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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1963432  
Subject: Unions and Car Companies Date: 12/12/2012 9:48 PM
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Many people seem to believe that unions are the downfall of American industry, in particular the car industry, and if they could just be gotten rid of, it would flourish again. A look at the situation in Germany suggests otherwise.

The German metal working sector is heavily unionized, and wages tend to be obscenely high.
A low- to mid-skilled worker working for the Daimler AG will earn as much or more per hour than a great many academics working outside unionized industries.
Yet look at the German car companies, how successful they are. There is in fact just one German car company that is not doing well, and that is Opel (a.k.a Vauxhall).
So what's different about Opel? Opel is part of GM, and had been mismanaged since the 1980s.
Opel in fact is subject to much less onerous collective bargaining agreements than VW, BMW and Daimler, but that hasn't kept its market share from dropping by half over the last 30 years.

The problem of the US car companies is not the unions, the problem is that for some reason anglo-saxon countries (the UK, too) seem to simply be worse at running companies involved in heavy manufacturing than the rest of the world.

My personal theory on why that is focuses on two factors:

1. The obsession with short-term "shareholder value" at the expense of long-term results. There's always a lot of things a company can do to make the present look pretty while hiding future costs. And US companies seem to do that a lot more than German, Japanese, Korean companies.

2. The cancerous financial sectors in the UK and in the US are draining the cream of human resources from the productive sectors. Every financial engineer is one less REAL engineer who could be doing something that actually benefits the economy instead of just shuffling paper around (or blowing up the economy).
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