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YAE: Unions, France, and the future of America

Sparkles

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Yet Another Example....

Some of you may remember a CEO who wrote a blunt and insulting letter to France back in February. At the time, at least the way it was portrayed to me, was that it was an American hick CEO, attacking all of France with stereotypes, and slander. Without more background on it, I didn't comment much on the whole incident.

Nevertheless, today I listen to a Radio broadcast by the BBC, entitled "France – The Tale of Two Factories".
BBC World Service - Assignment , France ? The Tale of Two Factories
You can listen to it here if you wish.
This broadcast, along with some other sources, gave me a clear enough picture of what is going on, to discuss it.

So as quickly as possible, a recap...

In the French town of Amiens, there is a Goodyear tire plant with 1,200 workers, all part of the General Confederation of Labour union. Over 5 years ago the plant went negative, and has lost money month over month since then.

The company proposed to cut 200 workers, adopt new working hours, and reinvest into the plant. The Unions opposed it, and went to court to prevent implementation.

A few years later, the company proposed to cut 400 workers, adopt new working hours, and reinvest into the plant. The Unions opposed that, and went to court to prevent implementation.

Now the company has slated the plant to be closed completely. So instead of losing 200 jobs, or 400 jobs, now they will lose 1,200 jobs.

Of course the evil international Goodyear company, is beating down the poor working people of France.

And now, the rest of the story....

The Goodyear tire plant, isn't the only tire plant in Amiens France, and in fact there's anther one just down the road. Dunlop built a tire plant in the same town, but it was later sold to Goodyear.

So both plants are owned and operated by Goodyear. However, the Dunlop plant was offered the same exact proposal as the Goodyear plant, but they accepted it. The General Confederation of Labour union, which was against the proposal, kicked the workers at the Dunlop plant, out of the union. Now the workers are part of a smaller union.

Because the Dunlop plant accepted the cut to a few jobs, and the new working hours, the plant is now profitable, and Goodyear has invested into the plant. Newer equipment, newer processes for more efficiency.

Meanwhile back at the Goodyear plant, the employees staged protests, burnt tires, and Goodyear has set 2014 as the year it will close the plant.

As a result Arnaud Montebourg, the French Minister for Industrial Renewal, has set about to find a buyer for the plant, to keep it open. The logical choice was Titan International, a tire company that specializes in agricultural tires, which is exactly the type of tire the Goodyear plant makes. At the request of Montebourg, CEO of Titan, Maurice M. Taylor visited the plant three times. After the third visit, Titan cancelled all further discussions of purchasing the plant.

This left Montebourg vexed, and wrote a letter to Taylor, asking why discussions had been ended. The letter in reply was the same that set off the firestorm of fury and anger. The letter was presented as an attack on all French, when in fact it was exclusively in reference to this Goodyear plant, and the Unions there.

Taylor wrote:
"How stupid do you think we are?" he wrote to the French industry minister. "The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three, and work for three." He concluded by saying, "You can keep the so-called workers."
Goodyear Sued by French in Ohio (GT)

Taylor in an interview with NPR:
Taylor wrote that he was no longer thinking about buying an ailing Goodyear tire plant in northern France, saying it would be stupid to buy a facility where workers were paid for seven hours but toiled for only three, spending the rest of the time on lunch and coffee breaks. He also told the minister what he thought about French workers when he visited the plant.

"I noticed that when you get to a machine and you're working, you work real good, you work as fine as any place, and you make a great product," Taylor said in an interview on the BBC. "But half the time, you guys are walking around, having discussions. It reminds me of a beauty parlor. You got to work a full six hours, you're being paid for seven. And the union president stands up to me and says, 'That is the French way, Mr. Taylor.' "
U.S. Boss Offers Blunt Critique; French Workers Give Fiery Response : NPR

For those of you who don't know, the workers there get paid for lunch and breaks. So out of the typical french 7 hour work day, they only work for 6. But because it's nearly impossible to fire a French worker, they don't work that much. So out of the typical 6 working hours, they spend half the time chatting.

