UNIONS; THE HIDDEN COSTS

This is being prompted by the recent demise of an industry giant. A company with a glorious past, one of innovation and a history of ignoring those who say '…it can't be done'. I am referring to the Labor Day closing of Consolidated Freightways (CF). It was an industry leader for the vast majority of its existence. Early in its history the company decided that the available tractors for pulling its trailers were not acceptable. For those of you unfamiliar with the industry, the unit that pulls the trailer or trailers down the road is not a truck, it is a tractor; a unit that is not complete without a trailer. They then started a new company, to manufacture tractors for them. This company was also hugely successful and changed the industry. This is but one of the innovations CF brought to the trucking and related industries. CF's demise was brought on by chronic labor disputes.

This is the first of the hidden costs of Unions, lack of job security. In any industry with intense competition, where some companies are union shops, and others are not; the union shops are the most likely to go under. I have had personal experience with that under a much smaller union trucking company. I could name several union trucking companies that have gone under in the last decade, yet I can't think of a non-union company that has done so. I'm sure there have been some, but they were all small players and didn't get much if any coverage; 20 to 30 jobs are not considered very newsworthy. However, the big ones that went belly-up were all union companies.

But why are Union Shops more likely to close the doors? And why is it always so messy when they do? Now we get to the second hidden cost; attitude.

Unions tend to create a wall of distrust between management and labor; this often is not in the best interests of the workers that the union claims to represent. However, it must be understood that in the trucking industry the union gets their cut via dues even when a company goes out of business. Some might be lost to non-union companies, but much of the freight will be picked up by other union companies. The freight still has to move sometime. The freight sitting on CF's docks, under armed guard, has traveled most of it's way via CF, whenever the CF drivers get paid (or get a settlement; which may take years), the union will get its share. And also keep in mind; even though thousands of truck drivers are now on the streets looking for work, not one employee of the Teamsters was laid off! Unions tend to act like leaches; they suck off the host until dead, and then move on. Unions get a percentage of each employee's pay (dues). They have every incentive to boost the hourly pay as high as they can, regardless of market conditions. Their jobs are safe, and there is always another host around the corner.

This leads the union leadership to have disregard for stable employment for its "employers"; the union members. The union leadership has no reason to worry about any companies' market share; since they have their fingers in so many different, competing companies. They have a virtual monopoly. If you are a union truck driver, you are a teamster. If you are a union steel worker, you are in another union. If you are a union meat cutter, that's another union. So, if you are a union member, and your union overplays their hand; it is no big deal to the union since they have a lock on that industry.

This leads me to a defining moment in my view on unions, the UPS strike a few years ago. Now keep in mind that these guys were making over $20/hr. There was one picket sign I just can't get over:

At over $20/hr, these people were telling this to their customers; proclaiming it loud and long! How many customers went to Fed Ex as a result of this sign? Did the union care? Nope; Fed Ex is under their thumb also. The money is just taking a different route to them; that's all. They still get their cut; or most of it anyway. Since Fed Ex couldn't handle all the volume most of UPS shippers tried to ship via regular LTL (less than load) trucking companies, like us or CF. It really messed up our system and we had to refuse new customers.

More distressing though, what does this sort of rhetoric do to the management/labor relationship? If I was management; I'd have it out for the employees that struck. These people who I am paying very high wages to, are telling everyone that I am 'using them severely'? Yep; I'm going to be ticked off for a long time! This makes management suspicious of labor and creates a vicious circle.

I work as a driver for a non-union trucking company (one of the late CF's competitors). Sure we gripe about upper management when they come up with stupid decisions, and sure we have our idiots in middle management (we have plenty of idiot drivers too). However; generally we work as a team. We view the market as a positive sum game; if we want more pie, we grow the business to make the pie bigger. Union shops tend to view the pie as static, it can't grow or shrink; the object is to take more of it from management. No thought is ever given to the fact that the whole pie might be dropped on the floor in the fight over a bigger piece!

CF was loosing money every day it stayed in business. We'll never know for sure if the Teamsters were willing to take the offered 12% pay cut to keep the company in business or not, but I'd have been surprised if they did. Unions tend to not allow pay to even stay the same; either a yearly raise is locked in or it is being "negotiated". In 2001 we didn't get a raise (neither did our CEO), a lot of drivers grumbled about it; but most of us felt it was more important to keep the company profitable. This year? Well the economy picked up and we got our raises. Not only that but it looks like our profit sharing will be really good, perhaps as high as $3000 for those of us at top rate. Was the lack of a raise worth keeping our good paying jobs? Sure was! However, CF was locked into a contract raise last year and had to give raises even though the economy wasn't good and the company was loosing money. Had negotiations been in progress in the summer of 2001, the union would have insisted on raises; regardless of the profit picture.

