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  • Morning Bell: How Chrysler Can Actually Help Detroit

    Did you know that there are no Volkswagen manufacturing plants in the Detroit area? Or Mercedes-Benz? Or Kia? Or Hyundai? Or BMW, for that matter? The Motor City has a well-earned reputation for having the greatest auto workers in the nation, yet honorable Michiganders largely build cars for only three companies.

    Apart from having their cars assembled in Michigan, it turns out that those three companies have something else in common: the United Auto Workers union (UAW). It also turns out that every other car manufacturer has something in common, too: not wanting the UAW to do to them what it did to the Big Three.

    Today, President Obama will address the UAW, and he should receive a rousing welcome. After all, his terms of the auto bailout richly rewarded his union allies at the expense of non-union employees and private investors, giving them, among other prizes, a very large stake of ownership in Chrysler. And together, they stand adamantly opposed to “right-to-work” laws that would empower the nation’s unemployed to find economic security with a non-union job.

    Right-to-work legislation protects employees from being fired for not paying union dues. Without that protection, workers are forced to support a union financially even if they’d rather spend their hard earned dollars at home, if the union contract harms them, or if they’re opposed to the union’s agenda. And if they don’t, they lose their jobs. Obviously, when given the freedom of choice, many workers choose not to unionize.

    Twenty-three states have right-to-work laws. But in Michigan, the powerful unions are preventing this job-creating measure from succeeding. And it is costing the state’s workers dearly.

    As Heritage labor expert James Sherk recently noted: “Union organizing activity drops in half after a state becomes right-to-work. This attracts investment. Businesses want to know that, if they treat their workers well, unions will leave them alone. Right-to-work makes that more likely and businesses notice…It was no accident that Boeing built its new 787 assembly line in right-to-work South Carolina.”

    As a result, manufacturing employment is over 30 percent higher in right-to-work states. Since 1990, the majority of new manufacturing plants by foreign automakers have been built in southern right-to-work states like Alabama, Georgia, South Carolina and Tennessee.

    If an enterprising auto worker in Detroit wanted to work for one of these companies that offer competitive pay, good benefits and the ability to get raises and promotions based on merit, rather than seniority, they would be out of luck. And that’s simply because the Big Three, including UAW-owned Chrysler, have colluded with the auto union to keep those jobs out of reach by opposing policies in Michigan that would encourage rival automakers to locate there.

    And while unions may offer their members certain benefits that are desirable, if not unsustainable, what they don’t offer is job security. Unlike in efficient, non-unionized manufacturing operations, unionized manufacturers are often forced into rounds of layoffs. There are about as many non-union manufacturing jobs today as in the late 1970s. During that time three-quarters of unionized manufacturing jobs have disappeared.

    So when Chrysler started running ads during the past two Super Bowls touting itself as a savior of Detroit, as its beacon of hope, it was perplexing.

    Chrysler employs a little over 4,000 employees in the city of Detroit, with 1,100 of these jobs recently “added,” as Chrysler would say. In reality, these were previously-downsized jobs restored, and according to WXYZ in Detroit, they did it by giving their employees an additional 49 days off of work every year — an inefficient union-centric business model that creates the conditions that necessitate bailouts and layoffs.

    By contrast, according to Kia, more than 10,000 jobs were created by the opening of its plant in West Point, Ga., in 2009, and it’s still expanding. The Mercedes-Benz plant in Tuscaloosa, Ala., has 4,000 line workers. Volkswagen and Hyundai both built plants in the last ten years that employ 2,000 workers. And the list goes on.

    UAW-owned Chrysler’s opposition to right-to-work discouraged these auto manufacturing jobs from being created in Detroit, a logical geographic location for the jobs with illogical labor rules. Furthermore, UAW president Bob King is leading an effort to amend the Michigan constitution to permanently block right-to-work laws.

    They claim they want to protect “the American auto industry,” but this is not about “American cars.” The controlling interest of Chrysler is Italy-based Fiat and previously was Germany’s Daimler-Benz between 1997 and 2008. This is simply about protecting union fortunes.

    If you think it’s too late for Detroit, think again. Indiana recently passed right-to-work legislation. According to the Detroit News, Caterpillar soon after closed a plant in Ontario, Canada, (where coincidentally it was locked in a labor dispute with a union) and moved those jobs to a recently opened plant in Muncie, In. Caterpillar also recently chose not to build a plant employing 1,400 people in heavily-unionized Illinois, who competed with many states, citing the “business climate” and announced this month that it would located in right-to-work Athens, Ga.*

    Chrysler can hire actors in Louisiana to play the part of Detroit workers, and it can produce cinematically brilliant television ads. But wouldn’t Detroiters have more pride in a job than a commercial? Chrysler and the UAW must drop its opposition to Michigan’s right-to-work legislation if it wants to pretend it cares.

