"Card Check:" Let a Million Little GMs Flourish?

As more workers and small business owners learn the details of unionization through "card check" -- that is, turn-key union organizing that denies workers their private (secret) ballot, while locking small businesses into government-arbitrated, two-year binding contracts if they can't reach an agreement with the union, once organized -- the more engaged they wish to become in opposing legislation that will advance the "card check" model when the new Congress convenes in January 2009. Such legislation passed the House in March 2007, but did not obtain the 60-vote margin it needed in the Senate to advance to the President's desk. President-elect Barack Obama says he will sign a bill if it reaches his desk.

Surveys have shown that American workers are strongly opposed to eviscerating the right to a secret ballot in the workplace. A Coalition for a Democratic Workplace (CDW) survey found that even a significant majority of union households (69 percent) oppose this type of organizing scheme.

Workers like the current system where employees privately vote in a federally supervised ballot election. For all practical purposes, this option would no longer exist under "card check." Under this approach, a union would be recognized once they receive a simple majority of signatures on authorization cards. Obviously, such a system is ripe for all kinds of shenanigans and abuse. "Card check" would expose workers to intimidation and coercion, and the process gives no voice to employees who were not offered an authorization card.

So what does this all have to do with GM, or the Big Three as the case may be? Well, hopefully Members of Congress -- as they look to advance "card check" legislation in the upcoming session -- will take what they have learned from U.S. automaker woes, and connect the economic dots on how run-a-way unionization through "card check" would impact the viability of U.S. firms -- both large and small.

The public and Congress have been absorbing the details regarding how U.S. automakers got into such dire financial straits. The more that is learned, the more skepticism there is in U.S.-automaker ability to get back on a competitive, sustainable track. Certainly, the management and boards of the "Big Three" deserve some blame for the state of these companies. The media, Congress, industry observers and consumers have certainly picked apart their shortcomings.

But to ignore the fact that managers and executives have limited operational flexibility in regard to meaningfully being able to manage human capital, trim labor costs and transform benefits packages, all because restrictive and expensive union contracts prevent them from doing so, misses a key part of the problem. Obviously, innovation and competitiveness suffer if not enough resources and time are dedicated to creative product development, or building lean and modern practices into operations.

On December 3, prior to the day that U.S. automakers were scheduled for a second round of congressional hearings, the United Auto Workers (UAW) finally made some concessions to help executives plead their case on Capitol Hill. But will these concessions be substantial enough to make a real difference for U.S. automaker survivability and competitiveness? While the UAW has said it may make more concessions down the road, for now they only agreed to "suspend" and "delay" specific contract items. Nary a word about new, permanent concessions, which suggests (at least to me) that the unions still don't understand that their wage and benefit packages need to be drastically restructured in order for their companies to compete against their more lean and innovative competitors.

UAW workers currently make nearly triple the earnings of the average private sector worker ($75.00 an hour in wages and benefits). Autoworkers in U.S.-based Japanese plants earn between $42.00 and $48.00 per hour in wages and benefits. In fact, the gold-plated health plans of the UAW add $1,200 to the cost of each vehicle, while the same costs add $215 per car of Japanese competitors (U.S.-based).

It seems that Congress should be experiencing a collective "aha" moment here as they examine and probe the fine details that underlie the automakers' woes. Indeed, if big U.S. companies can be rendered uncompetitive and financially strapped due to the inflexibility and high costs of labor union contracts, what would happen to small and mid-size firms if faced with similar restrictions?

Certainly, if currently non-unionized firms became quickly unionized through "card check" and were then forced to the bargaining table by government, to be met by government arbitrators (if they could not reach agreement with union representatives about contract terms within 6 months) who would "help" parties reach a binding agreement that would lock employers into specific costs (salary terms, health and benefits packages, hiring and workplace conditions, etc.) for two years....would we not have an economic debacle on our hands? Would even more firms go running to Congress for financial relief?

