Goodyear: Bad Policy

The United Steelworkers Union won one the other day. In the deal, the Union was able to win a number of concession from Goodyear:

  1. Minimum staffing levels
  2. Prevention of shifting production to any facility not represented by the Steelworkers Union
  3. $600 million in updates to the plants to keep them modern
  4. Wage and benefit increases
  5. Continuation of cost of living increases.
  6. A plant in Tennessee that was closed will have it’s employees to receive a buy out

So lemme get this straight.  Companies across the country, world in fact, are trying to cut back to minimize the impact of the global recession [which has most certainly ended by the way].  We are seeing staff reductions, we are seeing wage freezes and even in some cases wage roll backs.  All of this in order to keep companies from having to close.  But Goodyear?  What are they doing?  Why, of course, they are promising that they will keep a minimum number of workers on the job; not a maximum.  They are promising that they won’t move work to any plant not in America represented by the SWA.  Yeah, did ya notice that?  The Union didn’t say that they couldn’t move the jobs out of city or out-of-state or country, they simply said that the couldn’t move them where the union didn’t have representation.  So, if Goodyear wanted, they couldn’t move the plant to a Right to Work State and avoid a represented racket work force.  Nice.

Further, the Union was able to provide raises on top of cost of living increases to its membership.  All the while forcing Goodyear to spend $600 million in the plants so that they would be anchored to this ship wreck for the next several years.  Awesome.  Simply awesome.

Meanwhile,the only mention of why  these plants are in need of protection comes when the article mentions:

The Tennessee factory has been severely hurt by the economic downturn and an influx of cheap tires from China

Let’s ignore the fact that all of the tire buying American’s enjoy the “cheap tires from China.”  We like to have things provided to us at a price that is less expensive than we could otherwise find in the market.  So, while the American tire makers may see a decline in their sales, or at least in their profits, the rest of America see more money in their pockets.  This could be anyone from the single mother trying to make it to work to the florist that has to rely on tires to deliver her flowers on time.  All of this means added productivity.

Allocation of scare resources with multiple uses.

What we have now is an artificial allocation.  Or, people spending money on things that they wouldn’t otherwise spend that money on.  Which is almost always not optimal.  And somehow the press and the world rejoices at the fact that some Union jobs are saved at the expense of jobs elsewhere in the economy.  Jobs that have long ago ceased to be meaningful means of employment here in the US.  Here, you see, we are known for innovation and for services.  We need to free resources from the manual labor of tire making in order to free those minds to invent new kinds of tires.  Or news kinds of rubber.  Or any other of a long list of things yet to be invented but now prevented from being discovered.  All because of a racket.

But how, may you ask, can Goodyear continue to survive in this system where it is forced to pay fees and services to a work force that isn’t worth those fees and services?  Because, Mr. Obama has allowed Goodyear to charge an extra 35% for its tires adding directly to that companies bottom line.

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