Grand Rapids Pundit

Surprise! GM Wants Even More Money!

The Detroit Three (formerly the Big Three) groveled in front of Congress last month, asking for $25 billion to keep the doors open. Congress rebuffed them and sent them home with instructions to return with “a plan.” What do they come up with? A request that now clocks in at $34 billion. It has grown by a whopping 37% in just a matter of a couple of weeks! GM says that they need at least $4 billion immediately, before the end of 2008. It looks like they are burning through cash at a rate of around $4 billion a month now, obviously accelerating since their last quarterly report. Just last month alone, GM’s auto sales were down 41%.

I’d like to relate a story that was told to GR Pundit today by someone who is a project manager for a large computer manufacturing company.

This person, we’ll call him Ken, was doing a project at one of the big three automakers recently. We’ll call this automaker DA (for Detroit Automaker). Ken explained how he was attempting to help DA with its PC deployment process. Here’s how it worked: The computers would arrive. FedEx is not a unionized company, so the FedEx employees were not allowed to unload the computers. One unionized employee would move the PCs from the dock to the staging area. Another union employee would move them from the staging area to the storage area. Another union employee would move the computer from the storage area to the actual workstation of the person to use the PC. Each step would require a change order and a $50 charge from the union, plus the labor cost of each union employee. No one from Ken’s company was allowed to move the computers themselves, only the unionized employees could do so. Ken said the entire project was such a nightmare that they basically gave up trying to improve DA’s processes. Impossible due to UAW work rules.

This is why the UAW is desperate to prevent bankruptcy. It would ruin their “work rules” scam.

Perhaps this is one reason why 61% of Americans oppose the Detroit Three bailout.

Posted by: GRPundit on Wednesday, 3rd Dec, 2008

Destroy Michigan Government Now!

As our readers probably already know, a state ballot proposal has been submitted to “reform” Michigan government. It has the title of the “Reform Michigan Government Now” proposal. It may or make not make it to the ballot, depending on how many signatures are validated. The interesting thing about this proposal is that it crept up out of nowhere and it’s rather mysterious. No one’s talking about who is backing it financially, and campaign finance reports aren’t available yet. However, it has become clear who the proposal will benefit.

The proposal, which consists of 11 pages of fine print, sprinkles in a few items that most people support with items that start to look a little too targeted. For instance, the proposal would “strengthen the ban on illegal aliens’ ability to register and vote,” “require post-election audits of election procedures,” and “enact anti-fraud measures to protect the integrity of Michigan’s election process.” Those sound like reasonable reforms, and they are probably added into the proposal to make it easier to support. However, when one starts looking at the other legislative and judicial reforms, one sees that governmental representation is dramatically decreased. For instance, the Senate would be reduced from 38 members (1 Senator per 260,000 Michigan residents) to 28 members (1 Senator per 353,000 Michigan residents). In addition, it would decrease the state House from 110 members to 82. This would further strengthen the political party machinery grip on state elective positions, making it even harder for newcomers and non-politicians to get elected. Not to mention that this is a clearly anti-democratic step in the wrong direction. We would prefer to see an increase in both houses of the legislature, so that there are fewer citizens per representative, making for a truly citizen-oriented elected body.

Next comes the axe drop on the Judicial branch. The proposal would reduce the number of Supreme Court justices from seven to five and the number of appeals court judges from 28 to 21. As though the courts weren’t clogged enough already, this would make it even harder to work a case up through the appeals process.

If this all seems strangely targeted… well, it is. The Michigan Democratic party is solidly behind this measure and we’re finding out more about the motivations behind this measure every day.

What sort of motivations? This week, the Mackinac Center, a free-market think tank in Midland, uncovered the plan on the United Auto Workers’ web site. They had posted a PowerPoint presentation explaining the proposal and its effects. Check out the link for the full report, but here are some highlights:

Destroy Michigan Government Now - Whining Democrats

Destroy Michigan Government Now - Judicial Branch

Essentially, this is a proposal to ensure total Democratic Party control over the legislative, executive, and judicial branches of state government. We here at Grand Rapids Pundit want to be quick to point out that we are not Republicans. We do not think that this would be a good idea if it worked in the Republicans’ favor. Instead, we prefer split government, where no one party controls all the branches of government. This proposal is a thinly-veiled attempt by the Democratic Party of Michigan, in heavy collaboration with the United Auto Workers, to fundamentally change the structure of state government in their favor.

