Insider: History Bites Back

"Those who cannot remember the past are condemned to repeat it."-George SantayanaIt's hard to escape the gravitational pull of the auto industry in Detroit.

"Those who cannot remember the past are condemned to repeat it."-George Santayana

It's hard to escape the gravitational pull of the auto industry in Detroit. Each and every day the headlines of the major newspapers in this town blare of more impending gloom-and-doom on the horizon. The laser-like focus on what the industry has to do to right itself is missing one important element: History. Every pundit and expert has been saying the problems facing the industry began with people from the shop floor, the union bosses who muscled those Ivy League-educated big-wigs at the top into providing gold-plated healthcare plans and other perks not available to ordinary working folk (i.e., anyone not employed by the Big Three). After all, the UAW did manage to get the OEMs (and as a result Delphi and Visteon) to agree to establish "jobs banks," which provide excess workers with 98% of their regular pay for doing absolutely nothing. And who can overlook the munificent healthcare plans union members get? While that explanation for why those things came to be may be common thinking among those "in the know," in point of fact, they don't know.

Having talked to members of the 1984 bargaining team that created the "jobs banks" program, it seems that the history bandied about regarding the problems the OEMs face is revisionist. It wasn't the UAW that thought of the now-costly program, but the OEMs themselves (gasp!). As it was relayed to me, GM actually conjured up the "jobs bank" and brought it to the bargaining table. Apparently GM execs thought the "bank" would provide it with skilled workers who needed little training once the automaker regained market share. We know what happened to that lofty plan. GM's market share has done nothing but sink. In fact, some members of the UAW bargaining team in '84 voiced their objection to the "banks" idea, saying it was equal to shuffling the decks on the Titanic and would not make GM or the industry more competitive. So as the head honchos at Delphi, GM and Ford lament about the quandary they are in today and conduct regular meetings with UAW leaders trying to gain some sympathy, they need to place calls to their predecessors and thank them, too.

Thinking about all of this, I asked a top bargaining official at one of the Big Three recently whether management should shoulder any of the blame. His response: "Sure, we're part of the problem. But we agreed to those contracts during better times." Oh, so you should go into bargaining thinking things can only get better? I thought these were well-educated people with at least a modicum of street-smarts. Based on their thinking, we should all go out and buy Ferraris or Land Rovers that we can't afford now, because we all know we'll only earn more as we get older, right?

Now the industry and the union must work together to make things right. But, I urge those at the top of the Big Three and the suppliers to look at the glass as half empty, not half full and prepare for the worst, not the best. Otherwise, I'll just save this column and prepare to run it again in another 15 years or so.