Thanks Doug: US Outsourcing 7 cities

[LD3]

And yet outsourcing continues. What kind of proof do you need that unions are the primary reason why companies outsource and transfer as much labor-based work to foreign nations where the economics actually work?

And yet we have another airline that is unionized, that continues for year after year to turn a profit and keeps work in-house....They treat their emplyees well, and did I mention they are unionized.....They pay their employees the highest wages, and did I mention they are unionized....So your arguement that unions are breaking companies is not completely true, but I will not defend unions that continually defend slack ass problematic employees, that is one beef I have with unions....

I think SW has proven that management and unions can coexhist..

 

[CallawayGolf]

And yet we have another airline that is unionized, that continues for year after year to turn a profit and keeps work in-house....They treat their emplyees well, and did I mention they are unionized.....They pay their employees the highest wages, and did I mention they are unionized....So your arguement that unions are breaking companies is not completely true, but I will not defend unions that continually defend slack ass problematic employees, that is one beef I have with unions....

I think SW has proven that management and unions can coexhist..

WN is a great American success story. Anyone who says otherwise is just not able to face the truth. However, there is more to the story. WN profits are remarkable when compared to other major airlines no doubt. Compare WN profit margins to Coke, Apple, Microsoft, Exxon, and a host of other great American companies and WN profits look fairly paltry. Plus, a roughly twenty-year fuel hedging program generated far more profits for WN than their actual operations ever did over the same period. Very smart, but making profits from fuel hedging is more spurious than making profits from ancillary revenues if you ask me. So, despite WN being heavily unionized, their success has little to nothing to do with having lucrative collective bargaining agreements in place. Their single fleet type, single class of service and no-frills approach, and their fuel hedging has everything to do with their profits.

Of course US could copy copy WN and drop 100+ cities, drop international flying, drop first class, drop wide bodies, drop meal services, drop using GDS services, drop express services, and then go head to head with WN playing on their own turf. Not likely to happen but feel free to run with that idea if you like.

 

[BoeingBoy]

I don't know the answer on that one, but I suspect it has little to do with the rates ALPA agreed to.

Selling part of the 190's was strictly about raising cash and cutting capacity. It had nothing to do with pay rates because if it had they'd still be on the property.

Jim

 

[Glucose Intolerant]

WN is a great American success story. Anyone who says otherwise is just not able to face the truth. However, there is more to the story. WN profits are remarkable when compared to other major airlines no doubt. Compare WN profit margins to Coke, Apple, Microsoft, Exxon, and a host of other great American companies and WN profits look fairly paltry. Plus, a roughly twenty-year fuel hedging program generated far more profits for WN than their actual operations ever did over the same period. Very smart, but making profits from fuel hedging is more spurious than making profits from ancillary revenues if you ask me. So, despite WN being heavily unionized, their success has little to nothing to do with having lucrative collective bargaining agreements in place. Their single fleet type, single class of service and no-frills approach, and their fuel hedging has everything to do with their profits.

Of course US could copy copy WN and drop 100+ cities, drop international flying, drop first class, drop wide bodies, drop meal services, drop using GDS services, drop express services, and then go head to head with WN playing on their own turf. Not likely to happen but feel free to run with that idea if you like.

It was (and still is) the management team cultivated by Herb Kellerher and the employees of Southwest that enables SWA to be successful. Period.

Their success didn't come from being heavily unionized or through collective bargaining, it came from progressive management and well treated, happy and productive employees.

But your saying SWA is not as great as Coke, Apple, Microsoft, Exxon because they are non union? These companies aren't airlines either.

When the last time you flew to LAS on COKE? Actually, don't answer that.

SWA also never exploited, stripped the pension out from under, or sued any of their employees either. Definitely WEAK MANAGEMENT.
SWA should immediately start working on abrogating all of their collective bargaining agreements before their fuel hedges run out. Probably not going to happen either.

Who cares if SWA was profitable by hedging their fuel besides SWA? Their customers.
It's still a far better plan than than the one tacking on BS fees (one after another) because the airline can't figure out how to price the product to remain competitive yet profitable. Our customers don't like it either.

These fees unfortunately are probably here to stay, but isn't it amazing that while enjoying the LOWEST labor costs in the industry; the LCC business plan is still the old AWA's? Make fares cheap enough to fill every seat (without a care of customer satisfaction). Besides, who cares if they never fly US Airways again? There will be another sucker to occupy the seat as long as the fares are low..... right?

