The Unions Killed The Carmakers
GM, Ford and Chrysler are nearing the end, and it’s not only because they make a product that no one wants.
This GM “bailout” video below captures what is at stake (divide by 10 to understand the Canadian ramifications):
Direct impact:
239,000 employees
775,000 pensioners
2,000,000 relying on them for health benefits.
Suppliers:
$156 Billion in sales
610,000 workers
14,000 Dealers with
740,000 employees
Chapter 11 is the probably the only hope. A bailout, regardless of the size, won’t change the root cause of the problem.
They have to drop the social programs, the unions, and re-invent themselves to be competitive once again.
Or they can throw $50 billion or so at them to stall their death for a little while, and enlarge the impact.
Imagine if your business has to support three people for every employee.
These aren’t carmakers anymore – they’ve become social institutions.
Welcome to the future.
November 17th, 2008 at 6:17 pm
The statement that the Big Three are failing because they built cars no one wants, is a canard. (See my last blog, The Electric Kool-Aid Eco-Mobile)They are failing because they have too much baggage, they have the UAW, and because consumers are frozen with fear. Dealing in a tough competitive market is one thing, but selling a product amidst the present global calamity is an impossible feat.
November 17th, 2008 at 6:21 pm
There is a simple solution; renegotiate the labor contracts.
November 17th, 2008 at 6:27 pm
What a bunch of crap.
It presumes that the only option is total collapse of the industry when in fact the factories and workers would still be there.
Let them go into chapter 11 and restructure.
Someone said no one will buy a car from a company in chapter 11, okay, let the unions and the companies take that into account and restructure before they get to chapter 11.
Why should the poor shlub at the 7/11 give up part of his paycheque to subsidize an unskilled worker that makes five times as much as he does?
November 17th, 2008 at 7:15 pm
Universal health care is the reason why there are so many auto plants in Ontario.
November 17th, 2008 at 7:28 pm
I thought it took two sides to sign a contract. As ridiculous as the union demands were, the auto companies were just as stupid for signing them. And don’t cry about how they were faced with strike action. They had a choice…they could have locked out the union. Many other industries have done it.
Greed motivated both sides and now they have to face the consequences of their own actions. Except they don’t want to do that. They want the taxpayer to be just as stupid and agree to finance their gold plated union contracts and gold plated executive rewards.
When both sides agree to a 50% reduction in remuneration across the board, then the taxpayers should consider it. But not until then.
November 17th, 2008 at 8:09 pm
Chapter 11 is the best thing that could happen to these companies. They need to fundamentally restructure how their business operates AND the vehicles they produce in order to survive. There will be huge layoffs – no question there. They’re necessary if any of these companies have any hope of surviving. It’s either SOME of the employees get laid off or ALL of them do – government bailouts are NOT an option.
Businesses should be allowed to fail if improperly managed or if they produce things that nobody wants. Competitors will emerge to fill the void. That’s how the free market works.