6 ms·

Who shot General Motors? (Labor unions, in 1950.)

15 points by cmcginnis 18y ago

anewaccountname 18y ago
How about the CEO's, management, etc. who "miraculously" brought employee ownership of the company to around 20%! I'll let you guess how much of that was owned by lowly union workers, and how much was owned by executives. Or is it GE I am thinking of?
davidw 18y ago
Err... the stuff in ()'s is your own editorialized point of view. But this isn't really what I'd call hacker news in any case.
- cmcginnis 18y ago
  "But none of G.M.’s management miscues was so damaging to its long-term fate as the rich pensions and health care that robbed General Motors of its financial flexibility and, ultimately, of its cash. General Motors established its pension in the “treaty of Detroit,” the five-year contract that it signed with the United Automobile Workers in 1950..."
  - davidw 18y ago
    You're right - there's nothing at all in there about hackers or computers or startups. And as for the contract, presumably it was also signed by management, not just the union.
    - cmcginnis 18y ago
      "On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups."
      - davidw 18y ago
        What you guys don't seem to realize or take seriously is that enough of this stuff (Obama, Iran, unions, etc...) will drive the quality of the site down, just like reddit. "Non computer" stuff is often ok if it's just some random, interesting thing that's "food for the brain", but when you get into politics and economics (at least some kinds of economics) and stuff like that, it's just poison.
        mechanical_fish 18y ago
        I'm often tempted to disagree with the effective HN ban on political issues, because it leaves so many of the most important facets of life off the table. But, alas, I think this is correct. This is a terrible forum for discussing political issues -- because the signal-to-noise in politics is very low (any political discussion is mostly about team-building, horse-trading, and tooth-baring, not problem-solving or analysis and certainly not software or technology) and we don't have the time to wade through waist-deep piles of personal statements, deal memos, and threats; because this site draws people from very diverse political backgrounds who will take a very long time to reach equilibrium if they start team-building, horse-trading, or baring their teeth; but mostly because the place just works better if there's some focus. It helps us to know when to shut up. I interpret PG's mission statement not as an attempt to ensure that "anything of interest to anyone smart" is on topic, but as a signal that he doesn't want to be the Big Man who sets the agenda for news.yc. He wants the community to do that. And we have: political discussions get discouraged (using our polite jargon: "That's too reddit for this site") and I personally strive to limit my team-building, horse-trading, and tooth-baring efforts to the slyest possible implications. For example, I'm going to go mod up edw519. It's not as if there are no other political forums on the web.
        pg 18y ago
        There have always been a few stories like this. I understand that to someone who saw what happened to reddit, the sight of words like "Obama" or "Union" in a title is very alarming. But not all stories with those words in their titles are boring political ones. Don't worry, I won't let News.YC go down that road. I'll munge the voting algorithm before I let that happen.
sachinag 18y ago
I think this is a pretty misleading OpEd. It would be crazy to think that management broke fiduciary duty here (as the article implies, with the references to legislatures/taxpayers). It was twenty years before GM saw competition from the Japanese (in the wake of the oil crisis), and it's hard for us to see six months out in our own companies. Any rational shareholder, were they so smart, could have dumped GM in 1973. And, really, 1950 to now is two whole generations (generally defined as 30 years). Fiduciary duty means a "reasonable person" standard. While, yes, it would have been better now if they had the government take on these obligations then, it's clearly not unreasonable for GM to have decided otherwise. Second, and more interestingly to me, is that it was in GM's interest to bear health care costs. GM needed to attract and retain skilled labor (which is why they compensated them so well in the Treaty of Detroit). Bearing healthcare costs, as a flush company with two full decades of prosperity ahead of it, provided a competitive advantage in attracting and retaining labor versus other fields that these workers could have gone into, such as plumbing, construction, or the like. I'll leave the historical nature of the Big Three's political biases to others.
biohacker42 18y ago
As a libertarian immigrant, I don't care for unions. Please no Ayn Rand jokes, I can't stand her. So while the unions are certainly a big part of the problem, the responsibility is ultimately with management. It is ALWAYS management's fault. It doesn't matter if it is GM or a start up, it's management. If you are considering going to work for a startup, the management should be the most important factor in your decision. GM's management could have changed the company culture to be as efficient and productive as Toyota's. It's not like Toyota made a secret of how it works. GM could have seen the decline of proven and easy to access oil reserves, and the rise of the middle class in the BRIC countries and done the math. They are in the car business, so they ought to have seen what's coming. But no, crap giant gas guzzlers. The unions didn't do that, it was management.
- yummyfajitas 18y ago
  I think the stupid SUV's are the only thing that kept GM around this long. They probably would have died years ago if they never came up with them (the damn things are pure profit). As for Toyota-style management? It's difficult to do with strong, uncooperative unions. Want to replace 100 workers by robots? Not happening. Want to give workers decision making power, tempered by accountability for their decisions? The union demands more money for the decisions, and thinks that "accountability" means "talk to the steward." There is a reason Toyota builds factories in Kentucky instead of Detroit. http://www.nytimes.com/2007/09/04/business/04uaw.html?_r=1&pagewanted=all&oref=slogin http://www.nytimes.com/2007/09/04/business/04uaw.html?_r=1&#... I'm not saying GM made no mistakes, but unions did play a huge role.