Not any more. The other airlines are building a "better mousetrap" and we are far behind.
Even with the record load factors (due to lower than SWA fares) we are still barely making a profit - this time not only at the expense of the customers, but now the employees.
Due to the heavy load factors - not only is the the wear and tear and abuse on the aircraft evident, now it's becoming evident on the employees (you know the fume events and other MTC issues that don't happen). ONE of many reasons besides an alleged work action for all the MTC issues this summer.

Doug says we are running a great airline. ANY publication or ANYONE else out there (that we didn't issue a press release to), that also says we are running a great airline besides Doug?

<<<crickets>>>>

We could learn a lot from SWA, but this management team thinks they know better and they will tell you as much.
We could drop 100+ cities, drop international flying, drop first class, drop wide bodies, drop meal services, drop using GDS services, drop express services, and then go head to head with WN playing on their own turf. And much to the joy of a few - it would be AWA all over again circa 1987........... and we would still fail.

Success is a result of leadership and that comes from the top, and we are pretty vacant in that department and it is at all of our peril.

Besides great management and people had nothing to do with SWA's success - it was merely Wild Turkey and Herb's lucky eight ball.

Tempe: stand by for operation "Get Doug a beer and an eight ball"

 

[ggiby]

Who is going to get the outsource work?

thugs and illegal aillians
I am sorry for all who have worked here for so many years... does not anyone in mgt have a backbone???/ Ok how bout balls?

 

[necigrad]

1) Unions inflate wages above market rates. (Why would they exist if they couldn't provide that fundamental "benefit" to their members?)

"Market rates" are whatever companies collectivly in an industry can hire at. It's not necessarily what the work is worth, and is often as low as they can go and fill the position. The executives, however, get paid far superior wages that puts them many classes above their employees.

they advocate for paying people more to do less (Labor Day holiday was a great example, thanks 700 for that softball) ... ...they enforce unnatural restrictions on employees doing or not doing certain tasks for the benefit of the company and the customer ... ...by preventing Management from properly disciplining or terminating underperforming employees ... by adding expensive work rules like paid vacation days above what non-union employees are offered ... and by demanding onerous work rules and filing grievances which Management must respond to thus expending money, time and resources that would not be required in a non-union environment.

• Paid holidays don't advocate less for more. In fact, non union union employees don't have to work the holiday at all and get the pay. In Fleet Service we do the same job on a holiday, on a Monday, and on our anniversary because we couldn't get the night off.
• "Unnatural restrictions"? You mean scope that defines a units work. Well, you're right, those conditions prevent management (in theory) from doing that work. The only time there is a problem, however, is when MANAGEMENT FAILS TO STAFF PROPERLY!
• Preventing proper discipline? I call total BS on this. Management can fire ANYONE as long as they are doing it properly. If an employee does something wrong, nothing prevents the Company from proper discipline. Well, that's not entirely true, if the Company fails to follow a process they agree to then yes, they may not be able to fire someone that deserves that, but it was THEIR fault!
• Expensive work rules that are above and beyond non union. WTF? Regarding vacations (your cited example) put the union contracts side by side with non union. I don't know all the contracts, but Fleet is identical to the corporate policy. You might have a point on something like double time, but the company agrees to that, it's not forced on them.
• Onerous work rules? I'll guess this is more of the previous point.
• Grievances. Ah, yes. Of course these are a burden to the company. Sadly for your point, far more often then not the company loses them, proving their necessity.

3) Because of #1 & #2 above, many jobs and industries which were formally strong in this nation have seen dramatic declines since unions came along to "protect workers". I submit this is the case because companies, in the pursuit of generating the profits and ROI demanded by their shareholders and investors, decided to outsource jobs to contractors and/or to move entire operations to other countries where the total cost of labor is less expensive than doing the same work that can be done by unionized employees in the US.

Along with minimum wage, taxes and laws. Outsourcing isn't simply all about unionization. The simple fact is that in the United States the standard of living, and thus employment, has been rising. This costs money. You could certianly make a case for unions having something to do with that, but blaming them for all of that is entirely unrepresentative at best.

4) The final and fully expected result of all of this is that unions in America are directly responsible for lost jobs and the outsourcing decisions companies make.

See my above reply.

