I’m conflicted about this, so I thought it would help to write it out to see if I can come to a more solid position, and maybe some of you few readers out there might chime in.
Not that I was around, but from what I gather, America is a vastly different country than it was in the 50’s 60’s and 70’s. World trade has had maybe one of the biggest effects on us. So called “Free Traders”, those proponents of free trade like to imagine that the more countries we trade with, the more customers we have for our products, and vice versa of course. Honestly, I just don’t see it. If China can produce something for $1 dollar compared to it costing anyone else $5, who ISN’T going to buy the Chinese product? More importantly, what is it that China is buying from the rest of the world that’s supposed to balance out the equation?
Another example that is ever present these days in the minds of Americans are the car industries and their troubles. The biggest competitor with the US auto industry are the Asian manufacturers. If you think about it, they all seem to have started in a rather odd way by our thinking. They didn’t focus a whole lot on design, but put everything into reliability and did so as cheaply as possible. They paid their workers as little as possible to keep their cars as affordable as possible, and being that they seemed to run forever, they developed great brand names for themselves. Year after year they started to put more and more into design, making the cars as attractive as Detroit’s, while still keeping reliability.
Fast-forward to two-thousand-and-ten! Toyota, Honda, Lexus, Hyundai, etc. are making amazing cars. Unmatched in reliability and fuel efficiency, it’s going to be pretty hard for Detroit to compete, but not impossible, right?
It might be a fair fight if the US Automakers hadn’t promised all it’s workers Pensions and Health Insurance for life. That money is coming from somewhere, and it’s obvious that quality and reliability has taken the hit. With reports of “Peak Oil”, the point at which our oil production maxes out and begins to decline, it wasn’t the smartest thing for Detroit to pump out gas-guzzling model after model. From the Hummer to the Expedition, it didn’t take a psychic to figure out that they weren’t going to be huge sellers for very long. So for some reason while Japan and the rest of Asia is focusing very intensely on fuel efficiency and reliability, we couldn’t seem to take a hint that the tide may be changing and kept on with the same strategy they’d had since day-1.
So – mistakes were made, that’s a given, you’d have to be deaf, dumb, and blind not to see it. Now it seems that they’ve finally got the clue, but the same problems still remain. Detroit still owes massive pensions to ex-employees. If these pensions were to contribute to the bad business plan and run the auto industry bankrupt, there will be no pensions to be had. Much worse, the demise of any one of the US car manufacturers will trigger a huge financial disaster, possibly a Depression.
I think having written it out, the auto industry, and I mean the whole auto industry should suspend the pensions and have the employees start sharing the cost of health care. Simply so that we can start to become competitive with foreign manufacturers for once. Maybe the pensions should be converted into shares of the companies so that the better the company does, the more ex-employees are rewarded. Besides, what makes these workers more deserving of retirement assistance than the rest of America’s retirees that didn’t get pensions? I’m sure they worked hard, but do they deserve to help send us into another depression?
And what to do with the saved money? Pour every bit into reliability, fuel efficiency, and quality! While there’s nothing we can do about the higher wages Americans earn, there are other ways to cut costs in order to make a better car.
And I’m sure everyone out there agrees with me, right? Thought so!
Justin's Blog 