Money won't help if Detroit won't retool
It appears that we never learn and we confuse good intentions with bad actions that waste billions of dollars in taxpayer money. The U.S. auto industry is in trouble because its basic business model is not competitive. They are making the wrong cars and their costs are simply too high to successfully compete against Toyota, Honda and other foreign car manufacturers making cars in the United States. The average cost of labor of all industries in the United States with benefits is about $38 dollars an hour and the average cost of labor with benefits for Toyota, Honda and other foreign carmakers in the United States is about $48 dollars per hour with maximum employee flexibility. But the average cost of labor for Ford, GM and Chrysler is about $75 dollars per hour with rigid inflexibility from the unions. Because of the fact that they are not competitive, the U.S. carmakers are now in serious trouble.
Today there is a huge cry from Democrats to dump $25 billion of taxpayer money into Detroit to help them avoid bankruptcy. That will last about five months and it will change nothing. In five months the U.S. carmakers will still be in serious trouble and $25 billion dollars of taxpayer money will have been wasted because the root cause of the problem will not have been addressed. What has to happen is true capitalism. The U.S. automakers must make dramatic change and they may have to go bankrupt and reorganize to do it. The unions must be forced by bankruptcy to be flexible and renegotiate reasonable and competitive wages and benefits; and to accept flexible work rules to address today's lean manufacturing techniques. No matter how hard they try, Democrats cannot make consumers buy cars that they don't want at prices that they are unwilling to pay. In the end, Detroit has to be competitive.
Nobody wants to see anybody lose their jobs or take a cut in pay. But there is simply no choice in our world. You must be competitive in the marketplace or you will fail. It is a cosmic rule of the universe and there is no substitute. Giving $25 billion dollars of taxpayer money to Detroit without demanding reorganization and a reduction in labor costs is a total waste of taxpayer money. Only reorganization and a serious reduction in labor costs in order to be competitive will keep Detroit alive for the future.
Randy Rossi
Grayslake