Parker's and other executive compensation, especially in the form of stock-options, are irrelevant to the facts at hand. If the executives all agreed to cap their compensation at $100k I would expect and anticipate that they would make the exact same decisions as they do at their current level of compensation. They wouldn't stick around mind you, but as fiduciaries of the company they are fundamentally responsible for making good business decisions independent of their personal compensation - that is what a fiduciary is. Thus, there is simply no correlation between executive compensation and the decision to outsource except that outsourcing is proper for fiscal responsibility (as opposed to unions), and managers are charged with doing just that.

Executive compensation is tied to performance metrics because that is in the best interest of the shareholders/owners. The better the executives perform on achieving shareholder objectives, the better they are compensated. Only in some screwed up liberal philosophy would people be paid not to provide a greater return on investment, oh wait, that's exactly what unions do.

You're right here, except for an oversight. By your logic an executive should accept the job for (your number) $100K. They don't. They push for more (I THINK $550K for Parker), then add in bonuses. Parker get's a bonus for placing anything other then LAST of the major airlines. Yeah, that's a good goal for someone running the company. "Don't run the crappiest airline and we'll give you a bonus."

Why should anyone care about a pay disparity? What business is it of anyone to tell someone else how much they can or should make (employer to employee relationships notwithstanding)? Wages are paid, or should be at market rates. If a person's skills are considered entry level that anyone else can do without much training, then they would naturally get entry-level pay. If a person has highly specialized skills that are also in high demand, then he would get paid a wage that is commensurate with those skills and that demand.

Tom Hanks is a highly-skilled and in-demand Hollywood superstar. Should he not get paid more, and substantially more, for what he does than the extra who walks across the street in the background of one of his movies? The difference is based on skill, demand and the amount of value he brings to the financial equation. Americans would be much better off by not focusing on what certain people make but rather by doing everything they can to better themselves and the skills they can offer. That way they can be compensated by a wage that meets their reasonable expectations. And if a person doesn't like the wage they are offered, they can always go into business for themselves and earn as much money as their skills and ambition will allow for.

The world needs ditch diggers too, eh? I'm not one bit less skilled then Doug Parker. The difference is that my skills aren't with the running of an airline. In Japan CEOs make about 11 times that of an employe; in the US the number is up to 344 times in some cases (http://news.uns.purdue.edu/x/2009b/091103VenkatasubramanianCEO.html). CEOs make more in the US, and that's no ones fault except for the executives and Boards s of Directors i in the US companies.

Thanks for making my point. Onerous government regulations, punitive tax policies against corporations and those who produce wealth, and union shortsightedness are the exact reasons why Made in America products are so hard to find. Eliminate these and manufacturing and jobs will return to the US.

And yet outsourcing continues. What kind of proof do you need that unions are the primary reason why companies outsource and transfer as much labor-based work to foreign nations where the economics actually work? Americans have proven over and over again they will buy Chinese products by the cargo ship full so long as they are cheaper than American made products. Supply and demand forces at work once again.

I bring liberal politicians into the equation because without them unions would be powerless and jobs would not be lost. Want more proof, look at illegal immigration. Supply and demand once again. Why do we have millions of illegals working in America? Because people don't want to pay $5 or $10 a pound for apples or lettuce or whatever minimum wage, OSHA, and other laws would do to the price of these commodities. Farmers are stuck in the middle of having little ability to raise prices to cover their costs so they unfortunately turn to people who don't carry the same baggage as American workers who need a W2, payroll taxes and whatever. In many cases these small, independent farmers would go bankrupt if they had to pay minimum wage plus unemployment, workers compensation, FICA, Medicare and the rest of the overhead that has priced American workers out of these jobs. So Americans sit home without a job while illegals come over and have no problem finding work. These policies not hurting the rich, they are hurting the heart of America - the rest of us who actually have to work or we won't be able to pay our bills. Shameful.

Really? Some people in the field of economics would disagree with you. http://seattletimes.nwsource.com/html/nationworld/2015911531_madeinchina15.html?syndication=rss

 

[BLUTO]

Thanks for the great post grad,

One other bit of flawed logic... Mr. Golf has placed the reason for outsourcing directly on the shoulders of the unions. I guess no has told him that the textile industry which was the hardest hit was predominantly nonunion, and based in the right to work states of the south.

As I stated before, for the jobs to come back, every American worker will need to be able to work for less than a dollar per hour to compete with Chinese slave wages.

