Ford has the same obligations as the Former GM.
The best possible next event would be an orgy of backpedalling on Obama’s unfortunate comments by the administration to the heady music of spin-doctoring by the media. This is the best we can hope for. But not matter how zealous that effort, or how cacophonous a spectacle, the markets have heard the president, who has confirmed their hunch in an unmistakable way. In doing so, he has given them the ammunition they need to bring this already vulnerable nation to its knees, financially, weakening its reputation further, demolishing its bargaining position in the capital markets, and possibly forcing it “out of business.”
Good analysis.
There are many parallels there.
GM and Chrysler were DOOMED.
That's why they had to fork over more than $30 per hour in direct pay to their workers ~ everybody in the UAW knew the companies couldn't come up with the moxie to pay retirement and retired health benefits.
If the companies and unions had been honest and bargained in good faith, and set aside the funds necessary to back up the fringe benefit packages, they'd still be in business ~ and making less than $30 per hour.
BTW, many of the foreign auto and auto parts manufacturers in the United States are already into the same trick bag and regularly pay more than $30 per hour in direct compensation.
With the devolvement of GM and Chrysler to the level of major bicycle makers they will no longer provide a great attractor for "labor", and that should result in a decline in pay and benefits throughout the auto industry worldwide.
One Ford retiree told me about his neighbors dog that bit him while on his motorcycle. He sued and won a few bucks. I asked why go to the trouble. He said the attorney cost was free to company retirees so why not sue.
The USA has been incredibly blessed with peace and prosperity over the last 60+ years. This has made Americans highly resistent to change (which involves uncertainty or even some hardship) and our politics reflects that.
It’s amazing how simple economics escape the Northeastern liberal. Econ 101: In order to make a profit: Merchandise A must cost less to produce than the price merchandise A is being sold for. End of lecture!!!
Writing from Shanghai.
GM in China is reporting record sales and record profits.
A machine company in Chengdu bought Hummer.