The New York Times asks leading experts whether America “needs an auto industry.” Robert Lawrence and Tyler Cowen both point out that Japanese companies like Toyota make cars very effectively in the U.S. with American workers. As Lawrence writes, the problem is continuously “framed” in terms of costs and competitiveness, but that’s not really what’s the matter. The real problem is about out-of-touch, outmoded, ineffective Big Three management.
We’re told Chrysler needs a massive injection of “cutting-edge Fiat technology” to survive. Huh, why? What were these guys doing? Did they just forget that… er… new technology might be important to their long-run future?
Robert Reich lays down the gauntlet on jobs:
What? Having General Motors or Chrysler cut tens of thousands of jobs in order to be eligible for a government bailout reminds me of “saving” Vietnam by bombing it to smithereens. Aren’t we giving these companies billions of taxpayer dollars to save jobs? If not, we’re just transferring money from taxpayers to GM and Chrysler bondholders and shareholders …
[T]he “American auto industry” shouldn’t be defined as auto companies whose headquarters are in the United States. The true “American auto industry” is Americans who make automobiles. At the rate the Big Three are shrinking even as they’re bailed out, foreign automakers with American plants may soon employ more Americans than the Big Three do.”
Your thoughts?
May 1st, 2009 at 11:10 am
Management has nothing to do with it. Unions do.
Look, the UAW just rolled the Obama administration to jettison contract law and screw over senior bond holders. This is totally unprecedented, and shows the political power that unions have. They also screwed over common stock holders, and will come out of this being majority stockholders in whatever is left of the company.
If Toyota and Honda plants were unionized by the UAW, they would have similar results to the Big 3. It is no accident that they locate their plants in areas that have anti-union sentiment, if not Right to Work states.
Why did the Big 3 rely so heavily on SUVs and large cars? Because that’s the only way that they could make money employing UAW workers.
This shit is simple, but guys like Reich are union tools, and can’t admit what the real problem is.
It’s a sad day.
May 1st, 2009 at 1:51 pm
GM, Chrysler, Iraq, Afghanistan – after we have poured billions of dollars into them, is there any real chance we will get what we want (whatever that is)?
All this reminds me of Lyndon Johnson’s “War on Poverty” – a large amount of money was spent, and experts still argue about whether it did more harm than good.
May 1st, 2009 at 6:30 pm
Uh, no, experts do not disagree that Johnson’s War on Poverty actually DID bring down poverty levels in America.
It certainly did not do “more harm than good”.
As to the unions, VEPA, not the UAW per se, has control of 55% of Chrysler stock currently. This is because Chrysler could not pay what it owed to VEPA (which is a health care consortium for the union health care) and was paying them in stock. Furthermore, what VEPA needs is cash (to pay for health care) and intends to sell the stock ASAP.
Interesting the amount of disinformation being peddled around here.
May 2nd, 2009 at 9:24 am
How is “cutting-edge” Fiat technology going to save Chrysler when “cutting-edge” Mercedes technology could not?
May 2nd, 2009 at 9:49 am
Technology isn’t going to save Chrysler.
What doomed Chrysler was that Daimler didn’t gut the company of executives and middle managers when they came over here. The pre-merger Chrysler mindset didn’t change: build big trucks, crap cars, sell them to fleet companies, have twice as many dealers as you need, copy your vehicles so you can compete with yourself, go head to head with GM and Ford and forget about Japan and Germany, and while you’re at it, pay executives about 10 times what they’re worth.
If FIAT fires anyone with a 1990s mindset, that’ll help. Anything less simply won’t help at all. If they continue to let Chrysler design their own cars, that probably won’t help either.
We really don’t know what Chrysler-FIAT will look like yet. Daimler contributed some old platforms here and there but let Chrysler continue to operate fairly independently, which was a disaster. If FIAT only gets 20% of Chrysler ownership, then there’s zero hope and Chrysler will continue to build junk vehicles with a few decent FIATs and ALFA Romeos here and there.
May 2nd, 2009 at 9:55 am
What also has doomed Chrysler and GM and a number of other companies is that they have to provide health care and pensions to their workers since the government in the U.S. does not do so. Unlike Germany, Italy, and Japan, companies get saddled with huge costs for these things, and what would be funny if it wasn’t so tragic is you have economic conservatives damning unions as the Devil while bemoaning how much debt Chrysler owes said unions while consistently opposing any program that would release American corporations from such obligations in the first place.