 

[WorldTraveler]

It is true to argue as the article does that Chinese made products account for only about 3% of the value spent by American consumers. It is also true that the Chinese have not succeeded in producing most of the big ticket items like cars or even home construction that Americans spend their money on. But imported products have decimated a much larger percentage of manufacturing capacity of small and medium size businesses – because those companies produced the products which other countries can now produce much more cheaply.
It is also not entirely accurate to compare the total value of Chinese products based on today’s prices if you wanted to measure the impact on the US economy… the accurate measurement would have be to compare the average price of that product when it was produced in the US vs. what that product costs now – and factor in the associated job losses that went w/ moving that product’s production overseas. Finally, you would have to measure the value of the replacement jobs to determine if there really was “progress” to the American society in outsourcing those jobs.
Most of us know full well that the answer is that American society has not progressed because of the outsourcing of much of the US small and medium sized manufacturing base. What has happened is that American consumers are able to maintain a much higher standard of living – as measured by the amount of “stuff” they can accumulate – using less and less dollars. But America’s appetite for “stuff” has also translated into enormous amounts of personal debt, unprecedented in the world.
You have to honestly ask yourself if America would not have been better off keeping some of the tariffs in place that kept the US market more closed to foreign products, Americans would have paid more for what they do consume and have less choices, but still have more higher paying manufacturing jobs, most of which have been lost or for the ones that remain such as in the auto sector, they have to compete w/ foreign companies that have much lower costs.
…….
As to the question of WN and its treatment of its employees vs. its profits, no one will deny that the success of the company is tied to the way it treats its employees.
But far too many network carrier employees look over the fence at WN and their employees failing to recognize there are a whole lot of structural advantages that WN or even B6 have that the network carriers do not.
1. WN and B6 are much young airlines – and do not have many of the legacy costs that are a result of on older workforce, equipment and facilities that was right in one age but not today, and strategies that have needed to be changed. WN and B6 are post-deregulation era airlines… they built their business model around the current environment. Everyone of the network airlines was born 30-40 years or more before deregulation with business models that never could have foreseen the brutal competition that came w/ deregulation.
2. WN has succeeded because it created a high-density, high-efficiency transportation system that only works in a fairly small subset of markets in the US and they have used that model largely to create NEW demand…. They have certainly driven network carriers out of markets but they have largely not had to compete to win their customers… they created new ones.
3. It is now becoming apparent w/ the bloody competitive battles in DEN that WN’s business model is not built to engage in the brutal competition that much of the rest of the industry has had to endure for 30+ years. WN’s attempt first to buy F9 and then ultimately FL resulted in eliminating competition in a number of areas on WN’s network, all of which were strategically important for WN’s growth. WN clearly gained a lot of new assets/routes w/ the FL acquisition but don’t underestimate what they have accomplished by eliminating competition at MKE and BWI among other cities.
4. US at PHL is a perfect example of how network carriers CAN fight back against low fare carriers and win. US used the mass of its PHL hub against a much smaller WN in most markets and the results are showing that WN really doesn’t have a great track record in going after large network carriers in their hubs. The only other major competitive hub market, DEN, where WN is trying to gain market share is a financial basket case for all three hub carriers there. I don’t expect that WN will have any more success in expanding in ATL than they have had in PHL.
5. The statement that WN has made more money thru fuel hedges than running an airline is absolutely spot on. The simple reality is that WN used those fuel hedge gains to rapidly grow during a period when it alone had a huge cost advantage. The reason they were so aggressive in going into DEN and PHL was because they had those fuel hedges subsidizing their operating losses; now that those are gone WN has to make money the old-fashioned way – earn it. As long as WN continues to battle it out in DEN, they will have limited financial resources to engage in turf battles elsewhere.
6. Finally, for now, growth has long been the secret of success for WN. Everyone LOVES and benefits from growth, employees included. Every airline employee is excited when new routes are opened and new aircraft are acquired because it means new hire employees will come in behind them. WN has maintained solid growth for years. But now, their growth is slowing down if not stopping as they have to reallocate their existing capacity over a larger network; since fuel prices won’t permit further price increases with the same amount of capacity, carriers have to spread their capacity out over a larger network – fewer flights in the original number of markets and more new flights in new markets.
To highlight the role of growth in making employees happy even at network carriers, CO and DL are good examples of how growth even at a network carrier can keep employees happy. CO built its post-BK plan in the 90s on growing EWR into a global hub.. .and they used every available aircraft to fly to dozens of cities that could support air service from NYC. CO dominated the NYC market (in part because no other airline really challenged them) and added a lot of high value (to employees) int’l flying… they also had below average labor costs (not scale wages but average wages) because they had so many low seniority employees. As the growth opportunities for CO stalled, so did the enthusiasm for the company which has now resulted in the UA merger/acquisition; since UA has been in a very slow or no growth mode for years, a lot of dynamics at the new UA will be much different than at CO.
DL took a page out of CO’s book w/ its restructuring plan. Even before the NW merger, DL had added so much new service that it became the largest US int’l carrier as measured by RPMs. DL has continued to redeploy assets to produce revenue growth, even if it has meant having much more liberal scope policies on domestic routes than other carriers like AA and CO. Based on traffic reports for August that just came out, DL’s international system carried slightly more traffic than the new UA’s even after the CO merger. Granted, DL’s international system is more seasonal so that won’t last thru the winter but the slot swap and UA’s plans to pull down domestic capacity more than other carriers will mean that DL will continue to be able to grow domestically and then continue its int’l growth plan in the spring. I would submit that a big reason DL employees were satisfied w/ the company enough to not vote for representation is because DL has given them enough growth for their work situation to be just a little better than the rest of the network carrier.
Growth is good for everyone…it keeps costs down, creates happy employees, and adds new revenues.
WN has been able to deliver it for years… CO and DL figured out how to grow after their BKs to the benefit of their employees AND their bottom lines.

