Editorial: When unions go too far
Published: October 12, 2012
IN the 1950s, Detroit was one of the
most prosperous cities in the world. So profitable were the big
car manufacturers, fortunes were being made by their
stockholders and top executives, and even the lowest-skilled
workers enjoyed excellent wages and benefits. For their success,
the workers had not only the success of the companies they
worked for to thank, but also the strong unions they formed to
be their advocates.
Unfortunately, as is inevitable with any company that makes a
lot of money, auto giants such as General Motors and Ford soon
had some staunch competitors — competitors who made cars of
equal or even better quality and sold them at lower prices.
How did the upstarts, such as Toyota and Nissan, pull this off? They had to spend just as much to buy raw materials. Their engineers were no more talented than the people who designed Cadillacs and Corvettes. And their executives were no more skilled than the people at Chrysler and Oldsmobile.
The thing that enabled car manufacturers in Japan and Korea to
become so successful was simply that the people who made their
cars were willing to work for much lower wages than their
American counterparts. It was a phenomenon that was obvious to
anybody who looked — and which had obvious implications.
But American car companies and their workers were slow to
adapt. Somehow, they failed to acknowledge the existential
threat posed by their low-cost competitors. With doom staring
them in the face, GM, Ford and the others kept their wages far
too high for them to remain successful in the marketplace.
The result was that Toyota and other foreign brands became the
most popular cars not only in their home countries, but right
here in the United States, where domestic car companies didn’t
just lose their competitive edge. In many ways, they lost the
ability to compete at all. Starting in the 1970s, factories were
shut down, whole car brands disappeared, and tens of thousands
of workers lost their jobs. Nowadays, once-thriving Detroit
neighborhoods have become vast wastelands, full of abandoned
houses and vacant lots.
And the car industry wasn’t the only one where success and the
easy money it brought led to complacency and failure. The same
thing happened at airlines, newspapers, and other “legacy”
There’s a lesson in this story for the local hospitality
workers union demanding that La Playa Hotel rehire the hotel’s
Sure, they had good jobs. And everybody agrees that it would be
nice if they could all get those jobs back under the hotel’s new
However, it is also true that the new owners would obviously
prefer to have the old workers, with their experience and
institutional knowledge, back if it were economically feasible
for them to be re-hired. Which means that it is highly unlikely
that the new owners would not rehire the workers except for
sound business reasons. The old La Playa lost money; obviously,
the owners cannot continue to let that happen.
So, while it is perfectly fine for the union to lobby the new
owners to rehire the old workers, it is wrong for them to use
tactics — such as vandalism, trespassing and assault — which
police say have happened during the union’s picketing sessions.
Sometimes there are good reasons why wages have to be cut, or workers can’t be rehired.