I am not a huge fan of the UAW.
It has been obtuse, even obstreperous. But the idea that the collapse of General Motors and Chrysler Corp. is the fault of the unions is swill of the worst sort. Because not only is it false, if accepted it will simply mean that taxpayers are made to shovel more money down the gullet of companies that won’t make the necessary changes to their business model because they haven’t been forced to confront the fact that their problems have not been caused by “the unions” — the braying mantra they’ve been falling back on for years now.
Point Number One:
While almost everyone in the media and elsewhere is talking about the failure of the industry, note that Ford is not in trouble like GM and Chrysler are in trouble. It is GM and Chrysler that are on the verge of bankruptcy. Ford itself is healthy — and only in danger of being dragged along with GM and Chrysler because the collapse of those two would have a catastrophic ripple effect across the entire industry. Toyota, Honda and all the others would be gut-shot, too.
And yet, Ford uses UAW labor just like GM and Chrysler. But Ford somehow makes money — or at any rate, loses less than GM and Chrysler have. What to make of this? Could it be that perhaps Ford’s business model is — dare it be said — more attuned to market realities and better set up than GM’s and Chrysler’s?
Point Number Two:
GM and Chrysler claim the core problem is so-called “legacy costs” — meaning the pension and health-care obligations they owe current and retired UAW workers. There is an element of truth to this; the Japanese automakers don’t have to worry about health care costs because the Japanese have national health care (which means everyone pays, instead of just the automakers).
But to pin GM and Chrysler’s current debacle on “legacy costs” is at best a half-truth. A quarter-truth, really. The real problem — in Chrysler’s case — is an obsolete, unattractive product line. Not all of its cars — but enough to gum up the works very badly indeed. Chrysler failed to produce a successful successor to the formerly hot-selling Neon economy car; the PT Cruiser (also once a big seller) is now seriously dated; the Magnum and Pacifica wagons were huge belly flops — as have been the Jeep Patriot and Compass and Commander. The list goes on.…
In GM’s case, it is a divisional structure that should have been completely redone at least 20 years ago. It is absurd that an automaker whose total market share is only 20-something percent continues to try to sell cars through six full-line divisions (Chevy, Saturn, GMC, Pontiac, Buick, Cadillac — plus Hummer) and hawks often as many as three or even four rebadged versions of the same basic car.
Whose fault is this? The unions?
The UAW did not decide to keep Saturn long after it became clear that Saturn was a money-loser that also competed with Chevrolet as GM’s economy car brand.
The UAW did not decide to sell the same basic trucks and SUVs through multiple divisions — adding to the R&D and manufacturing costs of each vehicle and reducing the potential profit per vehicle by who knows how much. (Probably an amount equivalent to the $1,500 or so in “legacy costs” GM cries so much about.)
The UAW is not responsible for the Pontiac Aztek or GTO; the Chevy SSR, the slow-bleeding of Oldsmobile or the failure to update one of GM’s most successful car franchises — Camaro — allowing it to die an ignominious death and giving away the market to Ford and its super-successful Mustang.
The UAW did not decide to keep the god-awful Chevy Cavalier in production long after it had become an embarrassment; it was not the UAW that kept GM from bringing out a competent small car capable of competing on equal terms with the best Japanese small cars until just three years ago.
It goes on an on and on.
As for Chrysler: whose fault is the “merger of equals” (the buyout of what was a successful Chrysler by a pillaging Daimler Ag) that allowed the company to be ridden like Ned Beatty in Deliverance from profitability to penury? Daimler literally sucked the life out of Chrysler — leaving it with no money to fund new models and update existing ones.
This is the UAW’s fault?
Bottom line, the problems besetting GM and Ford are systemic and structural. The unions may not be helping, but the idea that they are the cause and that if only GM and Chrysler could cut their pay and rid themselves of the obligations they have to current and former workers, all would be well — is rank nonsense of the first order.
But it looks like the taxpayers are on the hook — because the federal government has fallen for the bait. On Friday, it was announced by the Bush Administration that some $17 billion would be made available to the ailing automakers. If the money is not conditioned on more than just forcing UAW concessions, but on addressing some of the much more cancerous problems laid out above, all we’ll get is a brief “time out” before we’re right back to where we were… about six-eight months from now.