Despite what I have just written, I am not anti-union. I have just looked at the costs of working for a union company. Yet, there are benefits for everyone in having unions. Although I am non-union (by choice) I make top union scale; yes, I am making over $20/hr. I don't have union dues. None of my pay goes to fund liberal candidates who wish to increase my tax burden (another cost of unions since they often donate dues money to the DNC). Yet, would I be making the money I am without unions? Nope! Would my benefit package be as good as it is without unions? Nope! Would we even have a middle class, much less an upper middle class without unions? Nope!

Unions were formed in the early part of the Industrial Revolution. Workers were treated not much better than slaves then. In some ways worse than slaves, since the employer had no vested interest in keeping the worker alive; he could hire another one at no extra cost. The slave owner, if he lost a slave, had to actually buy another. There was no recourse if a worker was fired. There was no unemployment check he could collect. The boss said "jump"; the worker asked "how high?" He didn't have a choice; he had a family to feed.

Unions evened the playing field. Not only that, they created a middle class that could afford to buy the products that were produced. The union movement even benefited the manufacturing industry in the long run; even though they had to be dragged kicking and screaming into the new phase!

Now, workers are treated with respect (in most cases), be they union or non-union. Pay for a skilled worker is fair. Most companies offer good benefit packages including health care and retirement. If a worker is fired without cause, he or she has options that can be pursued to correct the problem.

There are some industries that it would be silly to work in without a union. A great example is the construction industry. Jobs are fleeting there; often lasting only a few months. There is a lot of turn-over after each job. Having a Union Hall to go to for the next job, and having the pension administered by the union helps construction workers maintain some sort of stability in a very unstable industry.

However, unions need to understand that in order for them to continue, they need companies to stay in business. If a company cannot make a profit, where it its incentive to continue? Unions need to start working with, rather than against management. It would be to the benefit of their employers (the workers).

I stated earlier that even if a company goes out of business, the union still gets its cut. That isn't quite true though, except in the view of the union bosses. Private sector union membership has been dropping rapidly. The only area where union membership is growing is in the public sector; government. This is because the government has a true monopoly, and won't go out of business. Their costs can be passed on to the "consumer" via higher taxes and the "consumer" can do little about it. Taxes are enforced with the threat of jail time (just try to boycot the IRS!). Yet, union shops in the private sector continue to go out of business and much of that business goes to non-union shops. If private sector unions don't wake up to this fact, they may soon see some of their jobs going away, rather than those of their members.

Ok, let's finish the history lesson...

Fwiw, this is still bugging me.

I don't doubt that you know more about this subject than I do, but I do know something about it. I used to be a stockbroker, and I used to pay some attention to the trucking companies. I just need to remember and sort out all the things I've since forgotten.

I still don't think Freightliner ever tried to make tractors themselves. Not from scratch. They may have gone into a partnership with White where Freighliner was the lending party and White was the building party. That seems like it might be right.

White Motors --> White Freightliner --> White Consolidated --> Bankrupt

I also think Freightliner built trailers themselves for a time, with some success. That may have been what encouraged them to go in with White.

Now, if you can't take getting your mirrors ripped off by an Overnight driver while you're parked on the side of the road, what does that say about your sense of humor?

Harry ;)

--The true enemy of the working man is the liberals. Why do so many families need 2 incomes? Is it because of greedy corporations? Nope, because of greedy politicians trying to buy votes! Before the "Welfare State" existed usually only one income was needed. Tax rates were low on workers. Also, before the welfare state families were strong, especially black families. Since the introduction of the left's agenda 2 parent black families are almost a rarity. Few families can afford to have the mother stay home and take care of the kids. Children are raised by unrelated 3rd parties.

Do I really need to go on here? --
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All of the above are true, but you act like it is all the fault of government. You would ignore the hundreds of millions of dollars that business puts into corrupt politicians pockets.

Ever seen a town die because a buisness moved farther south, or out of the country all together? Sure it is all the fault of labor, they thought they should be able to afford to eat and work at the same time.

I have watched the conservative on this board defend the most outragious of business practices, as if business were a benevolent king.

The truth is most corporations think little more of an hourly employee than they do a roll of toilet paper. Pull all the paper off then get another roll. Get all you can from an employee, then get another.

Trucking is in serious trouble if GW's plan to open the borders to Mexican trucking goes forward, and I think it will.(But you already know that don't you?)

And of course labor will overwhelmingly vote Republican tis time, if your are correct. We piss and moan about perscription drugs for the old people who can't afford them. However we spend multiple billions of dollars providing health care for illegals. You want to see conservative credit go up with labor, address that issue.

I hate unions, wish we didn't need them, but we do.

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