"on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly workers."
Ruth E. Downs
By Cal Thomas
http://www.JewishWorldReview.com | Remember when Democrats lamented the growing budget deficit and
spoke of the burden our children and grandchildren would face if we didn't put our fiscal house in
order? That was when Republicans ran the federal government and Democrats opposed tax cuts. Now that
Democrats are about to be in charge, concern about the deficit has disappeared and spending plans
proliferate, even though the national debt passed $10 trillion in September and we added another $500
billion last month.
The latest, but by no means the last supplicant at the public trough, is the auto industry, which
wants a bailout to save jobs because its cars are not selling. There is a reason for that and it can
be summed up in five words: The United Auto Workers Union (UAW).
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Half of the $50 billion the auto industry wants is for health care for its current and retired
employees. This is the result of increasing UAW demands, strikes and threats of strikes unless health
care and pension benefits were regularly increased. While in the past UAW settled for some benefit
decreases while bargaining with the Big Three U.S. automakers, according to the Wall Street Journal in
September of 2006, "on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly
workers." Those increased costs, including the cost of health care, were passed along to consumers,
adding $1,600 to the price of every vehicle GM produced. In February 2008, after General Motors
offered buyouts to 74,000 employees, the Center for Automotive Research estimated the average wage,
including benefits, for current GM workers had dropped to $78.21 an hour. New hires pulled down a
paltry $26.65. GM, now facing a head-on collision with reality, has taken an important first step
toward fiscal responsibility by announcing the elimination of lifetime health care benefits for about
100,000 of its white-collar retirees at the end of this year.
Contrast this with non-union Toyota, whose total hourly U.S. labor costs, with benefits, are $35 per
hour. Those lower labor costs mean Toyota enjoys a cost advantage over U.S. automakers of about $1,000
per vehicle. Is it any wonder that Toyota is outselling American automakers and from plants that have
been built on U.S. soil? According to James Sherk of The Heritage Foundation, Japanese car companies
provide their employees with good jobs at good wages: "The typical hourly employee at a Toyota, Honda
or Nissan plant in America makes almost $100,000 a year in wages and benefits, before overtime."
While many in the Democratic Party have focused on "corporate greed" and "fairness," according to
Sherk, "competition, not corporate greed, is the real problem facing labor unions. When unions
negotiate raises for their members, companies pass those higher costs on to consumers." Americans used
to tolerate those increases, but no more. Competition has brought lower prices for Japanese cars and
Americans are buying more of them, taking a pass on those manufactured in Detroit.
The argument made by those favoring a bailout of Detroit is that it will save more than 100,000 jobs
in the auto and related industries. But what good does that do if people are not buying cars in
sufficient numbers to allow the Big Three to make a profit? This becomes the kind of corporate welfare
Democrats decry when it comes to Wall Street. But, then, Wall Street isn't unionized and Democrats
want and need the union vote.
What about Chrysler's bailout 30 years ago? It was a loan. Didn't Chrysler pay back the government?
Wasn't it worth the risk to save jobs? According to the Heritage Foundation, the $1.2 billion in loan
guarantees made by the Carter administration still resulted in a partial bankruptcy for Chrysler.
"Most of the company's creditors were forced to accept losses just as they would if Chrysler had gone
through Chapter 11, and the company ended up firing almost half its workforce, including 20,000
white-collar workers and 42,600 hourly wage earners. The only people who benefited from the bailout
were Chrysler shareholders."
The Heritage Foundation also notes, "If Washington really wants to help Detroit, they could end the
regulatory nightmare that prevents profitable, fuel-efficient cars from reaching market." Ford, they
say, has begun selling a car that gets 65 mpg, but they're not selling it in America. Why? Because it
runs on diesel fuel "and environmentalists in the U.S. have fought to keep diesel taxes high and
refinery capacity low."
More government intervention in private industry will bring us closer to socialism. Better to
renegotiate the labor contracts, re-train workers for other jobs, or help them get hired at the
Japanese auto plants in America than to subsidize a failed economic model for the sake of political
gain.
Lawrence Akutagawa
"Ruth E. Downs" <red...@newplus.net> wrote in message
news:gfcfap$q37$1...@news.albasani.net...
> Breakdown
>
> By Cal Thomas
>
> http://www.JewishWorldReview.com | Remember when Democrats lamented the
> growing budget deficit and
> spoke of the burden our children and grandchildren would face if we didn't
> put our fiscal house in
> order? That was when Republicans ran the federal government and Democrats
> opposed tax cuts. Now that
> Democrats are about to be in charge, concern about the deficit has
> disappeared and spending plans
> proliferate, even though the national debt passed $10 trillion in
> September and we added another $500
> billion last month.
>
> The latest, but by no means the last supplicant at the public trough, is
> the auto industry, which
> wants a bailout to save jobs because its cars are not selling. There is a
> reason for that and it can
> be summed up in five words: The United Auto Workers Union (UAW).
>
a bit of digging to get to the cited article, which is here -
http://www.jewishworldreview.com/cols/thomas111108.php3 /
>
But the union issues constitute only part of the problem. The other part
lies in the management structure/practices of the American auto companies.
Quick comment - dollar to donuts the money spread/range over the last five
years from the lowest wage earner in the US for Toyota, Honda, and Nissan to
the highest executive salary - perks, bennies, bonus, deferred compensation,
etc included...the whole kit and kaboodle - is far less than that for the
lowest wage earner in the US for GM, Ford, and Chrysler to the highest
executive salary. Then do the same analysis US factory by US factory, from
lowest factory worker to the plant/factory manager. I bet you'll find the
range a whole lot smaller for the Japanese companies than for the American
ones. And that's just the monetary aspect - not the day to day aspect of
management working with labor.
One of the continuing sources of puzzlement to me over the last 20 or more
years is GM's involvement with NUMMI.
http://en.wikipedia.org/wiki/NUMMI
http://www.nummi.com/
My understanding is that GM entered this endeavor with the intention of
"learning the Japanese way" of running the auto manufacturing business.
The UAW definitely has a presence there. And all indications I run across
indicate that the venture is a success, management and labor wise. Toyota
makes the Corolla and Tacoma there; GM, the Pontiac Vibe.
Yet neither GM nor the UAW seem to have learned/understood/internalized
enough at NUMMI over the past 20 plus years about management and labor
working together to have used NUMMI as a model for plants elsewhere. At
least, I for one have not run across articles/discussions/references that
indicate as much.
My concern (and bet) is that unless the American auto management and labor
come to realize that they are in different parts of that exact same sinking
ship and need to change what they have been doing for so many years, any
bailout today will provide only temporary relief - the continued management
and labor practices of yesterday will assure need for yet another bailout
tomorrow.