Auto union drove GM to trouble
The Obama administration's force out of GM CEO Rick Wagoner is supposed to help the automaker survive. But commentator Kevin Hassett says for the automaker to thrive, Wagoner's not the only one who should go.
Kevin Hassett, director of economic policy studies at the American Enterprise Institute (leadingauthorities.com)
More on Auto Industry
TEXT OF COMMENTARY
Tess Vigeland: As we discussed earlier, the Obama administration forced General Motors CEO Rick Wagoner to resign this weekend as part of the government's effort to save the ailing automaker. The firing-by-any-other-name was positioned as being in the best interests of GM's future. But with or without Wagoner, GM's future remains in question. Commentator Kevin Hassett says there may be more politics than economics at work here.
KEVIN HASSETT: President Obama has a huge political debt to the unions and that's why he's avoiding the obvious solution to the auto crisis.
Historically, failing American companies like GM have entered bankruptcy. In bankruptcy, they either liquidate or, if the firm is worth saving, reorganize.
Bankruptcy reorganizations are painful for stakeholders. Hard-nosed judges give workers, managers and debtors severe haircuts in order to reshape a firm into a new organism that can thrive again. But bankruptcy can work. Most everyone has flown on an airline that has emerged from a successful bankruptcy.
This economic crisis is unique in history in that troubled firms have sought protection from politicians, rather than bankruptcy courts. Why? Because if you're politically connected, you can expect a much better deal from politicians than you would ever get from a worldly and experienced bankruptcy judge.
GM is in deep trouble mostly because the United Auto Workers have festooned the company with rigid work rules and extravagant costs. The 2007 collective-bargaining agreement, for example, required the automaker to pay up to $140,000 in severance to a worker whose position was eliminated. And that is nothing compared to the enormous health-care costs these companies are laden with. The average cost of employing a worker at the Big Three, including benefits, was nearly twice that of Japanese automakers. No wonder the automakers are hemorrhaging cash.
A bankruptcy judge would bring some reason to labor costs and create a GM that could emerge stronger. But the unions have a better idea. They plan to use taxpayer money to fund their juicy compensation. And they know they can count on Obama and the Democrats to help them. All told, organized labor contributed over $74 million in the 2008 campaign cycle, 92 percent of that went to Democrats.
History will tell a simple story about GM: Union bosses successfully negotiated sweetheart packages that destroyed GM's competitiveness. If Obama was serious about creating an enterprise that can thrive in the future, he would have demanded that the union bosses resign along with Wagoner. Instead, it's payback time.
VIGELAND: Kevin Hassett is the director of economic studies at the American Enterprise Institute in Washington, D.C.
Comments
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From Belleville, MI, 05/02/2009
If you believe the Motley Fool and other “stock advisors” in the business press, 90% of GM’s losses can be attributed to the UAW which accounts for 10% of a vehicle’s cost.
The math may seem a bit obtuse but the politics is clear as fizz. The UAW’s disproportionate responsibility for the automakers’ unprofitability is based on the same sort of accounting whiz that led GM to claim they lost $39 billion in November 2007 due to “deferred tax credits”.
If it smells like b.s. and it looks like b.s., trust your common sense and skip the taste test.
Thanks to corporate welfare GM accumulated more tax deductions than they could take in a year. So they deferred the tax deductions and booked them as an asset until the asset got so fat it attracted the attention of auditors who asked — “quote unquote”— What the f##k is this?
Wagoner was quick to assure the Fools not to puzzle their pretty heads. The $39 billion wasn’t actually a loss of cash, he said, since it never had a tangible, marketable existence. It was merel y an accounting gimmick — a fancy — like paper wings.
The Fools refer to compensation like pension and health care as “welfare”, despite the fact that unlike “deferred tax credits”, the compensation was earned by productive labor. It’s no wonder the Fools are having trouble figuring out what part of GM is losing what, and how much, and why. They ignore the obvious and thumb their noses at analysis. For example:
GM sold 4.4 million vehicles in the US in 1992 and employed
265,000 UAW members.
GM sold 4.5 million vehicles in the US in 2007 and employed
73,000 UAW members.
A company can’t make productivity improvements as astounding as that and lose money on labor. Something else is shaking the timbers. Maybe we should question the competitiveness of salary workers? How do they compare with their Japanese counterparts in compensation and achievement? Or more precisely, who’s controlling the money?
Since GM sold as many vehicles in the US in 2007 as they did in 1992 and employed 192,000 less UAW members, profits should be way up by any accounting standard. Unless of course, profits were siphoned off into investments overseas, dividends, bonuses, or unaccountable black holes of financial rigamarole. (In 2005 GM paid Fiat $2 billion dollars to get out of a “put option” that would have required GM to purchase Fiat.)
GM sold over 9 million vehicles worldwide in 2005, 06, and 07. If GM lost money on sales that enormous, Wagoner wouldn’t have been awarded a $23 million payoff. He would’ve been put up against the wall and shot. What does the Board of Bystanders know that we don’t know?
For20starters, GM manufactures vehicles in thirty-five countries. GM has been expanding in emerging markets for twenty years and hasn’t let up on the gas. In September 2008 GM launched construction of a $250 million corporate campus in Shanghai. GM invests about $1 billion per year to expand production in China. In April 2008 GM announced a plan to build a $200 million engine plant in Brazil. GM opened a second plant in India in September 2008, bringing its production capacity there to 225,000 vehicles per year. It also announced plans to double the number of dealerships and service centers throughout India. In November 2008, GM opened a $300 million plant on the outskirts of St.. Petersburg that will produce 70,000 cars per year. In March 2009 a venture partly owned by GM through its Korean subsidiary Daewoo, announced a plan to open a new car plant in Tashkent, the capital of Uzbekistan, to produce 15,000 Chevrolets per year and create 1,200 jobs. Along side this international expansion GM announced the closure of twelve plants in the US in 2007. In 2008 GM added five more to the list of plant closings..
GM is on the march but according to the folks who call $39 billion in “deferred tax credits” an asset, the UAW must get leaner and “welfare” for blue collars workers should be axed so “unearned income” for the leisure class can get jacked up.
The $39 billion asset was a boondoggle, it never existed, not even as an unhatched egg, let a lone a chicken. It wasn’t a loss of cash, it was an auditor’s correction of crooked bookkeeping. But it helped steamroll the union and trumpet the demand to dump legacy costs. Labor’s legacy of profit was invested outside North America, but that shouldn’t make the debt uncollectable. Labor deserves to benefit from the investment of its legacy profits. Labor has a legitimate lien on capital.
This has been obvious since 2005 when Delphi first filed for bankruptcy. Delphi transferred assets overseas. They insisted that assets outside the jurisdiction of US courts were profitable, but untouchable. When Delphi proposed to cut wages in half and eliminate retirement benefits, we were warned that Delphi was the lead domino, and the wage and legacy cut would ripple through the economy. We were warned that the restructuring would spiral down and the impact on the econom y would be profound and permanent.
It doesn’t require a degree in economics to figure out that workers making $14 per hour don’t buy new cars. They don’t buy homes and they don’t invest their savings in the stock market. They live paycheck to paycheck. Restricted income leads to boycott by default. The economic blowback won’t end with the Detroit Three.
When GM’s labor costs reach parity with Toyota, Toyota will ratchet wages down again. The automotive industry is too entrenched in our national economy not to have a cascading impact on wages throughout the country.20The dominos won’t stop falling at the end of the assembly line. They’ll keep tumbling until every one is down.
