by Chris Johnson of Drawnlines Politics.
I am a long time car buff. My first cars were made by the Big Three- my favorite of which was a red on white 1972 Oldsmobile Cutlass Supreme. They really knew how to make a car then! In the years following that, American car companies fell prey to a fuel shortage and to trade rules that introduced the Japanese auto revolution in the U.S. Booming economies then brought about the notion of engineered obsolescence. This was the perfect storm that instigated severe cuts to quality. American cars became a joke.
It has been obvious to anyone that bothered to look that the “Big Three” were on a spiraling course to irrelevance for decades- that is, unless they were willing to do something about it. Well their hand has been forced now and I, for one, am anxiously waiting to see what comes from the now-in-motion fix being undertaken by General Motors.
Don’t get me wrong- a change is absolutely necessary to save one of America’s largest companies, their subsidiaries, vendors, and ALL of their employees. I am ecstatic to see that there is at least the hope of a serious and real shift in the way that American car companies do business. But being an idealist, I have a couple of critiques (suggestions really) about how this change is being undertaken.
I agree with President Obama in that our government should not own or operate General Motors. And also like him, I feel that the current situation of the Treasury holding about 70% of the shares for the company should be short lived. But, when a floundering giant like GM is gushing money and jobs; when a company that truly fits the bill for “too large to fail” is heading that way, who should take over? For my ideas on that, we have to look at one of the problems that everyone agrees is at the heart of the matter: labor.
It doesn’t matter if you are pro-union, pro-business, right, left, green, or purple- everyone knows that the relationship between the unions and the companies got built up into a deadly cycle that would eventually bring the manufacturing economy to its knees.
When you think about it, between R&D, manufacturing preparation, real estate, utilities, materials, and all the other sundry expenses that go into building a car, it is absolutely amazing that these companies can sell them for $20k and still make a profit… When you throw in wages, benefits, and retirement, it makes it into nothing short of miraculous.
The line employees at your run-of-the-mill GM plant are hard working. The job they do is both physically and mentally taxing. They deserve to be paid well for their toils. They by no means deserve to be paid better than anyone else that does their type of labor. Line employees that build circuit boards do not get pensions. Many airplane line employees do not get pensions- some do not even get benefits. The average pay for veteran factory employees does not reach the pay that GM’s union employees make. How can a company compete?
Now, here is where my liberalism jumps into high gear- I will do my best to keep it to a tolerable level. ALL EMPLOYEES DESERVE HELATHCARE AND A GUARANTEED RETIREMENT AHHH! And that’s all I have to say about that for today. I think I just channeled Sam Kinison for a second.
Until the day (and it is soon in coming, mind you) when we have sound and effective public retirement and healthcare programs, companies can’t be expected to compete if they are on unequal footing to begin with. Toyota, BMW, Hyundai, and many other “foreign” auto makers that build their products with American labor all pay their employees a fair, if not generous, wage. The big difference is that they are not saddled with the legacy costs of retired employees. Their labor costs are approximately half of their American competitors. And yet, the 2009 year model cars from Ford and GM are some of the best on the road. They have definitely got their swing back.
Now that they, once again, have a product that is worth spending some money on- let’s see what we can do to keep them open and save the world while we are at it. Here’s the silver bullet- sell General Motors to the UAW. Not the paltry 17.5% deal that they worked out with the bond holders- sell them a controlling share.
Here are the benefits:
First, we take the burden off of the US government to run a company-whew. We really shouldn’t be in the car business.
Second, free market enterprise is never better than when there is true competition in the market. If the government owns one of the competitors… it might be implied that they have a bit of an advantage.
Third. The union would be in control of its own fate. This one is my favorite. The union would pick board members and would vote on issues that would effect the future of their own success and employment. The company does well- there are bonuses all around. The company comes out with a new Pontiac Aztec (car people know what that means) and heads would roll. A decision about legacy costs would be arrived at before lunch on the first day. The industry standard 401k would instantly replace permanent pensions- and the beauty part is that every employee would know exactly why.
Lastly, at least for this article, General Motors would be liberated to move with market demand than it can in its current form. The big oil influence would be banished from the board room and replaced with the idea that better quality, ecology, safety, variety, and economy means that we all go home with more money to a happier, healthier, and more reliable home.
I am looking forward to being able to walk onto a lot in a couple of years and drive away in my new Cadillac CTSV knowing that it was made by American hands, with American ingenuity, and rest assured that the company made it through a revolution that defined the way that big business will be run from here on out.
Next time I think that I am going to take on that good-old-boys-who-like-to-play-with-airplanes club that we call the airline industry…