Thoughts on the Auto Industry Bailout
Like most people, I have conflicting thoughts on the prospect of a bailout for the hapless American auto companies. At one level, the chickens have finally come home to roost after decades of almost unimaginably awful business decisions have come to fruition. Whether it be fighting for decades against the very national health insurance plan that would now be saving them or fighting for decades against the very reduced emission standards that would have helped them avoid forfeiting the car market to the imports, Detroit has gotten it disastrously wrong nearly every step of the way. With that said, the pros outweigh the cons of bailing them out.
Many solid arguments have been made about the security danger and economic shortsightedness of forfeiting our manufacturing capacity to foreign nations and companies, which has been going on for the last three decades and seems inevitable with the current course of the global economy. More solid arguments have been made regarding the fact that bankruptcy by these companies would further diminish sales of their vehicles and drive them completely out of business, as opposed to past bankruptcies by the airlines which, because of the nature of their service, did not significantly curtail consumer demand. But there have been considerably fewer solid arguments made regarding the perils of Detroit's allegedly "corporate white knight" Japanese competitors or those much-reviled union workers and their mythological $75 an hour earnings.
Let's start with the Japanese automakers, particularly those with plants in the United States, who by the way only employ a fraction of what Ford, GM, and Chrysler employ here at home. Notice how every plant they build is in the nation's most conservative enclaves. That in itself makes for rather curious bedfellows between the producers and consumers of Toyotas and Hondas. Every "green" or "progressive" who believes they're saving the planet by buying an imported hybrid is really empowering regions of the country that elect Jim Inhofe and Jeff Sessions to the Senate and where "lib'ruls" are considered the scum of the Earth. Outside of actually campaigning for right-wing elected officials, there is no more tangible way for a consumer to empower the conservative movement than to opt for the purchase of a Toyota or Honda over a Chevy or Ford, whose employees are active agents for progressive policies in American government.
And perhaps the most underreported story regarding the sainted Japanese automakers is that they are far from operating within the confines of the marketplace. Whether we're discussing their plants in Japan, Europe, or America, every plant that Toyota, Honda, and Nissan builds is financed almost exclusively by taxpayers. Unless you live in a state willing that can afford to shower $400 million in giveaways upon the Japanese automakers, they won't be building a plant in your state. Bottom line: the Japanese automakers HAVE ALREADY GOTTEN THEIR TAXPAYER BAILOUTS.
Most saddening is the how workers at Ford, GM, and Chrysler are being scapegoated as the true villians in this calamity, often with patently false rhetoric served up on a platter by union-busting political leaders and echoed ad nauseum by a complicit media. The only people making $75 an hour at a General Motors plant are in management. And the automakers have ALREADY shed most of their "legacy costs" after foisting retiree health care costs to the UAW in the last contract agreement, yet all we hear about is that Detroit's real problem is greedy workers who have the audacity to expect a pension plan that was guaranteed to them and that they've been counting on their entire working lives. Furthermore, in the same contract negotiation the shed most of the Big Three's legacy costs, more concessions cut the starting rate of pay for a U.S. auto worker to $14 an hour. As angry as it makes me to hear pundits from across the spectrum point the finger at "overpaid workers" as the source of the Big Three's dilemma, I can't even imagine how angry it must make $14 an hour employees barely surviving today yet looking at even bleaker times ahead.
There's always been a perverse mindset in this country that takes delight when working people who earn a decent living get knocked down by the man. Not only is this the case among Republican politicians, conservative ideologues, and their corporate overlords, it also gets a receptive response among alleged liberals in the media and the white-collar middle class. Even as we generally discuss the need for expanding access to health care and growing the middle class, many of us still can't resist getting our digs in about the desperate need for Detroit to slash labor costs and benefits, ignoring the facts that indicate they've already been slashed to the bone. The first instinct of so many of us is to point our finger straight at the first person we see with a blue collar and carrying a lunch bucket and say "This is all your fault!"
As far as I'm concerned, every perceived gain that has been made by progressives in the last two years will be undone--and then some--if we allow the erasure of unionized American auto manufacturing to be cannibalized by the Sam Walton business model of their Japanese competitors. Any hope of reversing the decline of the middle class, as so many millions of Americans voted for last month, will be lost forever.
Many solid arguments have been made about the security danger and economic shortsightedness of forfeiting our manufacturing capacity to foreign nations and companies, which has been going on for the last three decades and seems inevitable with the current course of the global economy. More solid arguments have been made regarding the fact that bankruptcy by these companies would further diminish sales of their vehicles and drive them completely out of business, as opposed to past bankruptcies by the airlines which, because of the nature of their service, did not significantly curtail consumer demand. But there have been considerably fewer solid arguments made regarding the perils of Detroit's allegedly "corporate white knight" Japanese competitors or those much-reviled union workers and their mythological $75 an hour earnings.
