Those ever fascinating unions

I see that Chrysler workers in Canada ratified the collective agreement negotiated by its union leaders by 87%.

I negotiated collective agreements on behalf of my employer during my most active years in the work force and I have always been fascinated by the relationship between the rank and file workers and those who supposedly speak on their behalf at the bargaining table. There is an assumption most workers make that their locally elected leadership (the people who actually work in the establishment governed by the agreement) is in charge of the process.

In big unions, like CUPE or the CAW, not so. The regional or national boys always take over, and the local president and his or her two or three minions become seat-fillers at the bargaining table. The problem with this is that the union politics spearheaded by the national headquarters takes precedence over local issues.

I recall a circumstance when I caved into a union demand that I did not like regarding job security because the national office was demanding it in all their agreements (pattern bargaining). But, I also managed to soften the blow by offering much less money for wage increases than I had been prepared to offer. After all, I had to justify the agreement to my board of directors.

When the members voted to ratify the deal, only 65% approved. It was enough of course, but in the previous half century of the union’s life it was common to obtain 98% ratification. My sources told me the big disappointment was the wages and that the security issue was of no concern to the local.

I wasn’t completely surprised when I saw the CAW seemingly going down the road to collective suicide with its intransigence at the bargaining table, just before it did the abrupt about-face. The vote of the workers clearly indicates they would prefer a job to a long time in the unemployment lines, and I guess at some point the union leaders woke up to what the workers really valued.

Ford really does have a better idea

In Germany, new car sales are up by 21.5% in the month of February. In fact, it is the best February for sales in a decade. At the same time new car sales in Ontario are down by over 50%.

The difference is that, in addition to the carmaker’s generous incentives, the German government introduced its own incentive package, offering 2,500 Euros towards the purchase of a new car for anyone trading in one that is more than 9 years old.

Ford Motor Company of Canada suggested that the Ontario government launch a similar program. It has also been recommended (not by Ford) that the federal and provincial governments suspend their sales taxes on new car purchases for a time. This should apply only to cars and trucks made in Canada.

I remember back in the 1980s when the Japanese motorcycle companies invaded the “big bike” market in the U.S. and Harley-Davidson, the only surviving American motorcycle company, was on the verge of bankruptcy. President Reagan imposed a 100% import luxury tax on big motorcycles and this gave breathing room for Harley to reinvent itself and come roaring back, literally and metaphorically, to financial health.

Now a tariff is the opposite of a government incentive, but the point of Ford’s suggestion and the example of Reagan is that the government has tools at its disposal that it can wield very effectively to assist industry. It doesn’t require injecting massive amounts of money into the bank accounts of the companies that pissed their money away in the first place. And it certainly doesn’t require the government to supervise an industry the way the public would expect it to do to safeguard the loans.

If it is a credit problem, then the government could provide the lenders with credit guarantees for purchasers of new cars. These government tools are not forever. They would only be employed until there was some sign the industries were out of the danger zone.

I drive an 8 year-old vehicle made in Ontario. It has more than 335,000 kilometers on the odometer. The body is beginning to show some small signs of rust, but the engine and transmission are running just fine. I am expecting it to last to at least 500,000 km without major trouble. However, if the governments suspended the sales taxes, the manufacturers continued the attractive sales incentives I have noticed when passing dealerships, and there was a generous scrappage fee, I would trade it in tomorrow for a new one.

I am looking at a replacement vehicle in the $30,000 range. With sales taxes that car would cost me approximately $34,000. The manufacturers are currently offering discounts of $3,000. If a scrappage fee were introduced at say, $3,500, and the sales taxes were suspended, the cost of the vehicle is less than $24,000. That is a $10,000+ saving, tax included, on a car that was originally priced at $30,000.

It would very hard not to bite on that one.

They're finally giving them away

The yesterday I had lunch with a friend and we were lamenting the demise of the economy over a fine bottle of Australian shiraz, when my companion remarked on the number of unsold cars on the dealers’ lots. “They can’t give them away”, he said.

Well, that was yesterday and it is a fast moving economic crisis.

Wouldn’t you know it, they are now giving them away. Here is a story from today’s Toronto Sun about a GM car dealership in Peterborough, Ontario.

If you buy a new van at Storey Pontiac Buick GMC by March 31, you'll get a new car for free.

"We're trying to create some excitement," says owner Rick Storey.
"And in a challenging market, the ultimate winner is always the consumer."

The promotion at the Peterborough dealership started Tuesday and five vans have already been sold, he said yesterday.

It's first-come, first-served. Storey said there were 37 vans in inventory as of yesterday afternoon -- choose any one ranging in price from $26,000 to $33,000 and the dealership will throw in a 2009 Pontiac G3 Wave, worth about $15,000.

Meanwhile, prices on the vans are all clearly indicated, he says, and prices have not been marked up.

"There are no gimmicks," Storey says.

If you don't need two brand new vehicles in your driveway, Storey says, then the dealership can still offer you discounts on the vans.

NOTE: Pontiac advertises the Wave as a fuel-efficient car that "leaves a sad trail of brokenhearted gas pumps wherever it goes."