Labor and Management to integrate. 


AnnaburgerJobs are not special, nor are profits.  Each can be found elsewhere, relocated off shore or brought home, according to its maximum advantage and each is currently bound to rules that have no basis in human values.  That we have encouraged union leadership and corporate governance to act in short-term advantage against long-term values has proven to be an exercise in the reality of just how quickly the long-term comes upon us. 


It’s too late for American Steel and I make the case it’s too late as well for American Automakers unless something both drastic and unconpromising happens to force a detente.


Unions are at a crossroads and they are met at that four-way stop by a badly injured American business model.  What happens next and the fortunes and futures of untold millions of American families depends upon the intelligence and good-will of leaders who must unbind themselves from past grievances and past working relationships.

The prospects for that are not good
.  The best hope for the beginning of an industrial renaissance is in the hands of the head of one of the last family dynasties, William Clay Ford.  He and Anna Burger, who heads up a breakaway coalition of unions should lock themselves in a room and consider the future of American industry. 
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See Taking My Country Personally on my personal web site.