- josefresco 18y ago
  GM didn't buy their own SUV's, Americans did. So while we're all quick to blame GM for cashing in on SUV's we all did the dance with GM in the 90's which got them drunk with success and profit. That being said (and to counter my own point), the first Toyota Prius came out in 1997, and I don't think I need to tell everyone what gas cost then.
  - deleted 18y ago
    [deleted]
edw519 18y ago
Make cars people want.
- josefresco 18y ago
  It's kind of tough to succeed when your workers (with the same skills) get paid 2-3x what competing car companies pay. Profit margins are just as important to a company's success as demand. See Internet math of the late 90's for a perfect example of what 1000000 * 0 equals.
  - edw519 18y ago
    Profit margins are just as important to a company's success as demand. On what planet? Wanna buy a buggy whip, a cassette player, or a 5.25" floppy disk drive? All marked up 100%, but still good prices.
    - jcl 18y ago
      You wouldn't happen to have better examples? These only reinforce his point -- which alternately worded is: "Demand is just as important to a company's success as profit margins".
      - edw519 18y ago
        You wouldn't happen to have better examples? No. These weren't "examples". They were caricatures. Because the statement is absurd. What difference do your margins make if no one wants to buy your stuff? We're all so good at tech and so used to eyeball driven apps that it's easy to lose sight of the single most important fact of business: sooner or later someone has to be a customer. I never entered the "labor vs. management" debate here because it's a complex issue that won't easily be resolved here (or anywhere else). Instead I offered a play on pg's "Make Something People Want," slightly modified for Detroit. I don't know whose fault it is (nor do I care), but face it: hardly anyone wants Detroit's cars. They've delayed the inevitable by bolting 4 door bodys onto pickup truck chasses for 15 years now without preparing themselves for $4 gas. Duh. Look out your window right now. After the first 100 Camrys, Accords, and Altimas drive by, do you see anything from Detroit that you'd rather have? Neither does anyone else. That's Detroit's biggest problem, so I'll restate my original, they need to "Make Cars People Want". I know this is Hacker News (thus the questioning about the applicability of this post). We must not forget that the business aspect is just as important as the tech aspect. No matter what your other financials are, without demand, you have no sales. Without sales, you have no business. Then all of this is just one big hobby.
gahahaha 18y ago
From http://delong.typepad.com/sdj/2008/07/denpartment-of.html http://delong.typepad.com/sdj/2008/07/denpartment-of.html regarding this article. "When GM offered the UAW more lavish benefits, it did so in order to induce the UAW to accept less generous wages. The money that GM paid in the 1990s and 2000s to fund pension and retiree health bnefits was offset by wages that GM did not have to pay in the 1960s, 1970s, and 1980s. Lowenstein appears to want to live in a world in which GM (a) gets a break on its wage costs in the 1960s, 1970s, and 1980s; and can do so (b) without having to pay any money to fund pensions in the 1990s and 2000s." Bad management screwed GM, not not the Unions. GM ought to have set aside the money saved on wages to meet these future obligations. That they did not do so is just one of many examples of their management incompetence.
josefresco 18y ago
This article should be written about Chrysler, which many believe are in worse shape than the other "big 2". The bankruptcy watch for me goes like this; Chrysler, Ford then GM.
rudyfink 18y ago
It seems insane to me that the overall editorial conclusion is "we need to do more to fund public pensions". The entire rest of the article seems to be to the point that "pensions are an artifact of sky-high prosperity that ultimately rob the future". Maybe I am just misreading the article.
aggieben 18y ago
The sorry decline of General Motors has proved Reuther right: the government is the better provider of social insurance. Let industry worry about selling products. Huh? Seems to me that this just proved that the market is a better provider of "social insurance" in the form of products people want (i.e., medical care at market prices) than anything collective offered by either the unions or the government. Hasn't this guy ever heard of Social Security and it's looming insolvency? Why don't the same arguments apply? Just think...how much easier it would be for the government to prop up the financial sector temporarily (not that I'm for that...just following the argument here) if it didn't have 3 limbs tied behind it's back by SS/Medicare/Medicaid?
jhancock 18y ago
This article is bunk and a clear propaganda effort. GM is dying because its a big old company and big old companies die..and..because as a nation, the U.S. does not protect its companies/citizens from the effects of global free trade. The stock price is a different story. This article misses something important. Was there some massive cover-up with GM's financials? No. The debt due to pensions and such is not new information. If the stock buyers and analysts didn't adequately project a meaningful market price based on GM's published financials, who is to blame? Unions? No, the stock should be priced lower if thats whats on the books. Don't blame unions for bubble markets and the unfounded position that stock prices and company value should always grow.
MaysonL 18y ago
No, it's a clear case of assisted suicide, not murder.
rms 18y ago
As far as I'm concerned, GM had it coming for illegally destroying the USA's electric streetcar system. http://en.wikipedia.org/wiki/Great_American_Streetcar_Scandal http://en.wikipedia.org/wiki/Great_American_Streetcar_Scanda... It's too bad, really, every city could have had public transportation like San Francisco.

