Unions Have No Shame

Nothing would inspire the werewolf to indefinitely forsake professional car-washes more quickly than to learn that they have been unionized. If the macro-circumstances weren't so pathetic, this NY Times article on the steel workers' union attempt to strong arm the dudes that wipe down your car into a union would be somewhat funny. However, it isn't funny and it is freakin' disgraceful. First of all, the fact that the steel workers are out there footing the bill to try and agitate the mostly illegal Mexicans workers who are the backbone of LA's car-washer workforce show how desperate and fakakta the unions have become. This is nothing more than a racketeering attempt to squeeze struggling small business owners.

The national unemployment rate is cresting 10%, consumers are afraid to spend, employers are terrified to invest capital in hiring, and the American public has the overall confidence of an awkward pubescent dweeb at his 8th grade sock hop. How out of touch can the unions really be? These guys have out-lived their structural usefulness in an era of heightened consumer awareness and expectations, and via their greed have clearly demonstrated that they are impediments to American recovery.

One car-wash operator states the obvious ramifications in the article.

"Mr. Crestall said the unionization push would hurt everyone. “Having a union will mean higher wages, and that will lead to higher prices,” he said. “That will mean fewer consumers coming to carwashes, and fewer jobs for these workers.”

This lame micro-push is just a regional symptom of larger flaws in our governance structure and understanding of how leverage markets to betterment of all participants. Who knows if this push will succeed or not, but believe me you, this wolf's wheels will never be touched by a union member. (This acknowledges that his wheels were born of union hands, but that was beyond my control.)

The irony will be when the proponents of real corporate social responsibility (CSR) understand how adversely unions impact cost and operating structures, and ditch de-couple themselves from out-dated left-wing ideology for the potential third-way benefits that the concept of CSR can offer.

Recall U.S. Interests In Auto Industry

Sometimes stating the obvious is tough and readily apparent evidence is thin. Over at Forbes, George Pieler and Jens Laurson take the aforementioned circumstances and author a solid article addressing the issue as it relates to the concerns over government ownership of large swaths of the US auto industry. They also speak well to Toyota's raft of problems independent of U.S. government's conflict of interest. Can a regulator who owns the competition truly be objective? Who gets screwed by this lack of objectivity?

"In a way, this is business as usual and reflected in the drop of Toyota's share prices. What is not business as usual is that Toyota's competitors include not just other car companies but also the U.S. government, due to its effective ownership of GM. Whether foul play is involved, it's a bad idea for government to run a car company and regulate all competing car companies at the same time. The conflict of interest is obvious, but the government--certainly not at La Hood's initiative--didn't recuse itself. Did he suggest that "Toyota thinks they know how to fix the problem" to cast doubt on its actual ability? What would otherwise be an innocuous statement arouses suspicions under such circumstances.

The charge of bias can't be proved or dismissed. The accusation of pro-GM mercantilism will always be raised when its competitors are targeted. Genuine protectionism in favor of GM and Chrysler (as well as Ford) would be very bad for American consumers and American autoworkers employed by Toyota. But even the credible appearance of it is bad enough. If the public has to second-guess every one of La Hood's pro-safety actions and pronouncements on the ground he may be tilting the table for GM, it's not only Toyota or U.S.-Japan relations that suffer. The credibility of U.S. policies on automotive safety will be harmed most, which means that for public safety reasons alone the U.S. should discharge its ownership positions in GM and Chrysler as soon as possible and let them swim free." 

There is another conflict of interest that the werewolf believes is getting short shrift. The relationship that unions have with domestic vs. foreign automakers. Although not universal, the vast majority of foreign automakers who have established manufacturing operations in the United States have located their plants in "right to work" states. The automakers include Honda, Toyota, Nissan, Hyundai, BMW, and Mercedes-Benz and some of the states domiciling these operations include Alabama, Georgia, Kentucky, Mississippi, Texas, South Carolina, and Tennessee. 

Despite the recent contraction in credit, lower sales volumes, and poor macro-economic conditions a spectrum of reports suggest that these plants are more efficient, breed happier workers, and have a generally less adversarial relationship with management.  Given that the current administration is beholden to the labor unions that contributed handsomely to their election coffers and that the unions hold profound contempt for the foreign operations of competitors being sourced domestically under non-union negotiated labor contracts, and that since the government owns the companies that employ large segments of union membership that there is an inherent conflict of interest at work? The answer seems painfully obvious to the werewolf, but then again he doesn't want to be accused of chasing mice in his mind. Still the implications of such decisions impact stakeholders from consumers, workers, lenders, suppliers, and tax-payers that it would behoove us all if more attention was paid to the issue.

Barone - Unions Bleed Taxpayers

Michael Barone pens another superb piece on the economic hurdles imposed by unions on taxpayers, consumers, and business. Some very alarming trends are emerging. The article points out that private-sector union ranks are collapsing (a good thing), yet more than a third of public-sector employees are now unionized ( a scary factoid). Unions are no longer stewards of decent wages, improved workplace conditions, and agents of disenfranchised stakeholders. They are the new entitled fat-cats that have been very effective at eroding America's competitive advantage in key industrial and manufacturing sectors. From a sustainability and corporate responsibility perspective their needs to be an honest assessment of the costs they incur on all of us. Here are some well articulated highlights on impact of unions on the auto industry from Barone's article.