If the Detroit Three can’t sell cars to their own workers, it doesn’t matter how cheap they buy labor. The market is going down. It’s the paradox of thrift. When savings isn’t invested at home, in production as opposed to speculation, it reduces demand and inhibits growth.
The double whammy of free trade and de-unionization in the US compounded the thrift paradox. The savings extracted from cheap, non union labor was invested overseas. The companies’ thrift strategy undermined their most loyal customers — employees and communities in the US.
What can workers do? What’s our alternative? Strikes are worse than useless when the company wants to reduce inventory.
We are left with one option: the20wallet vote. We aren’t buying your crap anymore.
We won’t buy anything we can’t eat and we’ll be growing our own. We aren’t investing our life savings in banks or stocks or bonds. We are opting out of the system controlled by crooks and liars. In a rational society workers could petition the government to invest in productive enterprises that create jobs, but we don’t have a socialist democracy. We have a government controlled by money changers and pissant politicians.
Unaccounted billions are turned over to private financial institutions. A pittance is dedicated to20temporary job creation, and nothing is invested in manufacturing. Stop-loss loans that require collateral damage — layoffs and plant closings — as a condition of remission do not constitute investment. The arsenal of democracy has been outsourced to China, Brazil, and Uzbekistan.
Stuffing pockets at AIG, Bank of America, etcetera.... is not investing, it’s speculation, it’s casino capitalism. It’s a massive transfer of wealth from the working class to a cadre of people who live off unearned income.
Zero dollars have been invested by our government in regenerative, productive, industrial capacity. The paradox of thrift is self defeat. If government funds aren’t used to promote the prowess and ingenuity of manufacturing in the US, we won’t see recovery, we’ll see depression in capital letters.
The US market didn’t dry up natu rally, it was raped and murdered. Unlike the Fools, we know the perps aren’t the ones with dirt under their fingernails. The government has not, to date, gone door to door confiscating guns, but the oligarchy is methodically stripping the nation of toolmakers.
We are led to believe a lie when leaders degrade labor in honor of false profits.
04/27/2009
Im a proud auto worker with fifteen years of service.It blows my mind how people talk about something they know absolutly nothing about, Including this idiot. Does this guy even know what we have given up over the past five years. Gm has taken every pay raise from us including last week when they took our cost of living from us. I have not recieved a raise in years but everything in the world cost more and more every day. My bills have doubled but i still make the same wage I did five years ago. What more could we possibly do for this company. The government wants us to make $15.00 an hour if they get their way. If they want half the wage then they will get half the work which will cost them twice as much. I have a neighbor who makes well over $100,000 a year working for the government and he is dumb as a box of rocks. I think the government pays way to much for their work force who is off more then they are there. We need pay reform in our government not our auto industry. Just look at the cars when you drive around. Most of the asain cars built in the usa are down south where things are way cheaper and people believe we must make what they make. Why not make them pay their employees what we make. We were here first and now they set the standards for everyone else. Japan is taking over the auto industy now and there is nothing we can do about it. The big three may survive but the american people will ultimatly loose intrest in american cars so it really doesnt matter what we do for our company. Thanks Obama and all the congress members for blaming the workers for your mess. I didnt want your loan to begin with because I believe the government is not resposible for our troubles. Ford was right in not excepting that money and they may be the only one standing when its all over with. Then again nobody asked me my opinion.
From Grandview, MO, 04/09/2009
Maybe we all should look into how much money Kevin Hassett get per year and what are his perks. If people are to save for their retirement in 401k's, it will be a cold day in hell when they will have enough to retire on. Everyone I know has lost everything they have in their 401k's and some do not have any time to start over. This is not like the old days where almost everyone lived and farmed or owned plantations. The prices today on everyting is out of sight, in order to live you have to earn at least $60,000 a year. Every time you turn around every school district wants more tax money, utilities are going up, food prices are out the window and forget being able to have enough money to send your kids to college. The stupid part of this is you have people up in Congress who are earning a whopping amount of money and the President who think the auto workers earn too much money. WELL I SUGGEST THAT EACH ANY EVERY ONE OF THEM LIVE ON $60,000 A YEAR FOR 5 YEARS AND HAVE NO ACCESS TO THEIR TONS OF MONEY AND SEE HOW WELL THEY DO.
04/07/2009
Global freetrade benefits the business class, by sourcing cheaper sources of labor, resources, taxation etc. to sell to more customers. This is the American model for globalization. The downside is it forces American workers to compete with foreign workers. There are 200 million unemployed Chinese whom wish to work in a factory. There are roughly the same number of total American workers. The shear numbers are mind boggling. Pandora box has been opened. There is no way back to the standard of living Americans once knew.
Asian's have a saying for hard times: 'Better learn to eat grass" Its not so funny when you realize its true in many cases. As for the business class, which also runs the American government, I think even they maybe run over by the Chinese business machine.
From HI, 04/03/2009
Did George Bernard Shaw say, "Only thing wrong with labor unions -- nobody ever tried it" No, not exactly. But he did give us a hint.
Why The Mob never unionizes the truly downtrodden underdogs, the maimed victims of military draft, the hopeful victims of mortgage schemes, the hapless holders of deadly infections? No money in it.
From OH, 04/02/2009
With regard to teachers, the majority of them became teachers for the fact in reality, it is less work. Teachers teach the same subject(s) year after year. They don't have to expend much effort to stay on top of a subject they know like the back of their hand. They spend far less than 8 hours at school and during the few hours they are there, they get a free time plus lunch. Teacher unions are considered one of the strongest and most formidible in the U.S. They "say" they chose teaching because they care about kids. Yeah, right. Is that why they go on strike after the school year begins? Teachers have a unbelievable retirement pension. At least in Ohio, they also have the Public Employees Retirement System in addition to any pension provided by the local school district. Teachers in my community live in some of the most affluent areas. Can't do that on a low- paying job. Teachers in my community are also provided free gratis with a laptop computer and printer TO HAVE AT HOME. Time after time teachers have the kids in the classroom swap papers to grade them. I used to have to frequently call my kids teachers to point out the fact an answer was marked wrong when it was actually correct. Where's the oversight? Teachers frequently use the pre-written tests that are provided in the back of the teacher's manual that the teacher chooses to use in their classroom.
In addition, once a teacher gets tenure you can't get them out of the school system even after they've committed a felony. Teaching used to be considered a hallowed position and well respected. That was when teachers used to conduct themselves above reproach. Not so anymore. Every time you turn on the TV it's a teacher sleeping with a student or molestation, etc. I have personally found the most unruly kids in a neighborhood belong to a teacher. It's a case of "do as I say, not as I do." Teachers have double-standards. They give preference to the kids of other teachers in their classroom. When teachers are the coaches for after-school activities they choose the kids of other teachers first and have no hesitation telling you what they've done and why. It's a real pity communities no longer hold teachers to the level of accountability they used to years ago. Teachers used to have to conduct themselves so as not to draw any kind of public scorn or attention. That's no longer the case. Teachers "choose" to become teachers knowing full well they are going to spend hours each day with kids. Teachers want pity for freely deciding what vocation they want? Give me a break! As I previously stated, teachers have every weekend off, get (4) weeks of vacation "during the school year" in addition to having the summer off. There are times when overtime is mandatory in the auto industry (usually it's during the summer when everyone is having picnics, going here and there, enjoying being outside), autoworkers are "required" to work (2) weekends in a row before they can "request" the third weekend off. Not so with teachers. Teachers get every single federal holiday off too, which FAR exceeds what any autoworker gets. In addition, at least in Ohio, teachers ALSO get (5) paid snow days. They don't have to go to work when the superintendent closes school and they get paid for it. The autoworker has to get out in that snowstorm and get to work regardless. On top of all the other perks, teachers get "sick days" and "personal days" in addition to all their other days off through the year.