Hopefully voters will do their research before voting on this proposal, should it make it to the ballot.

Posted by: GRPundit on Friday, 18th Jul, 2008

Make Michigan Attractive to Business Again

The stunning inability of Michigan’s politicians to talk about the 8,000 ton elephant in the room continues to amaze us here at GR Pundit. Michigan’s economy is suffering a “single-state” recession for one primary reason – the United Auto Workers union. Why? Michigan’s economy is/was so heavily dependent on the domestic auto industry that any disruption in that industry would surely affect the entire state. The United Auto Workers, along with the management of Ford, Chrysler, and General Motors, conspired over the decades to build extremely lavish and unsustainable benefits packages for unionized employees. However, there was a problem. Toyota. Japanese carmakers entered the market with superior products at lower prices. Suddenly, the domestic big three are completely unable to compete. Here’s the rub: they are being prevented from competing because they simply can’t reduce labor costs enough. The UAW is standing in the way of the necessary and painful reorganization that is required to bring the domestic auto industry into line with foreign car makers.

While the politicians in Lansing debate how best to tax businesses in Michigan, we notice the deafening silence on the issue that is truly the destroyer of Michigan’s economy – forced unionization. This past Saturday’s Wall Street Journal had an excellent editorial by Larry Reed of Midland’s Mackinac Center. He outlines the case for ending forced unionization. The concept is called “right-to-work,” which means that anyone is free to join a union or not. Today’s law in Michigan states that if you join a company with a union, you are forced to pay dues.

We only need to look south, within our own United States, to see the contrast between a heavily unionized state and a non-heavily unionized state. Alabama, which is seeing new car factories being built like crazy, is the exact opposite of Michigan. In fact, according to the editorial, “If current trends continue, Alabama will eclipse Michigan in per-capita income in just three years. With base pay and bonuses, and especially when the cost of living is factored in, nonunion workers in many auto plants in the south are better off than their union counterparts in Michigan.” That’s a powerful statement.

Michigan needs to pass right-to-work legislation immediately. Another interesting point, according to the editorial, is that, between 1970 and 2000, right-to-work states created 1.43 million manufacturing jobs, while non-right-to-work states lost 2.18 million jobs.

The politicians can tinker with taxes all they want, but nothing will substantially change until the real labor environment in Michigan changes. Car factories are being built in the south, while car factories and manufacturers are shuttering in Michigan.

Posted by: GRPundit on Tuesday, 19th Jun, 2007

UAW Kills More Jobs?

WOOD TV 8 is reporting that Toyota has decided not to build a new factory in West Michigan because of militant UAW members who participated in an unauthorized protest at the Detroit Auto show, where Toyota Executives were in attendance.

From the article:

The rally wasn’t an authorized union gathering. UAW member Greg Shotwell of Coopersville, a worker at the Delphi plant there, organized it. Shotwell calls his group SOS, or Soldiers For Solidarity.

Cole told 24 Hour News 8 that upon learning Shotwell was from West Michigan the group from Toyota dropped West Michigan from the list.

“The message is that the UAW can’t control its own people,” Cole said.

The UAW is doing its best to ensure that Michigan economy continues to rank as the nation’s worst.

Posted by: GRPundit on Thursday, 9th Feb, 2006

Blue-Collar Workers Turn Backs on UAW

An interesting article in today’s Detroit News points out an instance, in Michigan, where factory workers are actively fighting unionization:

It speaks to a growing skepticism and sometimes outright distain of a union that historically inspired unflinching loyalty from members and fear from management.

Does this really surprise anyone? Just what, exactly, does the UAW do for its workers these days? The UAW got themselves into labor contracts which were inherently unsustainable, now the Detroit big three find themselves in a situation where they simply must move production overseas to compete.

Somehow Toyota is doing just fine with its factories in the US – but the UAW is actively hindering the big three’s ability to compete. The UAW, along with most of the legacy unions, is rapidly becoming obsolete. The sooner they disappear, the sooner Michigan’s economy can become competitive again.

