Over the past few months I railed against GM and Chrysler using US taxpayer bailout money to expand and open new plants outside of the USA. It is absurd that these companies expand outside the USA after accepting such huge amounts of US tax dollars to keep them afloat.
The problem is labor, not labor costs but labor unions. Because of the UAW purposefully cost 650 people jobs in Indiana. "Motors Liquidation Co., which was created to sell surplus GM property during the automaker’s bankruptcy, owns the facility. Without a buyer, the plant will be forced to close in October 2011. JD Norman Industries, of Addison, Ill., planned to purchase the Indianapolis Metal Center and have it continue producing fenders, hoods and other metal parts for GM. Norman also planned to bring in new orders from other automakers. " (Source) "Norman agreed to save the supplier from closure under the condition that UAW workers bring their pay closer to the industry average. The result would be a 50-percent pay reduction. That would amount to $15.50 an hour down from $29 for unskilled workers, and $24 an hour, down from $33 for skilled trade workers Employees who continued working at the plant and agreed to the reduced salary would retain GM seniority and receive a cash bonus up to $35,000. Employees who did not want to accept the pay cut would be free to transfer to other GM plants for up to two years."
All of the United Auto Workers (UAW) Local 23in Indiana if they choose could maintain their current pay at another GM facility. What they were voting on was whether to keep this facility open in Indiana under an agreement that would keep it competitive and pay over $30K per year for unskilled labor. It is no wonder US car makers have to move production outside of the country when base pay before taxes, health insurance, and other benefits is $60,000 per year for unskilled labor.
UAW Local 23 workers jobs were saved by the tax payers bailing out GM. Their wages were protected they could move or accept large cash bonuses. What the UAW did was slap the face of every future Indiana unskilled worker who would be happy to work for from 30 to 60 thousand dollars rather than flip burgers part time for minimum wage.
Huge areas of Detroit are a ghost town of empty factories rotting away. New manufacturing facilities in the UAW controlled Midwest are a pipedream. Nobody is building factories where they used to be. Companies are building new factories in the USA to make cars etc. They are building them and offer jobs that pay very well and have happy dedicated employees, just not in UAW controlled areas of the country.
Obviously the UAW doesn’t care future jobs or the future of manufacturing in the USA. We cannot give unskilled labor $60K per year base in pay and sell a competitively priced product. It doesn’t matter what the product is, cars or paper clips. The UAW’s position that unskilled labor must be paid $60K per year or they will force the closing of the shop is one of the a significant contributor to why unemployment is at 10% and the manufacturing sector is not expanding (especially in the Midwest).