How Detroit's Automakers Went from Kings of the Road to Roadkill

Hillsdale College Imprimis | February 2009 Issue | Joseph B. White

[IbJensen]

Second, GM mismanaged its relationship with the United Auto Workers, and the UAW in its turn did nothing to encourage GM (or Ford or Chrysler) to defuse the demographic time bomb that has now blown up their collective future.

In a nutshell.

[foreverfree]

bump

[PapaBear3625]

I've seen this in other places. The tendency of senior managers is to try to camouflage serious problems, so they are not visible until after the managers have moved on.

Actually trying to solve problems involves risks, hard work, and intelligence. Over the short tern, the visible fuss might depress stock prices and make managers' stock options less valuable, or even reduce their bonuses. Thus management has an incentive to not solve big problems.

[Dixie Yooper]

A graduate of Harvard University, he has worked for the Journal since 1987, and for most of that time he covered the auto industry, serving as Detroit bureau chief

I found this gem in the first paragraph and quit reading...The Big Three started building crap in the early 1970's driving most of their of their customers to the Japanese and Germans by 1980. Ever since then they and their Unions have been living off the profits from the 50's and 60's.

[bitterohiogunclinger]

“What will be the fate of a quasi-nationalized enterprise whose “board of directors” will now include 535 members of Congress, plus various agencies of the Executive Branch?”
With the government at the controls, the Trabant will look like a success story. The easiest way to fix that is to require Congress to drive nothing but vehicles that they mandate.
Of course Obama plans to drive the cost of gas into the stratosphere to ensure his socialist / enviro - wacko policies look cost effective. God help us all.

[Mister Da]

Most suburban families have 2+ cars in the family - usually one for each adult. We have 2 cars.

I'd be pleased to have an all electric vehicle in our garage, just to cut consumption of foreign oil, among other good reasons. With a 50+ mile range, it would be the around town car, with the guzzler for travel. I suspect many surburban families could do the same.

But that electric vehicle is gonna have to be TALL enough that I can see through the windshields of most vehicles in front of me. Driving in multi-lane traffic is tough, & I want to be able to see as far ahead as possible. The fool directly in front of me is on the phone, or applying their face. They aren't paying attention to the car in front of them, but I am if I can see it!

I certainly want that ability in any car I buy in the future - electric or gas.

[REPANDPROUDOFIT]

Under the current contract, the UAW will pay for retiree health-care costs using a fund negotiated in last year's contract—but that won't start until 2010. GM is on the hook to contribute $20 billion to that fund over the next several years—unless it can renegotiate that deal under federal supervision.

The article does a good job of pointing out the variety of (unsolvable)problems facing the auto makers. I see the UAW as the biggest culprit.

I am so sick of reporting that tells us of the dire circumstances surrounding the funding of the UAW health care system. The reporting always stops short of giving us the real story of said health care plan. Where are the details?

I have done some investigating of my own. I have found that UAW members receive their company health benefits FOR LIFE! There are 780,000 retired UAW workers. Their health care plan includes health, pharmacy, hearing and vision benefits - again FOR LIFE! Wouldn't every aging retiree love to have hearing and vision benefits for life! Unfortunately, the majority of us have to go on Medicare.

I have not been able to get much information concerning employee contribution to their own coverage. I did find out that, in 2007, GM demanded relief from the enormous burden of health care. The auto maker insisted that it had to end the LIFETIME clause and that all workers needed to go on Medicare at age 65. The UAW refused. In the end, the union workers kept their lifetime benefits and non-union workers were required to go on Medicare at age 65. Non-union retirees, who had already reached age 65, had to be retrained at "How-to-go-on Medicare" seminars.

But, here is the kicker. At age 65, the non-union worker gets a bump of $300 a month in his pension to offset the cost of going on Medicare. Basically, it ends up costing the retiree nothing for his coverage. Well, well, well! Does that give you some idea of how good the UAW plan must be? They flat out refused a plan that would continue to pay their health care premiums for life. It just happens that it would be Medicare instead of their current private plan.

