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Wednesday, November 19, 2008

What might have been
Posted by Jill | 6:23 AM
It's really hard for me to defend anyone who's Mormon these days, certainly not after the disgusting, and unfortunately successful efforts of the Mormon Church on Prop. 8 in California. Usually my attitude towards ANY religion, even Christianity, is that if that's what you need to get you through this God-forsaken level of reality, have at it. Just don't expect me, or anyone else, to believe as you do.

But Mitt Romney, of all people, has a largely sensible op-ed about the automobile industry in today's New York Times that if John McCain is reading it, ought to make him misty-eyed at what might have been, had he been able to put his own animosity aside and not listened to the Rovian wingnuts who decided that Sarah Palin would win him the election.

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

[snip]

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.


Note that I said "largely sensible." The automobile industry in this country and the UAW essentially created the middle class. The UAW over the years was able to obtain for its members generous pay and benefits packages that ought to be standard in any industry. Conventional wisdom has had it for years that it is precisely this rank-and-file compensation structure that ruined the automobile industry, and that UAW members bear the sole burden of cutting costs. Romney's piece unfortunately plays into this myth. A race to the paycheck bottom is no way to keep this country strong.

That said, I have to give Romney credit for acknowledging the responsibility of management pay and benefits, alongside boneheaded decisions like continuing to crank out and market gas-guzzlers even while Americans were dying in Iraq in pursuit of foreign oil. This is the industry that when faced with an oil crunch in the 1970's, gave us, instead of the Civic and the Corolla, the Ford Pinto and the Chevy Nova. This is the industry that decided to stop making the then-compact Dodge Dart/Plymouth Valiant line -- as good a warhorse of a car as was ever built -- and replace it with the legendarily awful Dodge Aspen/Plymoth Volare line. I remember a friend of Mr. Brilliant's family once trying to sell us a Chevrolet Citation -- another legendarily awful car.

To pump money into these companies and let them operate as usual buys those who will pay for it nothing, and buys rank and file auto workers only time -- and not much of that. I think that Romney underestimates the very real pain that auto workers, and those who rely on auto workers for THEIR income, are going to experience if we let the Big Three go into bankruptcy, and because he is a Republican, his ideas don't call for any kind of financial assistance and/or retraining of those who are going to be casualties of decades of bad decisions and short-term thinking on the part of auto industry management. Something must be done so that the Rust Belt cities and states that rely on the auto industry don't turn into ghost towns. If that means a huge financial assistance package, free education, and even a Federal make-work program that also provides health coverage for displaced auto workers, so be it. And of course Romney refuses to go that far. But at least let the money be put towards healing the wound.

All of this brings us back to John McCain, who, if he reads this today, has to be wondering right now what might have been had he made his decision on a running mate with his head.

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3 Comments:
Blogger Unknown said...
Great post.
The K Cars were a freakshow. Classic Reagan era "how much shitty will they accept?"
11/19/08, 7:29 PM  
Blogger Unknown said...
I should add that 2 friends at the time ('87 in BC) had a Lada and a Mazda RX2. Not nearly as embarrassing as a Reliant-K.
11/19/08, 7:40 PM  
Anonymous Anonymous said...
Much of the midwest's economy depends on the automobile industry --- there are companies three or four steps removed from GM, Ford & Chrysler who still are part of the industry. The automobile industry is also a major platform/application for high technology --- automobiles use far more microprocessors and compute technology than the PC industry. While Americans can buy cars from Japanese, European, Korean and Chinese companies, American companies will have a hard time selling technology to such foreign manufacturers (especially when Americans don't speak foreign languages and don't use the metric system).
11/21/08, 7:37 PM  
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