Some of the folks here lately have read and been active in discussion in response to the article Wal-mart and wages and salaries in America. Shortly after posting that article, we had announcements that two former stalwarts of the U.S. economy have fallen upon relatively though times, with both finding their stocks and debt ratings dropped down to the "junk" mark.
The prior article on Wal-mart notes that Wal-mart had surpassed General Motors (GM) as the nation's largest company. With that said, GM and Ford are both still large parts of the U.S. economy. They both still account for much of the employment of people in the mid-west "rust belt", either directly as employees of those companies, or indirectly as employees of companies that supply goods and services used to help build the products that GM and Ford sell to their customers.
There was discussion in the article on Wal-mart about the possibility that the problems that face the employees of Wal-mart, most of whom work at relatively low wage levels, might be fairly easily solved if Wal-mart's employees were to unionize.
Folks that have followed Wal-mart's business practices know that chances of a union ever getting a foot hold at Wal-mart are fairly slim. Much like a prior employer that I worked for, Wal-mart has a reputation as a business that would sooner shut-down a store or move out of an entire state or region rather than ever allow the employees to unionize. Sure, Wal-mart plays along with the legal requirements of allowing pro-union people an occassional chance to spread some propaganda, or try to hold a vote on bringing a union into a store, but Wal-mart has clearly spread the message that going union is not the answer, and most definitely is not an answer they will ever accept.
As noted in the discussion in the prior article, Wal-mart walks a fine line between holding profit margins, generating returns for shareholders, holding down prices for customers, and somewhere in the mix compensating their employees. Many (including the authors of the original piece in the top of the article on Wal-mart referenced above) would say Wal-mart doesn't do enough in that compensating area, especially when compared to the companies that this article is meant to focus on: GM and Ford.
Again, in the prior article, there was a reference made to Henry Ford, and his treatment of his own employees. Actually, the original responder was kingbee, with this comment:
despite their other faults, guys like ford and carnegie understood (altho they may not have always acted as if they did) the necessity of paying a living wage
... which is (for the most part) true (though Ford was still interested in the large profit motive).
Ford and GM have for years been somewhat at the mercy of their union employees. Dating back to the 1960s and 70s, the employees at these firms won concession after concession and benefit after benefit from their employers, while their employers took in more and more revenue. It took recessions in the 1980s to slow some of the wage and benefit growth at these companies, with several layoffs sending employees of these companies, and many others into unemployment lines, or down to the local military recruiter's offices in search of a job, any job, to help take care of the individuals and their families.
Also along the way, we had Chrysler almost close up shop, then later, thanks in part to Lee Iacocca and some others, come bounding back to life.
Unfortunately, as also discussed somewhat in this article:
Higher fuel prices helping environment, hurting SUV sales, our automotive manufacturers have been less leaders, and more followers in the last several years. Whether it's because of labor issues including unbending union requirements that don't allow these companies to respond as quickly to market conditions, or whether it's simply because companies like Toyota and Honda just build better vehicles that are more preferrable to those that GM and Ford (and Chrysler as well) are selling, there's obviously a problem.
I would say a good bit of the problem is the types of vehicles that these manufacturers make, but another part of the problem for these companies, who are now racking up debts and obligations that they may not be able to meet (including retirement and pension costs for their employees and former employees), are the costs that they must endure. They have promised -- via union contracts -- certain benefits and wage levels to their employees, and even if meeting those promises costs those employers too much, the unions are of course not about to let their members give back benefits and salary levels that were fought for over many years.
GM and Ford are now treating their stockholders to treatments that some would say is very reminiscent of the treatment they've given to the employees. GM's stock has taken a beating. Ford has seen multiple difficulties in selling vehicles. Chrysler claims that they are doing ok, but no one can be sure.
What are we to do if these companies lose more market share, and continue to experience problems selling their products? Do we turn them into government run businesses? Have them build vehicles for the government and military, even if we don't need them (GM already does this with the Hummer vehicles for the military, and all of these auto-makers supply vehicles for government fleets)??
Do we encourage and support these auto-makers if they start going through rounds of lay-offs and cutting their budgets?
What if we start giving these companies large government hand-outs to help make them more competitive? Can our country afford to dispense a few more billions (or perhaps Trillions over several years) from the federal budget to these companies just to maintain (or hopefully improve) the status quo for the employees at these firms, or do we start encouraging these employees to find new jobs and leave their old careers behind?
It's been said repeatedly that history is repetitive, and it seems to me that what we are seeing with GM and Ford is very reminiscent of the early 1980s when many of the people I went through basic training with had been employees of these same companies.
Food for thought and discussion.