I don't begrudge any person trying to earn a "decent" living, but I draw the line when my property taxes are constantly raised hundreds of dollars every year simply to cover the ongoing perks given to teachers and school systems. Buying a house is NOT like buying a car. You choose a house based on a long-term investment, not so with cars. My property taxes (and so too my house paymnt) has risen $2,600 ALL due to the school system. Well WHO do you think is going to sustain the school system's thirst for money if the auto industry and its workers go under?
From ochelata, OK, 04/02/2009
A person who believes that unions created the problems in the auto industry are still living in a fairy tale world. Many management decisions have contributed much more to the US auto business. Decision about product models, manufacturing locations, product quality, product input sources, board salaries and bonuses, union awards, etc., are all management decisions. I do not and never have been a union member or worker. I just think people who think unions did this to the economy need their heads candled.
From New York, NY, 04/01/2009
I am so tired of the right blaming the unions for having bargained effectively in the past. The culprits are not the unions but rather the greedy, lazy, stupid management who gave away the shop in good times.
04/01/2009
Funny, when the Communists still exists, the right wing pointed to the "overpaid" workers as proof that letting GM make massive profits, and trickling them down, was good for society, and thus capitalism was good for society.
Now, suddenly what GM agreed to, is bad. YET, if it wasn't for those paychecks...how possibly could there be a middle class that could afford houses, AND cars, AND college? Those paychecks didn't disappear into savings accounts, now did they?
GM's problem is easy to understand--they overproduced a product, perhaps both due to efficiency and to employ all the babyboomers. Why do I say they overproduced?
Well, go back a few years. When there were too many vehicles on the lots, because used cars could do the same work for a lower price, suddenly the advertising campaign and financial experts told consumers that leasing a car made sense. Can you imagine these same people telling us that renting makes more sense than buying a house and paying upkeep and taxes?
but that's what was told. Of course, these leased cars came back to sit on dealer lots again. So, a new advertisning campaign came out, telling us these weren't used, abused rental cars, but "pre-loved" cars.
If you ran a business, producing more product than customers, that required millions in advertising to create a demand, and the cost of your product was so high, many had to borrow money they didn't have....how long do you predict that company would last?
From Anoka, MN, 03/31/2009
I'm a union guy and I don't blame anyone for taking advantage of all that your company is willing to give you in return for your work. That being said, I take exception to Patty Miller from OH and her comments about teachers and our pay packages.
I'm a 32 year old high school teacher making less than $40,000 a year. According to Patty that makes me among the highest paid workers in America. Oh, yeah I get summers off. Did I miss the part where we are no longer required to participate in continuing education...over the summer? Are we no longer expected to take home tests and papers to grade on a daily basis...on our own time? Are we no longer required to create lesson plans for what amounts to 5-6 hour long presentations every day. If you really want to compare "Actual Hours" that we work I have no problem with that. Before we start comparing working conditions, try being responsible for 40, 15-18 year olds. I don't think I need to mention that we spent thousands of dollars to get the Masters level degrees that most of us have earned. I'm sure that Patty has her Masters in something that grants her at least $20,000 a year more than me.
I have no problem with the UAW, but it does say something when you feel the need to attack ANOTHER UNION in order to defend yours.
From New York, NY, 03/31/2009
I think there are valid points made by the author of this article and the comments on the forum. Do people skew the dollar numbers from the payroll/benefits to fit their arguments? Of course. You show me numbers from the UAW and I'll show you numbers from the Auto industry criticizing the unions... Not impressed. The issue I see here is that the UAW is handicapping the companies in the way that the companies cannot be nimble enough to change their plans to meet their needs and survive. What company or job these days gives you a pension? None, its not a financially reasonable thing to do, this is a vestige from the 40's and 50's that should be done away with. Every worker should be responsible for their own retirement with 401K or other savings. This is how 99% of the people entering the workforce will do it from now on and there is no place for pensions. Also the UAW secures sweetheart health plans for their workers, again no one else does this for their employees. Welcome to PIP health plans, enjoy it.
Unions were born out of a very real need in the early industrial revolution, back then workers were made to work like slaves like hours for a pittance. Unions came by and gave the average man a voice and power to assure fairness and equality in the labor-owner relationship. These days such bruteness is not required, no corporation will go to such extremes to squeeze their workers beyond what is expected, federal law protects you there. At this stage you can say that unions have too much leverage when dealing with their corporate counterparts and are too near sighted to see that the landscape around them has changed. So let them strong arm the US auto industry into oblivion, then hopefully it can come back and function like any other responsible corporate entity not having to be mommy and daddy to all their employees for life!
03/31/2009
Once again, we blame the victim. American workers are not culpable for business failure. They're the very folks who show up, day in and day out, to do their jobs. They have kids to feed, bills to pay and lives to live. If they happen to belong to a union, they have a voice in matters involving how they are to be treated in the workplace. They do NOT get to make the executive decisions that may ultimately lead to the demise of the company for which they work so hard. Many of us do not have union representation. A few years ago, I worked for a healthcare organization that "busted" the union by deciding to give disgruntled (and vocal) nursing staff a large raise. Those of us in the ancillary departments were not given one penny. Instead, management told us that if we so much as signed a union intent card, we'd be canned. Hassett's rant brought back that memory. Please do not bring him back. I could see the spittle fly from here.
From OH, 03/31/2009
It is abundantly obvious that Hassett's ONLY knowledge about the auto industry comes with driving a car. It stops there! Let me be perfectly clear. Hassett's article is a LIE. The only employees in 2007 who received $140,000 were employees who had MORE than 20 years of corporate seniority and who were willing to take the $140,000 and completely sever ALL ties to GM. That meant no pension, no health care, nothing! I am so amazed that the news media constantly promote an $80 per hour wage figure. Ridiculous! Why is it the hourly wage for UAW auto workers is always quoted to include benefits? Gee, I don't hear any other job being quoted in such like manner. It's always a double-standard. The banks and AIG can throw around millions, but don't let a UAW worker make enough to live comfortably. And I don't mean live a rich lifestyle!!! If you think the housing crisis is bad now, just what do you think would happen if the wages of the UAW workers were slashed? Tens of thousands of Americans would add to the foreclosure problems. People think these workers lolly-gag around during their shift and do nothing. Well in my plant we stand ALL the time on our feet, no sitting down whatsoever. There are NO chairs or benches to even sit on for a brief respit. In the summer the temps exceed 100 degrees day after day. The air you breathe is filled with oil and sludge that comes off the machines which are running at maximum capacity and all the time, year after year, it settles in your lungs. The floors are so slippery with the oil and sludge that you have to creep along slowly so as not to fall. You cannot climb the stairs without fear of falling and the handrails are coated with the same oil residue. The majority of Americans (including the news media) would turn up their noses at having to work in such conditions, thinking themselves too good to do so.
I'm sick and tired of hearing that the union is breaking the auto companies. In reality, GM/Ford/Chrysler pay their hourly workers within $2.00 of what Toyota/Honda pay their U.S. workers. Oh but NO, the media doesn't want that fact to get around. Sounds much better to make America think the union is out to cripple the companies. People like Hassett gets lots and lots of perks as well as a hefty wage. They just don't talk about it openly, but it exists nonetheless. We say members of congress get $150,000 yearly salary, doesn't seem like a lot, but it's all the extra perks that raises that $150,000 to over $500,000 per member of congress by the time all is said and done. Where are those stories?? Where is that truth??