There is nothing inherent in WN’s business plan that creates a sustainable advantage that network carriers can’t copy – or said another way, the network carriers, US included, have enough of their own advantages that they can produce benefits to their employees.
.
It is up to management to identify growth opportunities and for labor – represented or not – to give mgmt what they need to go after that revenue.

 

[CallawayGolf]

"Market rates" are whatever companies collectivly in an industry can hire at. It's not necessarily what the work is worth, and is often as low as they can go and fill the position. The executives, however, get paid far superior wages that puts them many classes above their employees.

No one sets market rates in a free economy. The forces of supply and demand dictate rates through supplier and consumer behaviors. If your premise is true, however, then unions really don’t make a difference in what employees are paid. Logically then unions provide no financial value in return for their members, since wages are “whatever companies collectively [sp] in an industry can hire at.”

[*]Paid holidays don't advocate less for more. In fact, non union union employees don't have to work the holiday at all and get the pay. In Fleet Service we do the same job on a holiday, on a Monday, and on our anniversary because we couldn't get the night off.

You missed the point here. 700 was claiming that unions and the benefits they have won for non-union employees is both productivity improvements and a paid holiday. My point was that paying people not to work on an invented Labor holiday is illogical and thus a mathematically tenuous claim that productivity is increased by paying for no work to be performed. Paying people double or more to work on a holiday also cannot logically increase productivity (Revenue / cost of labor).

[*]"Unnatural restrictions"? You mean scope that defines a units work. Well, you're right, those conditions prevent management (in theory) from doing that work. The only time there is a problem, however, is when MANAGEMENT FAILS TO STAFF PROPERLY!

And “staffing properly” to account for all circumstances which may or may not occur (equipment failures, weather disruptions, station disruptions, diverted flights, etc.) means paying people to be available when they are most likely not needed (lost productivity).

I worked in restaurants as a cook/assistant chef when I was paying my way through college. None of them were unionized. There were times when we were “slammed” with more orders than our ticket board could hold. At these times, which may have only lasted for 45 minutes or so, restaurant managers would come back and assume one of the cooking stations or assist the wait staff in prepping plates to go out to tables. This was helpful to all employees and customers as it improved kitchen efficiencies and increased our total output of dinner plates. In a union environment this would most likely have been prevented by the CBA. The manager would be forced to decide between increasing labor costs (reducing productivity) by adding staff to cover the slam periods (4 hour minimum mind you) or letting dining/kitchen operations suffer from being understaffed. This is a totally nonsensical way to run a business. Having the manager step in to assist was appreciated by everyone and no one was harmed, except the person who wasn’t asked to come in and sit on his thumbs for three plus hours doing nothing but getting paid.

[*]Preventing proper discipline? I call total BS on this. Management can fire ANYONE as long as they are doing it properly. If an employee does something wrong, nothing prevents the Company from proper discipline. Well, that's not entirely true, if the Company fails to follow a process they agree to then yes, they may not be able to fire someone that deserves that, but it was THEIR fault!