15 points by cmcginnis 18y ago

How about the CEO's, management, etc. who "miraculously" brought employee ownership of the company to around 20%! I'll let you guess how much of that was owned by lowly union workers, and how much was owned by executives. Or is it GE I am thinking of?

davidw 18y ago

Err... the stuff in ()'s is your own editorialized point of view. But this isn't really what I'd call hacker news in any case.

cmcginnis 18y ago
"But none of G.M.’s management miscues was so damaging to its long-term fate as the rich pensions and health care that robbed General Motors of its financial flexibility and, ultimately, of its cash. General Motors established its pension in the “treaty of Detroit,” the five-year contract that it signed with the United Automobile Workers in 1950..."
- davidw 18y ago
  You're right - there's nothing at all in there about hackers or computers or startups. And as for the contract, presumably it was also signed by management, not just the union.
  - cmcginnis 18y ago
    "On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups."
    - davidw 18y ago
      What you guys don't seem to realize or take seriously is that enough of this stuff (Obama, Iran, unions, etc...) will drive the quality of the site down, just like reddit. "Non computer" stuff is often ok if it's just some random, interesting thing that's "food for the brain", but when you get into politics and economics (at least some kinds of economics) and stuff like that, it's just poison.
      - mechanical_fish 18y ago
        I'm often tempted to disagree with the effective HN ban on political issues, because it leaves so many of the most important facets of life off the table. But, alas, I think this is correct. This is a terrible forum for discussing political issues -- because the signal-to-noise in politics is very low (any political discussion is mostly about team-building, horse-trading, and tooth-baring, not problem-solving or analysis and certainly not software or technology) and we don't have the time to wade through waist-deep piles of personal statements, deal memos, and threats; because this site draws people from very diverse political backgrounds who will take a very long time to reach equilibrium if they start team-building, horse-trading, or baring their teeth; but mostly because the place just works better if there's some focus. It helps us to know when to shut up. I interpret PG's mission statement not as an attempt to ensure that "anything of interest to anyone smart" is on topic, but as a signal that he doesn't want to be the Big Man who sets the agenda for news.yc. He wants the community to do that. And we have: political discussions get discouraged (using our polite jargon: "That's too reddit for this site") and I personally strive to limit my team-building, horse-trading, and tooth-baring efforts to the slyest possible implications. For example, I'm going to go mod up edw519. It's not as if there are no other political forums on the web.
      - pg 18y ago
        There have always been a few stories like this. I understand that to someone who saw what happened to reddit, the sight of words like "Obama" or "Union" in a title is very alarming. But not all stories with those words in their titles are boring political ones. Don't worry, I won't let News.YC go down that road. I'll munge the voting algorithm before I let that happen.

