"Big Brother Nixes Happy Hour"

Remove all ads!

Indeed, and considering that those who get the lowest wages in America are completely unprotected by the law and work in hellish conditions that remind me of the industrial revolution in Europe, I do consider our system to be much more humane and secure. Corporations are not meant to abuse the human body and wreck them useless after ten years of work, they are meant to provide steady income in exchange for decent work.

The negative side of our system is naturally unemployment but so far we have managed to hold ourself competitive. My fear is that the left takes this system too far when we'll end up in the same condition as France is in now, which would be bad for everyone. Balance in all things.

 

Yes. The US-companies have already out-sourced and moved away. Just like GM did. It's not the Unions that led GM do bankruptcy, it's no one wants to buy their cars. And no their strategy of outsourcing to Germany and Korea has failed too. They should have gone to Mexico earlier, like VW did. But given the still rather high number of 77%, there is still a whole lot of industry to go. Our companies actually went to the US und Mexico because of the cheap labour cost and market-vicinity.

But the reason is not, that productivity in (post) industrialized countries shrank, it's the others gained productivity. It's a lot wiser now to produce in Arabia or Mexico and shut down the old sites, because it makes more sense. And salary isn't the most important factor. Its nearear to important markets, the energy costs are lower, the land is cheaper, skilled labour can be found in aboundance there and gaps can be filled with Indians.

But that's no problem. Lacking innovation is a problem. We will end up like Finland and the United Kingdom were 20 years ago, impoverished and down on are knees.... and then we get up again by selling mountain tours to the Indians and the Chinese. Everything will work itself out fine...

[ August 07, 2005, 22:38: Message edited by: Iago ]

 

An example of a certain online retail giant and their outsourced customer care department:

Their requirements were 80% for quality and 10 CPH (contacts per hour) which was the US teams targets. After 2 months in Belfast they discovered that the locals were more effieient by raising the quality to 96% and the CPH to almost 20 (nearly all jobs come to Ireland). Later 'Performance related Pay' scheme came and while quality was constant, the CPH shot up to almost 30 per hour.

The said company is extremely pleased, expecially with the money they are saving, so they gradually move more positions to India (at this time, all US and UK positions are in India) where the CPH is is 45, but as for the quality... its now under 60%.

My point is that some companies couldn't care less about their customers interests.

 

Ah yes, the generous healthcare benefits that GM has to provide for 1.2 million people play absolutely no role in this. Neither do the pensions provided to the same people.

Yes, one of GM's many problems is that their cars are not selling like the company needed but to say that the unions played absolutely no role in their downfall is incorrect.

 

Hm, as our systems in pensions is different... you talk about heathlcare benefits that became part of a standard frame contract and as such part of every individual contract, after an agreement between an union an the comapny ?

In this case it's a sort of payment. And if they agreed to that contract...

I think the height of salaries does not decide if a factory can stay in a certain place or not. Other deciding factors are way more important that the height of pay. With a lowering of wages, the shut down is merely postponed for 5 or 10 or 15 years. If so, I say the goverments and the unions are guilty of prolonging the agony, but are not the cause of death.

Anyway, it's all about innovation. I think GM started to have serious problems to sell cars in the 70's. As a result, they should have started to close down their factories back then. Even if I don't know too much about Opel/GM, I think it's same case everywhere.

And the Unions and goverments in such cases aren't the reason, they're just a factor retarding the shut down. Innovative destruction -> If Suzuki/Opel/GM would have been gradually shut down according to the decline in sales, the mess would be over long ago. If goverments and unions intervened, they may have to prolonged the agony for a decade and some. Prolonged it, not caused it.

They only reason those companies could stay is by being innovative. By becoming something different. Making cars (and lots of other similar stuff) is nothing special and it needs no skills that can't be found in the third and second world. And skill would be one of the reasons to stay in the first world. So, all similar companies will (as you pointed out with the gradual change to a service-economy) sooner or later end up having their factories in Arabia, India, Southern Italy, China and Brasil. Only for really innovative products, like some parts of mobile phones or north-Italian life-style goods, exists still some small reason to produce them in the first world.

The height of salary doesn't play such an important role in these case. Nor abolishing rules and regulations. Like having working-hours cut down to a lousy 48 hours a week, healthcare or minimun vacation of 2 weeks in the years. These first-world luxury will maybe soon be gone for good.

There is plenty of "payment" in such rules. And they were paid for by advantage in skills, experience, formation, infrastructure... monopolized in the first world... and this monopoly has gone... and so will all benefits go, except we keep our economies innovative enough.

 

I would have to partially disagree with you Iago. There are a number of factors to consider with GM that have to do with the core-market for the U.S. car manufacturers.

The core market for GM has always been the U.S. "We must buy American Union made products" crowd. As far as they are concerned anything that isn't made in the U.S.A. by good old union men is not acceptable. This attitude HAS been gradually eroding over the years, which is one reason why GM's sales have not been as strong as they had hoped, but there are still a lot of people who will only buy American Made.

The U.S. car manufacturing companies assembly line jobs were always looked at as being the most desirable factory labour possible (this is also true in Canada - one of my friends was jumping for joy when he landed a job on a Ford assembly line).

This is because the very strong unions had managed to secure base pay two to three times higher than just about any similar job and on top of that the benefits were typically much better than elsewhere.

The unions were also very big on preventing anyone from being fired for such minor things as being lazy and incompetent. Also they were big in insisting that promotions and raises be based upon senority and not job performance. They were also opposed to any automation that would take away jobs from humans etc. etc.

All this leads to a situation where the deck is completely stacked against the company being able to make the required changes that would allow it to be as productive as the Asian competition.

 

I think we agree absolutely. I was focussing on pay, but I also mentioned market vicinity. (I don't know the actual terminology in English... market proximity ?).

Those factories that produce for the North-American markets will stay as long North-America buys what they produce.

The Union movement you mentioned and government intervention of the 80's administration with its(particularly punitive customs duty for not American made cars) made the US a reservation for strange oversized cars no where else found (and sold).

This is also one of the reason why all car-companies are so internationally intertwined. Companies like GM bought know-how by buying foreign companies (like Opel and Suzuki) and a chance to produce for foreign markets in exactly those foreign markets. Others, like Mercedes-Benz, built factories in the US to gain access to the North-American market.

But. as I said, that's mainly a prolonging of the agony. Lowering pay 20%, add 2 years existence. And then cut again, prolong again, cut again, prolong again. A very long and painful last breath. I tend to think that a swift cut has long term the best benefits, as it gives the chance to start something new.

[ August 08, 2005, 21:12: Message edited by: Iago ]