I’m guessing you have never worked in an at-will status for a small company. Can you imagine the owner of a small business sitting in a meeting and having the kinds of insults thrown at him that Doug takes on a regular basis at Crew News and SOTA meetings. No, those business owners and managers just call people who are performing poorly or are not demonstrating loyalty to the company into the office and tell them their services are no longer required. No grievances, no lengthy multi-part process, and no need for a justification. As an owner/manager you simply state (if you are smart about it), “you are an at-will employee and the company no longer requires your services”. If the employee asks why they are being let go, they manager should just tell them they don’t need a reason in an at-will agreement and show them the door. That is NOT how it works under union contracts and in bigger companies that have federal/state laws that meddle in their business.

[*]Expensive work rules that are above and beyond non union. WTF? Regarding vacations (your cited example) put the union contracts side by side with non union. I don't know all the contracts, but Fleet is identical to the corporate policy. You might have a point on something like double time, but the company agrees to that, it's not forced on them.

Some CBAs do reflect non-union benefits; others are quite a bit more expensive than non-union. Sure the company agrees to the CBA, but would they agree to pay double time, as one example, if collective bargaining wasn’t a factor? I say they would only if they couldn’t find workers willing to do the job for less – market rates – or if the company is profitable and generous enough to go above and beyond market rates.

[*]Grievances. Ah, yes. Of course these are a burden to the company. Sadly for your point, far more often then not the company loses them, proving their necessity

With no CBA there are no grievances and no associated costs for running a business as the owners/managers see fit to do so. Grievances, like unions, add unnecessary costs to the business which, in turn, reduces the company’s ability to pay workers. Since wage rates are set in the CBA the only remaining relief value is to reduce staff (lost jobs). Outsourcing begins to look quite appealing vs. the cost of administering a CBA.

You're right here, except for an oversight. By your logic an executive should accept the job for (your number) $100K. They don't. They push for more (I THINK $550K for Parker), then add in bonuses. Parker get's a bonus for placing anything other then LAST of the major airlines. Yeah, that's a good goal for someone running the company. "Don't run the crappiest airline and we'll give you a bonus."

Of course they don’t. Executive pay is set by the BOD who want the best and most experienced leadership team to protect shareholder interests. Wages, bonuses, stock options and benefits for executives are paid based on skills and experience with an expectation that monies paid to the leadership team will be returned many times over (or losses will be mitigated in challenging times) based on their performance. The owners of the company think it’s worth paying executives and who are we to tell them what to do with their own money?

The world needs ditch diggers too, eh? I'm not one bit less skilled then Doug Parker. The difference is that my skills aren't with the running of an airline. In Japan CEOs make about 11 times that of an employe; in the US the number is up to 344 times in some cases (http://news.uns.purdue.edu/x/2009b/091103VenkatasubramanianCEO.html). CEOs make more in the US, and that's no ones fault except for the executives and Boards s of Directors i in the US companies.

And that is the difference. Doug’s skills are unique and expensive for an airline to attain. Losing his skills, experience and leadership would be potentially devastating to the financial health of the airline and it could put 32,000 jobs at risk. Unless your job has the same level of risk, then it is doubtful that you would be offered the same level of reward (wages). Who cares what Japan’s business elect to pay their executives? They can do with their money what they like. So can and should everyone else who lives in a free society. Why not worry about what you do with your own money instead of what shareholders do with theirs?

Really? Some people in the field of economics would disagree with you. http://seattletimes.nwsource.com/html/nationworld/2015911531_madeinchina15.html?syndication=rss

Did you read the article. Dry cleaners, beauty salons and other services that would be logistically impossible to outsource are the kinds of jobs you want to take credit for being “Made in America”. Do you think Americans would fly to Mexico to drop off their dry cleaning and get their nails done? America has seen a massive decline in manufacturing as part of the GDP and also a massive decline in manufacturing jobs as most of the non-food consumables are produced outside of the US. Not all of those industries and jobs were unionized, but the damaging laws that disregard the legitimate need for businesses to remain competitive in a global economy are responsible for this decline and the union lobby is just as culpable as liberal/centrist politicians.

 

[signals]

Outsourcing, especially ramps, is nothing new. If they don't outsource then I believe they give new hires a raw deal.

 

[UPNAWAY]

Callaway obviously understands economics, markets and freedom better than any other posters here.

Freedom is 1000 x more efficient then any policy put in place by government or unions. In a completely free market 90% of the population will be better off. In a tightly controlled environment only 10% will do well. The rich are getting richer and the middle class is shrinking but not because of free markets but because of all the muddling and restrictions we do place on freedom. You cannot separate personal and political freedoms from economic ones. Despite what the Politicians and media and schools have told you we don’t need protection we need freedom, self reliance, individualism not collectivism!

