Romney skewers unions, Big Three in Op-ed

Rick Moran
"Let Detrtoit go Bankrupt" is the title of Mitt's piece in the New York Times and he pulls few punches in letting the auto industry have it for their many sins.

A sample:

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

Instead of a bailout, Romney proposes a sizable increase in spending on research that would benefit the auto industry:


It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.


He alludes to a "managed bankruptcy." And perhaps this is something the federal government can, in fact, help with. But a blank check - which is what the industry is asking for now - would be a waste.

The auto industry is headed for a shakeout regardless of whether the government intervenes or not. It can happen to the betterment of the industry by making it leaner and stronger, or it can codify failure. Romney's call is clearly not to subsidize the losers.

Also make sure you check out the two excellent articles in today's American Thinker: Editor in Chief Thomas Lifson's "Oligopoly and the Fall of the American Automobile Industry" and C. Edmund Wright's "Expect an early Obama Bailout of the Big Three."

"Let Detrtoit go Bankrupt" is the title of Mitt's piece in the New York Times and he pulls few punches in letting the auto industry have it for their many sins.

A sample:

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

Instead of a bailout, Romney proposes a sizable increase in spending on research that would benefit the auto industry:


It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.


He alludes to a "managed bankruptcy." And perhaps this is something the federal government can, in fact, help with. But a blank check - which is what the industry is asking for now - would be a waste.

The auto industry is headed for a shakeout regardless of whether the government intervenes or not. It can happen to the betterment of the industry by making it leaner and stronger, or it can codify failure. Romney's call is clearly not to subsidize the losers.

Also make sure you check out the two excellent articles in today's American Thinker: Editor in Chief Thomas Lifson's "Oligopoly and the Fall of the American Automobile Industry" and C. Edmund Wright's "Expect an early Obama Bailout of the Big Three."