    We cannot continue to repeat mistakes and continue to offer Detroiters the same broken policies that turned a shining city into a busted mess. If the city ultimately fails, it will be a great symbol of the liberal philosophy of managing decline through dependency. If Detroit succeeds, it will be because its citizens were offered more choices, more freedom, more jobs, and more economic opportunity.

    *An earlier version incorrectly reported Caterpillar’s plant was recently built, rather it expanded operations; and listed North Carolina in lieu of Georgia.

    Quick Hits:

    Posted in Economics [slideshow_deploy]

    55 Responses to Morning Bell: How Chrysler Can Actually Help Detroit

    1. glynnda says:

      You're stating the obvious here…..the best way to help the new "Government Motors" is to let them go. Just like adult children-at some point they have to launch or fail……Obama and his cronies are enabling these people just to keep their political seats. Enabling always does 2 things: 1. makes a manipulator out of the enabler and 2. encourages the enabled into more dependent behavior.

      How about we take some serious action and file suit against the federal government for taking this action and interfering in private enterprise? How about we stop being politically correct and start a movement that states Chevy, Chrysler and any other company that has received government bail outs is no longer an "American" owned business and therefore does not deserve the considerations we try to give American business.

      I for one will never buy another Chevy, Chrysler, etc. again. They have violated the entire point of being American….

      • Chris in Kalifornia says:

        I'm driving a 12 year old Dodge pickup but I won't buy another one. Hopefully Ford will go back to putting manual transmissions into their heavy duty pickups with diesel engines and then I'd be interested in a Ford. Maybe Toyota will build one. That would probably be fine truck!

      • Toyotasux says:

        You are right- it is much more patriotic to buy a car from a foreign company….

    2. M Tietjen says:

      Check your facts Caterpillar will go to Athens Ga for the 1400 new jobs not NC

    3. FIAT [chrysler], should move to Georgia/Alabama where we are a right to work state. Why did G M need Obammie money to survive AND "FORD" DID NOT?????

    4. sdfultz says:

      Yea, move south, work cheap and be happy!

    5. toledofan says:

      It really boils down to management and what management agrees to give to the unions to avoid any conflict. The reason the south is doing well, regarding manufacturing, is because of the unions in the north; to keep the unions out the companies like BMW, KIA, etc., basically offer their employees similar benefits and they keep the unions out of their business. So, the game will go on until all of the states follow suit and make right to work laws the way of the land.

    6. inverbrass says:

      Historically I have always purchased GM automobiles, but no more. GM accepted bail out funds and then lied about repayment. Chrysler is no better. If I buy American it will be Ford, if not, then Toyota, Nissan, Audi,
      Mercedes, etc… Unions, much like obama, have outlived their usefulness.

      • You DO understand that "American" cars really aren't American any more… That a majority of their parts are fashioned overseas and imported? So BMW, Kia, Nissan, Toyota, and Honda are just as much American as the big 3, if assembling cars in this country make them American.

        Non-union Honda is thriving in Marysville Ohio and employing thousands. The pay is good, the benefits are good, and their cars are very well manufactured.

        I will also never buy another UAW (Govt Motors or Chrysler) product.

      • Toyotasux says:

        Audio does not make cars in the US

      • John of N. Ft. Myers says:

        I agree with you except for "unions, like Obama, have outlived their usefulness". The idea of unions comes from the Communist Manifesto. Unions never were a good idea. What unions have always been is now just getting more and more transparent. Obama has been transparent since he was in office in Illinois. Take away his teleprompter, and he is fun to listen to. Right on, inverbrass!!!

    7. Victoria DeLacy says:

      If you want to see the whole truth about the way Detroit has dissolved from a once great and thriving city into a ghost town, check out the video on you tube by Crowder entitled "Detroit in Ruins" – the Democrats heading up the government in that town along with the unions have literally destroyed the town and left it a shambles. All the more reason to realize we do NOT want that done to the rest of America…which brings up the critical need to be sure to head to the polls this November to VOTE REPUBLICAN to save the USA from that fate!

