Some of our car companies may go bust. They are all suffering and shaky. Another possibility is that Ford and General Motors might turn themselves into private companies.
Ford was a private firm until 1956. Even though it is a public company now, the Ford family still controls it. Chrysler is already a private firm. Private companies can go bust as easily as public ones.
Ford and GM are certainly going outside the country to make cars to sell back home. For instance, Ford is about to invest several billion dollars to build a new plant in Mexico to make cars for you and me.
There is no mystery about why these companies are fleeing the U.S. They are losing their shirts here.
There is no mystery as to why they are losing money here. At the moment they offer the wrong types of vehicles. High gas prices have turned American heads toward fuel-efficient cars. Our car companies have zillions of guzzlers on their hands.
They also lose money because they shell out about $1500 more than the foreign firms to make a vehicle . That is, the foreign firms build cars for our market here. In our southern states. With American workers. They have a $1500 per vehicle advantage over our companies from the get-go.
This is because our companies are lumbered with the UAW. The UAW contracts make the American companies pay lots of benefits the foreign companies do not pay. And the contracts restrict how workers may work. Management cannot shift Worker A to another job for the rest of the week because the contract won’t allow it. Down south, at the Toyota plant, there is a lot more flexibility.
Incidentally, workers for the foreign companies take fewer sick days. Workers for American car companies are absent three and four times as often as Toyota and Nissan workers in the South. You can draw your own conclusions about this. And you can imagine the extra costs that high absenteeism inflicts on the auto companies.
Some folks ask “How can the UAW let the American car companies go bust? How can the workers? Why don’t they see the writing on the wall? The writing that says pretty soon there may not be any jobs left.
