Bye Bye Big Three?

Several people have hit on reasons why the big three are in trouble but no one has mentioned the main reason. THE UAW. I saw an interesting report this week. It went into some of the reasons why the big three are having so much trouble these days. It mentioned the perceived but not actual superiority of Japanese cars as a small factor. It mentioned the import tariff imbalances-5% on a car imported here and 20% on an American car imported into countries like Japan. It mentioned the impact of government regulation like Cafe standards and safety standards that foreign makers do not have to deal with. But the most telling was the cost of production. It costs the American manufacturers 53% more, FIFTY THREE PERCENT MORE, to produce a car than it costs a foreign manufacturer to produce a comparable model. Why? CEO compensation? Partly, but the disparity between what American CEOs and foreign CEOs are paid is not very big. Materials? No. No real difference there. The biggest disparity in cost? LABOR. That's right. The cost of maintaining the pay and benefits of union workers and former union workers is killing the American auto industry, much like it did the American steel industry. The potential government bailout is not seen so much as a bailout of the big three as it is a bailout of the UAW. Many opponents of the bailout argue that it will only serve to postpone an inevitable failure by temporarily funding un-supportable union labor costs and that it would be more beneficial to let GM, Ford, and possibly Chrysler file for bankruptcy protection or fail completely and renig on the union contracts. A pretty horrible situation and a pretty horrible choice to make. Thanks UAW. What are all those wonderful benefits and pay plans worth after they kill your employer? All the union guys will refuse to believe it and try to cite other causes but the numbers do not lie. Un-supportable union labor costs are the main cause of the potential death of the American auto industry.