      • Jim P. says:

        I was thinking that the Repubs need an ad showing the decline of Detroit at the hands of the Demcrats, liberals, progs, etc. and what happens when liberalism runs amok. Let me take a look at the You Tube posting and that might be the ad that I am looking for.

      • Wayne Peterkin says:

        Good comment and true. Obama is trying to do to all of America what 60 years of liberal Democratic "leadership" has done to Detroit. The most prosperous city in America in 1950 has been converted to an economic cesspool because of that leadership.

    8. Ron says:

      Im not a union fan But I do know that when GM, Ford Or Chrysler sells a car the profits stay in the US. Although VW and KIA and the rest of the foreign manufactures employ a few workers in the scheme of things all their profits go to there home land. Someone should research the whole deal and I bet they will find that 80% of the money leaves the country when someone buys a foreign car. Foreign meaning anything but GM,Ford Or Chrysler

      • Wayne Peterkin says:

        Not entirely true. Parts are bought worldwide. Therefore, part of the profits are spread to countries around the world who supply parts to every manufacturer including Ford, GM, and Chrysler. While some of the sales profits for foreign brands do go overseas, your claim of a "few workers" is misleading. Not only do those manufacturers often have many US plant workers, dealerships and all of their employees are paid from sales profits also. A lot of people in this country benefit from the sale of a Toyota, VW, BMW, or other foreign brand.

        • Toyotasux says:

          Zero sum game. If those dealers were not selling imports, they would be selling Ford, GM and Chrysler cars.

      • Dance says:

        The profits go to China.

      • Toyotasux says:

        Good point Ron. I wonder how many imports are driven in Germany and Japan? I wonder if Germany would have been so willing to let Volkswagen fail or Japan Toyota? We must be the laughingstock of those two countries.

    9. Lisa says:

      Detroit..Look at it.. It's pretty damn obvious what Gm has done there. I'm with Victoria De Lacy on this.

    10. Eric Nisula says:

      Guess who backs Unions big time; helps them cheat; helps them sic goons on folks;
      gives them our tax dollars; subverts the law to help them………give up???

      BARACK OBAMA!!!!!!

    11. OBAMAGOTTAGO says:

      It is hard to fathom, but the UAW "legacy" costs of an American manufactured car now surpasses the raw material costs of producing that same car. Those costs must be passed through into the new car someway yet yield a car that is cost competitive with others not bearing such "legacy" costs. That is done by compromising the quality and workmanship of the end product! So the next time you are sitting in the waiting room of a dealership or car repair business as your poorly made domestic piece of junk is patched up, reach around and pat yourself on the back as you should realize you are subsidizing the UAW by bearing the costs of such unnecessary repairs. I will continue to drive my late model Honda Accord with 181,000 miles on it, and realize that I have never, ever had anything done to it but incur routine maintenance on it.

      • Toyotasux says:

        Most GM, Ford, and Chrysler cars have just as good if not better quality than transplant cars made in the US and Canada.

    12. Bob Ward says:

      It is hard to fathom, but the UAW "legacy" costs of an American manufactured car now surpasses the raw material costs of producing that same car. Those costs must be passed through into the new car someway yet yield a car that is cost competitive with others not bearing such "legacy" costs. That is done by compromising the quality and workmanship of the end product! So the next time you are sitting in the waiting room of a dealership or car repair business as your poorly made domestic piece of junk is patched up, reach around and pat yourself on the back as you should realize you are subsidizing the UAW by bearing the costs of such unnecessary repairs. I will continue to drive my late model Honda Accord with 181,000 miles on it, and realize that I have never, ever had anything done to it but incur routine maintenance on it.

    13. ThomNJ says:

      @Ron – that is not so easy to say. I understand your point, but with the current sourcing of parts, it is very tough to say any car other than Ford, Chrylser or GM is "foreign". From what I have read, some of the so-called foreign cars that are built here have more American content than the so-called domestic vehicles.
      Also of note is the fact that VW had built the Rabbit (Golf) in Westmoreland, PA in the late 1990's. It was a DISASTER, because they had to give up so much control to the unions and part of that was to provide "immediate" American content. The car at one point had a round headlight switch on the dashboard, for example, to replace the rectangular rocker switch on the German model – except that the rectangular pattern was still there – almost literally the round peg in a square hole. The cars suffered from really bad paint runs (I spotted one from 20-30 feet away, it was so bad) and a general lack of good quality. VW was forced to abandon the idea – and instead built plants elsewhere in the world. Look how many jobs were lost and how long it took to get VW interested enough to come back.

