What Happened to Us Labor

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.