In 1946 nearly 50% of working Americans were represented and working under a union contract. In 1997 that number had fallen to 14.1 percent and in 1998 it continued its downward spiral to 13.9 percent. One could easily make a case that organized labor will become extinct in the next 20 years. The decline has been steady and certain. Bright spots have been absent, reverses in the spiral short-lived. Even with the increases in population, the actual number of card carrying union members has decreased. But this statistic does not show the actual loss of union jobs. Heavy manufacturing, mining and shipping were once the bastions of the labor movement. Today, these have seen the most significant reductions. It is getting difficult to find union jobs in Manufacturing outside the auto industry and these are disappearing fast. In fact, according to a recent USA Today article, less than 9 percent of Manufacturing jobs are “union”. Any group but organized labor would consider this rate of a loss a disaster, from nearly 50 percent to 9 percent in 50 years.

Automakers, tired of the hassles of restrictive union rules that made their business more costly and increasingly impossible to run have engaged in several successful programs to free themselves of the needlessly rigid straightjacket called a union shop. This straightjacket is pressed by union leaders who can only see perpetuation of the status quo rather than moving on to better things for their members. Their people are losing their jobs for a lack of vision by union leaders. Good union leaders can (and have) met this challenge and kept jobs while maintaining good wages, benefits, and safe working conditions.

The automakers’ reaction was and continues to be outsource much of the work other than the actual assembly of a car. The production of the small parts was an early victim of this program. Henry Ford made money making cars. He considered the parts production a place to earn a second markup, make money on making the parts after making the money from selling the car. And by making the parts he figured into the replacement parts business, one of the most profitable aspects of any heavy manufacturing. Henry Ford even grew the rubber trees, produced the rubber for the tires and cut and milled the wood for the trim. It’s like a farmer growing corn and feeding it to his hogs. He gets two markups. Sometimes Henry Ford got three or four. To make more money in the auto business you can either sell more cars or you can engage in more aspects of their manufacture and use of the product. Henry Ford did both to maximize the profit. Providing transportation for the masses was Henry Ford’s core business, not assembling cars. This is a key concept, one that the auto industry today has missed. And the automakers are not the only ones engaging this kind of stupidity, one heavy machinery manufacturer, also within the clutches of the UAW, introduced a new and revolutionary machine in the 80’s that was so “subassemblied” that putting it together added little value. The revenue was there but not the profits. They went to the people who made the subassemblies. One of those subassemblies was the whole cab, complete with wiring and controls.

Back to the present. The parts were easy to outsource and politically it was easy to explain, “It is not a part of our core business.” Let’s face it, when the American auto industry was king, making cars and anything needed to make them was their core business. You can give me all of that crap about doing what you do best and keeping focused but when you abandon any portion of your business you can’t expect the person who picks it up to share the profits. They want their share and they will get it unless you can beat them out of it as have some unscrupulous businesses. But you beat the supplier out of his money now, tomorrow there will be no supplier or one who makes junk. Today the automakers buy almost everything and put it together. And they don’t even put it all together. I don’t know of any of them buying their engines for cars from outside but this extreme outsourcing is done in the truck market. Just check who made the engine that powers a heavy Ford truck. The engines are painted blue but many are made by the yellow guy in Peoria, Illinois, not in Michigan. And the same can be said for Mack, White, and others. In reality automakers no longer manufacture a car. They just assemble it. They are more like a company that makes tea bags than an auto company. Functionally it’s just like dad putting the bikes together on Christmas Eve and there is little value added in the process. It’s just a matter of sticking it together and inserting some screws. With this change, the pie that the Automakers and Autoworkers once fought over is substantially smaller. The parts manufacturers have gotten some of it and few of them are union. So the autoworkers are getting an even smaller piece. I might add that in spite of the new “concentrating on our core business” direction tightening screws is something so complex that union autoworkers have failed to master it. Buy any new UAW built car and see how many loose screws there are in it. No wonder the manufacturers want them to do as little as possible. They are expensive and the less they do, the less that gets screwed up or better yet, not screwed down properly.