Let's start with the Japanese automakers, particularly those with plants in the United States, who by the way only employ a fraction of what Ford, GM, and Chrysler employ here at home. Notice how every plant they build is in the nation's most conservative enclaves. That in itself makes for rather curious bedfellows between the producers and consumers of Toyotas and Hondas. Every "green" or "progressive" who believes they're saving the planet by buying an imported hybrid is really empowering regions of the country that elect Jim Inhofe and Jeff Sessions to the Senate and where "lib'ruls" are considered the scum of the Earth. Outside of actually campaigning for right-wing elected officials, there is no more tangible way for a consumer to empower the conservative movement than to opt for the purchase of a Toyota or Honda over a Chevy or Ford, whose employees are active agents for progressive policies in American government.
And perhaps the most underreported story regarding the sainted Japanese automakers is that they are far from operating within the confines of the marketplace. Whether we're discussing their plants in Japan, Europe, or America, every plant that Toyota, Honda, and Nissan builds is financed almost exclusively by taxpayers. Unless you live in a state willing that can afford to shower $400 million in giveaways upon the Japanese automakers, they won't be building a plant in your state. Bottom line: the Japanese automakers HAVE ALREADY GOTTEN THEIR TAXPAYER BAILOUTS.
Most saddening is the how workers at Ford, GM, and Chrysler are being scapegoated as the true villians in this calamity, often with patently false rhetoric served up on a platter by union-busting political leaders and echoed ad nauseum by a complicit media. The only people making $75 an hour at a General Motors plant are in management. And the automakers have ALREADY shed most of their "legacy costs" after foisting retiree health care costs to the UAW in the last contract agreement, yet all we hear about is that Detroit's real problem is greedy workers who have the audacity to expect a pension plan that was guaranteed to them and that they've been counting on their entire working lives. Furthermore, in the same contract negotiation the shed most of the Big Three's legacy costs, more concessions cut the starting rate of pay for a U.S. auto worker to $14 an hour. As angry as it makes me to hear pundits from across the spectrum point the finger at "overpaid workers" as the source of the Big Three's dilemma, I can't even imagine how angry it must make $14 an hour employees barely surviving today yet looking at even bleaker times ahead.
There's always been a perverse mindset in this country that takes delight when working people who earn a decent living get knocked down by the man. Not only is this the case among Republican politicians, conservative ideologues, and their corporate overlords, it also gets a receptive response among alleged liberals in the media and the white-collar middle class. Even as we generally discuss the need for expanding access to health care and growing the middle class, many of us still can't resist getting our digs in about the desperate need for Detroit to slash labor costs and benefits, ignoring the facts that indicate they've already been slashed to the bone. The first instinct of so many of us is to point our finger straight at the first person we see with a blue collar and carrying a lunch bucket and say "This is all your fault!"
As far as I'm concerned, every perceived gain that has been made by progressives in the last two years will be undone--and then some--if we allow the erasure of unionized American auto manufacturing to be cannibalized by the Sam Walton business model of their Japanese competitors. Any hope of reversing the decline of the middle class, as so many millions of Americans voted for last month, will be lost forever.
posted by Mark at 10:16 AM
4 Comments:
I too never believed that it was the workers' faults that the Big Three are in so much trouble, and I too was pissed to see so much union bashing in discussions on the Big Three. It's the fault of the management so obsessed with profits that they slash workers' pay and benefits while keeping their own big salaries and believing that gas guzzlers, which raked in so many profits for them in the past, will continue to do so despite evidence to the contrary that's as clear as day.
While I certainly won't defend the Big Three's dependence on gas-guzzling SUV's, it's nonetheless fair to say that they would have gone broke 10 years ago if not for robust sales of high-profit gas guzzlers in the era of cheap oil. Recognizing the writing on the financial wall with their business model, the Big Three knew the high margin of profit per vehicle on SUV's would be the only thing that could cover their long-term costs. Sales of compact cars (or any cars for that matter) would not provide them enough profit margin to cut it long-term, so they neglected that market. While it certainly looks dumb in retrospect and for the most part was, it was driven by the fact that they knew their finances were hurting 15 years ago.
I do have some hope for unions' revitalization in the near future. Obama supports the workers of the recently-closed Republic Windows and Doors factory in Chicago who were staging a strike demanding the management gives them their benefits and payments after their layoffs.
http://www.suntimes.com/news/politics/obama/1318766,barack-obama-republic-window-doors-120708.article
My biggest concern is that the auto makers are being 100% re-active. it is almost as if they think..."If we can just survive for a little while longer, we will be back to status quo once the recession is over" Cutting costs is certainly a good step but there needs to be innovation, new products, enhancement to existing products. Start building things that people want to buy instead of providing the minimum they can get away with.
The time of traditional unions needs to be over. While I don’t believe that floor sweepers are making $75 an hour. I do believe that union workers are provided many expensive benefits and privileges that the rest of the non-union workforce does without each and every day. These things are expensive to a company especially when you multiply it by thousands of employees. Over the years, Union workers have evolved into ungrateful, non-motivated, skill-less employees that get more vacation, sick time and personal time than any of their non-union counterparts. These all costs employers a lot of money. So I guess what I mean is... it is not about just hourly wages when you’re trying to cut costs.
I am disappointed that my money was used to bail out three companies that clearly don’t get it. I say let them fail. It will hurt us all in the short term, but force innovation and creativity in the long term. Maybe Apple will start making cars.
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