Even if the idea of another federal bailout of private companies had merit, Detroit’s Big Four of GM, Ford, Chrysler and the United Auto Workers (UAW) union still have not presented credible evidence that a $34 billion bailout now wouldn’t be merely the opening bid. If anything, the “restructuring plans” offered yesterday to Congress made it clear that the people running GM, Chrysler and UAW still don’t get it (Ford may yet be an exception). Clearly, even under the most dire circumstances, there is little will in Detroit to do what must be done to survive and compete – slash labor costs to levels comparable to those paid by Toyota, Honda, Nissan and other foreign automakers to workers at their U.S. plants. Cuts must also be made in the gold-plated benefits received by 540,000 UAW retirees, which far exceed those provided the vast majority of working Americans.
Consider the GM plan of putting its Saab and Saturn divisions under “strategic review,” as Hummer already is, converting Pontiac to a “niche” brand, shuttering 1,800 of its 6,500 dealerships, and amending the current UAW contract. But “strategic review” is an insulting euphemism for “maybe,” much as “revenue enhancement” really means “tax hike.” Why not kill those brands now, along with Pontiac? Similarly, axing 1,800 dealers would still leave GM with far too many, compared to its market share. The UAW contract should be torn up, not merely amended.
As for Chrysler, it mostly promises to do what it previously promised to do, including developing a new line of electric vehicles, consolidating excess model lines and seeking partnerships to reduce costs. Plus, “all stakeholders,” presumably including the UAW, will give more unspecified concessions. Sen. Bob Corker, R-TN, offered a blunt and accurate response: “There is not a person alive who thinks Chrysler can make it as a stand-alone automaker.” So why hand over $7 billion to a doomed enterprise?
Finally, there is the UAW, which magnanimously offered to consider talking about compensation concessions sometime in the distant future. True, union officials agreed to delay payments into a special health care benefit fund, and to close the infamous Job Bank that pays laid-off workers as if they were still working. But the heart of Detroit’s problem is antiquated work rules, and wages and benefits at least $25 an hour higher on average than those paid workers at the U.S. plants of Toyota, Honda and Nissan. Until those core problems – and retiree costs – are addressed, everything else is window dressing. With the UAW as the 16th most generous all-time political contributor – giving almost exclusively to Democrats – $34 billion worth of window dressing is all we’re likely to get from this Congress.