In reality, a UAW hourly worker makes roughly $62,000 a year BEFORE TAXES. Heck, you've got teachers who make a LOT more than that, and they get the whole summer off and (4) weeks of vacation during the school year on top of that. If you were to figure the "actual" hours a teacher works by dividing it into their salary, you would easily see a teacher is one of the highest paid workers in all of America. They get paid time off that exceeds many corporate execs. And still we hear teachers piss and moan over not making enough. Teachers have a pension plan that rivals Congress. Pity, pity.
In truth, salaries account for LESS THAN 10% of the total cost of GM's cost. As I recall, when the figures were released two weeks ago, salaries accounted for 67% of AIG's cost. Is anybody yelling foul over that? You need a plumber to fix a leaky faucet you pay them $75 just to come out, plus parts. They in and out in less than an hour. That's okay, you suck it up and consider it necessary. But you think a $26 hourly wage for a man to earn standing 8+ hours on his legs on a cement floor is over the top. Who the heck are you to say so?
As far as I'm concerned Mr. Hassett, you have breathed more air than you are entitled to, you are the very reason there is a shortage of it for everyone else. Now, tell me, how do you like someone else making a judgment on what you are and are not entitled to? Sauce for the goose is sauce for the gander. I bet you drive a Japanese product. You spit on the graves of the 3,000 brave men and women who died 12/7/1941. Support the U.S. Troops? You haven't a clue what that means. ALL U.S. Troops deserve our support, even those who have paid the ultimate sacrifice. They deserve our homage and respect. Buying a Japanese car is no different than Germany coming to the U.S. and building a swastika factory here. Would you buy one and proudly display it for all to see just because it was made in America? Principles are cheap, they don't cost a thing. They only count when it hurts to stand by them. YOU Mr. Hassett are no gentleman and you have no honor.
From CA, 03/31/2009
Some of you were right, this exact article IS on the Fox News Channel's website right now.
Which is where it belongs.
From CA, 03/31/2009
Those of you who pointed out that this kind of bull belongs on FOX News Channel were right. This exact article IS on Fox's website.
http://foxforum.blogs.foxnews.com/2009/03/31/hassett_gm_obama_union/
From Las Vegas, NV, 03/31/2009
While I do think that there are many unionized auto workers who are overpaid for what they do, blaming GM's problems on those workers is ridiculous. Executive are the ones making the big (and apparently bad) decisions, and they make the ridiculously big bucks. Plus, Mr. Hassett's comparison of the cost of an American auto worker (including benefits like health insurance) to the same worker in Japan is comparing apples to oranges: Japan has national health insurance, so the Japanese auto makers do not have to pay for their workers' health insurance. If he wants to make his point, he should at least get his details straight.
From Columbus, OH, 03/31/2009
The "simple" story is that it keeps coming back to the same short-sighted management pratices at GM. They agreed to union contracts like they designed cars, with only the next quarter's stock dividends in mind. They made billions for decades and then they got caught looking on the fast balls of $4 gasoline prices, double-digit healthcare inflation, and the popping of the credit bubble that came down the middle of the plate.
The U.S. auto makers just need to learn the art of "long-term" planning.
From St Petersburg, FL, 03/31/2009
You have to ask yourself why workers wages are always the attention issue. Could it be a ploy to misdirect attention downward? It was said several years ago that McDonald's could pay it's counter help $37 per hour if it chose to (minus executive bonuses, perks, etc) and still make the same profits. Lets quit shooting our workers and look at the real problem.
From Bethlehem, PA, 03/31/2009
I would love to hear Robert Reich's rebuttal of this commentary.
From CA, 03/31/2009
I like Marketplace, I listen regularly and generally find the program enjoyable and informative.
However, every time someone from the American Enterprise Institute speaks on the program, I am surprised by the distortions and assertions that are not backed up by facts and examples and don't square with the facts.
This clown blames GM's problems on the workers not being willing to work for wages Japanese factory workers make.
What a crock. There was no mention of the figures, the numbers, the percent of operating expenses that wages make up for unionized workers. The wages were just said to be double what Japanese workers make.
There was no mention of how the union workers' wages compared to executive compensation in all its forms.
There was no mention of the fact that people don't want to BUY GM's PRODUCTS either. Kevin just puts all the blame on those greedy workers.
Every time someone from The American Enterprise Institute speaks on Marketplace, the show loses credibility.
As a listener and fan of Marketplace, I am insulted every time this guy, or David Frumm, or any other of these hack liars are given any air time on your otherwise high quality program.
Sincerely,
Bret Bailey
From Sandy, UT, 03/31/2009
One important item lots of you are missing is that we keep these auto companies alive at "MY" expense, which I will not tolerate. I will not pay huge sums of money for an auto and then pay my taxes to subsidize keeping the company afloat. How is that even American? Say what you want about those of us who are anti-union, it is hard to refute that if a company isn't cutting it, the employees will not have jobs. It is Econ 101.
From New York, NY, 03/31/2009
It really is disappointing that Marketplace would air this drivel - not because it's conservative but because it's intellectually dishonest, misleading, and an insult to workers across America who are struggling under the current economic crisis. As William Holstein wrote in yesterday's New York Times: "Fully one-half of the company’s unionized work force has been laid off or taken buyout packages, and the U.A.W. has agreed to a two-tier wage system in which new workers make only $15 an hour." There are lots of outdated rules and compensation requirements in current union arrangements, but the unions have repeatedly come back to the bargaining table and made concessions. It's in their *interest* for their companies to keep running effectively.
But it's also in their interest to make sure that their workers - America's workers - have adequate health insurance, and compensation when their jobs are eliminated and they face the daunting, possibly impossible task of finding a new job. Kevin Hassett is right that change is required for American auto companies to survive. But why on earth is it always workers who have to sacrifice their hard-earned benefits for the competitiveness of an abstract entity - the corporation? The U.S. ought to be finding ways to provide better health insurance and better unemployment benefits so that corporations aren't burdened entirely with the weight of the social safety net. But to suggest it's all the workers' fault for wanting too much health insurance, too much compensation? At a time when American workers are seeing their jobs and benefits disappear by the day, while the titans of Wall Street get a trillion dollars and lunch at the White House - that's cold, cruel, and insulting.
From Walnut Creek, CA, 03/31/2009
Excuse me, but could that have been a more obvious hatchet job on the unions?
If the commentator would have started with his actual interrogative saying, "Why remove only Waggoner? Why not also remove the union leadership?" reasoned discussion might have been allowed to follow.
Sadly, his commentary was a toxic waste of airtime that only furthered division rather than asked for engagement to solve the problem.
But he doesn't want to fix the problem. Or if he does, he has no imagination whatsoever. Please reconsider asking him for commentary in the future.
From Eagle Rock, CA, 03/31/2009
It bothers me that business is able to perpetuate the myth that the employees in America hold so much sway in politics. Any gains in rights for people in the workplace are immediately fought against by business using money. During the last election business gave $1,952,949,841 (from Center for Responsive Politics), over 25 times the money as labor. Also, I find it interesting that Mr. Hassett thinks it is wrong for a worker to get $140,000 in severance. What does he think about Wagner getting $20,000,000?
From Morristown, NJ, 03/31/2009
It's easy to blame the unions for everything, and that's just what patella response reactionaries like Mr. Hassett always do. Apparently facts don't matter. Here's a bunch of facts that contravene Mr. Hassett's claims.
