This one is a bit of a puzzle.
OK. In '94 rich guy named Richard Dauch, a conservative "Buy American" guy tired of watching jobs go offshore and foreign products taking over our markets, gets together a group of investors and convinces them that US workers are the best and that if they build here and pay the workers a fair wage, their company will make money.
He and his investors then sink $$$3BIL$$$ into a company called American Axle and Manufacturing in Detroit. They make - what else? - axles, mostly for (*cue ominous music*) SUV's.
For years, Dauch told his workers that if they embraced technology and were dedicated to making better axles, they would prosper with the company. By most every measure, American Axle has made good products. It invested substantial sums in worker training and new manufacturing systems. Orders poured in to make parts for sport-utility vehicles and pickup trucks that provide the bulk of its business. Workers did well, too, averaging $28 an hour in wages, with generous benefits.
So it worked. Both company and workers thrived. Everybody was happy.
The strapping Dauch often walked the assembly line, stopping to arm-wrestle employees or to ask about their children.
So what happened?
The price of gas happened. As it soared thanks to Iraq, a pack of greedy speculators feeding on rumors of "peak oil", and a US president who insists on propping up oil prices by buying it at the highest prices ever for a Strategic Oil Reserve larger than we've ever had before in our history, the sales of gas-guzzling SUV's sank. The same gas-guzzling SUV's AA&M was making axles for.
Mind you, SUV's are still being made and axles for them are still being bought. The profits aren't as high as the first few years but AA&M, make no mistake, is still profitable - $37Mil in '07, of which nearly a third went to Dauch in salary -
a 9 percent increase over his previous year's salary -- an increase the company said was warranted because of his leadership in returning the firm to profitability in a fiercely competitive business.
OK. So Dauch got an extra $$MIL$$ for "returning the firm to profitability". So why was his next move to go to the union and demand givebacks?
Two of Dauch's largest U.S. competitors that fell into bankruptcy, Delphi and Dana, have negotiated labor agreements that are less than half as costly as Americans Axle's, according to the company. Meanwhile, foreign firms that operate in the United States, including Bharat Forge, have far cheaper labor deals. Auto parts plants overseas have even lower labor costs.
Of course, that was true 14 years ago, too. Dauch could have moved AA&M overseas then (as he is threatening to do now if he doesn't get major concessions from the union) but it was important to him to make a statement: you can make money in America, even if you pay decent wages. And he proved his point by doing just that.
So what's the deal? All of a sudden $$10M/yr isn't enough for him and $28/hr for his workers is too much? Wha' hoppen?
I think maybe what we got here is the story in microcosm of what's happened to the country between Bill Clinton's thriving economy and George W Bush's economic train wreck.
- It's a story of greedy investors unhappy with what they consider minimal profits when, if they could just screw the American workers around, they could make a LOT more.
- It's the story of an idealistic conservative who has been bombarded with New Conservative ideology (workers are parasites; they deserve NOTHING; they ought to pay to work for you; rip them off, it's your right - hell, it's your DUTY) for a decade and has now been brought to a point where he's looking around at the pennies paid by rip-off artists here and overseas and wondering just how much bigger his piece of the pie could get if he stopped, well, coddling his spoiled workers.
- It's the story of fear and anxiety over a world marketplace made dangerously unstable by the bottomless greed of the investor class and near brought to ruin by the greed of merchant bankers, oil companies, and financial speculators.
- It's the story of how one well-meaning man caused all kinds of grief to less well-meaning men who had cheerfully ripped off their workers and stuffed their own pockets with the proceeds. What was it the NAM guy said?
- "Mr. Dauch is just doing what he has to do to survive," said Hank Cox, a vice president of the National Association of Manufacturers. "Something's got to give if those jobs are going to stay in the United States."
Oh yeah? Why? The company is making money. Why mess with success?
"Because it make liars out of the rest of us."
Oh, yeah. That's right. It does.
Conservative ideals used to mean something. They used to be worth fighting for. Now they're for sale to the highest bidder. Liberals may have turned to jelly and their ideals to suggestions driven by expediency, but conservatives have turned into heartless monsters and their ideals into corrupt bargaining and tangible betrayal for bucks. ("Betrayal for Bucks" sounds like a new conservatives-only game show hosted by Rush Limbaugh and Ben Stein.)
The union, feeling betrayed, isn't buying it this time, hence the strike.
The strikers see the job action as a last stand for the kind of factory wages that have supported the middle-class lifestyles of millions of manufacturing workers. Some have lashed out against free trade in response to the company's threat to move work out of the country to save money. If a profitable company refuses to maintain their wages, the workers ask, who will?
"If we accept this offer, it would set a precedent for everyone else," said Karl Schaffer, 39, as he picketed outside the gleaming headquarters the company built next to its refurbished Detroit plant four years ago. "The company is making money."
That question I bolded is one workers - union and non-union - had better start asking themselves right quick.