Conclusions....

ONE..... I have said many times that Unions do nothing but harm their own people. As much as they blame the company, the Dunlop plant operated by the exact same company, is now profitable and growing.... only because the workers there defied the Unions and accepted the company proposal.

Same people, same product, same company.... one is profitable after ignoring the union, and one is being closed down after following the union.

Further, the Union itself doesn't deny the issue. When Taylor addressed the union workers at a public meeting, he openly said you work 3 out of 7 hours, and the Union president himself said "it's the French way"... I think is more accurately "it's the Union way" which is why France has a such a high unemployment, and has gone back into recession.

TWO..... Note also, that the French Industry minister, couldn't find a French company to buy the plant. Evidently even the French people themselves, know that investing in France is a fail. It's not often you see members of government actually seeking out foreign people to buy their domestic businesses.

THREE..... Moreover, note that you can not harm the rich. I've said this a hundred times, and people keep denying it, and yet it happens over and over and over again.

Every time you think you are going fight the rich, YOU LOSE. These guys reject the company, we're going to stick it to the man, we'll go to court and have this blocked. And they did. They won. .... now they are going to lose ALL jobs... not just the 200, or just the 400. They are going to lose EVERY job.

They ended up lose everything, instead of a little. You have the choice to either work in a way that your labor is profitable to the rich guy, or you can choose to not be profitable and not have a job at all. Those are your options. Even Taylor said that after the tire plant is closed...:

Taylor called French unions crazy and said he'd open a factory in China, pay workers a fraction of French salaries and export those tires back to France.

Again, Taylor wins, and the French workers lose. Welcome to reality. Will you be staying for awhile?

FOUR.... Lastly, the only claim to contradict Taylor's letter, was that some claimed that French are not overpaid. This is technically true, if you look at direct income. The average French worker, is paid 1/3 less than an America.

However, the raw money in the paycheck is never how much the company pays out for a worker. When you include taxes, deductions, mandatory contribution, and so on, the Average French worker is paid far more.

On average it costs a French employer €34 ($44.89) an hour to keep a worker on the payroll, more than in any euro-zone country except Belgium.

The answer—and this is where Monsieur Montebourg gets it wrong—is that the government burdens employers with payroll taxes and regulations that drive costs through the roof. That explains why France has lost more industrial jobs than any European country during the past decade.

Mandatory employer contributions toward pensions, unemployment insurance, health care, and other benefits can add 50 percent to an employee’s base salary.
U.S. CEO Insults French Workers. He

In other words, for a typical $15/hr manufacturing job in the States, in France the worker would be paid only $10 an hour, but the cost to the company would be around $20 an hour.

FIVE.... I've said this a hundred times before too. Every time that you demand the government require more benefits from companies, are you in effect demanding that your pay is cut. If the company has to pay out more money for your benefits, for ObamaCare, for Social Security, for Medicare, for Unemployment Comp, and on and on.... the company isn't going to just pay out more. They are going to cut your pay, to pay out those benefits.

All of this:


Should be lessons for us in America and elsewhere. If we follow the French lead, we'll end up with the same results. You want more mandated health care? expect declining wages. You want more retirement benefits? Expect lower wages. You want more Unemployment comp? Expect lower wages. You want more vacation weeks? Expect lower wages.

You want more Union power? Expect more job losses. And by the way, Goodyear isn't the only company leaving France. In the past 5 years all of these companies have reduced or pulled out completely, from France:

Arcelor Ford Coca-Cola Renault Samsonite Sanofi Sony Merck Serono Michelin

One estimate is that over 1500 firms have proposed moving out of France. Congrats on the Unions, and the Socialist ruling party in France.

Yeah, those workers are sure sticking it to the man......... Current France unemployment 11% and increasing.
 
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