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Exhaust Note #8: American Axle Hasn’t Flinched

I’ve never owned a major manufacturing corporation worth millions, never employed Union workers and I’ve never played the game of ‘Chicken’; but I’ve heard all are risky endeavors. In the case of American Axle they are dealing with all three variables concurrently. They are said to be ‘sitting on “$344 Million” (AN), employing 3,650 UAW members and American Axle CEO Richard Dauch is currently playing ‘Chicken’ with UAW President Ron Gettelfinger. Are we taking bets? I’m really trying to figure out what I would do in either position and whose side I’m really on.


What happened?
Since February 26 all 3,650 UAW member walked off the job leaving American Axle production in a lurch. In the last two months this strike has affected progress at as many as 30 GM plants. American Axle produces parts for GM’s full-size pickups and SUVs, the hot new Chevrolet Malibu, and many others. This means almost 50K GM employees have been affected.

The walkout concerned the wages and benefits of Union Workers employed by American Axle, which had been paying workers $28 an hour. American Axle, which has taken a look at their competitions less generous wages, is currently proposing $14 an hour. Union President Ron Gettlefinger is saying ‘no dice’.
Union vs. Non-Union
My very first job was a union job. I can still remember being dropped off in the supermarket parking lot and noticing bumper stickers saying, “Live better – Work Union”. I remember receiving union letters, good benefits and of course paying union dues. On one hand unions can be good. They ensure a very safe working environment, typically better pay, great hours and legal protection. Generally speaking unions help employees avoid being ‘exploited’ by employers.
On the other hand I won’t work for a company that doesn’t treat me fairly and I wouldn’t expect a company to employ me if I didn’t treat them fairly. Maybe the pendulum has swung in the other direction; unions helping employees exploit their employers? Sometimes the wages and benefits negotiated by union workers actually impede the company’s ability to compete with other companies. There seems to be an anti-competitiveness associated with unions where they end up being victims of their own success. Unions raise wages substantially above the wages of non-union workers completing the same tasks. The result is usually union-made products being so expensive that sales are lost. This sometimes forces companies to move operations overseas or in American Axles case, Mexico.
There is also something to be said about the value of merit. In many cases even the best union employees are unable to move up in the company based on merit; unable to advance due to limits defined by union contracts. It has been said that some union employees may even become complacent either because they cannot advance or they have become so comfortable (and protected) that they lose the incentive to work hard. For some reason our Welfare system comes to mind… maybe even military pay structures? If I have more children I get a bigger check right? Let’s not get started on the whole ‘entitlement’ thing…
I admire generous companies who treat workers fairly. The best working environments offer a win/win situation for employee and employer. If unions are still vital why is only 15% of our workforce unionized? Should we be worried that that percentage is dropping?
Between Big Business and the Union
Right now GM seems to be caught between American Axle and the UAW. Hat in hand as they lost production of almost 100K trucks and over 1K cars through April 5 (and counting), GM’s options seem limited. We all understand that labor is a commodity that is bought and sold. But we have trouble justifying the Union’s stranglehold on those inflated wages and benefits despite American Axle’s competitors’ wages/benefits and the possibility of American Axle moving production elsewhere (read: outside the U.S.). If that happened we’re not sure there would be many union jobs to be had. But since the two sides can’t agree on a mutually beneficial price for labor, everything will remain at a standstill… that is until someone (Richard or Ron) swerves. Only time will tell and American Axle is sitting on $344 million while the union is sitting on nearly $900 million in their strike fund.
Playing Chicken
As you may all remember, the game of Chicken tests the resolve, intestinal fortitude, and often the reaction time of two drivers driving towards each other on a collision course. The first one to swerve before the collision loses the game; if neither driver swerves there is inevitably a collision which could be fatal to both parties. In this case we have American Axle in one vehicle and UAW in the other (only this time GM seems to be tied to a pole in the middle). Unfortunately, we can only discuss this game in theory as our attempt at purchasing two junked vehicles (i.e. a 1975 Chevrolet Vega and 1977 Mercury Bobcat), a couple of helmets and hiring two interns to demonstrate our analogy backfired. The job posting alerted OSHA and we received a nasty letter citing something about ‘workplace hazards’.
So, in theory, one tactic is to convince your opponent of your intentions before the game begins, either verbally (“There’s not a chance in hell I’m swerving”) or physically (Welding your steering geometry in place so that your vehicle’s steering will be disabled and you will not be able to swerve even if you’re having second thoughts at the last minute). I’ve heard employing both verbal and physical tactics may improve your chances of winning by at least 30%.
I can almost hear the verbiage now:
Richard: “I’m taking production down to Mexico.” “I’m pouring concrete to expand our Manufacturing complex in Silao as we speak.”
Ron: “Good luck with quality control down there. Did I mention we’re paying our members $200 a week to strike?”
Simple, Expedient Solution
I really think the solution is simple. This can all be settled over a high stakes game of chicken. We should have American Axle CEO Richard E. Dauch and UAW President Ron Gettelfinger get into those two junkers we still have a lead on (the ’75 Vega and ’77 Bobcat) and truly go head-to-head. Mano y mano. Whoever swerves first loses. Then we can all get back to business and get this nonsense behind us!

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