John on April 25, 2009 at 5:50 pm
GM announced this week that they will be shutting down a number of American plants for an extended period over the Summer. This will give retailers time to move some of the cars already on the lots (inventory is currently at double the ideal level). Chrysler and Ford haven’t made similar announcements yet, but they are probably coming.
At the same time, GM is facing “surgical bankruptcy” and is closing over 1,500 dealerships nationwide. Chrysler is also going to have to shutter dealerships in the near future. The total could be as many as 5,000 nationwide or about 25% of the total.
Why were American manufacturers hit so hard while the foreign nameplates seem to be hanging on (though not by much). The chart below encapsulates the problem:
Obviously this is not sustainable. Unless American automakers can sell proportionally more cars than their foreign rivals (and they haven’t), the cost of labor must go down significantly.
Yet here is the response of UAW President Ron Gettelfinger:
In the cartoon version of the domestic auto industry, the UAW has sat with its head in the sand while our employers faced financial disaster.
In the real world, we’ve made painful decisions, decisions that negatively impact our members, time and time again, to help our employers work towards a sustainable, viable future as profit-making manufacturers…
The simple fact is that even if went beyond what we have already done, and reduced labor costs to zero, even if our members agreed to work for free we still could not solve all the financial problems facing Chrysler, Ford and GM.
The greed and short-sightedness of the UAW has come back to bite their members where it hurts. Many of their constituents at GM will lose employment this summer for two months at a minimum. Quite a few will lose jobs altogether once GM closes Pontiac and other non-performing brands. What’s most galling is that the “surgical bankruptcy” which is necessitated by their collective rapacity is being bankrolled by the US taxpayer.
Category: Energy & Economy |