Replies

“I read Pat’s well-argued column to say it’s all of the above: UAW, bad management, and Government intrusion into the market.”

If you look at Detroit’s most pressing current problems: labour cost disadvantage, pension and retiree medical costs, too many dealers, too many brands, bad quality, wrong product mix - most of these point to the consequences of caving into the UAW.

Even the product mix is skewed by the unions, if suvs have more profit, it helps offset higher labour costs. The bad quality is partially a result of product cost cutting to offset higher labour costs.

I say unions and bad management are the cause. The transplants thrive with the same regulatory constraints on plants and vehicles, but they were smart enough to locate where they can keep the unions out, and plan their products and build quality for the long term.

Trade restrictions are a red herring, Detroit can’t expect to sell large numbers of cars in a high gas tax country like Korea - hell, they are struggling in their home market where gas is 1/3 of the price.

GM management was/is weak, greedy and stupid. I was rereading “On a clear day you can see GM” last night. Even by the mid-60’s according to DeLorean, GM’s market research was showing there was a clear movement of younger buyers to smaller cars. GM’s outside directors were asking why GM wasn’t doing anything on small cars. The answer was that big cars were more profitable, so who cares. That’s short sighted when you intend to be in business in the future, but it works if you are only interested in the easiest path to next year.

If GM started a long term strategy 30 years ago to move to Dixie like the transplants did and get the UAW out of there we wouldn’t be commenting on this news story tonight. If GM had also taken it’s own market research seriously and planned its products for the future and kept the quality up they would still have 50% of the market.