Automakers and Government.. History and Truth Seeking

The Automakers face a number of issues which in my opinion are hardly solvable by MORE government solutions. When Iacocca turned Chrysler around in the 80s, it was by innovation and a “bailout” loan by government which also required additional private financing and external arrangements… Compromises were made by the auto workers, management, and even the federal government.

An issue similar to those faced by Iacocca however, is the part played by government. But Chrysler was able to save 600 Million by asking for a 2 year moratorium on exhaust standards. Further, by creating an air of “crisis” and using it to compel the participation of all concerned (employees, management, unions, the public) that Chrysler’s future was their own, he was able to generate consensus to make it happen. Of course a $1.2 Billion loss in 1979 helped to persuade a great many that things were in dire need of attention.

In fact, one can find any number of similarities to the Chrysler problems in this fascinating piece by Dimitry Anastakis. However, this time it is far bigger a problem to solve. To begin to have a clue on how to deal with it we must understand the fundamental reasons for the current situation.

Government… There you have it. Government is the reason for the impending failure for the largest part of our manufacturing sector.

However, not for the reason given by one of the “talking heads” (Kirstin powers, a “democrat strategist”) on Fox news or elsewhere that “government should have mandated more innovation…” In fact that is the brilliant thinking which brings us to this point in the first place. Government cannot “mandate innovation.” If government could, wouldn’t we have already broken through all invention thresholds, and transcended into godhood?

Consider what would happen if Government “mandated“ all restaurants provide ZERO calories in their meals. Would it be unrealistic? To the uber quick minds of the token liberals at Fox, or the regular cast at CNN or MSNBC, sure! Why not? We have the technology, don’t we? Perhaps not. These business would FAIL, and because of the size and number of them, wouldn’t we be looking at a great big burger bail?  “Whopper Junior.. YOUR FIRED!”

Business responds to the natural needs of consumers. If people like to drive big SUVs, the companies will make them. There is usually a fairly decent time between need and delivery requests however, and this time the manufacturers which had heavily profitable units building and selling SUVs, trucks, and other gas guzzling autos were caught up in a perfect storm of environmental insanity, overreaching government regulations and a main manufacturing structure in Michigan which has been held prisoner to a government protected monopoly of (community) workforce organizers for decades.

As a business owner, I personally have a fierce objection to government meddling in the affairs and decisions I make to secure the best employees, and gain the best profit for my efforts. I take all the risks, spend the most time, and worry about my business more than any government desk jockey who at a moment’s notice can decide to make life unbearable with bureaucratic contrivances which could be culled only from the pits of hell. I force no one to work for me, and likewise prefer a similar respect.

GM, Ford, Chrysler… having a specific size fall under any number of strategies however, and must under penalty of law deal with an organizing element which is often unyielding, blind, or even worse, in a position of the rock and a hard place. The UAW organizers have a problem. If they allow the automakers to adjust the need for employee services, and likewise the compensation, if even to survive, then they admit the reality of their real power. Certainly for the employees to find that their union cannot protect them from impending doom short of serious concessions, merely raises the question of a need for the union in the first place. Why would you need a union to get to point B from point A if B is only going to assure the destruction of the enterprise in the first place?

This is not meant to completely bash on the unions, but rather to point out that if the business has a choice of who it employs, and the employee has a choice if he/she wishes to join the union, perhaps a smarter union would emerge… and without the need to MANDATE that it happen.

The second part of government interference relies more on looking at recent cause and effect cycles.

Somewhat the same problem we had in the 70s, gas guzzling cars stop selling when fuel costs go up, or shortages happen. Though there is plenty of fuel, there is less domestic production. The resulting prices become more out of control for us, and add to this the recent “mandates” on carbon emissions, which uses flawed climate science for modeling, drives different formulations for different regions of the country, and uses taxpayer dollars to subsidize consumption of food (corn) as a fuel, in turn driving household costs up.

All of a sudden… no one could afford gas, pay the mortgage, or buy cars…

My solution for the big three in the next post.