sachinag 18y ago

I think this is a pretty misleading OpEd. It would be crazy to think that management broke fiduciary duty here (as the article implies, with the references to legislatures/taxpayers). It was twenty years before GM saw competition from the Japanese (in the wake of the oil crisis), and it's hard for us to see six months out in our own companies. Any rational shareholder, were they so smart, could have dumped GM in 1973. And, really, 1950 to now is two whole generations (generally defined as 30 years). Fiduciary duty means a "reasonable person" standard. While, yes, it would have been better now if they had the government take on these obligations then, it's clearly not unreasonable for GM to have decided otherwise. Second, and more interestingly to me, is that it was in GM's interest to bear health care costs. GM needed to attract and retain skilled labor (which is why they compensated them so well in the Treaty of Detroit). Bearing healthcare costs, as a flush company with two full decades of prosperity ahead of it, provided a competitive advantage in attracting and retaining labor versus other fields that these workers could have gone into, such as plumbing, construction, or the like. I'll leave the historical nature of the Big Three's political biases to others.

biohacker42 18y ago

As a libertarian immigrant, I don't care for unions. Please no Ayn Rand jokes, I can't stand her. So while the unions are certainly a big part of the problem, the responsibility is ultimately with management. It is ALWAYS management's fault. It doesn't matter if it is GM or a start up, it's management. If you are considering going to work for a startup, the management should be the most important factor in your decision. GM's management could have changed the company culture to be as efficient and productive as Toyota's. It's not like Toyota made a secret of how it works. GM could have seen the decline of proven and easy to access oil reserves, and the rise of the middle class in the BRIC countries and done the math. They are in the car business, so they ought to have seen what's coming. But no, crap giant gas guzzlers. The unions didn't do that, it was management.

yummyfajitas 18y ago
I think the stupid SUV's are the only thing that kept GM around this long. They probably would have died years ago if they never came up with them (the damn things are pure profit). As for Toyota-style management? It's difficult to do with strong, uncooperative unions. Want to replace 100 workers by robots? Not happening. Want to give workers decision making power, tempered by accountability for their decisions? The union demands more money for the decisions, and thinks that "accountability" means "talk to the steward." There is a reason Toyota builds factories in Kentucky instead of Detroit. http://www.nytimes.com/2007/09/04/business/04uaw.html?_r=1&pagewanted=all&oref=slogin http://www.nytimes.com/2007/09/04/business/04uaw.html?_r=1&#... I'm not saying GM made no mistakes, but unions did play a huge role.
josefresco 18y ago
GM didn't buy their own SUV's, Americans did. So while we're all quick to blame GM for cashing in on SUV's we all did the dance with GM in the 90's which got them drunk with success and profit. That being said (and to counter my own point), the first Toyota Prius came out in 1997, and I don't think I need to tell everyone what gas cost then.
- deleted 18y ago
  [deleted]

edw519 18y ago

Make cars people want.