Labor comprises less than 10% of the total cost of a motor vehicle. The non-union assemblers of foreign vehicles have very similar hourly wages as unionized American car manufacturing workers, although their fringe benefits aren't as great. However, workers who make many of the components for the foreign autos in their lands of origin (e.g. Japan, Germany) enjoy comparable wages plus even better fringe benefits (some of which are provided at lower cost by their respective governments). The components of foreign origin are also subject to shipping costs and tariffs unlike those of domestic origin.
So when all is said and done, the higher benefits of the unionized domestic auto workers does not account for the difference in real and perceived value that has driven down the sales of domestic, compared to foreign autos.
The unions had absolutely nothing to do with the following decisions that helped the decline of the market for domestic autos.
GM could have had a very competitive plug-in hybrid in production several years ago if it had pursued the technologies it demonstrated in the EV-1 electric vehicles it instead crushed in 2001-3. Instead it pushed the Hummer and other SUVs that are now a drug on the market and responsible for much of the loss GM has been experiencing. Instead of getting ahead of the greening and fuel economy trend as the foreign auto makers have, the big three have fought the 18 states seeking to improve fuel economy tooth and nail in court.
The big 3 also failed to pick up on the trend of many American drivers, especially younger drivers, seeking vehicles that are not only more fuel efficient, but have superior road holding and handling characteristics instead of providing a soft and "cushy ride".
Detroit has long resisted, instead of embracing the kind of innovation sought by consumers as accurately depicted in the cinematic biography "Tucker, The Man and His Dream." Almost all of the safety innovations introduced in the Tucker Torpedo, and resisted by Detroit were ultimately adopted by the latter, after first going into production on foreign vehicles. Sixty years after the Torpedo's signature innovation, the cyclops headlight that is aimed by steering wheel movement is now being introduced for the first time in a luxury Japanese Lexus.
Detroit management has long taken an innovation resistance and follower stance. It did so with quality, reliability, fuel economy, safety, handling etc. So if you want to lay blame for our once precious industry's decline, put the blame where it belongs, with the decision-makers.
From Reno, NV, 03/31/2009
Yesterday's editorial regarding CEO Waggoner, GM, and the UAW was highly insulting. The speakers comments should have been reserved for FOX News where they would have a friendly reception in their biased point of view.
Blaming the UAW (who should SHARE the blame) for all of GM'S fall reeks of unvarnished labor bashing.
These contracts were signed by both parties, and not at the point of a gun.
In addition Mr. Waggoner has been at hte head of GM for a long period of their decline. The company has not made money since 2004, losing billions in that time frame. This speaks to MANAGEMENT'S errors in judgement and strategy, not the men and women on the assembly line making cars.
I would remind the speaker that it is labor, through Unions and populist inititives that created strong middle class of this country.
Your speaker wishes the US to return to a two tier caste system, the haves (apparently like himself) and the rest of us peasents who would work for him, for minimum wage, and should be happy for his discarded bread crumbs.
From Dayton, OH, 03/31/2009
Unlike many others, I for one am pleased to hear Kevin Hassett's take on the problems in Detroit. It is important to hear contrary opinions because it offers us the opportunity to refine and hone our opinions. And to further remind us of how completely absurd and out of touch with reality are the American Enterprise Institute and the Republican party in general.
But Mr. Hassett's opinion is not unique. During the past few months I have noticed a proliferation of articles with commentary whereby all of Detroit's woes are placed firmly at the feet of the UAW. To those folks, and now Mr. Hassett I say the following:
Yes, I too agree that UAW members perhaps made too much from their jobs. Did assembling a vehicle really need to pay as much and contain as much in the way of benefits as did the UAW contracts? Probably not. But what is interesting is that we don't know what are the pay/benefit packages of those working in the glass towers.
It's awfully easy to attack the workers with their publicly disclosed contracts. But it is impossible to do such with management (other than those at the very top). Why don't we take a look at how much is being made by those in the glass towers before we cast stones at only the workers in the factory?
But even more on-point, it isn't the UAW that decides what cars will and which cars won't be built. It isn't the UAW that determines the issue of quality engineering. It isn't the UAW that determines what other lines of business the company will engage in.
Ultimately the members of the UAW simply build the vehicles. Period. Everything else is controlled by the suits in the glass encased buildings. I find it incredibly difficult to understand how the demise of the Big 3 could be solely the fault of a bunch of men and women who simply assemble a product designed, engineered and marketed by others.
Mr. Hassett, and his fellow friends at the American Enterprise Institute, are clearly fools. And I hope every American who has ever, is currently or ever will work in a blue collar job will remember how this Republican party mouthpiece informed American workers that they are really the cause of our economics woes.
03/31/2009
When will you stop giving the neocons a platform to scream eptithets in a class war they have been waging since the 1970's? Reagan, the union buster, is their hero. But union busting brought us a financial bust with no safety net - an idea that Freidman et al. shredded and then cbeered as Congress removed the last supports to it. Instead of looking like the 1950's, we now look more like the 1920s.
Unions have been criticized and bashed, sometimes for good reason but most currently,as Haslett demonstrates, in lying, craven and mean spirited way.
Unions did not provide massive rewards to executives planning the future of auto matkers. The sought to share in the profits. But consider if unions had dared criticize management's short sighted goal of maximizing short term profits at the expense of planning for the future, the Neocons would have derided and savaged them for bringing Swedish socialism to America.
If anyone wants to hear this unrelenting bashing of American labor, Fox news offers it round the clock. Get rid of the AEI and Cato Institute guys. They are ideologues who never let facts interfere with their ideas. After the fiascos in American finance and Iraq, can't we just close the door to their room?
From Boston, MA, 03/31/2009
Poppycock! nuff said.
From FL, 03/31/2009
It is a shame that NPR keeps giving a forum, to people that gets everything wrong all the time, to spread misinformation. Keep the good work, you may go the same way the newspapers are going….
From Merica, AK, 03/31/2009
Did you know that there are 150 million workers in the US? That's 150 million CHAIRS. Take away the CHAIRS, that's a savings of at least 150 million DOLLARS. This money could make us competitive with the JAPANESE! HELLO -- USE YOUR BRAINS, LEFTY WINGNUTS.
From MO, 03/31/2009
Why does Marketplace persist in airing the viewpoints of know radical right wing organizations such as the "American Enterprise Institute"? Is Ruperd Murdoch purchasing and controlling non-profit media too? Why do the producers of what use to be a reasonably unbiased business information program need to resort to such crass editorializing? If I want to listen to Rush Limbaugh I'll change stations. Please cease and decist this abuse of your listening audience.
From Erie, PA, 03/31/2009
Mr. Hassett should take his anti-union propaganda to Fox News; I hear he may find some fellow sympathizers there.
From Anchorage, AK, 03/31/2009
I think you should get rid of Kevin Hassett because he is a liar. He is perpetuating the myth that labor is what has damaged the US automakers; a myth that has been floating around since the Reagan Administration. The reality is, and has been for some time, that 90% of the labor cost to manufacture a car in the United States goes to management - not to the folks building the cars. One need only look at the divide between management salaries at Toyota, now the leading auto manufacturer in the world and GM, Chrysler, or Ford. It's management at the big 3 (didn't there used to be 4) that has damaged the U.S. auto industry - not the folks who really build the cars. Shame on you for allowing Hassett to spread the big lie. Your show lost more than a few points, in my book, by letting this guy have air time.
From lansing, MI, 03/31/2009
Mr. Hassett characterizes GM's story as a simple one. "Simple" certainly describe Mr. Hassett's analysis, which is oversimplified to the point of ignoring an imposing array of facts. What's the line they use on "Car Talk?" Oh, yes - "...unencumbered by the thought process." That tidily sums up Mr. Hassett's analysis.
