My first post for the Water Cooler Economist will be a rant. I will probably drive away half of my prospective readers with this one, so I hope those of you who choose to stick around will enjoy it.
Detroit. They call it the Motor City. I would tend to disagree. I would call it the shelled-out remains of a bygone era. Only a half hour from my home, this city has become the national example for poverty and gun violence. Industry has been steadily flowing out to Detroit for the past few decades now, leaving the city with abandoned buildings and abandoned hope. I cannot, however, blame these companies. Take a look at the additional city tax; it isn't exactly conducive to business. Of course, Michigan's state laws seem to be structured to punish the small businesses that could be saving the states economy, so I can't target only Detroit. Even the "Big Three" automotive companies have been moving operations out of the state for years now.
Of course, the flight of the Big Three can't be blamed merely on state taxes. I haven't checked, but they are probably all but totally exempted from paying them. That would at least serve to explain why the state can't pay for decent roads or working social programs. No, I blame the UAW. The United Auto Workers are not present down south where GM, Ford, and Chrysler have been relocating factories. While I fully support the idea of unions, they're kind of like communism. They are great in theory, but fail to fulfill their promises in practice. The union went from an organization to protect worker's rights to an organization of blood-suckers bent on taking the automotive industry for all it's worth. The idea of paying an unskilled worker $24 per hour to bolt on lug nuts seems a bit absurd. If that's not enough, they also get a very nice benefit package as well. To further the issue there are minimum employment levels, so at any given time GM may have twice as many people as they need in the factory doing nothing and still collecting their ludicrous wage.
There is a reason that the Japanese and European automakers have not built factories in Michigan, but elsewhere in the country. That reason is because they understand that the UAW has become a plague and they don't want to get infected. The UAW, however, is not fully to blame for the downfall of the American automotive industry. In fact, I will blame the Big Three themselves for the position they are in right now.
A stubborn resistance to coming out of the automotive stone age has led to the American automotive industry to ruin once again. This isn't the first bailout that has been requested and if it is fulfilled, I highly doubt it will be the last. It seems that no matter what the rest of the global automotive industry is up to, Detroit turns a blind eye and insists on sticking with what they know. Need an example? Hybrid vehicles. Detroit had hardly started working on prototypes by the time the first Japanese hybrids were already on US roads. How about efficiency? Many engines in the Honda family (even economy models) are pushing about 100hp per liter of engine capacity. The new Corvette Z06, GM's crown jewel, barely manages 72hp per liter. The Big Three's relentless resistance to modernization has all but signed their death notice.
GM, Ford, Chrysler: WAKE UP! You are competing in a globalized market. Well, I wouldn't say competing, but you are operating in a globalized market.
Now let me say that I am a proud American. I have lived in Michigan my entire life and my father made much of his career selling (for various suppliers) to the Big Three. That said, if I were planning on buying a new car today, it would probably be Japanese or German. Let's face it, I can buy a Honda, Toyota, Mazda, or Volkswagen for less money than the equivalent American-made vehicle. On top of that, the foreign car will have better fit and finish, be more reliable, and last for tens of thousands more miles. I will get better gas mileage and lower emissions with the foreign vehicle and it will likely still be faster than the American equivalent. So why on earth would I buy the American vehicle? Furthermore, most Japanese manufacturers and many European makes are wholly assembled in the United States, many times with more American made parts than the American vehicles. I am benefiting American blue collar workers as much, if not more, than buying an American car. So where is my motivation?
My advice to the American automotive industry? If you're really up the creek, declare bankruptcy. It will get you out from under the thumb of the UAW and allow you to hire auto workers for a more reasonable rate (say, $8 per hour). Rebuild yourselves. Start making cars that are more efficient, better constructed, and more reliable. Call Italy and Germany, see if you can borrow some designers that will draw up some cars people actually want to be seen in. Appeal to the youth, not with boxy pieces of garbage you pulled from the reject pile, but with sleek, efficient cars that are under twenty thousand.
So that's it. That's my rant. Now that I've alienated much of my potential audience, I'd like to thank those of you that are still reading. In leaving comments, please try to be civil. Calling me names and insulting other posters isn't very conducive to intelligent discourse. That, and I will delete your comment as soon as I see it.
Photo credit: Check out Made in Detroit. They make some cool stuff and are working to promote a new, better Detroit.
P.S. I promise subsequent posts will be much better supported (with endnotes) and considerably less crass.
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