 

[SparrowHawk]

Callaway obviously understands economics, markets and freedom better than any other posters here.

Freedom is 1000 x more efficient then any policy put in place by government or unions. In a completely free market 90% of the population will be better off. In a tightly controlled environment only 10% will do well. The rich are getting richer and the middle class is shrinking but not because of free markets but because of all the muddling and restrictions we do place on freedom. You cannot separate personal and political freedoms from economic ones. Despite what the Politicians and media and schools have told you we don’t need protection we need freedom, self reliance, individualism not collectivism!

Mr Golf understands a great many things to be sure but he has yet to offer some of the reasons companies choose to outsource and they are NOT directly tied to the hourly wage. You've touched on it somewhat.

If I'm an outsourcing contractor, my $12.00/Hr people aren't going to work any faster or better then the current $12/Hr folks who have the jobs now. So why switch? Several reasons actually.

1. Outsourced employees don't go against headcount! Why is that important? Because your company looks better to Wall Street when they look at things like Aircraft/Employee ratios as a determination of alleged "productivity".

2. HR functions become the headache of the outsource provider. In industries where the work is relatively low skill and non customer facing, turnover is often through the roof. Thus, by shifting the recruitment, hiring and staffing levels, the contracting company has placed the burden solely on the outsource provider.

3. This will be doubly true going into ObamaCare as companies will look to shift the staggering federal mandate off of their plate and onto a outsource provider. You can thank the Back Bench Junior Senator from IL Masquerading as President for what will become a nation of "temps". We see it already. Go into a supermarket and most of the people resetting the shelves and displays are contractors and have been for years. There are several national companies who do nothing but provide outsourced services to retailers of every stripe.

4. Work rules! Outsource providers don't have any except for "Do it or get out! We can replace you in a heartbeat". Outsource providers don't pay less per hour in general terms. What they often do is staff in a way that allows them to get work work done in the time allotted with less people. Work rules kill union jobs. NO ONE in American business wants to hear "It's Not My Job". Scope clauses don't protect! In fact they have the opposite effect of exposing good higher paying jobs to outsource providers. Case on point is the retail merchandiser type jobs from above. Working for a contractor you get between $11.00 & $13/Hr. The same UFCW member working at say Cub or Rainbow earns around $9.50 to $11.00 per hour plus has to pay union dues which further lowers the take home. So then you ask how is the outsource provider cheaper? well they have no rule that says 4 people must work an 8 foot reset. Outsource providers do it with 2 to 4 depending on the number of SKU's in that 8 ft section. Days of work for the provider company can be a few as 3 hours to as many as required. No overtime ever as once you hit around 38 hours they send them home and finish short handed

So in the end this isn't a "union thing" it's an economic thing brought on and made worse by the Back Bench Junior Senator from IL Masquerading as President who has 21 tax increases in his 34 months in office. Taxes so high and onerous they are likely to drive entire industries offshore. Then you have this same Back Bench Junior Senator from IL Masquerading as President rewriting and adding 4200 NEW regulations for EPA alone. Tell me what sane company is going to invest in new plants and corresponding job growth not knowing what the regulatory landscape is going to look like? Let's throw in the EPA and their unwillingness to issue drilling permits. Several large companies have invested BILLIONS attempting to develop oil fields only to have their leases expire before the permitting process is complete. One such company is going to access the deep sea field from Russian Waters as a result, so much for job growth. Then just for giggle throw in the crushing debt brought on by the Back Bench Junior Senator from IL Masquerading as President and you can easily see why company's want people to perform tasks not as employees but as contractors.

 

[CallawayGolf]

Mr Golf understands a great many things to be sure but he has yet to offer some of the reasons companies choose to outsource and they are NOT directly tied to the hourly wage. You've touched on it somewhat.

I agree with about 98% of your post. I believe the points you made are all valid reasons why outsourcing occurs and I think they compliment my views concerning the problem of hiring and retaining workers in this non-free market environment. I happen to see a greater linkage to the effect unions have on the problem, but the concepts related to productivity, work rules, and onerous regulations are essentially the same either way.

Nice post.

 

[SparrowHawk]

I agree with about 98% of your post. I believe the points you made are all valid reasons why outsourcing occurs and I think they compliment my views concerning the problem of hiring and retaining workers in this non-free market environment. I happen to see a greater linkage to the effect unions have on the problem, but the concepts related to productivity, work rules, and onerous regulations are essentially the same either way.