May 3rd, 2009 at 8:29 pm
anyone who can’t admit that the unions priced themselves out of jobs is in complete denial.
And yes, LBJ’s war on poverty was the beginning of the end for the African-American family. Nothing has set back the black family, more than good intentioned white liberals. The statistics are as clear as they can be.
May 4th, 2009 at 10:08 pm
That’s nice, Jim. Maybe you could point to where I said unions didn’t price themselves out of jobs, and then you can explain how the poverty rate in the U.S. dropped in half between the beginning of the Great Society and when it was implemented.
What’s up next, FDR cause the Great Depression for you?
May 5th, 2009 at 3:00 pm
I don’t know that my statement was necessarilly directed at you, it’s just a fact that unions have priced themselves out of competitiveness; you can’t pay a worker in China $1 a day and pay an american union worker $1 every 2 minutes; And on top of that saddle American companies with the highest tax rate in the world.
Yes, unions had their place, and went a long way to raising the standard of living in the United States. However, now that the Industrial Age is over, what does a union provide that isn’t already a law? Minimum Wage? Got it. Discrimination protection? Got it. Working conditions? Got it.
Unions are just the last dinosaur walking the employment scene, and the one that has dims talking out of both sides of their mouths: They rail against “Big Business”, when they do nothing but empower them with increased regulation and oversight, essentially cutting out small businesses. What they really want is de-facto state run mega-corporations to load up with union workers to vote the party line.
The Obama administration is changing rules to favor a political class (unions), and that is going to have a chilling effect on future lending to all corporations. They are spending $12 billion to save 54,000 Chrysler jobs (at $22,000 per job). With 600,000 jobs a month being lost, why are these 54,000 jobs more special than those of the rest of the unemployed, who get a fraction of that amount in unemployment benefits?
No FDR didn’t cause the Great Depression, but he certainly prolonged it’s length. I’ve proved that here before.
May 6th, 2009 at 5:45 pm
First off, there’s PLENTY of people who would happily repeal minimum wages, discrimination protection, and so forth, and you seem to be overjoyed at voting for them and/or promoting their agenda. These are also many of the same people who are quite happy shipping as many American jobs offshore and setting up shell companies to avoid taxes. You decry regulation after saying that regulation is actually a positive good, somehow never seeing the fact that “minimum wage” is in fact a regulation.
Since unions are about 11% of the population, they have actually very little power in the economy as a whole, much less than your sainted megacorporations.
As for your non-sequitur about spending money to save Chrysler jobs, after thinking for a moment, I would hope that you realize that far more people in this economy rely on Chrysler’s and GM’s continued existence then only the 54,000 that work for Chrysler itself.
And FDR didn’t prolong the Great Depression unless you belive WW2 also prolonged the Great Depression. Such assertions are beneath your intellect.
Objectivity, not ideology.
May 6th, 2009 at 10:45 pm
WW2 ended the Great Depression, not prolonging it.
Fact.
“First off, there’s PLENTY of people who would happily repeal minimum wages, discrimination protection, and so forth, and you seem to be overjoyed at voting for them and/or promoting their agenda”
I haven’t heard anyone wanting to repeal minimum wage or discrimination protection, let alone anyone I’ve voted for. I’m not sure what you’re babbling about or trying to insinuate.
If we really wanted to de-politicise (sp?) minimum wage, why not tie it to inflation? We could eliminate this as an item of contention once and for all, but that hardly helps in your class-warfare mentallity.
“These are also many of the same people who are quite happy shipping as many American jobs offshore and setting up shell companies to avoid taxes.”
Again, nobody wants to take jobs out of the country, but they will if the cost of keeping them here is out of whack with what they can spend elsewhere. That’s just basic common sense. Want to keep jobs in the US – keep taxes low. Want to increase the amount of revenue into the treasury – keep taxes low. For the life of me, I can’t figure out why that is so hard for liberals to comprehend.
If anything we need to get people used to NOT “relying” on the auto sector for it’s well-being. Automobiles are a non-growth industry (save for India, China), where we are now only at replacement production (replacing old cars with new cars). So what are we left to conclude as to why our leaders are wasting money on the GM’s and Chryslers? – vote buying.
The Industrial Age is over, time to move on