This whole big three Detroit auto company bail-out is really beginning to piss me off. Ford, GM, and Chrysler pay, on average, $78 per hour for labor to manufacture cars, compared to $48 for Toyota, here in the United States. This figure includes pension and health benefits for current retirees, as well as the future costs of retirement benefits for current workers.
A reorganization of these companies makes absolutely no sense unless this $78 figure is reduced to approximate the $48 figure. Otherwise, Detroit is simply not competitive. The only way this can be done is to reduce the benefits of existing retirees and the current and future benefits of existing workers. These health and retirement benefits, it is relevant to add, are vastly superior to what the vast majority of Americans receive, excluding members of Congress.
Will the Democrat-controlled Congress and White House put together a deal that reduces these benefits, even slightly? Of course not. They are not going to cross the United Auto Workers, one of their main campaign contributors. So the $78 figure will not be brought down to the $48 figure. There will be no real, effective, reorganization. The bail-out money will disappear into a black hole.
Those of us who have had our 401K retirement benefits reduced by 50%, 60%, 80%, or more, will be committing our tax dollars, and our grandchildrens’ income and assets, to finance the retirement and health benefits of former and current Detroit auto workers. Why? Because the Democratic Party is beholden to the labor unions.
I understand the reasons for wanting to rescue the indigenous American automobile industry from the current financial meltdown and the mistakes of the past. Millions of jobs are at stake. I have friends who depend for their livelihood on the big three auto companies. But if the root causes of Detroit’s bankrupt condition are not addressed, then the inevitable collapse is only being postponed, at great current and future expense.
I am in favor of a government bail-out of some kind for the American automobile industry, but only if they are rehabbed sufficiently so as to become competitive with Toyota and Nissan and Honda and Hyundai and Volkswagen and Mercedes. If they are not competitive, then the whole exercise is a very expensive waste of time.
In the long run, it will only hurt the U.S. economy, which is to say the economic well-being of the citizens of the United States, including the residents of Michigan.
we should bail out the poor people…like me
So many jobs depend on the “Big Three” but beyond labor costs not one of these companies has been all that innovative and showing itself to be a leader in design.
Even if you reduce labor costs to make the companies more productive does it really matter if Japan and German keep building consistently better cars?
There was a time when the United States was an automotive giant and rest of the world looked to our products for a sign of what the future of motoring would be.
For Detroit to survive long-term it has to learn how to be a leader once again.
Perhaps a more equitable comparison could be made on those pension payments and health care benefits and retirement programs …… do the “Big 3″‘s bennies equal those of Toyota, etc.? I mean, even @ the disparate pay scales, are there other facets to this employment picture that affect that difference?
You’re quite correct James. Marketing driven design: big powerful ‘top-dog’ US vehicles, has been changing slower than the public’s awareness, and in that – US automakers have put themselves way behind the salability curve. The foreign automakers come from more progressive design environments (Japan and Europe), where they’ve had to think in more ‘reality’ terms than ‘fantasy’ terms.
The “Big 3” have been caught up in the US dreamscape as most of us, and have been snoozing. The price of blissful ignorance is coming home to roost.
For a good example of the “Big Three” falling behind the world take a look at emission controls and mileage.
To start with, let’s get three points clear
(1) I think that everyone would agree that cars that pollute the environment less are a good thing.
(2) I think everyone would agree that cars that use less gas are a good thing.
(3) I think everyone would agree that improvements in technology can make tomorrow’s cars less polluting and more efficient.
It seems that for years the “Big Three” have spent an awful lot of money on lawyers constantly trying to fight tighter regulations concerning mileage and emissions (to be honest Toyota has done this as well).
Now companies like Honda have simply integrated the above three points into their design process. Each generation of their vehicles generally improves on the efficiency of the last.
As a result they really aren’t concerned about US emission regulations because they are continually bettering them every step of the way.
Where Detroit is lumbering behind, other car companies are leading.
This forward looking viewpoint is what the “Big Three” need to embrace as a company wide philosophy.
No Surprise that GM had to sink like the Titanic.. Just the pain and hard work of 300 Million Taxpayers going down the drain.. Whose responsible for that?