On the second front the manufacturers outsourced other services, the same argument was used, “It’s not a part of our core business.” I ask the question. Is keeping your machinery that is used to make cars maintained a part of your core business? I can argue the merits of outsourcing lawn mowing, if that doesn’t get done right the worst impact is a fine from the local municipality for weed cut violation. But by giving in on this one the unions opened the door a crack for the management and while it was unlatched the management drove the bulldozer through it. Ask any Caterpillar UAW (U ain’t working) members about the Don Fites Buldozer. And I didn’t name it that, they did. I don’t understand why union leaders were surprised by this management action. They tell their people every day you give management an inch they take a yard. They say you have to watch management or they will take advantage of you. But they were asleep at the switch or drunk on beer in the union hall when the union jobs went out the door. I say this because the UAW 786 Union Hall that went up for sale in York PA recently was advertised as having a large walk-in beer cooler. It was almost as if this was an essential item for conducting union business.

Equipment and facility maintenance was an early function to outsource. Why? Management found this function unmanageable with the current hoard of managers and the current management mind set. The men and women who performed this function were by necessity mobile and hard to track. They required real management skills and effort to direct. Managers had to get up off their duffs and get out there where it was happening and know what was happening. And too much of American Management was not up to the task. Let’s face it, most American management can see a golf ball at 300 yards but can’t keep track of 5 employees when they get outside 25 yards. They can coach soccer but don’t have a clue on how to build a rapport with the people they supervise in spite of the fact that the same principles apply. They can jog miles in the evening but walking across the building a couple of times a day to see what is happening, called Management By Wandering Around (MBWA) is too much effort. The maintenance people became part of the message line the unions used in the plants. They moved information about. They aided in creating dissent. They routinely took too long to do jobs. After all, the production worker, a guy putting pieces in a machine and taking them out can be watched and if he isn’t working, you can tell – although some of them easily snookered the management and got away with a half a day of work. But what about a guy who is pulling a maintenance cart from here to there, is he working? If he is standing there watching a machine, is it to look busy, or is he working? If he has the cart parked with tools out on the floor, is he working? Few managers really knew what their people should be doing or how long it should take so they didn’t know if they were goofing off. The solution should have been to fix the management problem not outsource the function, unless the function, if managed properly internally is more expensive. But the outsourcing was the easy out.

This outsourcing became the company’s message to the union, “You’re screwed and we are turning the wrench.” Somehow it became as much emotional as financial.

Lest someone say I am just against outsourcing there are places it makes good financial sense. I currently work for a company that would be a fraction of its size if companies didn’t contract for services so I could be considered pro-outsourcing. It makes sense where the vendor possesses collective skills, (including management) tools, and processes within its ranks that the average company cannot afford, usually because they would be underutilized. But as a company gets larger it is hard to justify outsourcing on that basis, often the tools are fully utilized as would someone skilled in the use of them. Also outsourcing makes even less sense when there is no leveraging through it. Where the contracted service can share tools (including things like computer programs) this is a boon. But the automakers took a valid management tool and used it to try to gain the edge over the unions. Unfortunately they cut the profit potential of their businesses at the same time. Any time a technical solution is sought for a management problem the result is less than desired. By rolling over and playing dead on it the unions condemned themselves to extinction.

The automakers formed alliances with the Japanese and tried to freeze the unions out or at least limit their activity. Just the aura of Nippon management had a ring that threw fright into autoworkers as if it were a Japanese dive-bomber in World War II. In addition, moving plants to the south, in the right to work states came into vogue. Note that it costs big money to relocate a plant. But the unions drove the price of labor so high that it was economically sound to move the production. And let me assure you, there are more factors to the price of labor than wages and benefits and in many cases the wages and benefits would have been justifiable if the other costs were not there. Unrest, harassment in the form of frivolous complaints and the like just raise the cost of labor since the management time to handle it is extra cost. A union member and a steward can take 10 minutes writing a grievance but till it is resolved it may take hundreds of hours of time, much of which the company pays for, not to mention the legal fees that may be needed. And the practice of multiple grievances drove companies crazy. This is where every employee entered the same grievance rather than entering one blanket grievance with fifty names. And the stupidity of some of these baffles the imagination. One such grievance complained about the size of the rocks the company used to fill a drainage ditch. Why? Because some employees, against company directive and prominently posted signs, used it as a short cut exit from the parking lot. They claimed the company was responsible for the damage to their cars. The old union leaders that fought (and some died) for a living wage and safe working conditions must roll over in their graves when they see this insanity! The greed, the frivolity and in the name of trade unionism that was once a phrase that meant integrity and helping the underdog! In the midst of this, the use of OHSA and other safety agencies to harass the company in the name of safety concerns will some day come back to the unions in the form of erosion of their ability to protect their members from unsafe conditions. This can happen because future legitimate safety complaints will be viewed as union action.

