The New York Times writes, regarding the General Motors bankruptcy:
Rarely has a company fallen so far and so fast as General Motors.
“Fast”? Hello?!
Actually, Michelene Maynard doesn’t really mean that: She documents the exact opposite of a “fast” fall in the otherwise perfectly good article that follows. It’s just that, well, you know those blogs — no one edits the darn things, right:
“I never ever could have believed that one day this thing would go that way,” said Jim Wangers, a retired G.M. executive who was part of the team that developed the Pontiac GTO, and the author of “Glory Days,” about Pontiac’s heyday in the muscle-car era of the 1960s….
The company did have vast numbers of loyal buyers, but G.M. lost them through a series of strategic and cultural missteps starting in the 1960s.
It bungled efforts in the 1980s to cut costs by sharing the underpinnings of its cars across different brands, blurring their distinctiveness.
G.M. gave in to union demands in 1990 and created a program that paid workers even when plants were not running, forcing it to build cars and trucks it could not sell without big incentives.
The Times article ultimately avoids a key issues by the light of everyone with an ounce of economics understanding: Those union demands, and that giving in to them, made the structural cost of buying any GM car completely uncompetitive, even when they were desirable to own.
Was this GM’s fault? It probably could have done a lot more to bargain tough with its unions. But how much more? Was a GM lockout going to happen in any version of the America most of us have ever known? How was GM to deal with this:
[In 2007, the UAW’s President Ron] Gettelfinger . . . . declared that he is not in a “concessionary mood.” UAW workers at Ford and GM agreed to a health-care cost-sharing deal during an unusual round of mid-contract negotiations in 2005. Closing the competition gap with Japanese auto makers now, Mr. Gettelfinger insists, requires not more concessions by auto workers—but a Japanese-style government health-care system for all workers.
“We pay more, but get less,” he thundered to roaring applause at a recent NAACP luncheon . . .
Before the 2005 “givebacks,” the Detroit Three companies picked up the entire health-care tab for all their hourly workers—active, retired, dependents and, incredibly, even laid-off workers till they found other jobs. Workers were not required to pay any premiums, deductibles or co-pays-except for routine physical exams and prescription drugs. The 2005 deal left these benefits virtually untouched . . . In short, for a grand total of $752 in out-of-pocket annual costs, UAW retirees and their spouses get full medical coverage for life. Given the huge retiree population that the Big Three support—GM has three times more retirees than active workers—this has saddled them with a combined unfunded health-care liability exceeding $100 billion. . . .
UAW workers still enjoy a health-care deal that no one else in America or Japan—or quite possibly the planet—does. Yet Mr. Gettelfinger said last week that the 2005 health-care givebacks were the toughest decision he ever made in his entire career. This is a startling admission that reflects the depth of the UAW’s entitlement mentality, and its detachment from the world that its fellow Americans inhabit. But such lavish expectations are unsustainable under any system—American or Japanese. This is a reality that Mr. Gettelfinger must accept. Otherwise, he may well push U.S. auto makers over the cliff—and his comrades with them.
It remains to be seen whether and to what extent Prime Minister Obama and his union-financed Congress will do their best to put Humpty Dumpty–the UAW, that is, no matter whether it bears a BUICK, CHEVROLET or CADILLAC nameplate–back together again. When you’re spending a trillion dollars a year, after all, picking up another $100 million is nothing, especially when you hold so much stock in the debtor.
Better question: Will conservatives (I didn’t say Republicans) do anything to stop the process by which we might indeed join the lot of them as they proceed, Wile E. Coyote-like, down into the gulch? Or have we so diluted our voices with nonsense such as screaming about Obama’s date with his wife, his use of teleprompters and his choice of mustard that when it comes to policy discussions that really matter, we’re…
Just about as market-friendly, idea-wise, as GM?
