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December 12, 2012
Michigan Auto Union Reactions a Harbinger of Things to Come?
In the early 1980s, Ford and Chrysler were struggling to make ends meet and Chrysler needed a government bailout to keep going. General Motors' predicament in the 1980s wasn't life threatening so it continued along its merry way without making significant changes.
I don't remember which automaker it was, but in the early 1980s one of the Big Three asked its union workers in Michigan to take a pay cut so that it could continue to operate. The unions were told that if they didn't accept a pay cut, the firm would move production to Texas.
The unions considered the request and unceremoniously rejected it. The company closed the plant and started manufacturing in Texas. That's a perfect example of union workers in Michigan cutting off their nose to spite their face.
GM still hasn't made the kinds of changes that it must make if it hopes remain solvent, and without government intervention GM would have gone down the tubes in 2009. Even with government support, the company's future doesn't look bright.
American taxpayers are the losers and so are auto buyers because GM cars and trucks are still overpriced. A quick look at Forbes' list of the most overpriced cars in 2010 makes my point. During the first seven months of 2012, GM had an 18% share of the U.S. market -- down 2% from 2011, and in the global arena, Toyota is taking GM to the cleaners.
Consumers aren't confused. They know value when they see it, and more and more each day they don't see value in GM products. Even the Chevy Volt that has attracted so much political and media attention is running far behind Ford's C-MAX Energi in terms of energy efficiency, and the price differential between the two products is roughly $10,000 for comparable cars ($29,000 vs. $39,000).
As otherworldly as this sounds, consumers are being asked to fork over about 33% more money for a Volt than for a C-MAX Energi, and those who do are getting less energy efficiency in the bargain. Anyone who believes that GM can survive in the competitive market with product offerings like the Volt needs to have his head examined because consumers aren't stupid. Over the long haul, they won't pay more for less.
Unless things change at GM in a hurry, the Volt is heading for the trash heap of history along with all those Cadillac Cimarrons. The Cimarron was supposed to compete with BMW, Mercedes, and Audi in the 1980s, but it failed miserably. GM is on life-support right now, so it must change or it will die as a company along with the Volt. The government can't keep it from happening because like it or not, in the end, the market always wins.
Facts are stubborn things, and they tell us that the 2009 GM bailout was a catastrophic mistake. Just look at the numbers. According to the Heritage Foundation,
This is what President Obama had to say about all those silly people who claim that he used taxpayer dollars to pay off his auto union supporters in 2008:
In February, most of the auto union workers who attended the president's speech probably continued laughing all the way to the bank, but the worm has turned. Michigan lawmakers passed "right to work" legislation, and Michigan Governor Rick Snyder (R) signed the bill. That means those workers won't be required to join a union simply to get a job.
Union leaders know exactly what that means. Many of those workers will decide not to remain union members and union coffers will suffer. It's as certain as the sun rising in the east.
And what was the diehard union activists' reaction to the tidal shift in Michigan politics? Did they show any humility, any sense that they appreciated their circumstances?
The numbers that I've shown suggest that they might have been humbled a little, but they weren't. Instead, they took to the streets like the brown shirts of a bygone era to force their will on the rest of us. These YouTube videos demonstrate their reaction better than anything that I could write:
At this moment, the only people who seem to be unable to come to grips with reality are the president, Democratic members of Congress, union workers, and other useful idiots. Unfortunately, they represent the majority of voters in this nation, and thanks to them, President Obama has four more years in office.
Since the typical second term of a president is less successful than his first, can the nation survive four more years of Obama? That's questionable given the fact that his first term was a disaster, but only time will tell for sure. This much is certain, though: if you are smart, you will begin to prepare for some dark days ahead. The auto unions' reaction to changing conditions in Michigan may be a harbinger of things to come.
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