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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” American businesses.

There’s a lesson in this story for the local hospitality workers union demanding that La Playa Hotel rehire the hotel’s former workers.

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 ownership.

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.