Morning Bell: How Chrysler Can Actually Help Detroit

Rory Cooper /

Did you know that there are no Volkswagen manufacturing plants in the Detroit area? Or Mercedes-Benz? Or Kia? Or Hyundai? Or BMW, for that matter? The Motor City has a well-earned reputation for having the greatest auto workers in the nation, yet honorable Michiganders largely build cars for only three companies.

Apart from having their cars assembled in Michigan, it turns out that those three companies have something else in common: the United Auto Workers union (UAW). It also turns out that every other car manufacturer has something in common, too: not wanting the UAW to do to them what it did to the Big Three.

Today, President Obama will address the UAW, and he should receive a rousing welcome. After all, his terms of the auto bailout richly rewarded his union allies at the expense of non-union employees and private investors, giving them, among other prizes, a very large stake of ownership in Chrysler. And together, they stand adamantly opposed to “right-to-work” laws that would empower the nation’s unemployed to find economic security with a non-union job.

Right-to-work legislation protects employees from being fired for not paying union dues. Without that protection, workers are forced to support a union financially even if they’d rather spend their hard earned dollars at home, if the union contract harms them, or if they’re opposed to the union’s agenda. And if they don’t, they lose their jobs. Obviously, when given the freedom of choice, many workers choose not to unionize.

Twenty-three states have right-to-work laws. But in Michigan, the powerful unions are preventing this job-creating measure from succeeding. And it is costing the state’s workers dearly.

As Heritage labor expert James Sherk recently noted: “Union organizing activity drops in half after a state becomes right-to-work. This attracts investment. Businesses want to know that, if they treat their workers well, unions will leave them alone. Right-to-work makes that more likely and businesses notice…It was no accident that Boeing built its new 787 assembly line in right-to-work South Carolina.”

As a result, manufacturing employment is over 30 percent higher in right-to-work states. Since 1990, the majority of new manufacturing plants by foreign automakers have been built in southern right-to-work states like Alabama, Georgia, South Carolina and Tennessee.

If an enterprising auto worker in Detroit wanted to work for one of these companies that offer competitive pay, good benefits and the ability to get raises and promotions based on merit, rather than seniority, they would be out of luck. And that’s simply because the Big Three, including UAW-owned Chrysler, have colluded with the auto union to keep those jobs out of reach by opposing policies in Michigan that would encourage rival automakers to locate there.

And while unions may offer their members certain benefits that are desirable, if not unsustainable, what they don’t offer is job security. Unlike in efficient, non-unionized manufacturing operations, unionized manufacturers are often forced into rounds of layoffs. There are about as many non-union manufacturing jobs today as in the late 1970s. During that time three-quarters of unionized manufacturing jobs have disappeared.

So when Chrysler started running ads during the past two Super Bowls touting itself as a savior of Detroit, as its beacon of hope, it was perplexing.

Chrysler employs a little over 4,000 employees in the city of Detroit, with 1,100 of these jobs recently “added,” as Chrysler would say. In reality, these were previously-downsized jobs restored, and according to WXYZ in Detroit, they did it by giving their employees an additional 49 days off of work every year — an inefficient union-centric business model that creates the conditions that necessitate bailouts and layoffs.

By contrast, according to Kia, more than 10,000 jobs were created by the opening of its plant in West Point, Ga., in 2009, and it’s still expanding. The Mercedes-Benz plant in Tuscaloosa, Ala., has 4,000 line workers. Volkswagen and Hyundai both built plants in the last ten years that employ 2,000 workers. And the list goes on.

UAW-owned Chrysler’s opposition to right-to-work discouraged these auto manufacturing jobs from being created in Detroit, a logical geographic location for the jobs with illogical labor rules. Furthermore, UAW president Bob King is leading an effort to amend the Michigan constitution to permanently block right-to-work laws.

They claim they want to protect “the American auto industry,” but this is not about “American cars.” The controlling interest of Chrysler is Italy-based Fiat and previously was Germany’s Daimler-Benz between 1997 and 2008. This is simply about protecting union fortunes.

If you think it’s too late for Detroit, think again. Indiana recently passed right-to-work legislation. According to the Detroit News, Caterpillar soon after closed a plant in Ontario, Canada, (where coincidentally it was locked in a labor dispute with a union) and moved those jobs to a recently opened plant in Muncie, In. Caterpillar also recently chose not to build a plant employing 1,400 people in heavily-unionized Illinois, who competed with many states, citing the “business climate” and announced this month that it would located in right-to-work Athens, Ga.*

Chrysler can hire actors in Louisiana to play the part of Detroit workers, and it can produce cinematically brilliant television ads. But wouldn’t Detroiters have more pride in a job than a commercial? Chrysler and the UAW must drop its opposition to Michigan’s right-to-work legislation if it wants to pretend it cares.

We cannot continue to repeat mistakes and continue to offer Detroiters the same broken policies that turned a shining city into a busted mess. If the city ultimately fails, it will be a great symbol of the liberal philosophy of managing decline through dependency. If Detroit succeeds, it will be because its citizens were offered more choices, more freedom, more jobs, and more economic opportunity.

*An earlier version incorrectly reported Caterpillar’s plant was recently built, rather it expanded operations; and listed North Carolina in lieu of Georgia.

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