So do we blame the unions or mgmt? I think most of the blame rests on the shoulders of mgmt. Show me where I am wrong.
I blame some of it on management -- they certainly have caused some of their own trouble. But I think even more of it has to do with government policy not adapting to changing circumstances.
The US auto companies were giving lifetime pensions and health benefits to their workers decades ago, when those things were en vogue at US corporations. In doing so, they did some good things for themselves -- they turned Detroit, Lansing, et al into "company towns" and probably kept their turnover pretty low. But they had little competition other than each other.
Starting in the '80s, I believe, the financial industry managed to convince the American worker that 401(k)s, IRAs, etc were much better than company-provided pensions, and employers have been giving fewer and fewer defined-benefits packages which require them to make payouts post-retirement. However, the U.S. companies have still been on the hook for hundreds of thousands (millions?) of retired employees (as they should be), whereas the foreign companies who set up shop here later in the game, have not been. Not to mention that those foreign companies aren't responsible for paying their current employees' health care costs in their home countries.
A better government industrial policy would've seen this coming in the '80s or '90s, but heck, most of the government is in the pocket of forces that benefit from a much more short-term oriented industrial policy.
How do we fix it now? I'm not sure.
But the bottom line is that our companies really got hit more than anything by the sudden downturn. Even the Japanese companies were showing losses during the worst of it. If demand returns at a sustained level, so will our automakers.
All of what you say makes sense....I would throw in cafe standards as well. The gov't was lax in requiring American auto companies to raise their standards even as their competitors were raising theirs.
Having said all that, I still hold mgmt accountable. They have known for 20 years that the fiscal policies they put in place with unions in the early 80s were not doable. Instead of confronting unions and renegotiatating those contracts, they consistently backed down. Mgmt did not have the backbone. Only when at death's door over the past five years did they step up when it was nearly too late. And even then, clever mgmt at Ford which was once the also ran auto company managed to avert the worst of it while GM and Chrysler succumbed to BK.
I may be unfair but I still see incompetent mgmt as the primary culprit. |