    14. Joe says:

      I grew up in a union household. The union screwed my father forcing him to work out of state the last 10 years of his life and then screwed my mother out of most of his death benefit. I try not to ever buy a union made product, certainly not a new product. I will never buy another General Motors or Chrysler vehicle. I will buy American made Nissan. They are better made products, last longer, and no union thug benefited from my hard earned cash.

      • Toyotasux says:

        I bet you liked the health care and other perks that the union negotiated on your behalf growing up. Don't sell us this "American made Nissan" argument as you being patriotic. Any person who would buy a particular product so another American can be out of work is UNPATRIOTIC in my opinion.

        • Jeanne Stotler says:

          I was married to a Union man, he died and I got a Big 0 from the company, despite he was told different when he retired. Oh yes we had health Ins, it was paid out of his salary so was his retirement, alot of NOn-union jobs offer te same, it's called mtching funds, just as is Social security. I had to work 16 hour days until my youngest was out of school inorder to make ends meet, so much fo Union an Company promises.

          • Toyotasux says:

            Sorry to hear about your situation Jeanne. I am not saying that unions are a panacea by any account. However, based on personal experience, unions have a tendency to provide better wages, benefits, and job security for its members.

    15. Jeanne Stotler says:

      Let all the auto companies move their factories to "right to work States" We will welcome them in Virginia and I m sure there are a lot who would work for wages loer that Union, just pay them them salaries = to union minus the union dues, big savings right there.

    16. J Sirko says:

      Yes the profits and tax on them is foreign so what's your point? You'd prefer the cars be built in South Korea or Germany, lose the jobs and prosperity they bring to the workers and community and taxes going to all levels of government? I grew up in Detroit and it's so sad to see how the Democratics and unions sucked the life out of a once great place. Obama just continued the decline with a brief reprieve to fund his fantasy.

    17. TOM SMITH says:


    18. Marshall says:

      Another problem the UAW and Obama has is, we private bond investors, as a matter of principle, who were cheated by Obama in the auto bailout will not buy an automobile built by the UAW.

    19. George Batcabe says:

      I live in Nevada, a Right To Work State. Our Sr. Senator, Harry Reid is supposed to represent our interests.
      What has he done to support the rights of workers to choose whether-or-not to join a union & support it's
      agenda? It's all about POWER (union & gov't.) &" We The People" are, hopefully, waking up to its abuses
      and will vote to get back to following the Constitution this November!

    20. Richard Helfrich says:

      You state: "And while unions may offer their members certain benefits that are desirable, if not unsustainable, what they don't offer is job security …" Don't you mean ''if not sustainable'?

    21. Larry W says:

      The Obama Administration's first major step in violating our Property Rights and The Rule of Law…different but vital pillars Capitalism, were the ABUSE of GM Bondholders! In total violation of credit and bankruptcy law, GM bondholders got 3 to 5 cents on the dollar! This act was a clear statement of where our Country was headed and here we are; The Takers out number The Makers and a Community Organizer is just hitting his stride.
      …and Ron, profits go to share holders. Chrysler is largely owned by Italian Fiat and GM is still, largely (35%)owned by UAW, both pretty "foreign" to free enterprise.

    22. horsecollar says:

      "And while unions may offer their members certain benefits that are desirable, if not unsustainable," What does "not unsustainable" mean? Why don't these guys learn how to use the King's english before they start writing?

    23. KC-NM says:

      UAW and Obama – wow two drippy seeds in a pod! The other "union" that need to be terminated is the federal employee union. There is no reason for a federally tax funded employee be represented by a union. It is not a wonder why our federal and state government functions that have union employees are so inefficient and ineffective. They learned a lot from UAW and the liberal left!

    24. J Mitchell says:

      It seems that no one blames the court system for the results of the bankruptcy rulings. The bankruptch court ignored the law regarding the secured creditors and gave the companies to the Union doubtless under the pressure from the administration. It would seem that the impeachment of the bankruptcy judges would be in order and if not politics will rule the court system as it seems to do now.

    25. Dance says:

      Not only Motor City, but the union cancer is rotting our government agencies from the inside out. I have worked 40 years in private industry and the last 5 years with a federal government agency. I can witness the effect of a unionized work force on the workplace environment. They bully management, call themselves co-management, protect the non-performers over those that put forth an honest effort, Unions reduce the workforce to the lowest common denominator. Unions are basic obsolete, in my view, because of modern management philosophies and current laws protecting all workers. Unions use the workers to obtain power for themselves. Our current President has enbolden Union bullies and now there is real friction in the workplace.