Posted by: GRPundit on Monday, 19th Dec, 2005

Michigan Ouch

Over the last month we’ve seen several events which will permanently shift the economic reality of Michigan.

1) Northwest Airline’s mechanics strike, which flopped and ended up in a busted union, had no consequence for NWA. This marks a major turning point for unions in Michigan – they have lost the organizational power and they don’t have the sympathy of the average Joe.

2) Delphi’s Bankruptcy. This will have some very far-reaching effects, and it is already starting to ripple. Not only is it likely that thousands more manufacturing jobs will be lost here in Michigan (including some in the Grand Rapids area), the Unions are suddenly on their heels. Nearly immediately after the Delphi Bankruptcy filing, GM and the United Auto Workers worked out an agreement to shave billions off GM’s health care bill.

3) Today, the Detroit News reported that October car sales dropped to a seven year low. Total Big Three US market share dropped from 57% in October of 2004, to 52.4% in October of 2005. In the mean time, Toyota captured 15.1% of the market, the highest ever for that company. This will continue to have far-reaching effects on the Big Three (Ford and GM in particular) and will put further pressure on those companies to achieve higher cost savings, in turn putting pressure on the UAW for more concessions.

Things aren’t looking good. What can be done to help? Michigan must aggressively become a business-friendly state to attract non-manufacturing jobs. How do we do that?

1) Eliminate the single business tax – the most onerous business tax in the nation.

2) Lift the cap on charter schools – our traditional public school systems are collapsing under their own bureaucratic weight. A market in education will fix this problem. Competition will improve achievement for all students.

3) Pass a “right to work” law which allows employees to decide whether or not to join a union when they take a job at a union shop.

Those are just first steps. Hopefully we can stand up to special interests in order to improve the economic situation for all Michiganders – but we’re not holding our GR Pundit breath.

Posted by: GRPundit on Wednesday, 2nd Nov, 2005

Labor Day Cancelled

In what can only be described as a delicious irony, the labor day parade was cancelled in Grand Rapids.

Local unions, which have the responsibility of financing the cost of putting on the parade, simply didn’t have the money this year. They couldn’t come up with the necessary $25,000. Union leaders, however, promise to be back with a parade next year at a trimmed-down $10,000 cost.

According to Wikipedia, Labor Day started in the 1880’s, by organizations such as the Knights of Labor and the International Workingmen’s Association (which was led by Karl Marx himself).

We here are GRPundit don’t mourn the loss of the labor day parade.

Posted by: GRPundit on Monday, 5th Sep, 2005

‘SHOW ME THE JOBS’

It’s the irony of the year that the AFL-CIO stopped in Greenville to hold a “Show us the Jobs” rally this weekend. It is organizations like the AFL-CIO that advocate such job-killing measures as forced unionization and living wage laws that end up increasing unemployment.

It is a pretty well-established fact in the world of economics that unionization, especially forced unionization, increases unemployment. Why? A brief explanation: unions limit the size of the workforce because they require higher wages to do jobs that could be done at lower wage levels. The result is that the supply curve of labor is skewed by higher-than-market wage levels. Employers, in order to remain profitable, are able to hire fewer people with the same amount of money. Therefore, some workers get more money per hour, but fewer workers are employed, increasing unemployment.

There has been an extensive amount of research on “right to work” states where forced unionization is outlawed (you can’t be required to join a union in order to work in a union show in a right to work state). Right to work states have seen faster rates of growth in employment, wages, and decreases in poverty rates that non-right to work states do not show.

In addition, organizations like the AFL-CIO advocate in favor of so-called living wage laws, requiring companies and government units to pay higher wages. Again, economists understand that the minimum wage increases unemployment (due the same principle as unionization), but the living wage magnifies the problem. Increasing wage levels artificially through regulation distorts the labor market and, once again, forces employers to hire fewer people, once again increasing unemployment.

And the real sticker is that those hardest hit are minorities, unskilled laborers, and the disabled, since they are the first to go when these types of laws go into effect. Why hire someone who doesn’t have the skills at a high wage when you can find someone who does and pay the same?

So, go ahead AFL-CIO and drive the big bus around getting people whipped up into a frenzy over job creation, but know that you’re a big part of the problem.

Posted by: GRPundit on Monday, 29th Mar, 2004