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10/10/2005

Five myths about today’s auto industry

Source: UAW
by Ron Gettelfinger

Is the unionized American auto industry dead?

There are some who claim Detroit automakers are stuck in old ways of doing business and unable to compete with their more flexible Asian and European competitors.
It’s true that today’s auto companies and autoworkers face more challenges than ever. But much of what is said about the auto industry doesn’t square with the reality of what’s being done inside today’s auto factories.


For one thing, several popular vehicles that carry foreign nameplates are actually built here in the U.S. by UAW members, working with the same union contracts that supposedly make auto plants “uncompetitive.” Our members now build vehicles not only for Detroit-based automakers, but also for Isuzu, Mazda, Mitsubishi, Toyota and Volvo Trucks.
Some other common misconceptions:


Nobody builds auto plants in Michigan anymore.
All the new factories are down South. That would be news to GM, which just spent $1.5 billion on assembly operations in Lansing; to Ford, which spent $2 billion to rebuild the Rouge complex in Dearborn; and to DaimlerChrysler, which partnered with Hyundai and Mitsubishi to build a new $700 million engine complex in Dundee.

Packed with the latest technology and powered by ultra-modern conveyors, these facilities are flexible enough to produce multiple vehicle and engine models – and ergonomically designed to prevent workplace hazards and injuries.

The Big Three are going broke because their labor costs are too high.
UAW members are proud of the value we produce for employers: $463,000 per worker in a typical auto assembly plant, according to output-per-worker calculations from the Annual Survey of Manufacturers by the U.S. Bureau of the Census.

Thanks to this extraordinary productivity, the average auto assembly worker produces far more than he or she gets paid, by a margin of hundreds of thousands of dollars per worker. This remains true even when overtime, health care, pensions and other labor costs are included.

When it comes to quality, the Big Three are still way behind their competitors.
Not according to J.D. Power’s 2005 Initial Quality Study. This influential report found that the top three quality plants in North and South America are all unionized GM facilities – two in Canada and one in the United States. GM produced the top-quality performer in five vehicle segments, including the mid-size and full-size car segments; Ford was a winner in two product categories.

UAW members recognize the link between quality and productivity and job security, and we are working every day in every way to ensure that we make a difference when it comes to quality. The customers who purchase the products we build deserve no less. The quality measurement gap used throughout the industry has narrowed to a small margin, and our members are proud of that. But, until we are the very best, it will not be good enough.

Detroit builds nothing but gas guzzlers.
UAW members build the hybrid Ford Escape, the hybrid Mercury Mariner, and light hybrid versions of the Chevy Silverado and GMC Sierra. Other models are scheduled to come on line in 2007, and Ford recently announced it will produce 250,000 hybrids by 2010.

The Big Three are also using new fuel-saving technologies – like diesel powertrains, cylinder deactivation, continuously variable transmissions and lightweight materials – which can cut fuel consumption by 20 percent or more. These innovations aren’t visible to most consumers or the media. But they’re being installed on high-volume products like the Ford Explorer, the Jeep Cherokee and the Chevy Malibu, which sell hundreds of thousands of units per year. Even a small improvement in fuel economy on that many cars can make a big difference for America’s energy supply.

In a global industry, with cars coming from all over, it doesn’t make any difference what car I buy.
According to the Automotive Trade Policy Council, DaimlerChrysler, Ford and General Motors accounted for 85 percent of the total investment in the U.S. auto industry between 1980 and 2002, a total of $176 billion invested in U.S. communities. These three companies alone purchase 80 percent of the auto parts now produced in the United States.

Big Three investment and purchasing supports millions of U.S. workers, retirees and their dependents. Yet the U.S. remains the most open automotive market in the world. Forty percent of vehicles sold in the U.S. have foreign nameplates, compared to 22 percent in the Europe, 5 percent in Japan, and just 2 percent in Korea.

Additionally, the Big Three are faced with free trade agreements that allow unfair trade practices like currency manipulation which give some foreign automakers an artificial advantage. These are not complaints – just facts.

It does matter and you will find union-made vehicles in every segment and in every price range, from fuel-sipping small compacts to family-size minivans. The auto industry can have a strong future in Michigan – if we all work together to make it happen.

This article first appeared on Oct. 7, 2005, in the Detroit News’ Labor Voices

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