Ron Gettelfinger's address to the 64th Annual Indiana University Business Conference

03/11/10

Thank you and good morning. On behalf of the active and retired men and women of the UAW, I want to thank Indiana University's Kelley School of Business and Dean Daniel Smith for inviting us to be a part of this discussion. We are very pleased to be included on the panel with the renowned author Mr. Marshall Goldsmith, Mr. Robert Echert of Mattel and Mr. Jim Turley of Ernst and Young.

This year's conference theme, "Remaking America: New Strategies for Exceptional Times," couldn’t be more on point. We are living in exciting and challenging times and America does need something of a makeover. We firmly believe that labor and management will have to work closely together to put our country on the right track.

Contrary to what some people may believe, the UAW and other unions have no interest in tearing down employers. It's counterproductive to our goal of protecting workers. We need employers to succeed so workers have a chance to share in that success.

Case in point -– regardless of the rhetoric to the contrary -- we worked closely with Chrysler, Ford and General Motors before, during and since the global economic downturn slammed automakers around the world in 2008 and 2009. We knew the only way for those companies to survive was through our involvement in the process and finding a way forward that benefits everyone -– workers, companies, suppliers, dealers, Mom-and-Pop shops and the communities where we live and work.

The concessions our members agreed to beginning in 2005 and again in 2007, 2008, and 2009 were difficult. We did what needed to be done to save our industry. Without our direct involvement early on, more communities would have been devastated by additional plant closures, more workers would be collecting unemployment and signing up for already strained social services, more municipal and school district budgets would be under a sea of red ink, and we might not be seeing the very beginnings of an economic turnaround.

Our members, active and retired, have made many sacrifices, but those sacrifices will mean little if we don't fix some very basic problems that our nation faces.

We simply cannot compete with countries that subsidize their workers' health care while we are left with a patchwork system that is inefficient, expensive and getting worse every day. Our continued failure to enact serious health care reform puts U.S. employers at an enormous competitive disadvantage. All of our major trading competitors have public health care systems that deliver quality care at an affordable price.

And it's not just the 47 million people in this country who lack any form of health insurance who are paying the price, or, the millions more who are underinsured.

It's also American businesses that are footing a major share of the highest health care bill in the world: In 2008 the total cost was estimated to be as high as $2.3 trillion or 16.2 percent of our nation's Gross Domestic Product and once projections are in for 2009 it could top 17 percent of our GDP.

And with the highest health expenditures per capita:

• According to the National Center for Health Statistics infant mortality in our country is worse than in 29 other countries, including practically all of Europe, Canada and Australia.

• The United States ranked 50th out of 224 nations in life expectancy, according to estimates from the 2009 CIA World Fact book.

• Profits for the 10 largest U.S. insurance companies jumped 250 percent between 2000 and 2009 while millions of Americans lost coverage, according to the U.S. Department of Health and Human Services.

Why do we spend so much on health care? It's partially because about one third of our health care dollars doesn't pay for actual health care. It goes toward administrative costs, including marketing, advertising, executive salaries, and other items that have nothing to do with the practice of medicine.

We can do something about these problems that affect our ability to compete globally, but we must have the will. The UAW makes no apologies for our support for universal health care, which goes back to the 1960s when Walter Reuther was our president. We believed then and we believe now that all Americans have a right to decent, affordable health care.

We know one thing for sure. This crisis is not going to resolve itself, There is an opportunity to do something about this problem now but only time will tell if as a nation we are willing to step up.

We also need a new approach to international trade to create a high-road path to economic growth for workers and employers. We support trade as long as it is fair trade. Consider this one example:

In 2009, in a bottomed out auto market, imports of Korean automotive products in the U.S. were valued at $8.4 billion, while U.S. exports of similar products to Korea amounted to only $492 million. Also, last year, Korea exported 476,833 passenger vehicles to the United States, while all U.S. producers were allowed to export only 5,878 vehicles to Korea. Another way of saying this is the deficit in automotive products now accounts for 75 percent of our overall trade deficit with Korea.

Historically, Korea has kept its market almost completely closed to U.S.-built automotive products, as well as automotive products from other nations. It does this through a combination of tariff and non-tariff barriers such as safety, emissions and other technical standards.

Korea's market has one of the lowest levels of import penetration -– 4.4 percent -– of any major automotive producing economy in the world –- second only to Japan which has a 3.9 percent level of import penetration. Despite previous agreements between the United States and Korea in which Korea promised to eliminate its barriers, the Korean market is still shielded from any significant competition.

Korea is one of a number of striking examples that could be used. However, there is hope in the area of trade practices but it comes about because the negative impact on our economy is looking us squarely in the eye. Early this winter CNBC taped a program entitled, "Meeting of the Minds: Rebuilding America" at Carnegie-Mellon University in Pittsburgh.

The panelists were Labor Secretary Hilda Solis; Bill Ford, executive chairman of Ford Motor Co.; Jeffrey Immelt, chairman and CEO of General Electric; Dave DiMicco, president and CEO of Nucor Corporation; John Engler, president of the National Association of Manufacturers and the president of the USW, Leo Gerard.

Instead of confrontation, the discussion focused on rebuilding manufacturing capacity and restoring America as an export powerhouse and jobs generator.

These quotes which I am paraphrasing from the discussion resonated with me:

Mr. Immelt –- The idea that we could "put factories on a barge and ship them wherever we wanted to, wherever had the lowest wage, and we would still be beloved by our populace turned out not to be such a great idea."

Mr. Ford –- "We need a national policy on manufacturing, and we need the government to be an ally and not an adversary."

Mr. Gerard –- "We need a balanced trade agenda that's going to start refocusing on exports –- we need to have a national strategy to rebuild manufacturing up to it's traditional 20 percent GDP."

