So much for the demonising of trade unions. As the dust setttles on the Global Financial Crisis, some US corporate leaders seem able to read the lessons of history. Bill Ford, executive chairman of the Ford Motor Company, has credited his company’s survival to what, to some, would seem to be an unlikely source: the trade union movement. In particular, the United Auto Workers (UAW) union and its then-leader, Ron Gettelfinger. On CNBC yesterday, Ford thanked the UAW for saving Ford in its darkest days, and for preventing the bankruptcy that befell General Motors:
“When we got into a really tough period, I sat down with Ron and I said, ‘You have to help me save the Ford Motor Company so we didn’t have to go through bankruptcy, so we didn’t have to get a federal bailout,'” Ford said. “And he did that.” Ford credited the union with helping his company regain a foothold in the North American market. He added that the UAW helped the entire industry “get back on its feet.”
After years of receiving favorable contracts leading up to Ford’s financial woes that began in 2007, the UAW rebalanced its health-care costs and improved performance in manufacturing plants. “We’ve had a great relationship with our workforce. I don’t look at them as union and nonunion but as Ford workers..We have a lot of second-, third-, fourth-, fifth- and even sixth-generation workers at Ford in our company.” Those employees helped pull the auto company “through the dark days,” Ford added.
Unfortunately, this silver lining seems to have a dark cloud right behind it. A major element in how the UAW helped Ford to survive since 2007-08 was the union’s acceptance of a “two tier” wage system that cut Ford’s labour costs, and put it on the path to recovery. That recovery has been impressive. On Tuesday, Ford reported record quarterly profits in its core North American market. Yet guess what? Knock me down with a feather duster, but Ford is now reluctant to share the profits of recovery with the workers who made it possible:
Two days after Ford reported 2013 pretax earnings of $8.6 billion, calling it “one of the company’s best years ever,” Joe Hinrichs, president of Ford’s Americas region, rejected the idea that the company could afford to eliminate two-tier wages. “We have got to be careful [not] to say, ‘Well let’s start disrupting the system,'” Hinrichs told reporters Jan. 30, according to WDRB-TV in Louisville, Ky., where he announced plans to add 350 jobs at a plant building Super Duty pickups. “The system is working.”
The system is working…? Yeah right. The Ford situation is a stark reminder that concessions made by unions to employers in the name of survival during bad times will rarely, if ever, be restored once profitability returns. Good faith tends to be a one way street.
For an example of the same one-way process closer to home, one need only look at RNZ’s revelations over who profits from the efficiency gains being made at Transpower. Reportedly, investment in the national electricity grid is likely to yield efficiency gains, worth huge sums of money. Good news huh? As taxpayers, we invested in the grid, so…as consumers, we will reap the benefit of lower power bills, right? I mean, isn’t that the reason why we pay for these upgrades – to create efficiencies in which we can all share, by paying less for the power we use?
Well, apparently not. Instead, Transpower plans to channel those profits into a higher dividend to the government, while any further investment in the grid will be met by charging higher prices to consumers. So the more we invest, the more we pay, and the more money goes straight into government coffers. Usually, we call that sort of thing a tax. This allegedly centre-right government seems to be all for it.
Labour Party energy spokesperson David Shearer was not happy with the suggestion the company could pay higher dividends to the Government. “The six months up until the end of last year they generated a profit of $153 million for the Government, which was up 117 percent,” he said. “Transpower should not be a revenue-generating project for the Government. It should be an agency which runs the grid as efficiently as it possibly can so that consumers get good value for money and cheaper prices.”
Amen to that. In the meantime, we’re an exploitable resource. Much the same as those auto workers at Ford.