    26. Marie says:

      Thank you for the information. We were considering buying a Chrysler for knowing that I am not so sure that I will look in to that. I want a car built by a person who cares about the work he does and the product he puts out there. Union workers are ot of that stripe/ They do the least for the most and thwart those who do have pride in their work. WE have never bought a foreign made car but maybe we have to look around. Thank you for the state of Chrysler in Detroit.

      • Buy American says:

        Don't buy into that cool-aid. I have never and will never buy a car made by a company other than GM, Ford, and Chrysler. I bought a new Chrysler last year and it has been the best vehichle I have ever owned- I get compliments on it all the time. I have had the misfortune of renting Toyotas and other imports on business and could not wait to turn them in. I do not know where you live, but if you have a chance visit a Ford, GM, or Chrysler plant on a tour. You will find hard-working people that care about the job and the customers that buy their product.

    27. O2BMe says:

      I remember when my father complained when he didn't want to go out on strike. I asked him why he and his friends didn't go to the meeting and vote against it. He said they had tried that but the Union had arranged it so that they couldn't vote and were shouted down. There was no point since anyone opposing the strike wasn't allowed to even speak or vote. That was in the steel industry which no longer exists in this country.

    28. Bill says:

      If you want to know how not to work and get a big paycheck, visit a big three
      manufacturing facility. unfortunately, some of these UAW people actually think
      they are working hard because they watch some of their teammates standing
      around doing nothing all day.

    29. Blair Franconia, NH says:

      If Michigan became a right to work state, then the UAW would have some competition. It'll never happen because monopolies HATE competition.

    30. The Educator says:

      The premise of “right to work” versus “non right to work” is exaggerated when it comes to plant selection. Ohio, Kentucky, West Virginia, Illinois, and until recently Indiana, are all non-right-to-work states that have transplant operations. Ontario is also a very union-friendly province and has several transplant operations. Of all these, only the Mistubishi plant in Illinois is represented by the UAW. Isuzu assembles trucks in a non-union Michigan plant, and there are many huge suppliers in Michigan that is nonunion. In other words, union and nonunion operations can coexist in the same state. In fact, Toyota could build a

    31. The Educator says:

      (continued…)Why do transplants build in the South? Look at the map. While most of Ford, GM, and Chrysler’s manufacturing base is located in Michigan, most states have one transplant operating within its borders. This was done to buy political clout. So when you have a situation like you did in 2008 where the American car companies were asking for a bailout, you’ll have bought-and-paid-for politicians like Shelby of Alabama fighting against it to protect the automakers with operations in their states, all the while these politicians will serve up federally backed taxpayer money to get these operations.
      Remember this: when a country loses ownership of its manufacturing infrastructure, it loses political clout as well.

    32. Great article from the Heritage Foundation on the Right-to-Work debate. Liberal lies are exposed!

    33. Clarence A. Rumpel says:

      The concept of "worker representation" I believe is sound and justified. The problem with the American union concept is that it is "controversial". There was at one time union, or worker representation, on the Board level of some European companies that served the worker as well as the corporate entity. Controversy does not work in a partnership, a corporate entity and certainly not in a marraige. Managemrent and private unions need to develop a new model of reaching mutual goals or they will fail. Detroit has aready failed and the American citizen was the pawn along with foreign investors who provided the bailout. The non-union companies have found a better method….woking together is better.

    34. Dr. Pete Kleff says:

      These auto manufacturers building plants in "right-to-work" states best be careful. One might expect a letter from the NLRB advising that such location violates federal labor law a la Boeing.

    35. RennyG says:

      Believe it, he got us!!! another four years and he will have achieved his purpose!!!!
      Take over our country and change it from president to "King!!!"

    36. Wayne A. says:

      I am left to wonder whether those companies who decided to not put plants in right to work states will be targeted by the Obama administration. Nothing surprises me about this totalitarian administration anymore. Also, somebody please explain to me why all government workers should be allowed to unionize. It is the biggest farce I ever heard of. Government employees have more benefits than the private industry by far and are almost never in danger of losing their jobs. As someone who worked for the Federal Government for many years I find union organization in government to be obnoxious and totally without merit. The only thing that blue collar workers could do as a union was negotiate over working conditions and that was it.

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