Mr. DiMicco - "Business leaders and our policy makers in Washington for the last 20 years have had failed trading policies; negative manufacturing policies. They have not been doing what's necessary to have a strong and thriving middle class in this country. Instead what we have done and allowed to happen has destroyed the middle class in this country."

This discussion is refreshing, especially considering our unemployment is nearly 10 percent; our nation has a $517 billion trade deficit for 2009; we have lost 2.2 million manufacturing jobs since the recession began in 2007, and as of May 2009 our manufacturing employment slipped below 12 million for the first time since 1946.

We know that American workers can compete with workers in any nation as U.S. worker productivity continues to surge. And union workers are among the most productive in the auto industry. According to the 2008 Harbour Report, the industry standard for measuring productivity, the 10 most productive auto plants in North America are facilities where workers are members of the UAW or the Canadian Auto Workers.

But U.S. workers, regardless of the sector, cannot compete with nations that pay abysmally low wages, use child and prison labor, have no health and safety standards and treat the environment like an open sewer.

Our country's workers are competing with nations like China and Colombia where workers' rights are non-existent. In China, independent trade unions, free from government control, do not exist. Workers in China do not have the right to form unions of their own choosing.

And despite claims by the Colombian government, the violence against trade unionists continues unabated. At least 39 trade unionists were murdered in 2009. The level of impunity for the perpetrators of crimes against unionists remains high –- in more than 95 percent of the known cases, no one has even been charged. It's one of the reasons why the UAW and other labor groups oppose a free-trade agreement with Colombia.

Now, here at home we recognize that the changes demanded by the intensely competitive global marketplace can be extremely difficult -– for employers, for communities and for workers and their families.

We all know that employers must be highly efficient in order to succeed. The pressure is relentless, there is little margin for error, and the cost of failure is enormous. In the face of all this pressure, ordinary workers need a voice; a check and balance to ensure workers interests are dealt with fairly. That check and balance is the workers' right to form their own union

But the path for American workers who want to exercise their right to form a union is blocked by some employers who willfully violate our notoriously weak labor laws. Today violating labor laws is viewed simply as another small cost of doing business. A rewrite of U.S. labor law is needed so that when a majority of workers want a union in their workplace they can form one without fear of employer threats, intimidation and firings. The proposed Employee Free Choice Act will streamline the process for union-representation and ensure first-contract negotiations that will benefit workers and employers.

Health care, fair trade and worker rights are the bigger picture items that we believe will help turn our nation around. But there are other things we can do to help get this nation moving again.

And, as was mentioned in the CNBC program, it starts with enacting a manufacturing policy that invests in the factories, technology, skills and infrastructure essential for a robust, competitive industrial economy.

The decline of manufacturing in our country poses a serious threat to both our nation's economic and national security. In the last several decades, we've witnessed the exodus of our industries from clothing and computers, to cameras, cell phones and semiconductors.

The rapid relocation of manufacturing from the U.S. to China and other low-wage countries is now accompanied by a transfer of our technological capabilities. Foreign manufacturers are quickly shifting their design and R&D functions to China. So much so, in fact, that China has now surpassed the U.S. in technological standing according to Georgia Tech's biennial "High-Tech Indicators" study.

Couple this with the alarming decline of our machine-tool industry -- long considered essential to maintaining our national security -- and it should come as no surprise that we are quickly losing our capacity to supply our own military with ammunition and other essential armaments, as well as our ability to develop the defense technologies of the future.

Manufacturing also matters; not just because it's a source of good-paying, family-supporting jobs, but because those jobs create a ladder to the middle class. Because manufacturing jobs create other jobs, they provide a stable tax base that contributes to stronger communities.

As for the automotive sector, we know we must continue to invest in green and advanced technology vehicles, and we've successfully lobbied our government and domestic automakers to do just that. But while hybrids, electric and other alternative-fuel vehicles may get the headlines, it will be many years before these technologies are fully integrated into the American mainstream.

In the meantime, that means we’ll still be using the reliable internal-combustion engine for the majority of our transportation needs. New government regulations will require passenger vehicles to achieve roughly 35.5 miles per gallon from 2012 to 2016. So these engines and transmissions will need to be far more advanced than ever.

Auto manufacturers are responding:

• Ford has its Eco-Boost gas-powered engine that combines advanced direct injection technology and turbo charging, resulting in 20 percent better fuel economy, 15 percent lower emissions, and better performance than larger engines.

• Some of GM's most popular engines feature variable valve timing, which also leads to better fuel economy, fewer emissions and better performance.

• Chrysler is becoming a world leader in diesel technology through its alliance with Fiat.

According to a report prepared for the UAW and the National Resources Defense Council which will be released later this month, the technology exists, or will soon exist, to make rapid advances in fuel efficiency. And that could lead to 190,000 new auto jobs by 2020. But, as the report notes, the key question will be, "Where will those jobs be located?"

The governments of European and Asian countries have invested heavily in their manufacturing sector, including automotive. Indeed, some foreign-based auto manufacturers have significant leads on domestic manufacturers in hybrids, diesels, direct diesel injection and turbochargers because of their governments' support.

Our government needs to aggressively invest in these technologies. But along with providing incentives to manufacturers, the government has a responsibility to taxpayers to ensure the products that result from our investments are made in this country. We failed in part to do this in the federal stimulus package, and our tax dollars ended up funding some projects, and the jobs that go with them overseas, like the Chinese-built wind turbines you no doubt have read about.

All parties; labor, management, government, and others, must work together to drive change and be a part of the solution to national and global issues. If we do, we can improve our communities, improve our security, improve our environment and create a global economy that truly works for working people around the world. It's up to us and our future leaders, which road we choose.

Thank you very much.

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