Sunday, August 26, 2012

Factories, Unions, and a Bit of Truth

I spoke to a young fellow the other day.  He’s been working in a factory this summer to raise money for university.

I teased him that he was going to miss the factory life and he sort of chuckled and said that he wouldn’t.  So I asked him “How much they would have to pay you to work there for twenty or thirty years?”
“Not enough” was his reply.

He’s like many people that don’t like the idea of working in a factory.  They don’t want the heat, the smell, the tedium, or any of the other things that makes factory work so wonderful.

This is why it bothers me when people blather on about over paid lazy workers in factories.  Especially unionized factories.

Remember Henry Ford?  They like to say he gave raises to his workers so they could buy his cars, but the fact is that he was selling cars faster than he could make them.  Henry Ford realized that to keep his workers he had to treat them better than the competition.

The competition was not the other car makers, but employers in general.

Working for Ford was hot, noisy and tedious and absenteeism and high turnover were Ford’s biggest problems.  He realized that if he paid more for workers and gave them a shorter work week that they would stay, and that was far cheaper than constantly training new workers to replace the ones that walked away.

Training and absenteeism slowed the production lines down dramatically.  By paying more and having shorter hours he was able to produce more cars each day and the cost of production dropped.

Don’t believe me?  Let’s play some golf.

I’m not a golfer, but you’ve invited me to be the fourth with you and your friends.  Since I’m not a player, I ask lots of questions.  Which club should I use here?  Where should I shoot for?  And you can add in the extra time for my extra strokes and looking for lost balls.  Trust me… your round will take far longer than usual.  Probably a lot less fun too.

You could probably invest some time and effort to try and teach me to play passably, but if I quit playing you’d just start the same routine all over with a new player for your foursome.

Or just keep your original foursome intact?

Mark Carney, the Governor of the Bank of Canada recently spoke to the CAW.  He said that the high Dollar was not so much of the problem as high wages and lower productivity.

Well if we go back 10 years, the Canadian Dollar was worth around 60¢ U.S. and now the U.S. and Canadian Dollar are worth about the same.

Ten years ago, Canadian manufacturers were turning down work because they didn’t have the capacity and now they have lots of capacity and can’t get work.  This is not the workers’ fault. 

It is the owners who decide on what to make and what to spend on the manufacturing and they decided that it was better to have more people working than it was to improve and update their equipment.  The only ones with up to date equipment now are the ones that expanded their facilities and brought in new equipment or the ones who built factories in the last decade or so.  Guess who are doing better today?

Productivity isn’t in the hands of the workers.  It is in the hands of the owners.

A while ago there was an economist talking about productivity on the radio.  He explained that if Canadian car makers included a GPS system in every car and raised their prices to account for this luxury feature that their productivity would increase.  Productivity is not about how many you make or how hard you work but is based more on how much you charge.

And now Jim Flaherty wants to know why the big companies are sitting on their wallets.  Much of the reason is written above.

You can’t blame the corporations for not wanting to invest when there is no market for their goods.  They only spend money when they can make money doing it.

It’s the carrot and stick scenario here Jim.  If you want a jackass to move, you hold the carrot in front of him.  When you get to where you want to be, you give the jackass the carrot.  Your tax cuts are in effect dumping a bushel of carrots in front of the jackass and being surprised that he doesn’t move.

If you aren’t going to make business earn their tax breaks by creating jobs you are giving them welfare.

You see Jim, there is a reason why the Japanese car makers opened up shop in North America.  They were selling enough cars that it became more profitable to build cars here rather than build them in Asia and ship them here.

Henry Ford helped the workers to enter the middle class.  Everyone benefitted from his foresight and the Japanese are following in his footsteps.  The policies of the North American car makers and other industries are driving the workers out of the middle class. 

The Harper Party’s policies echo those of the North American automakers. 

If this war on the worker continues do you think the Japanese automakers will still be here?  I’m betting against that.  If it is more profitable to make Camrys and Civics in Asia they will build them over there again.  And the market share of Camrys and Civics is based on the middle class buying them.

Here’s a little secret Jim, Dalton pay attention here too, if you take the money that you are throwing at big business and give it to the workers, we’ll spend it.  We will help to restart the economy.

And another secret?  Unions don’t like strikes.  Strikes cost them money.  The workers don’t like them either.  Strike pay is a mere pittance compared to what people make at their jobs.  How far would $200 a week take you?  That’s what CUPE pays as strike pay.  You really have to be pretty upset to go on strike.

Workers like to work, they get paid for it.  Unions like for the workers to work, they get to collect the dues.  Unions are just like business that way.  Businesses only make money if the workers are working… but only if people are buying what they make.

Anyway, I wish the young fellow well and I hope he does well at university so he won’t have to work in a factory in the future.

I’m reminded of a friend who took his son to his work to show him what Dad does.  Dad works in a truck plant.  His son was amazed that his Dad was able to go to the same place day after day week after week for over twenty years basically doing the same thing at his job for all those years.

His son was planning on going to University as well.  Dad was planning to foot the bill like he had for his other kids.  He wants a better life for his kids.

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