From Rochester Hills, MI, 03/31/2009
I love listening to Marketplace, but I am disappointed that Marketplace allowed this report to air because Kevin Hassett is ignorant of what GM is going through. I’m willing to bet $6 Billion in bailout money he has never lived in Michigan nor worked in the auto industry, as someone who lives in Michigan and has once worked for GM as a white collared worker. The problems GM is having is the result of managements’ lack of vision for the future. In 2003, has oil prices were steadily increasing, GM unveiled their new bigger lines of SUV’s and expending the Hummer brand! Final in 2007 they realized their mistake and were scrambling to change there product lines so they could be profitable again, when September 15, 2008 occurred and froze up the credit market. There are Americans willing to buy GM products but can’t get the loans to buy one. Next, time Kevin Hassett know what you’re talking about!
03/30/2009
mr. hassett must think that the public has the brains of a retarded ameoba. when the ship ends up on the rocks it is due to the captain's miscalculation. the management at gm have cleverly shot themselves in the foot over and over. then they reloaded. the american enterprise institute should work harder on their fairy tales if they expect them to be believable.
From Oakland, CA, 03/30/2009
Although most of what I would say has been said already, I couldn't help but add my comments. What I would like to say the most is that I hope that Marketplace allows someone who is not such an anti-union ideologue make a more balanced analysis of the causes of GM's problems. Among the many failings of GM enumerated by others in these responses I'd like to point out a few more. GM tied its fortunes to the sales of huge SUVs on which it made large profits. Part of the reason for these profits was the lower regulation on these cars, a loophole that GM was happy to exploit and preserve. Their management had no Plan B - unlike Toyota, VW, Nissan and Fiat, who all have a wide variety of cars that they can sell, both large and small. When fuel prices soared over the summer and the economy tanked many people finally realized that these huge cars were a liability. Although gas prices have one down few have forgotten how quickly they went up and are simply not buying these cars like they used to. GM has talked about the Volt like its the second coming of the company but if they had truly been interested in alternatives to the cars they've been selling they would have had it on the market years ago, before the Prius.
From Escondido, CA, 03/30/2009
Mr. Hasset's dissection of GM's problems conveniently left out a large part of the equation. Collective Bargaining Agreements are not negotiated at the wrong end of a gun barrel. The UAW didn't force or dictate the terms of fiscal surrender to GM - the Corporation willingly signed CBO after CBO, like clockwork, every few years.
From Santa Barbara, CA, 03/30/2009
The American Enterprise Institute is just a shell for the right-wing extremists ideologues. Shame on them!
In my opinion, the reason GM is in trouble is because they made cars nobody wanted to buy. Oh, maybe a few in the Mid-West did, but not us on the coasts.
It is so refreshing to read so many comments here from so many people who saw right through Kevin Hassert's game.
From Pasadena, CA, 03/30/2009
Please add me to the list of those who were INFURIATED by Mr. Hassett's anti-worker rant.
In 1967, my 25 year-old dad left his job as a tool-and-die maker at GM's UK subsidiary, Vauxhall, to come to the U.S. and work for one of its non-union parts suppliers. Within a year, he had found out what UAW scale was, and switched to a job at Ford's Woodhaven, MI stamping plant. The additional income allowed him to buy a house, maintain two cars, and eventually raise four kids -- including two former prosecutors and one police officer, with a total of three B.A.s and two advanced degrees between us.
Why did the American Dream work for us? Because the Union worked for us. Organized labor is the best model for generational upward mobility that this country has ever been blessed with. When Mr. Hasset spits on union auto workers, he denigrates not only industry men and women who, quite literally, fought, bled and died for the right to organize; he also spits on people like me, their literal and figurative descendants, who now occupy white-collar and professional jobs only because of their sacrafices.
Fortunately, in the 1930s, when those workers were sacraficing so much, our new national leaders ignored the same advice Mr. Hassett now offers. If they hadn't, the Henry Fords and the Chryslers might have ended up swinging from lamposts -- and we might have a quite different system of government in this country.
From Orange, CA, 03/30/2009
While I agree that the Obama administration's actions will be influenced by their debt to the unions for election support, I cannot let Kevin Hasset's later statements go unanswered. He says "History will tell a simple story about GM: Union bosses successfully negotiated sweetheart packages that destroyed GM's competitiveness." This is far less then the full story. If someone is willing to pay me twice what others make for the same job, should I refuse it? My career was in a unionized business and I have to fault the company management for giving away the store to the point that they "destroyed GM's competitiveness". The union always asks; it is the function of management to draw the line.
From Boise, ID, 03/30/2009
Empty of logic.
Would Mr. Hassett blame the unions for causing the HUGE gulf between executives' salaries and employees' wages? A gap that continues to grow geometrically? How many $140,000 severance packages (if this is factual) could Mr. Wagoner cover with his single good-bye check?
From chicago, IL, 03/30/2009
You have to marvel at the chutzpah -- and unabashed hypocrisy -- of folks like Mr. Hassett and the American Enterprise Institute for placing the blame of the failed auto industry at the doorstep of labor. They react with outrage at "$140,000 in severance to a worker whose position was eliminated" yet never even mention the severance of $20 MILLION dollars in pension that will be paid to failed CEO Wagoner. Go ahead and keep putting sole blame on the unions -- it's a strategy that's proven as effective over the last century as Rick Wagoner's have proven for GM.
From Akron, OH, 03/30/2009
We live in a freemarket society with simple rules ...“Compete free or die” these are the rules of the free market . When we focus on our own interest rather than what is best for the consumer no matter what the industry or product we will fail . Those companies who work together (management and unions) who decide to begin with the end ( "what does the consumer want" ?) in mind and both agree and focus on the same goal with vested ownership in the outcome (a satisfied consumer ) served profitably everyone wins . The domestic auto industry has not done this . Why ? …..does it really matter at this point ? Who is right , who is wrong ? …..while we try to figure out who is to blame , I can assure you there is a company right now who will be the next GM who is focusing on one thing …..“what does the consumer want and need and can we produce it profitably” ? What “I” want and need should be considered AFTER the previous questions can be answered and agreed on by all involved . We are reaping what we have sown , we have become a nation of “consumers” …..no , “over -consumer “ . This is proven by our national savings rate . The real question is ..."will we change"????? ...history will tell .
From Cleveland, OH, 03/30/2009
If the Unions are so smart, why are they almost out of work? If the CEO's are so smart, why they so screwed? Both parties did this out of thier own greed. If GM fails I will have some champagne to celebrate, a whole compnay of managers and unions getting what they deserve after years of mismnagement. Yea.
From OR, 03/30/2009
Mr. Hassett, you cannot compare the U.S. and Japanese auto industries. The Japanese auto industry has a younger, healthier workforce, and their workers in Japan have national healthcare, which is a huge burden lifted from the Japanese industry. Also, Japanese CEO's earn way less than their U.S. counterparts.
The U.S. auto industry obviously did not have any trouble meeting their union contract obligations until the economy tanked. The problems they face now have more to do with the current state of the economy and the lack of product innovation than they do with the unions. It's easy to bash the employees and the unions; how about coming up with some more thoughtful insights/solutions?
03/30/2009
Why support this crap with a donation when it's given away for free, 24/7, on FOX.
From Silver Spring, MD, 03/30/2009
Yep The UAW forced that $20 million pension payout on Rick Wagoner....
