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Saturday, October 04, 2003

Union workers at Pratt and Whitney, Connecticut's long time aircraft engine manufacturer, have voted by a margin of 219-203 to reject offered pay cuts, and instead take the alternative: 160 jobs will be cut instead. This vote was watched carefully yesterday here in the Nutmeg State, and some were surprised at the outcome. Most were disappointed either way. I watched the local news, and followed in the newspapers the comments from the union members. Most has been predictable.

  • "I'm really upset right now."
  • "It never should have come to this."
  • "It's going to be tough to make that kind of money elsewhere."
  • "I think it's corporate greed."

  • Corporate greed. There's the mantra I was waiting to hear. It's always about corporate greed, and never anything else.

    Let me start by saying that I don't wish job loss on ANYONE. I've been there. It hurts, and not just financially. But anyone who works for a publicly held company needs to know that the executives who make such personnel decisions work for the shareholders (ironically, most of the union members are also shareholders). Shareholders are interested in one thing: maximizing the value of the share. This cannot be done by overpaying for work that can be outsourced.

    Let's delineate the job details here. Currently, the materials handlers make an average of $21.70 per hour plus generous benefits. The company, as per the union contract, offered to keep all of the workers, but with a 15% pay cut, or they would be forced to eliminate 160 positions, and offload the rest to external vendors.

    The reason? Pratt is paying too much for work that is largely unskilled. Connecticut is an expensive place to live, to be sure. But, honestly, $21.70 for shipping and receiving personnel is a bit excessive. Many people are willing to do the same work for less. That's a byproduct of an economy that is losing manufacturing jobs every cycle.

    Additionally, the company offered early retirement in the form of a $10,000 payout, plus one week's pay for every year of service to the company, plus their existing pension benefits. The company sought to encourage older workers to step aside, so that those with less senority could stay aboard. This apparently swayed few to make the choice to do so.

    To be frank, the expectation of the standard of living in America has made it so that keeping unskilled manufacturing jobs here is cost prohibitive. It would be cheaper for some companies to simply go out of business. This happens more often than we would like.

    So, the machinists voted narrowly to reject the pay cuts. I think this is indicative of the mentality of the union. They typically believe that their position with the company is an entitlement. No concessions are ever needed. No performance metrics are ever acceptable.

    This time, they are misguided to vote against concessions. The logic is that the company will seek to outsource the work anyway. The truth is that they have no choice presently if they want to remain competitive in the aerospace industry. The market dictates this. As far as I can tell, a wage cut is better than no job at all. Apparently, if I were part of the machinist's union, I would be in the minority.


    .: posted by Dave 10:04 AM

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