"Private-sector unionism is adversarial. Economic studies show that such unions do extract premium wages and benefits from employers. But that puts employers at a competitive disadvantage. Back in the 1950s, the Big Three auto companies dominated the industry and were at the top of the Fortune 500. Last year, General Motors and Chrysler went bankrupt and are now owned by the government and the UAW. Ford only barely escaped.

Adversarial unionism tends to produce rigid work rules that retard adaptation and innovation. We have had a three-decade experiment pitting UAW work rules against the flexible management of Japanese- and European-owned non-union auto firms.

The results are in. Yes, clueless management at the Detroit firms for years ignored problems with product quality and made bonehead investment mistakes. But adversarial unionism made it much, much harder for Detroit to produce high-quality vehicles than it was for non-unionized companies." 


With that kind of well documented legacy, do we really want to straddle our already obese and incompetent governmental infrastructure with a new bracket of unsustainable obligations? 

Words of Wisdom from Willie Brown.

Growing up in California, it's hard not to like Willie Brown, even if you don't really agree with his politics. The dapper, former Mayor of San Francisco always had a straight talking edge about how he stated things, and for a career politician, that's a rare and much appreciated attribute.

It looks like post politics, Willie has established himself as a on-line columnist at the San Francisco Gate, with a page called "Willie's Words." I was pleasantly shocked by some of the content and tone in Willie's latest column. He honestly dissects the unhealthy and unwarranted impact that state employee unions have on the state of California. He also subtly lambastes his own party for their dependence on the unions. It's refreshingly stark and honest. Here's some golden content from the post:

"The system was set up so politicians like me couldn't come in and fire the people (relatives) hired by the guy they beat and replace them with their own friends and relatives.

Over the years, however, the civil service system has changed from one that protects jobs to one that runs the show.

The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life.

But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers.

Talking about this is politically unpopular and potentially even career suicide for most officeholders. But at some point, someone is going to have to get honest about the fact that 80 percent of the state, county and city budget deficits are due to employee costs."

Those numbers suggesting that 80% of the budgetary deficits are sourced from employee costs are shocking, if true. It also amazed the werewolf how corporate honchos could have D&O suits brought against them for fiscal malfeasance that hurt shareholders, yet, the bozos who are managing the state in Sacramento and have committed heinous fiscal crimes themselves get a pass(sort of). Why are those righteous anti-corporate activists silent? California's looming financial implosion will likely disadvantage more people than any corporate meltdown could.

Given it's dismal fiscal state, and looming implosion, California serves as an important lesson for how not to govern and manage a large governmental enterprise. Despite being the model "blue-state" in the minds of many(mistakenly), and frankly, a great place to grow up, California is the textbook of dysfunction.

There are multiple perspectives to tackle pursuant to the aforementioned claim. California is infamous for its crappy tax regimes, hostility to large employers, poor litigation governance, strangely polarized electorate, high barriers to market entry, etc. However, the werewolf thinks the primary lesson at hand is how dangerous and poisonous the labor lobby and unions are to the long term fiscal health of any entity. The tolerance of unions, eventually leads to fiscal submissions to their demands. Their demands, always unreasonable, are sourced in leveraging their monopoly of the labor pool, and this in turn, over-prices the worth of what they bring in terms of value-add to any entity, be it government, business, or other. Self-interest is good. In many ways, unions are an example of the ugly manifestation self-interest. The problem occurs when self-interest is backed by the force of a monopoly. This is where all other stakeholders get bent over, and the paradigm gets screwed. In an earlier post, the werewolf noted how America's coolest CEO, John Mackey, of Whole Foods, suggested that unions are like herpes. The werewolf is beginning to think that Mr. Mackey was too generous, and the unions are starting to look more like the AIDS virus. They weaken and emaciate you until you are a shell of your former self, allowing for the weakest of ailments to eventually kill you. I think Mayor Brown is beginning to recognize that writing on the wall. Better late than never.

Unions are like herpes and John Mackey is the Man.

John Mackey and Whole Foods: newyorker.com

Here is a must read profile of Whole Foods CEO and co-founder John Mackey. The big kahuna of hippie capitalism and one of the few leading business luminaries I actually admire and respect. His career is a testament to what modern corporate social responsibility (CSR) management theory should consider and implement if it was honest with itself. There's too much content in this article to parse out in one post, but this newly discovered Mackey quote “The union is like having herpes. It doesn’t kill you, but it’s unpleasant and inconvenient, and it stops a lot of people from becoming your lover" is epic, and spot-on. (The werewolf may have it chiseled on his tombstone)

As a great admirer of conscientious capitalism, I have always been dumbfounded by the lefty, do-gooder, hippesque adoration for unionized labor. Unions represent a huge threat to stakeholders like consumers, suppliers, shareholders, management, and the even the long-term prospects of employees themselves. (has anyone looked at Detroit and the US auto industry lately?) Monopolizing labor is just as dangerous for the long-term, as the monopolization of any other good or service in a market driven economy. I have long been fascinated by the inherent incompatible realities of unions and those who claim to care about all stakeholders, as CSR stewards. It's time to address the elephant in the room and realize that one of the most ethical and socially responsible moves a company can make for its employees and workers is resist unionization at all costs. If CSR is serious about itself as a concept, it will file divorce papers from the liberal/democratic interest groups and de-link itself from partisan politics. Wishful thinking.