From Freedom, OK, 03/30/2009
To all you that think we need unions today for work safety you probably work in a union. Unions have outlived their time we have goverment agencys that monitor those problems today. (OSHA,IMSA,Ect.) I work in the energy business so their can be situations that can be dangerous. I think health care is fine but pay some of it out of your own pocket just like the rest of us and work till your 62 before you demand all your benefits. I beleave your close a plant and you get laid of that mean you go file for unemployment benefits, not get paid 80 percent of your salary and stay at home. Unions destroyed the steel industry in the United States and it will do the same with the Auto Industry, so wake up people. I think the President should stay out of the Auto makers business and stick to the goverment side because their are people that can then their are people that run for goverment offices.
From Phila, PA, 03/30/2009
To paraphrase a number of management gurus ..." ...if you have a powerful union ( in your organization) management probably deserves it..."
From Angwin, CA, 03/30/2009
Hassett's extreme right-wing anti-union demagoguery is exactly what might expected from American Enterprise Institute, a place where America's wealthy elite buy ideas they like to hear from people willing to sell themselves. Will Marketplace give anything like time for rebuttal ON AIR from people willing to tell the whole truth about GM and labor?
From York, PA, 03/30/2009
It is so interesting that the people who think that there are good reasons why the bigwigs that screwed up AIG should keep their jobs and their multi MILLION dollar bonuses are the same people who are blaming the blue collar auto workers for the demise of the big three and think nickel-and-diming them over health care benefits and hourly wages is what's going to save the auto industry. I guess the people we should really be blaming for AIG are their secretaries, getting those big $30,000 salaries, spending all that money on day care. How could they be so selfish?
From Enid, OK, 03/30/2009
The propagandists of the old Soviet Union certainly would hire this apologist for the failed management of GM. He is good at staying on message. If I want to hear this message I can turn to Fox network. Balance has been the hallmark of NPR. I am disappointed. When will you present the other side?
From Columbus, OH, 03/30/2009
The union didn't dig GM's grave alone -- management dug with the ferocity of John Henry. Adding brands instead of subtracting, rolling out one mediocre design after another, and never EVER taking on the union Hassett claims was killing the company. It's amazing what labor and management can do when they work together.
From Arlington, VA, 03/30/2009
Since Mr. Hasset is against union members getting health care through work, does that mean he supports the nationalization of health care in the US?
I'd also like to know if it was the union workers who fought every technological innovation from seat belts to exhaust limits, to CAFE standards. Infamously was it the UAW who thought $11/car was too much to keep people from dying in car fires in the Ford Pinto?
For decades the heads of the Big 3 have stood behind a "Can Don't" motto. Even now US automakers use leased hybrid technology from Toyota.
I'm not, totally, against letting these companies go bankrupt. But lets keeps some perspective and place blame where it belongs, with Same Stuff Different Day practices of the people at the top.
From Orfordville, WI, 03/30/2009
Here are some facts. Automobiles are durable goods and are subject to the business cycle. They are HIGHLY regulated. Those of you who don't like unions have never worked a dangerous job. Otherwise, you would know why Unions are important. The editor on this story did a very poor job.
From Minneapolis, MN, 03/30/2009
Thanks for the preview on how some will try to spin Obama's ouster of Wagoner.
But the problem with Hassett's argument is that is rests on a laughable assumption: that GM's union (or Obama) has somehow prevented GM from filing for bankrupcy.
If bankruptcy really would be better for GM (by giving it the leverage to reform the union contracts that Hassett says are "mostly" to blame for its predicament), why doesn't GM just file already?
From Long Island, NY, 03/30/2009
I'm astonished that this kind of fact-challenged nonsense gets on the air at all. I could count at least one outright falsehood in each paragraph I painfully listened to. If I wanted to read or listen to right-wing drivel I'd read the Wall St Journal editorial page or Glenn Beck !!
From Emeryville, CA, 03/30/2009
Whoa! Marketplace!
In the future please note that Mr. Hassett's curriculum vitae includes co-authorship of "Dow 36,000..."
His perspicacity should be on view for all!
From Minneapolis, MN, 03/30/2009
Mr Hassett's commentary is breathtaking in its oversimplification. The most glaring one: "History will tell a simple story about GM: Union bosses successfully negotiated sweetheart packages that destroyed GM's competitiveness."
As others have pointed out, management in other industries has been able to be successful while partnering with unions. Also, to ignore the quality chasm that existed betwen GM cars and imports over the past 20 years (my car-driving years) is just silly. Like Ed Strenge, I drove a Chevette. It rusted away to the point where I could see the road beneath my feet. Same with my parent's Chevy Celebrity (within 5 years!)
Now, I drive a VW Passatt diesel wagon (37 mpg on highway), nary a problem at 60,000 miles. My wife's 1996 Honda Civic is at 120,000 miles, and despite a ding in the door that we've elected not to bother with, almost no rust.
Most of my peers have similar experiences- we grew up driving lousy GM cars. We now have the money to be able to choose from among a host of well-built, reliable imports. And yet somehow I'm supposed to ignore all of this and just blame the union? Please...
From Bemidji, MN, 03/30/2009
Absolutely pathetic reporting. No context and no perspectives from union members or leaders, who have been absent from the mass media's discussion of union/automaker relationships. I listen to NPR so that I can have DIFFERENT perspectives than the ones I receive in the mainstream media, and as such, I would have expected something a little more thoughtful than this from NPR.
From Tiffin, IA, 03/30/2009
Japan- What would you like to drive? (Listening)
GM- You should drive what we make, right?
(Ignoring)
From Detroit, MI, 03/30/2009
I would like to enlighten all of you that live outside of the auto industry and preach like you know what has been going on for the past 3+ decades.
Listen... I have lived nearly a half century in the auto industry and have seen it from all ends.
The results that you see happening in the auto industry are from several decades of fighting between the union and management. Who's to blame? BOTH! We as a country have to stop fighting about who owes us and figure out how to work together to build our futures TOGETHER.
The auto companies and unions have polarized and galvanized their respective positions for generations. The Union says the rich management owes them a better living. Management says that manual labor can't tell them how to run a company... between the fighting, they forgot about building quality cars and a making a business thrive.
Have the unions hurt the auto industry? YES! Their pay and benefits have been like landing a government job for life for generations. Has management attitude hurt the auto industry? YES! Accountants that don't know how to build cars or work with people have been running the companies like they were on Wall Street.
I have watched labor and management act like children fighting over the favorite toy until it broke ...
... Now the toy is broken and nobody can play with it.
From Emeryville, CA, 03/30/2009
Almost everything I wanted to say has already been done quite eloquently by Ashley Hunt of Van Nuys. It's useful to give a myopic ideologue a voice. It gives other ideologues a chance to agree and the fact-oriented public a chance to refute him factually, point by point.
It's also a warning. Many people agree with the AEI and its shills. John McCain won 48% of the vote. If the Obama admin doesn't turn the economy around, the ideas expressed in the piece and lots of much loonier ideas may carry the day in future elections. The large-scale adherence to this incoherent ideology in the American body politics is worth noting, at the least of it.
From grasonville, MD, 03/30/2009
Once again the American worker is being blamed for the demise of the U.S. auto industry, when, in fact it has been short sighted policies by management that have driven GM and Chrysler to the brink. Mr. Hassett, in his anti-union diatribe of 30 March , 2009 certainly cherry-picked his facts regarding the costs associated with manufacturing a car. First, he made no mention of the ridiculous compensation packages payed out by GM to managers who lost money. This is also a problem in other sectors of the economy, but that is convieniently forgotten by Mr. Hassett and those of his ilk. Secondly, he neglects to tell your listeners that health care, the major problem in the auto companies pension arrangements, is payed for by the government of Japan for for its' auto workers. Is he suggesting we follow this path ? I doubt it. Mr. Hassett and his kind want to embrace good old Joe Sixpack when they need his vote to maintain power, but they're more than willing to throw him under the bus as soon as they're done with him.
