A couple months ago, I wrote two posts (here and here) that talked about problems I saw at General Motors (namely the very high benefits they are paying their employees instead of spending more money on research and development and how this kept me from buying an American car -- since their cars are technologically inferior). As you might imagine, this was a controversial topic, and people commented on both sides of the issue. The first comment is from someone who agreed with me:
Ha ha! I'm with you on this one. I've only driven Japanese my whole life. Can't beat 'em.
But someone else had a different point of view:
I don't know what you are griping about... my Honda was made in the USA, and my fiancé’s Chevy was made in Mexico. Buy a Honda and you are buying an American-made vehicle.
Then there was a comment from someone who really disagreed with my reasoning:
I don't see the connection. If I read the post correctly, you are saying that American car manufacturers (ACM) make a poor quality product because they pay their workers too much. I don't see a connection between the two. Also, how does that compare with the Japanese car makers? I don't have the answer to your posted question: Why can't America build a better car? I can, however, offer some observations. First, the ACMs don't seem to understand what consumers want. Let me use advertising as an example. The ACMs spend small fortunes to tell us how our lives will be better and our lifestyles more adventurous if we drive their largest SUV (I seldom see US small car commercials). By contrast, the Japanese car manufacturer’s focus on the more ordinary -- grocery store trips replace driving up mtns. While I don't blame advertising for the poor quality cars, I think it demonstrates a lack of addressing the desires of consumers. I also have the impression that the ACMs spend most of their time fighting changes (e.g., regulations, changing consumer attitudes, market forces) while the Japanese and Korean car manufacturers focus on adapting their operations to these changes. Perhaps that's just a function of size.
And of course, there's the pro-labor response:
Don't worry, we are well on our way to solving that problem. With the recent bankruptcy clearing the way for older corporations to rid themselves of prior pension obligations and the continual roadblocks set by our court systems for organized labor, unions will eventually find themselves with absolutely no ability to bargain. But you better be careful about what you ask for. If it were not for unions, we would not have a 40 hour workweek and many of the OSHA regulations that they fought for this century. Now that the government has taken a more paternalistic approach to protecting the American worker's environment, unions mainly bicker over small aspects of the workplace (fringe benefits, reduction in force, hiring practices). But that still does not erase all the good they have done for the average American. But I agree that the times when a baggage handler or an assembly tech could support a family and reproduce offspring with a superior education are almost going, going, gone.
And a more-balanced perspective:
The 40-hour work week is a myth anyway. If you're in management or a professional, you're salaried, and that means you work as much as you have to. 60- and 80-hour weeks are common. Of course, it's hard to feel sorry for a guy making six figures who has to work 80 hours, but on the other hand, his willingness to do so is what makes him worth the six figures. Hourly workers typically have to get a second job if they need to reliably get paid for more than 40 hours.
And another balanced comment:
I agree that the benefits are absurd, but do bear in mind that 1977 to 2004 is not an apples to apples comparison.
Tens of thousands of low-paying jobs were eliminated (automated) in the late 70s and early 80s. Hundreds of guys with drills and wrenches were replaced by three robots and a technician for a tenth the cost.
Total cost of payroll went down. When you eliminate the low end, of course the AVERAGE goes up.
Again - I agree with you regarding benefits. The unions are insane. They asked for too much. But if you want to really be incensed, compare executive pay of 1977 and 2004. How executives can be rewarded for losing market share is beyond me.
Disclaimer: All numbers pulled out of my...
Finally, a comment that could see both sides of the issue fairly clearly:
I read that same article and it is amazing to look at the pay increases, but it's hard for me to blame the unions; they were only doing what their constituents asked of them. Why didn't someone at the top stop the madness? Blaming the unions for this is like blaming your kids for wild behavior after years of getting their way because their parents never took the sometimes painful step of refusing a request.
What do you think?
GM needs to sell off Saab. It needs to eliminate GMC and Hummer. Then it can work on building a better car.
Posted by: James Klich | November 07, 2008 at 06:00 PM