Government Motors

Stuart, one of American Travisty’s readers, had this to say about GM’s bankruptcy:

This is absolutely ridiculous!  Rewarding the UAW for basically bankrupting the company is wrong.  Don’t get me wrong, unions do serve some important functions, like protecting workers against company explotation, but unfortunately the UAW has strayed far from that model.  Their constant inflexibility and short-sightedness has put GM in this position (CEO’s also must share the lion’s share of the blame for building poor quality machines).  The UAW has repeatedly acted contrary to the interest of their parent company.  Sometimes their “negotiating” appeared like they forgot who was employing their workers.  This highlights my fundamental disagreement with the Obailout model:  Not allowing poor business models and poor business decisions to fail.  Capitalism has a built in check and balance system.  Its called failure.  Bad businesses don’t survive, the good businesses compete on the basis of price, quality and functionality.

The workers union strongarmed and weakened GM to such an extent that the company has failed.  But not to worry, uncle Nobama, can save us.  By bailing out GM (again and again, when are these payoff going to end?!), the union execs do not “see” the consequences of their actions.  By forcing the company to agree to horrific salary and retirement deals, the UAW brought bankruptcy on the company.  Before Obailout, the company goes under, the union workers are now out of jobs, and they think, “hey, maybe we shouldn’t have pushed for that extra week of paid leave (at $55/hr), because that cost the company XXX millions of dollars”.  I would keep an eye on this situation, because Obama and his “car czars” are in a perfect position for huge kickbacks both politically and personally after they leave public service with their fingers in many large companies and knowledge of their internal workings.

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2 Responses to Government Motors

  1. Eric says:

    “The UAW has repeatedly acted contrary to the interest of their parent company.”

    Not to agree, or disagree, but it’s worth noting, Stu, that the UAW doesn’t have a “parent company.” The union is beholden to its workers, not Detroit automaker.

    I think you’re assigning a very heavy portion of the blame to unions — certainly a part of this whole mess — but ignoring the fact that GM and Chrysler had inflexible and backward thinking business models. There’s a reason Ford is going to make with the bailout help but the other two needed to file for Ch. 11. GM overreached with dealerships and brand names, while Ford worked to diversify beyond their bread and butter of trucks and SUVs so when the time came that people wanted cheaper, more fuel-efficient cars, they were in a position to make and sell them.

    Automakers can’t strong arm their employers like they used to in the early 1900s anymore. But to say that the tables have turned completely is probably a bit dramatic.

    Anyway, cool blog.

  2. travis87r says:

    Valid!

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