He says “assume industries where unions have gained strongholds have ended up as failed industries” (paraphrasing). Then he says this implies that no model of industry has succeeded without labor exploitation. That doesn’t follow strictly from the original premise so it must have an implicit assumption built in which is that non-union labor is exploitative.

Maybe I’m being stupid but I don’t see how else this works out. Can you expand to help me understand what I’m missing?

I could have been clearer, you are right. I was trying to engage in a thought experiment. In union = failure axiom, there can be contradicting explanations as to why. My OP implied “unions make things fail” (and I assumed due to commonly assumes reasons like inefficiency), I construed the idea that “unions might be exposing a dependence on exploitation”. I don’t necessarily ascribe truth value to either premise, just wanted to expand the possibility of explanations. I wasn’t clear on that, apologies for the confusion.