Seems like Gresham's law doesn't it? Good money drives out the bad...
BTW - when is the last time a labor union - as opposed to an auto manufacturer - has been found in restriant of trade? So is it that there are "places where labor laws do not exist" or that U.S. labor unions have been granted too many subsidies/protections. The answer lies in the suffering business model of Ford nd GM, whose eventual bankruptcies, just like thier cousins in the steel industry, are inevitable.
"The answer lies in the suffering business model of Ford nd GM, whose eventual bankruptcies, just like thier cousins in the steel industry, are inevitable."
ANd had Ford and GM not been making substantial profits at the time these agreements were made, these privlidges would never have been granted. Those concessons to labor were the price Ford and GM were willing to pay in order to stay in business.
Again, I am no fan of labor unions, and the days where they did more good than harm have long since passed or been superceeded by state and federal legal protections for workers. However, the problem with Detroit (and a good number of other American industries) is that we have achieved a point where it now costs more to provide benefits to workers than it does salaries (as per a study I saw when I was a VP at Smith-Barney, it can often cost 2.5-3 times salary to provide a worker with the full panoply of benefits that Americans have either become accustomed to or demand). Many more benefits have been mandated by the American government. To compensate, companies tend to find cheaper alternatives (i.e. overseas labor and lax enforcement regimes), and pooh-pooh homegrown, common-sense solutions (automation, multi-tasking employees, safety and production technology). This is only common sense, if your goal is the quick fix.
But, what happens when, in the course of lowering costs, you begin to follow a tried-and-tested formula which becomes counter-productive in the long term, as in, trading short-term profitability for the prospect of losing the talent base you need to stay in business?