From East Orleans, MA, 03/30/2009
GM failed because they made lousy vehicles not because they paid their workers a living wage. Enough with the union bashing.
From Wyndmoor, PA, 03/30/2009
Clearly, Mr. Hassett has his own political biases having served as economic adviser during both McCain presidential campaigns, as well as G.W.'s 2004 campaign and having been a senior economist for the Federal Reserve. Why is he supporting bankruptcy for GM and not the Wall Street companies? I must say I'm tired of the scapegoating of the labor unions when it is the GM management who are responsible for the performance of the company. Suggesting that retired workers don't deserve hard won health benefits and that workers make too much money is typical partisan politics.The entire country struggles with health care and Mr. Hassett is blaming the union for working for it's members? In 2005, health care costs totaled 15 percent of the U.S. gross domestic product. That number is expected to grow to 20 percent of GDP by 2015.
03/30/2009
Was Hassett grinning when he compared GM workers' health care costs with those of Japanese workers. Please inform Hassett that in Japan, health care is provided by governments and costs are lower than in the US. Is he suggesting that the US needs a single payer system? Hassett is extremely disingenuous.
From Lima, OH, 03/30/2009
Labor unions are not the problem as Mr. Hassett would have us believe. They are the solution. Good wages and good benefits make for good consumers. It is a simple economic equation. The banks and corporations of America can be successful If and only If comsumers are financial capable of making purchases! Why can't the "experts" understand this. The free marketeers got rid of the steel industry and our manufacturing base and now they want us all to buy cars from China. Well all I can say is I sure hope those cars are cheap enough so I can buy one with my Wal*Mart salary and benefits.
From Culver City, CA, 03/30/2009
With regard to Kevin Hassett's comments about the auto industry, let's not forget that the laissez-faire, no regulation economists from the American Enterprise Institute helped to create our current economic morass. It's a wonder they still have enough credibility to speak on your program.
From Princeton, NJ, 03/30/2009
Kevin Hassett is 100% correct. The unions have bought & paid for the DNC, and that is just as bad for the US as the oil industry's stranglehold on the GOP. The union-supporters on here carefully word their protests so as not to reveal the real inadequacies of their argument. The UAW boss should be the next to go, but he's bought his way in to a safe job.
From Santa Monica, CA, 03/30/2009
Blaming only the unions for Detroit's troubles is a familiar and decades-old practice. But Mr. Hassett's assertion that GM's problems are "mostly" wrought by the UAW is specious. Ultimately, the problem for American car manufacturers is poor sales. Does he really believe that it's the fault of the unions that far fewer people want to buy American autos today than they did twenty years ago? If GM and Chrysler had offered cars which competed with the Hondas, Nissans, and Toyotas which gobbled up so much of the Big Three's market share, we wouldn't be looking to Ford as the last man standing. And I think even Mr Hassett would be hard-pressed to blame the folks on the assembly line for the consitently poor choices made in the design, development, and marketing departments of the American automobile industry.
From Santa Monica, CA, 03/30/2009
Like his employer, AEI, Kevin Hassett would have been a welcome guest at Berchtesgaden, where they understood the value of the big lie. A few months ago the New York Times evaluated UAW salaries and found that the $75/hour figure widely circulated by people like Hassett is a lie, trumped up by adding pension and health contributions for retired workers to current workers' salaries. The actual number is $55 or $10 more per hour than U.S. auto workers in Japanese plants. Labor represents 10% of the cost of a car. If GM were currently earning 10% more per car or selling 10% more cars, would they be healthy? Of course not. Corporations continually resist union requests for their members to sit on boards and shape policy and direction, usually offering them more money to keep them out of the loop. Who sabotaged our auto business? The same geniuses who paid themselves handsomely and now ask for taxpayer bailout money; the same ones who donate to the American Enterprise Institute and the Republican party. We've had 30 years of AEI's policies. Have they worked?
03/30/2009
It takes two to tango. Who agreed to
these "sweetheart packages" every time a
new contract was negotiated?
From Malvern, PA, 03/30/2009
Kevin Hassett (who, to admit my bias, looks to me like a Lad who's likely never seen the inside of any factory) claimed that Bankruptcy is the way most businesses facing such difficulties are reorganized. Like Chrysler did Kevin? Nice fabrication.
He also explains that Japan doesn't have to pay healthcare benefits. Because their government helps with the payments Kevin.
Like most things CEI floops out for the noise machine to trumpet: this one is FAILED.
03/30/2009
Kevin Hassett provides a perfect example of the ideological idiocy which drove America to the point it has reached. The UAW has done nothing but give back to prop up a failing business model, but his anti-union myopia caused him to miss the fact that the biggest losers in any auto bankruptcy will be the auto dealers, often the biggest business in small and medium sized towns and cities. The franchise agreements will be torn asunder by "a worldly and experienced bankruptcy judge." In a choice between Wall Street and Main Street, Obama and Goolseby chose Wall Street. The UAW isn't even a factor. Too bad Hassett can't analyse politics any better than he can economics.
From Columbus, 03/30/2009
Mr. Hassett's assertion that the "simple" story benind GM is that the Union negotiated GM into bankrupcy infers that the businessmen who ran GM were a bunch of rubes who just fell off the turnip truck and got fleeced by a bunch of city slickers.
Please.... It takes two to sign a contract. I challenge Mr. Hassett to point to any real union contract signed by a large corporation that wasn't profitable for both sides.
If GM executives were so naive that they sign repeated bad contracts, maybe they SHOULD go?
From Van Nuys, CA, 03/30/2009
Thank you for giving Kevin Hassett a voice on Marketplace today, it was very instructive to hear the kind of free market fundamentalist, blame everyone but the business owners or market structures ideology that he espouses — ideology which instrumentalized thinkers like Hassett so neatly package into the language of a science. The omissions of his commentary are most telling: for example his failure to subject his U.S. and Japanese auto-workers' salary comparison to cost of living differences between them; or his omission of any context when referencing auto-workers' large health care commitments, a context which is not the fault of unions but of the larger abrogation of governmental oversight when it comes to the ways health care is privatized, profit-ized and exploited, against which the unions have been strong enough to protect its members, unlike most other workers — which is exactly why unions are necessary. But his blindness to that context and his vision of workers' needs as a mere impediment to "competitiveness" (meaning profit) may have something to do with the insurers, health care companies and other big-businesses that think-tanks like the American Enterprise Institute are set up to promote. Woops, am I suggesting that his job is to think through, language and voice interpretations of the world that serve the interests of a specific class of individuals and businesses, rather than reason? Oh well, I guess my whole reason for writing this comment is to thank Marketplace for providing us with this insight by letting him speak.
From Sacramento, CA, 03/30/2009
My experience as an automobile consumer is that GM's failure in the marketplace is due to its cars of inferior quality. GM's cynical top management rolled out the Chevette, which I bought. After that experience, I never bought another new GM product. No, it's Honda and Toyota all the way now. One reason why Japanese "benefits" are less costly than the benefits, especially health care, that GM pays, is that Japan has a national health system, and medical costs in general are cheaper in Japan. Hassett's failure to mention this fact is intellectually dishonest and disengenuous.
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