Last night I listened to this episode of This American Life, title NUMMI, that explains why GM failed because they did not build reliable cars. Combative relations between labor and management combined with the entrench interests of labor and management prevented necessary change for decades despite GM having co-owned and manged a US based plant with Toyota that produced reliable cars. To me, as more of a management type, the interview with one of the union workers was revealing.
"They would even keep track of stuff they'd missed, because that's what the company puts in the, that the only way you could protect you job is to keep the team strong, so there's a week link you have to get rid of that week link. So I'd go tell them 'You can't do that. You can't build up a case for management against your union member. Made me angry and disappointed that the union had gone so backwards that they forgot what a union meant--taking care of each other.'
What does/must he think? Either jobs are secure regardless of the quality of output or that there is relatively little difference between one member or all members loosing their jobs. It is as though he thinks that there is a fixed amount of profit to be split between management and labor and that the quality of output does not impact the size of the pie to split. Oddly, for the career duration of many union members he was right. It took 50 years for GM to fail. Maybe he seemingly odd believe were optimal for members with high enough discount rates. Keep in mind that GM would have survived longer if not for 2008's deep recession and recent high oil prices that killed sales of SUV's, GM's most profitable products.
He seemed far crazier before I analyzed his personal incentives. Now, his us versus them attitude make sense, especially for him. When his pension is considered the logic becomes far more questionable.
Saturday, August 28, 2010
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