I know, many will argue two points - we don't need to glut the Medicare rolls with these retirees and these workers made their retirement plans based on the promises of gold plated health care. But, IMHO, it is better for them to be on Medicare than to dump billions and billions into paying for their Rolls Royce policies. Let them pay for their own "hearing and vision" coverage like the rest of us. As for their plans for a cushy retirement free of health cost burdens - fine with me, as long as the company is paying for it. But, when they want me to pay for it, IT ISN'T FINE!

[GeorgiaDawg32]

exactly right..I have a Ford F150 that sits high enough I can see way down the road (unless I’m behind an 18 wheeler) and if I see a problem 200 yards ahead, I’m on the brake, or changing lanes or both before the car in front of me has started to react. This comes in especially handy when I’m hauling my 6500 lb. travel trailer and NEED extra room to avoid problems..

I won’t get into a car when all I can see out of the windshield is the rear bumper of the car in front of me..

[REPANDPROUDOFIT]

My husband is 6 foot 5. I haven’t seen a “green” car yet that he could get into.

[ReleaseTheHounds]

This is a long article that I’ll bookmark with this comment, but it occurs to me: what if GM had followed the approach of GE back in the 1950’s and engaged Ronald Reagan to be company spokesman and take up the challenging to the unions?

Reagan was just a role-player in that battle, but he ultimately became the spokesperson who helped get things done. And as a result, GE managed their unions very well with rarely a strike and usually successful reasonable contracts. Now I know the UAW is different and they would play the Big 3 against one another, but I wonder if history would have come out different...

It’s sort of amazing when you think about it: two of the biggest scourges of American life (communism and the union movement) were defeated over the course of our lifetimes by the same guy, the great Ronald Wilson Reagan.

[RoadTest]

“Actually trying to solve problems involves risks, hard work, and intelligence. Over the short tern, the visible fuss might depress stock prices and make managers’ stock options less valuable, or even reduce their bonuses. Thus management has an incentive to not solve big problems.”

Good point, and very true.

[grellis]

If you would like to be added or dropped from the Michigan ping list, please freepmail me.

Lengthy

[Mister Da]

If no bankruptcy occurs for GM, it will wind up being nationalized - fully or partially. That means Obama/Pelosi/Reid (OPR) will be making some really big decisions for GM - like what to build.

Now, OPR hates oil! For all the wrong reasons, but they do hate it.

So, you think OPR is gonna let GM continue to build big gas guzzling trucks & SUVs? I don't think so!

That pretty much leaves electric cars.

I'm not saying GM will survive or thrive - I doubt it with the twin yoke of the UAW & OPR to bear.

[IbJensen]

That pretty much leaves electric cars.

And many of us more freedom loving citizens would go mad!

Plug it in, charge it overnight and drive 120 miles.

[IbJensen]

The country is in deep trouble.

A great and affable man like RWR could never be the answer now after the communists have taken over the nation.

A benevolent despot is now required in the mold of, say, a Francisco Franco, Albert Fujimori or an Augusto Pinochet.

[westmichman]

I get IMPRIMUS mailed free each month and it is always excellent! (I’m giving it this month to my GM-Dealer brother in law.)
Just go to:
hillsdale.edu and sign up for free delivery.

[CSM]

I just received my Imprimus yesterday and I won’t spoil it now! I’m just here for the comments.

;-)

[IbJensen]

I’ve been receiving Imprimus for a very long time now and look forward to it every month. Most all on this thread would enjoy the free subscription.

[jeffc]

All of this was explained in The Reckoning by David Halberstam (-"stom"?) in . . the late '80's.

Well written, if slightly weighted against the U.S., but included many personal stories of individuals from Lee Iacocco's fights with Henry Ford II to the struggle of a laid-off UAW diemaker trying to adjust to the way things had changed to.

I guess the future is to relive our past mistakes.

[MaggieCarta]

GM has become Government Motors.

Thanks for posting this article. I love Hillsdale.