Foreigners Debunk Myth of Unproductive U.S. Workers

For years, the alleged inefficiency and relatively high wages and benefits of American workers were repeatedly cited by auto makers and financial analysts as key factors in the decline of the auto industry in this country.

But the experience of foreign manufacturers operating plants here clearly shows that the denigration of Americans as rather sloppy, costly workers was unfair.

The reasoning behind the recent far-reaching corporate decisions of Toyota and Volkswagen make the point nicely.

Look first at Toyota. Even as it is building a new assembly plant in Georgetown, Ky., Toyota has decided to add an $800-million engine plant. That is a compliment to American workers and, happily, it means more jobs for them.

The sharp decline in the value of the dollar, strong sales here and the Japanese determination to increase its share of the huge U.S. market were critical factors in Toyota’s decision to add the engine plant.

The extra capacity will help Toyota reach its stated goal to have 75% of the components in its U.S.-built cars also made in America.

Toyota says productivity of its workers in the United States and Japan is now comparable, and labor cost differentials are no longer significant because of the drastic change in the dollar-yen ratio and also because Japanese wages are rising faster than those in this country.

In 1985, wages and fringe benefits in the U.S. auto industry averaged $19.63 an hour, compared to $8.14 in Japan, or just 41% of the cost here.

As of last week, U.S. auto industry workers averaged $19.88 an hour and Japanese workers earned $14.95, or 75% of the U.S. rate. And much of that labor cost advantage is erased by the cost of shipping cars across the ocean.

Pay raises for the Japanese and changes in the exchange rate are the prime factors in narrowing the gap between American and Japanese workers. Since the efficiency of workers in the two countries is now comparable, those old bugaboos of high American labor cost and lack of productivity were not even a consideration in Toyota’s decision to expand its U.S. operations.

Even the trouble Toyota does have at one of its plants in the United States was not caused by inefficiency of American workers or their wages.

There has been a slump in sales of the Chevrolet Nova, the GM car produced by American workers under Japanese management at the Toyota-GM joint venture plant in Fremont, Calif. There has been no drop, however, in sales of the Toyota models made there by the same workers.

Because of GM’s sales decline, production at Fremont is being cut to 650 cars a day from 750. But none of the 2,500 workers will be laid off because the company’s contract with the United Auto Workers includes a firm no-layoff policy that can be modified only in dire emergencies.

The confidence in American workers expressed by Toyota executives was similar to the praise given them by Volkswagen. Unfortunately, the outcome differs sharply--VW is shutting down its only plant is this country, putting 2,500 workers out of jobs even as Toyota expands.

VW sales have dropped so precipitously in this country that it is closing its plant near Pittsburgh, even though VW pays its workers in Germany at least 15% more than it pays Americans--and, don’t forget, it has to pay hefty shipping costs to get cars here from Germany.

The United Auto Workers protested, charging that the VW decision to close its U.S. plant indicates that VW expects to bring cars here from their low-wage facilities in Brazil and Mexico.

Leaders of IG Metall, the union that represents VW workers in Germany, also protested the company decision.

“The decision to close the Pennsylvania plant was not clever because it increases the protectionist mood in the United States, and that could ultimately hurt us,” said a spokesman for IG Metall, adding:

“It means we lose our foothold there, one that will be essential if (U.S.) import laws make it more and more difficult to ship our cars to that important market.”

But the German union officials who are also members of the VW board of directors didn’t fight the plant closure decision.

They finally, if reluctantly, accepted it because they know the Pennsylvania plant has been operating well below 50% capacity for the past five years and was losing money steadily.

The union spokesman stressed that “all of our members are working and we did not want nor need the U.S. jobs to be brought back to Germany, but we understand that VW could not indefinitely sustain such heavy losses in America.”

VW officials deny that they plan to shift production to low-wage countries to become more competitive.

But it must be a real temptation. After all, while labor costs in the United States are significantly lower than in Germany, wages and fringe benefits for auto workers in Mexico are astonishingly lower. They average less than $1.35 an hour.

And in Brazil, wages and benefits total only $2.28 an hour.

That wage gap is partially offset by less efficiency in the developing countries, compared to the United States, Germany and Japan, although the gap is closing.

UAW President Owen Bieber denounced VW’s decision to close its only U.S. plant, saying it was the product of a “shortsighted, bottom-line mentality (that) betrayed the company’s loyal and productive U.S. work force.”

Bieber may not be far off the mark if Toyota continues to thrive with its American work force and VW falters in the continuing competition for a share of the American car market.

Coors Workers at the Crossraods

The AFL-CIO and its allies won an impressive victory last August when they ended a 10-year boycott against Adolph Coors Co. in return for substantial concessions from the ultraconservative management of the Golden, Colo.-based firm.

But the victory was far from total because Coors’ workers are still not represented by any union.

That crucial decision will soon be made by the workers themselves, and the outcome of a union representation election is uncertain.

However, a major obstacle to a union victory has apparently been removed by an unofficial understanding reached by union leaders to head off a bitter jurisdictional battle between the Teamsters and the International Assn. of Machinists, both of which want to represent Coors’ employees.

Most jurisdictional disputes between the Teamsters and unions affiliated with the AFL-CIO were settled with remarkable dispatch after the Teamsters rejoined the labor federation on Nov. 1. The Teamsters, America’s largest union, was ousted from the AFL-CIO in 1957, on charges that it was dominated by corrupt leaders.

But the inter-union battle at Coors is still a focal point of the rivalries between the Teamsters and other AFL-CIO affiliates because labor’s decade-long, bitter boycott of Coors’ beer attracted nationwide attention.

That struggle epitomized labor’s fight against right-wing, anti-union forces, and it will be a serious setback for organized labor if Coors’ workers decide to remain non-union despite the AFL-CIO’s initial victory.

The prospect of a union loss would be substantially increased if a pro-union majority vote at Coors is split between two feuding unions, leaving neither with the majority needed to win a representation election.

Talks among union officials will continue this week in an attempt to settle the jurisdictional dispute. But at least it now seems certain that the two unions will, sensibly, not fight each other for the right to represent Coors’ workers.

There are several settlement possibilities. An obvious option is for one of the two unions to simply withdraw from the contest and support the other’s organizing campaign.

But which union should withdraw? The machinists union is the designated hitter at Coors for the AFL-CIO and already has a strong core of supporters there. On the other hand, the Teamsters represent the bulk of the rest of the nation’s brewery workers.

Another option is for the two unions to wage a joint campaign in which each union would seek to represent a portion of the Coors work force. Or they may decide to set up a joint committee of the two unions so together they could function as the workers’ bargaining agent.

Labor’s current opportunity came last summer after more than a year of secret negotiations between top officials of the AFL-CIO and the company, which was hard-pressed by the boycott.

In return for ending the boycott, the company agreed to allow a quick union representation election, not to stage a vigorous anti-union campaign and to use union workers to build a $70-million brewery in Virginia.

A union win at Coors would be a small but significant and much-needed sign that organized labor finally is ending its deep decline of recent years.