Nice post.

Unions openly supported and members voted for the Back Bench Junior Senator from IL Masquerading as President in droves and now as I can't help but chuckle and remind them "Be careful what you wish for". They voted for:

9.1% unemployment
$4.00 Gallon Gas
Job growth crippling tax increases across the board
Job killing regulations that number in the thousands
The Job & People killing program known as ObamaCare
A POTUS, who if he maintains his level of debt accumulation will have incurred more debt than all of the prior POTUS's COMBINED

61% of the public didn't want ObamaCare when it passed then and now the numbers are in the 70% range.
Gas prices have stayed higher longer than under the prior Empty Suit. Crushing debt will do that to all commodities, looked at your grocery bill lately? Another hidden tax on Workers brought to you bt the Back Bench Junior Senator from IL Masquerading as President

So if you want to be angry at unions, be angry for their blind support of a man who isn't qualified to be Mayor of Wasilla, AK, who has never created a job, met a payroll a day in his incompetent life. We are where we are not because Doug Parker is evil incarnate, we are where we are due to the failed economic policies of a third rate political hack who with support of big Labor got elected.

Think about it for a second, If we had a robust growing and expanding economy with unemployment in the 5% range do you really think anyone would care about the impact Unions have? A strike in a high growth scenario would be seen merely as a union trying to get a bigger piece of a growing and expanding pie.

 

[CallawayGolf]

Unions openly supported and members voted for the Back Bench Junior Senator from IL Masquerading as President in droves and now as I can't help but chuckle and remind them "Be careful what you wish for". They voted for:

9.1% unemployment
$4.00 Gallon Gas
Job growth crippling tax increases across the board
Job killing regulations that number in the thousands
The Job & People killing program known as ObamaCare
A POTUS, who if he maintains his level of debt accumulation will have incurred more debt than all of the prior POTUS's COMBINED

61% of the public didn't want ObamaCare when it passed then and now the numbers are in the 70% range.
Gas prices have stayed higher longer than under the prior Empty Suit. Crushing debt will do that to all commodities, looked at your grocery bill lately? Another hidden tax on Workers brought to you bt the Back Bench Junior Senator from IL Masquerading as President

So if you want to be angry at unions, be angry for their blind support of a man who isn't qualified to be Mayor of Wasilla, AK, who has never created a job, met a payroll a day in his incompetent life. We are where we are not because Doug Parker is evil incarnate, we are where we are due to the failed economic policies of a third rate political hack who with support of big Labor got elected.

Think about it for a second, If we had a robust growing and expanding economy with unemployment in the 5% range do you really think anyone would care about the impact Unions have? A strike in a high growth scenario would be seen merely as a union trying to get a bigger piece of a growing and expanding pie.

Yep, liberal anti-free market politicians could not exist without the support of unions and unions could not exist without the liberal anti-free market politicians returning the favor. Two sides of the same coin. Of course I'm not angry at unions or anyone else for that matter. People do stupid things and hold to illogical ideologies every day of their lives. It's just part of being human.

Objectively, however, as long as the government favors restrictions on the free market, and their coddling of unions is a big part of those restrictions, the American economy will suffer. Unfortunately most Americans have no idea of the extent of our economic problems. Pass a constitutional amendment that requires a balanced budget and limits the federal debt to 20% of GDP ( I would prefer 5% or less), and people will finally have an idea of just how horribly far off course we are.

The total cost of government interference is beyond most people's ability to comprehend. Heck most can't even remember how much they paid in federal income tax each year, much less how much of their earning potential goes into Social Security and Medicare as a regular part of their wage losses. Add to this state and local sales tax, property tax, gas tax, death tax, gift tax, auto registrations, transportation taxes, hunting/fishing licenses, parking meters, national park entrance fees, and on and on an on and you see that people really have no idea how much they are paying in taxes. But that's not all, you have to add to all of this the increased costs of goods and services resulting from corporate/business taxes, Sarbanes-Oxley, Frank-Dodd, OSHA, worker compensation, FLSA, EEOC, FMLA, and dozens of other legislative acts that add financial burdens on business who then pass those burdens on to consumers through higher prices (hidden tax). Add all of this up and every American is so burdened by political incursions into the free market system and the back pocket of hard working citizens that we are well beyond the point of sustainable prosperity. Total economic failure is not just an option, its beginning to look a lot like the only destination we are headed to, especially under the "leadership" of people like the "Back Bench Junior Senator from IL Masquerading as President".