Watching the demise of the big three automakers and the attempts to save them I cannot help but listen to the pundits. "It is the large retirement structure that is sinking them and making them noncompetitive in a world market." Gee, but that has a familiar ring to it. "They took those loans knowing that they wouldn’t be able to pay for them."
It’s always us, isn’t it? Marshall Fields once said, " the customer is always right," but today the customer is always at fault. If you listen closely the underlying theme isn't that capitalism has failed us, the people, but that we have somehow failed capitalism. To blame the unions and retirement benefits for GM’s demise and not GM’s desire to sell 1955 Chevy Suburbans as a great new vehicle. Whose idea was it anyway for Cadillac to sell a pickup truck? Were customers pouring in and asking Cadillac dealers for pickup trucks?
The competitive advantage foreign automakers have is national health insurance. GM pays an average of a $1000 per car to cover health care costs while both German and Japanese autoworkers earn higher wages than UAW members. Yet somehow it is the American worker that must take it on the chin, take a wage cut and benefits concession. Gee, I guess we forgot why Henry Ford once paid his workers $5.00 a day. Workers who can afford to purchase the products they manufacture do a better job, and then after a hard week's work go out and buy the products that they helped to build.
American Axle is a good case in point. After a ten week strike they lowered new hire wages from $23.00 per hour to $14.00 per hour. American then awarded CEO Richard Dauch an $8.5 million bonus along with his annual salary of $1.47 million and $94,682 in other compensation. That would be fine except that the company had just been through a long strike, business was off, and the company was shutting down three plants. Does that sound like bonus country to you? American Axle’s largest customer is GM. Will the American Axle new hires be able to afford to purchase any GM products at $14.00 per hour?
Ford is no better. The design team for the Ford Mustang back in the 1980’s thought it wise to move their operations out of Ford’s Dearborn headquarters.
There was too much oversight; every time an engineer drew a line, someone asked, "why?" They rented an old transmission plant and began with a staff of 12 engineers and 26 total employees. Then they completed two years of design and development work in 16 months. You don’t make friends in corporate circles by showing up a whole office building full of engineers.
Rumors and complaints began to circulate that the Mustang SVO team was off the reservation. One design engineer had purchased an after-market shifter knob with stitched leather and a foam rubber center. All agreed the leather shifter knob added to the comfort and ambiance of the car. Remember now, we are talking about the Mustang, a car that has built many mansions for Ford motor company employees. When the design team submitted parts and costs lists to the company, the shifter knob prompted a company memo. The company advised that they had, in stock, plastic shifter knobs with a net cost of .19 versus the proposed leather knob with a net cost of $4.00. Sometimes you don’t know whether to laugh or cry; $4.00 on a $10,000 car and they scratch their pointed little heads and wonder why they’re in trouble.
The new Cadillac CTS comes with a 40-gigabyte hard drive. It weighs almost two tons and gets 16 miles to the gallon, in the city, and costs over $50,000. But oh yeah, it does come with a leather shifter knob. Why isn’t America lining up for such a vehicle? One of the original Mustang designers opined, "We’d have made more mistakes if we hadn’t been in such a hurry." Yet these companies and pundits blame their employees and their labor agreements for their troubles. Honda employees retire, as do Mercedes and BMW employees.
American automotive marketing always desires to sell up. If you show up at a dealership to purchase basic transportation, and insist upon it, you will, in many cases, be given the bum's rush. "That feature is only available on the Super Collider model. Why, for just $20.00 a month more you can get undercoating and premium air in the tires. Of course you’ll want to purchase our extended warranty that covers all body and chassis parts that might break or fall off during the first four years." The answer to the extended warranty question is as follows: "You want me to wager you that this car is going to have problems and the only way to make it better is to pay you more money now?"
The car companies want to build the most profitable cars rather than practical cars. They assume it’s better to make more on each vehicle than to make more by selling more. It reminds me of the screw factory in the old Soviet Union where the polit bureau member announced to the workers, "Your quota is two tons of screws each week, but what is most important is that you produce them in the most efficient way possible!" When he returned at the end of the week to check on them he found, out in front of the factory, two one-ton screws.
So, let's see if I’ve got this straight. The banks are in trouble because otherwise honest, hard-working people borrowed money from unsuspecting banks fully intending never to pay them back. Now tell me again why that bank president received a $70 million bonus last year? To be worth $70 million you’d have to manage the bank and hit .300 between Jetter and A-rod.
The car companies are in trouble because of the high labor and pension costs for the people who buy their products. No matter how many employee buyouts, layoffs, and spin offs GM offers, their market share still continues to shrink. It’s just a mystery, isn’t it?
I think these experts and pundits might not realize it but they’re tap dancing into the dog pen. By repeatedly saying that the problem is caused by the workers' needs they are inadvertently condemning the capitalist system. Let’s call it a Palinism, making an argument so badly as to help the other side. For if American free-market capitalism cannot provide for the needs of the citizens, i.e., decent wages and retirement, then what is the answer but the overthrow of American free-market capitalism.
With glee and invective they called Obama a socialist and a communist! Claiming that he wants to redistribute the wealth despite the complete redistribution of wealth to the upper income levels for over the past thirty years. There is a time to speak up and a time to shut up and the Republicans had better wise up and help the new President. Or in four years it might be the public that will wise up and the next candidate they call a socialist or a communist might actually be one!