josefresco 18y ago
It's kind of tough to succeed when your workers (with the same skills) get paid 2-3x what competing car companies pay. Profit margins are just as important to a company's success as demand. See Internet math of the late 90's for a perfect example of what 1000000 * 0 equals.
- edw519 18y ago
  Profit margins are just as important to a company's success as demand. On what planet? Wanna buy a buggy whip, a cassette player, or a 5.25" floppy disk drive? All marked up 100%, but still good prices.
  - jcl 18y ago
    You wouldn't happen to have better examples? These only reinforce his point -- which alternately worded is: "Demand is just as important to a company's success as profit margins".
    - edw519 18y ago
      You wouldn't happen to have better examples? No. These weren't "examples". They were caricatures. Because the statement is absurd. What difference do your margins make if no one wants to buy your stuff? We're all so good at tech and so used to eyeball driven apps that it's easy to lose sight of the single most important fact of business: sooner or later someone has to be a customer. I never entered the "labor vs. management" debate here because it's a complex issue that won't easily be resolved here (or anywhere else). Instead I offered a play on pg's "Make Something People Want," slightly modified for Detroit. I don't know whose fault it is (nor do I care), but face it: hardly anyone wants Detroit's cars. They've delayed the inevitable by bolting 4 door bodys onto pickup truck chasses for 15 years now without preparing themselves for $4 gas. Duh. Look out your window right now. After the first 100 Camrys, Accords, and Altimas drive by, do you see anything from Detroit that you'd rather have? Neither does anyone else. That's Detroit's biggest problem, so I'll restate my original, they need to "Make Cars People Want". I know this is Hacker News (thus the questioning about the applicability of this post). We must not forget that the business aspect is just as important as the tech aspect. No matter what your other financials are, without demand, you have no sales. Without sales, you have no business. Then all of this is just one big hobby.

gahahaha 18y ago

From http://delong.typepad.com/sdj/2008/07/denpartment-of.html http://delong.typepad.com/sdj/2008/07/denpartment-of.html regarding this article. "When GM offered the UAW more lavish benefits, it did so in order to induce the UAW to accept less generous wages. The money that GM paid in the 1990s and 2000s to fund pension and retiree health bnefits was offset by wages that GM did not have to pay in the 1960s, 1970s, and 1980s. Lowenstein appears to want to live in a world in which GM (a) gets a break on its wage costs in the 1960s, 1970s, and 1980s; and can do so (b) without having to pay any money to fund pensions in the 1990s and 2000s." Bad management screwed GM, not not the Unions. GM ought to have set aside the money saved on wages to meet these future obligations. That they did not do so is just one of many examples of their management incompetence.

josefresco 18y ago

This article should be written about Chrysler, which many believe are in worse shape than the other "big 2". The bankruptcy watch for me goes like this; Chrysler, Ford then GM.

rudyfink 18y ago

It seems insane to me that the overall editorial conclusion is "we need to do more to fund public pensions". The entire rest of the article seems to be to the point that "pensions are an artifact of sky-high prosperity that ultimately rob the future". Maybe I am just misreading the article.

aggieben 18y ago

The sorry decline of General Motors has proved Reuther right: the government is the better provider of social insurance. Let industry worry about selling products. Huh? Seems to me that this just proved that the market is a better provider of "social insurance" in the form of products people want (i.e., medical care at market prices) than anything collective offered by either the unions or the government. Hasn't this guy ever heard of Social Security and it's looming insolvency? Why don't the same arguments apply? Just think...how much easier it would be for the government to prop up the financial sector temporarily (not that I'm for that...just following the argument here) if it didn't have 3 limbs tied behind it's back by SS/Medicare/Medicaid?

jhancock 18y ago

This article is bunk and a clear propaganda effort. GM is dying because its a big old company and big old companies die..and..because as a nation, the U.S. does not protect its companies/citizens from the effects of global free trade. The stock price is a different story. This article misses something important. Was there some massive cover-up with GM's financials? No. The debt due to pensions and such is not new information. If the stock buyers and analysts didn't adequately project a meaningful market price based on GM's published financials, who is to blame? Unions? No, the stock should be priced lower if thats whats on the books. Don't blame unions for bubble markets and the unfounded position that stock prices and company value should always grow.

MaysonL 18y ago

No, it's a clear case of assisted suicide, not murder.

rms 18y ago

As far as I'm concerned, GM had it coming for illegally destroying the USA's electric streetcar system. http://en.wikipedia.org/wiki/Great_American_Streetcar_Scandal http://en.wikipedia.org/wiki/Great_American_Streetcar_Scanda... It's too bad, really, every city could have had public transportation like San Francisco.