The losses in mining, primarily coal, were also significant. Use of machinery reduced the number of men needed to operate a mine. The tradeoff was simple, spend money for machinery, reduce expenditures for labor. Ironically the environment also suffered from this action as more coal was strip mined, a practice that is environmentally much more devastating than underground mines. Transportation has likewise been hit. The double trailers were an attempt to cut the number of drivers, primarily union drivers. It has not only had an impact on the union but also the safety of the general public. And the union demands made this management act more lucrative.

But the automakers took another page from the Japanese. It was JIT, Just In Time delivery and they tacked on something called Point of Use. The doctrine of JIT with Point of Use says have your supplier only deliver what you need; only when you need it, and have the supplier deliver the material to the point of use. The ideal situation results in no inventories, everything just magically appears at the point of use when it is needed. Once upon a time the manufacturing plants had inventories, material handling and people who did these jobs. The material handlers were employed by the company and if their producing counterparts had a union card, they did too. But today these functions are being taken over by subcontractors who “specialize” in placing their own people in a plant to carry out these functions. The “production workers” carry a union card but these material handling people rarely do. They maintain the inventories, ON THE CUSTOMER SITE. And I am told this saves money. Not on your life, unless the job was being featherbedded before. Well, we know the answer to that, it was another job like maintenance. The materials people were too hard to track. And the companies have further reduced the union liability.

Enough for bad news. Let’s look on the bright side. The unions have enjoyed fifty years of favorable legislation and court decisions. The NLRB is so pro-union that its rulings only favor management when the union position is grossly stupid. Less than half of its rulings stand up in even the most liberal courtrooms if the company has the guts to challenge. But the first law of bureaucratic influence is alive here. The NLRB would have no reason to exist if there were no unions. So the bureaucrats know unions must continue to exist if the NLRB is to provide jobs for bureaucrats. So unions will continue to exist and the bureaucrats who derive their jobs from them will continue to see they exist. Ironically in this favorable environment union membership is declining. And one must conclude that if it is declining in favorable times there must be something wrong, probably an internal problem. It is like the extinction of the dinosaurs that could not adapt. Few unions have been able to adapt, actually, the brains of the unions, the leaders, have not been able to adapt.

There are some unions that have seen increases in membership in the last 50 years, primarily the Retail Clerks, Teachers and Government Employees. Let’s examine them. The retail clerks unions were for a while a factor but they are experiencing hard times, they cannot seem to be successful in organizing the major chains, and they are loosing membership in the smaller chains because of fierce competition from the major chains. Let’s face it, if a single store is organized and one of the major chains finds the situation untenable, they close and move out of town. The union members find themselves with lots of union scale wage contracts and no wages. Then there are the teacher’s unions. These people were once called “professionals.” Today they are just day laborers who carry a union card, who hoot and yell at union meetings and vote to strike at the drop of the hat and the students, parents, taxpayers and education be damned. This is not universally true but the number of militant union members in education has grown so that positive peer pressure on teachers in schools is nearly as extinct as the do-do bird. This was once the force for improvement. The administration didn’t have to work so hard, if a teacher wasn’t cutting it, his peers would see if they could provide help, encouragement and direction. Often that improved the situation and preserved both the person’s job and the educational environment. Sometimes the direction they suggested was the door. And in those days we didn’t have as many Dr.’s in the school system, but then they weren’t needed, our educational system wasn’t as sick as it is today. More of the staff taught students and less of them were needed to direct others. Like any other professionals, teachers need coordination and support, not direction. I am predicting that in the next ten years we will see an aggressive program to reduce the number of teachers in the system, to reduce the cost. As the cost is driven up, we will have incentive to find ways to do this. Bill Clinton is a passing fancy. His “for the children” message will go out of vogue just as the sacredness of the space program did when the American public learned how much it cost. Education is today the fair-haired child the space program was in the sixties. This will happen with education shortly after 2000. When it does, the number of union members in the teachers unions will fall. How? Probably outsourcing! A footnote here, one of my former cronies at Caterpillar, now in education and local government read this and reminded me that there already is outsourcing, it is called private schools. With limited resources, a situation encouraged by teachers unions that fight the voucher system, they do a better job of educating children. I know why the teachers are afraid of vouchers.

