The Big Three schlep back up on Capitol Hill, hats in hand, massaging the road sores they got from actually driving from Detroit to D.C., where they will beg for bucks once again. They are in hopes that their performance will be a lot more convincing – not to mention, vastly less tone-deaf – than their last appearence. In the meantime, we’re treated to a parade of concerned Senators and Representatives who wail that, without an immediate bailout, The American Automobile Industry Will Come To An End As We Know It.™
In order to understand why, you have to grok that there are really TWO American automobile industries – the traditional one in Detroit, and the one that exists everywhere else. You see, Ford, GM and Chrysler haven’t monopolized the American manufacturing of automobiles for years. For instance, let’s say you’re in the market for a new pick-em up truck. You want a full-size vehicle…none of that little miniature, “I think I can, I think I can” rice-burner stuff. You want a muscle truck. You look at Ford, Dodge, Chevy/GMC. They’re all kinda pricey. Proud of those puppies, they are. Then a buddy says, “why not go look at a Toyota or Nissan. You scoff. He persuades. You go. You find that Toyota and Nissan now make full-size trucks that compare favorably with those made by the Big Three. But you’re still not convinced. There’s just something…something un-American about buying a Japanese truck. You protest to your buddy that you will only “buy American.” That’s when the other shoe drops…buy a Toyota or Nissan truck and you are buying American, for they are both made right here in the good ol’ U S of A.
So what does “American-Made” mean today, anyway?
Back in the day, “American-Made” meant GM, Ford or Chrysler. Today? Not so much. Just about every manufacturer built plants in the USA years ago, to take advantage of cheap labor (!) in the South, as well as avoiding import tarrifs (gee…I thought protectionism ALWAYS worked) and transportation costs. Turns out that one of the two automobile manufacturing industries in America is thriving. The other is dying. Care to guess which one is which?
Toyota, Nissan, Honda, BMW – name a manufacturer, and they likely have one or more plants in the USA. Of course, since they locate in right-to-work states, they are (currently) unencumbered by the cement anchor that is the modern labor union movement. They pay competitive wages (compared with other local industries) and have plants that are productive, laborers that are happy, and make cars and trucks that sell. Contrast that with Detroit, where they are burdened by sloppy management, labor union contracts that require manufacturers to pay workers for months even after they are laid off, building more units than they know they can sell. Brilliant.
Don’t believe me? Compare any comparable model between one of the Big Three and Toyota and Nissan. On an average it costs the Big Three about $1500 MORE to build the same car than it does the Japanese companies. The difference? Legacy health care, pensions, and out-of-control labor costs.
The key to solving this mess is bankruptcy. It’s the only way to break the union contracts, wipe the pension and health care slates clean (although any bankruptcy judge worth his salt will protect the workers first, so don’t buy the claim that bankruptcy will harm the workers and retirees). In order for Detroit to compete with Japan Inc. (not to mention Germany Inc., Korea Inc. et all) is to do what they do – build cars that people want to buy, and build them for less. You can’t do that when you pay your workers $100/hour and your competition pays $40/hour. You can’t do it when you are required to keep factories open, making cars you can’t sell, and your only other option is to pay your workers up to 95% of their salaries for up to three years, to not work.
Math is a cruel mistress.
I don’t care how much they posture, preen, or prevail upon the manifest gullibility of Congress. When your costs of doing buisness are higher than your competition, you’re gonna lose. The foreign manufacturers figured out how to game the system – by opening American factories and becoming American companies. Americans make the best automobiles in the world…it’s just that they make them for Toyota, Honda, Nissan, and BMW. If Congress will practice a little ‘tough love’ here, maybe Ford, GM, and Chrysler can get clean, get sober, and become competitive again. Now that’s an “American-made” idea I can get behind.