The more realistic scenario is that untold numbers of businesses would simply shut their doors. If the entrepreneur loses financial and management control of the business in this extraordinarily difficult economic period (on top of an incredibly competitive global economy), why bother with it all?

I fear, however, that most members of Congress -- especially in the U.S. House -- will not get it. Many of those members of Congress who supported "card check" legislation the last go around, will probably vote for it again. They will simply choose to ignore the facts out of loyalty to labor union leaders.

The best shot that small businesses and their employees have for defeating this misguided and backward measure is in the U.S. Senate. Labor union bosses will need 60 votes to hand a "card check" bill to President-elect Obama, and entrepreneurs are blessed with the fact that more reasonable minds on both sides of the political aisle reside on the Senate side.

I want GM and U.S. automakers to survive. I drive a GM Vibe, and my family has a long history of buying U.S.-made trucks, minivans, and other vehicles. Like millions of American consumers, we have been loyal to the U.S. automakers and their workforce. But now they -- the labor unions -- must give back, and much more than what they are currently "conceding."

The bigger picture is this -- the U.S. cannot afford to become a nation of mini-GMs. "Card check" legislation is organized labor's last big hope of enacting an artificial means to pump up their declining union membership through radical government intervention. But it would be a horrible mistake if Congress and President-elect Obama strip employees of their right to privately decide whether they believe union representation is in their best economic interest. It would be an economic tragedy if entrepreneurs and their workforce were stripped of their operational and innovative capacity to quickly respond to changes in the marketplace, which restrictive union contracts would prevent them from doing.

I really do hope Members of Congress, and President-elect Obama are learning from this sad, yet very timely and enlightening, lesson.

Karen Kerrigan
President & CEO

Richardson a Smart Choice for Commerce Secretary

President-elect Barack Obama announced his pick for U.S. Commerce Secretary today -- Governor Bill Richardson (D-NM). Many politicians in the Governor’s party declare to be “pro-business Democrats,” but Governor Richardson’s record and actions in New Mexico actually support his regular touting of this label.

He has publicly championed the fact that business-friendly policies are central to economic growth. For example, about his efforts to lower the top income tax rate from 8.2 percent to 4.9 percent in New Mexico, he told the Wall Street Journal in 2005: “This was our way of declaring to the world that New Mexico is open for business.”

He added: “After all, businesses move to states where taxes are falling, not rising.”

In fact, New Mexico has shown marked improvements in its business climate as measured by various private sector “ratings” that rank the states. Inc. magazine, for example, gave New Mexico a “four star” rating for the Governor’s pro-growth policies in October 2006. And, SBE Council’s Small Business Survival Index found that New Mexico showed major improvements in key areas that are used to measure the policy environment for small business start-up and growth.

Of course, there are policies where the business community has disagreed with the Governor -- specific tax increases, for example, and too much government spending. In general, however, his stances on trade and taxes, matched by his understanding that America needs a strong business sector, is a welcome sign from an incoming Administration that is looking to advance a wrath of new rules and regulations for U.S. businesses.

Make no mistake, Governor Richardson’s main job will be to help implement President-elect Obama's agenda (and some of those items could prove costly and burdensome for small businesses if fully implemented). During the presidential primary, he also showed some “flexibility” on issues (like taxes and trade), which belie his pro-business record.

There is no doubt that President-elect Obama needs a credible individual in his cabinet to work with the business community at home, and represent us abroad. Governor Richardson is a smart choice for Commerce Secretary.

As a key member of the Obama cabinet, Richardson will have a unique opportunity to put his self-proclaimed 'pro-business Democrat' label to work. Our nation’s precarious economic condition offers business leaders and entrepreneurs the opportunity to work with sympathetic political leaders who understand where economic growth comes from. One of those leaders is Richardson.

As a business leader, I am hopeful that Governor Richardson will seek input from entrepreneurs and the business community in regard to all the key issues that concern us. The many challenges that the U.S. economy faces are much too big to ignore those who are the central part of the solution.

Karen Kerrigan
President & CEO