Then there are the government workers unions, AFSCME for example. Here too the rates and numbers are going up and up. States are looking for solutions to this increasing problem. I believe the outsourcing of state functions will (and must) increase. Private prisons have been tried successfully but more things will be done as the costs go up. And there are other ways. The internet can be a significant force to cut government cost. Putting information on the web like the zoning laws is one way of decreasing costs of informing the public. It reduces the number of copies to make and hand out. And the information can be kept up to the minute easily. Often the actual computer document that is printed to produce the paper copies can be exported to the web in seconds. The public has access almost as soon as the document is changed and proposed changes can be displayed in the same way. The state of Connecticut nearly outsourced its Information Systems work recently. Although it failed other states are looking at similar plans. They will not all fail. I believe the days of government streamlining and hard times for AFSCME are nearly upon us. (In 1946 AFSCME had less than 100,000 members, today it has 1.3 million. Courtesy AFSCME Home page). Its growth has slipped recently, and will slip more in the near future.

Let’s look at some of the other negative impacts of unions on American business.

First, there is the issue of seniority. Let’s face it, as a 55 year-old who stayed with one company for 32 years before leaving as a “retiree”, seniority is important. If seniority is not recognized as having some value, morale is sure to suffer. The idea that someone can stay for twenty years and have some newer employee receive preferential treatment at his expense, with no mitigating reason taints morale. But let’s face it, when a person has hit their level, they should neither become a roadblock or stumbling block. If they possess nearly equal qualities, senior persons should have preference. Unions understand only lock -step seniority. And there is a good reason. In the building trades and the docks, the bosses hired and promoted their nephews. The rest of the crew got screwed. Seniority was promoted by unions to prevent these practices. It was effective but like anything else, it can become a problem if not used with common sense. And in American Business and unions, common sense is an uncommon virtue. Finding it is like finding the proverbial honest man.

Second is the idea of job security. Let’s face it, the only job security is attained by doing a job so well that nobody in their right mind would get rid of you. Of course there are no guarantees here, not all American management are in their right minds. But we have to risk that. A union contract can guarantee you legal job security but if the company goes belly up there is not security. Unions seem to forget that the goose that lays the golden egg each week can die if too many eggs are produced or if the goose isn’t properly fed. All the hype and rhetoric aside, all other things being equal, job security is better in a healthy company than in a sick one. The company’s inking a union contract is no guarantee that they can carry out the promises.

Third there is the issue of increasing costs. Let’s forget about wage and benefit demands. Work rules cost money. Featherbedding, a 1960’s word that has gone out of vogue is still going on. Tying a company’s hands so they cannot manage the business effectively has no long-range benefit. I have seen one opening create nearly a dozen moves. Each of these moves created a new “trainee” position. There were weeks and months of disruption. There are better ways of doing this if some common sense is used, all having less cost. In many cases it would have been cheaper to move one or two people and award the rest of the “disadvantaged” workers pay differential as if they had moved! And then make sure these are not disadvantaged in the next move. Other areas of increased cost include paying for a second set of management, the union leaders. Just the idea of having two sets of leadership in a plant is stupid. This structure wastes time, money and often puts the employee in a management/union no mans land where he can be shot by either side for following the directives of the other side.

I know of workers who risked it all because union leaders with agendas that did not give priority to the worker’s welfare told them to do things that were not protected activity. Had the company wished, they could have been disciplined for the action, including firing. Yet their union leaders continued to tell them the activity was protected. Why? Because the union’s agenda required them to take the risks.

I may sound anti-union. I am not. I believe unions at one time made this country better. But that day has past. The agendas of fat cat union leaders, making tens of times the salaries of their members have perverted the union ideals. Many of these leaders really do not have any idea of what happens on the shop floor. Many of the old masters of trade unions would call these leaders garbage if they were here today. And not all unions today are bad but it seems that power corrupts and absolute power corrupts absolutely. I use this word in the sense of abuse of power. How do I define that? Any power that is wielded for any purpose other than the benefit of the members, collectively yes, but more important, the protection of every individual, is a corruption of that power.

To return someone to the job who should have been fired is a corruption of the power, it cheapens everyone in the group.

To press for injustice in discipline, that is, to protect the guilty is to cheapen the whole group.

To suggest activities that are immoral or illegal is to degrade the whole group.

I personally fear that organized labor will not survive the first two decades of the 21st century and I do not consider this good for the American Worker or the country as a whole. But trade unions, as they are, are not a force for the benefit of the worker. For him or her, it would be better for them to pass from the scene, hopefully to be reborn, rather than continue in their perverted state.