A New Era for GM and the UAW?
Although purists on both sides are crying foul, the recent agreement hammered out by negotiators at General Motors and the United Auto Workers may very well signal the beginning of a new era. However, before this era can come to pass, two very important things need to happen.
First, the union membership needs to sign on by ratifying the agreement as quickly as possible, preferably by a wide margin.
Second, managers need to act on the unprecedented flexibility being granted them by the deal to turn GM into a manufacturer that can truly compete on its home turf in the 21st century.
For years, management and industry analysts have bemoaned the labor rules, jobs bank, and “legacy” health and retirement costs that have hamstrung domestic automakers. However, the dirty little secret of the U.S. auto industry is that labor is just one of the reasons companies like GM continue to lose market share.
Ever since the 1980s, for example, the Big Three have been riding the sport utility wave without balancing out their product line so that it could adapt to changing market conditions-like spiking gasoline prices. For some reason, Ford and GM, in particular, do a great job of building and selling smaller vehicles abroad. But, they are still getting their clocks cleaned in the United States.
The Big Three have also failed to come through in terms of quality. Granted, they have achieved great success in some areas. However, in far too many cases, they continue to be plagued by a “good enough” mentality. The result has been what Newsweek’s Alan Sloan calls Toyota’s “price premium.” After factoring in the differences in their product lines, it turns out consumers are actually willing to pay more for Toyota products, because of their perceived higher quality and higher resale values. Personally, I’ve been driving Toyotas my entire adult life for a very simple reason-they have provided years of trouble-free driving.
Finally, GM, Ford and Chrysler need to get their messages straight. The Big Three have made big gains. In fact, they are doing better than Toyota and Honda in many areas. But, the message isn’t getting across. Recently, Ford turned things around in Brazil by redesigning its product line to match consumers’ needs and getting the message out so that consumers knew what they were doing. There are plenty of good reasons people should by buying GM cars, beyond the simple fact that they are “American.”
In the coming days, there are sure to be plenty of commentators finding all kinds of fatal flaws in the current agreement: GM’s commitment to keep jobs in the United States will make it impossible to turn a profit; Ron Gettelfinger and the UAW leadership have betrayed their membership. But the bottom line is that, at least at the highest level, both the Big Three and organized labor now recognize they are in the same boat, for the first time in their often-tumultuous history.
As Cornell University labor expert Arthur Wheaton recently commented in a story in the Detroit Free Press, “The UAW knows that their future is tied to future product.” Only time will tell whether that knowledge will result in concrete action, and whether the Big Three and organized labor will truly work together or sink together. But, one thing is for sure. The time has passed for excuses.
First, the union membership needs to sign on by ratifying the agreement as quickly as possible, preferably by a wide margin.
Second, managers need to act on the unprecedented flexibility being granted them by the deal to turn GM into a manufacturer that can truly compete on its home turf in the 21st century.
For years, management and industry analysts have bemoaned the labor rules, jobs bank, and “legacy” health and retirement costs that have hamstrung domestic automakers. However, the dirty little secret of the U.S. auto industry is that labor is just one of the reasons companies like GM continue to lose market share.
Ever since the 1980s, for example, the Big Three have been riding the sport utility wave without balancing out their product line so that it could adapt to changing market conditions-like spiking gasoline prices. For some reason, Ford and GM, in particular, do a great job of building and selling smaller vehicles abroad. But, they are still getting their clocks cleaned in the United States.
The Big Three have also failed to come through in terms of quality. Granted, they have achieved great success in some areas. However, in far too many cases, they continue to be plagued by a “good enough” mentality. The result has been what Newsweek’s Alan Sloan calls Toyota’s “price premium.” After factoring in the differences in their product lines, it turns out consumers are actually willing to pay more for Toyota products, because of their perceived higher quality and higher resale values. Personally, I’ve been driving Toyotas my entire adult life for a very simple reason-they have provided years of trouble-free driving.
Finally, GM, Ford and Chrysler need to get their messages straight. The Big Three have made big gains. In fact, they are doing better than Toyota and Honda in many areas. But, the message isn’t getting across. Recently, Ford turned things around in Brazil by redesigning its product line to match consumers’ needs and getting the message out so that consumers knew what they were doing. There are plenty of good reasons people should by buying GM cars, beyond the simple fact that they are “American.”
In the coming days, there are sure to be plenty of commentators finding all kinds of fatal flaws in the current agreement: GM’s commitment to keep jobs in the United States will make it impossible to turn a profit; Ron Gettelfinger and the UAW leadership have betrayed their membership. But the bottom line is that, at least at the highest level, both the Big Three and organized labor now recognize they are in the same boat, for the first time in their often-tumultuous history.
As Cornell University labor expert Arthur Wheaton recently commented in a story in the Detroit Free Press, “The UAW knows that their future is tied to future product.” Only time will tell whether that knowledge will result in concrete action, and whether the Big Three and organized labor will truly work together or sink together. But, one thing is for sure. The time has passed for excuses.