Eric's Beijing Diary

Delphi. When I first saw the news about Delphi going "belly up," I passed it over. I don't have time to dwell on every news item. Trivia Pursuit is fine as a parlor game, but it can be very debilitating if you really want to get a handle on what is happening in the world. So I passed it off as another story about a company that somehow couldn't put it together.

But a couple things changed my mind. One is the fact that Delphi has become a symbol for the ultimate futility of high-dollar unskilled labor, with wages kept artificially high by militant unions. The other is the success of Delphi Asia. The CEO of Delphi Asia is a Korean by the name of Choon T. Chon. Mr. Chon, in explaining the demise of Delphi in America, told his staff, "Our mother has a tumor. This tumor is the UAW.

Delphi's workers in America were paid $27 an hour. If you add in the value of the benefits package, it came to about $65 an hour. Total cost for wages and benefits in China comes to about $3 per hour. Pretty easy to see that the American company just couldn't compete.

During my years in America, I had an uneasy relationship with unions. In the State of North Dakota, I was not only a member of the teachers' union, I was on the negotiating committee, charged with negotiating pay increases and contract issues with the school board. But I have also crossed two different picket lines during teacher strikes--one in Oregon, and one in Montana. The striking teachers in Eugene, Oregon, were pretty raucous. It's hard to describe the impression I had riding the school bus provided to take the substitute teachers from the hotel where we were staying through the picket lines to the classrooms where we were supposed to teach--neatly dressed teachers yelling obscenities, and giving obscene gestures--it was really sickening. The striking teachers in Great Falls, Montana were quite a bit more civilized. But I remember one teacher in particular who made me laugh. I really didn't intend to, but I was caught off guard. I was sitting on the bus, waiting to leave, when a striking teacher walked by with a sign that said, "I have a Master's Degree." It struck me funny. I hope he didn't see me, because I really would not want him to think I was making fun of him. I wish I could have talked to him. I would have said, "Sir, nobody cares that you have a Master's Degree."

This is the fundamental problem with unionism in America. I believe the unions were necessary at one time. But they went too far. If you are in a job where you have to continually be badgering your employer to pay you more money, then you are either working for the wrong company, or you are in the wrong business. The key to prosperity is to develop skills that put you in demand, and then let that demand create your income naturally. But many of the unions are populated by workers who are not skilled, and either cannot or will not get those skills. So they have used the union to help them obtain wage packages far in excess of what their skills would ordinarily win them.

During the years I was in the trucking industry, I used to dread going into union steel mills, because if I came in within an hour or two of the next shift, it was just about impossible to get anyone to do anything. If I had a load of steel, there was no way I could take it off myself. There just isn't a lot of motivation to produce in a union establishment. A story related to me by an oil man in North Dakota accentuates this. He had gone to work for a GM plant, and was forced to join the UAW. A few weeks after starting work, his coworkers began to pester him to slow down, because he was making them look bad. He ignored them. Before long, the union boss came to him, very upset. He ordered this guy to slow down. Well, this guy wasn't in the mood to let a union boss tell him what to do, so he just kept working. He told me it wasn't more than a few weeks before his employer came to him and told him very apologetically, "If you don't slow down, I'm going to have to let you go. The union is complaining, and we don't want any trouble."

"Slow down or get out." This is the watch word of union America. Many, many companies have finally gotten fed up and moved their manufacturing operations to Asia. But the US Congress still doesn't seem to get it. Of course the Congress has a role to play in addressing the trade imbalance. But the first thing they need to do is to come to terms with the fact that America's labor problems are not China's fault. And they weren't Japan's fault in the Seventies. Japan kowtowed to America and the Japanese economy went flat. China is not so easily pushed around.