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Forum Post: What killed the auto industry?

Posted 5 years ago on Feb. 13, 2013, 8:18 a.m. EST by GirlFriday (17435)
This content is user submitted and not an official statement

This is an article from 2009 but considering the number of posts that I have read that are repeating the lies from this-- mayhap we can set that record straight.

In November 2008, GM opened a $300 million plant on the outskirts of St. Petersburg that will produce 70,000 cars per year. In March 2009, a venture partly owned by GM through its Korean subsidiary Daewoo, announced a plan to open a new car plant in Tashkent, the capital of Uzbekistan, to produce 15,000 Chevrolets per year and create 1,200 jobs. Alongside this international expansion, GM announced the closure of 12 plants in the U.S. in 2007. In 2008, GM added five more to the list of plant closings.

GM is on the march, but according to the folks who call $39 billion in "deferred tax credits" an asset, the UAW must get leaner, and "welfare" for blue collars workers should be axed so "unearned income" for the leisure class can get jacked up.

The $39 billion asset was a boondoggle--it never existed, not even as an unhatched egg, let alone a chicken. It wasn't a loss of cash, it was an auditor's correction of crooked bookkeeping. But it helped steamroll the union and trumpet the demand to dump legacy costs. Labor's legacy of profit was invested outside North America, but that shouldn't make the debt uncollectable. Labor deserves to benefit from the investment of its legacy profits. Labor has a legitimate lien on capital.

SOLDIERS OF Solidarity has been saying this since 2005, when Delphi first filed for bankruptcy. Delphi transferred assets overseas. It insisted that assets outside the jurisdiction of U.S. courts were profitable, but untouchable.

When Delphi proposed to cut wages in half and eliminate retirement benefits, we warned that Delphi was the lead domino, and the wage and legacy cut would ripple through the economy. We warned that the restructuring would spiral down and the impact on the economy would be profound and permanent.

It doesn't require a degree in economics to figure out that workers making $14 per hour don't buy new cars. They don't buy homes, and they don't invest their savings in the stock market. They live paycheck to paycheck. Restricted income leads to boycott by default. The economic blowback won't end with the Detroit Three.

When GM's labor costs reach parity with Toyota, Toyota will ratchet wages down again. The automotive industry is too entrenched in our national economy not to have a cascading impact on wages throughout the country. The dominos won't stop falling at the end of the assembly line. They'll keep tumbling until every one is down.

If the Detroit Three can't sell cars to their own workers, it doesn't matter how cheap they buy labor. The market is going down. It's the paradox of thrift. When savings isn't invested at home, in production as opposed to speculation, it reduces demand and inhibits growth.

The double whammy of free trade and de-unionization in the U.S. compounded the thrift paradox. The savings extracted from cheap, non union labor was invested overseas. The companies' thrift strategy undermined their most loyal customers--employees and communities in the U.S.

Read the entire article here

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[-] 1 points by shoozTroll (17632) 5 years ago

They were banking on Jay Leno buying all the cars.

Plus all those pensions weren't funded properly to begin with.

I posted a link where Ford admitted to still underfunding their pension funds, while they are still cutting benefits to retirees, at the same time as they distributed record bonuses. .

[-] 1 points by GirlFriday (17435) 5 years ago

And the incessant chatter of unions destroying Detroit is an outright lie. It makes Ann Coultier and the right wing look like shit..

It also makes the 9 dollar an hour lift out of poverty look like shit., too. If you can't do it at $14 than you sure as hell can't do it at $9.

[-] 0 points by shoozTroll (17632) 5 years ago

The US auto market often becomes saturated, that's when they out source and "right size" in the US.

After all the cuts Ford made, they were recently crying that their US plants lacked capacity to respond to demand, which just becomes another excuse to outsource..

PS $9 an hour would have been effective 20 years ago.

[-] 1 points by GirlFriday (17435) 5 years ago

Ford pisses me off to no end. Really.

[-] 1 points by shoozTroll (17632) 5 years ago

Their VEBA retirement system recently screwed my wife and I on our "Cadillac" health care(sic).

Our co-pays have doubled and tripled, and for me, office visits are now severely limited.

[-] 2 points by GirlFriday (17435) 5 years ago

That completely sucks.

We had a bunch of guys that would get laid off every year and listening to their shpeil on restructuring for the past x amount of years has become downright disgusting

[-] 2 points by shoozTroll (17632) 5 years ago

They've been in a state of constant restructuring since the early 80s.

At one point, the board of directors stated that they wanted to get out the manufacturing end and just do design and collect profit from the nameplate.

I guess even they found that running a large corporation is a pain in the ass, so they want to just sit back and rake in the profits and never get dirty.

[-] 2 points by GirlFriday (17435) 5 years ago

They've been in a state of constant restructuring since the early 80s.

Absolutely and every one of them. People stopped buying US cars because they would have a known defect and the next year they would kick out the same defect. It became all about the money at the top. It is just a bunch of shit all the way around.

[-] 2 points by shoozTroll (17632) 5 years ago

Most of those defects were the result of outsourcing, or design, in the first place.

I've asked the anti-union folks to show the worker caused defect that caused a single recall.

They couldn't site one, because there are none.

It was often union workers that found the flaw that caused the inhouse recalls that the public never hears about.

[-] 2 points by GirlFriday (17435) 5 years ago

I agree. In fact, the majority of these issues were by design.

[-] 2 points by shoozTroll (17632) 5 years ago

WallStreet greed, really.

It's literally everywhere there's a profit to be made.

[-] 2 points by GirlFriday (17435) 5 years ago

Yes. But there seems to be a huge disconnect on what killed the industry and Detroit. It makes some of the postings here repetitive nonsense.

[-] 2 points by shoozTroll (17632) 5 years ago

It's at WallStreet's connection to it all, that the perceived disconnect is happening.

The puppet masters are still successfully hiding behind the curtain.

OWS revealed a brief, yet telling glimpse.

The image of them sipping their martinis is still burned onto my retinas.

[-] 1 points by GirlFriday (17435) 5 years ago

I don't see them as hiding. I see it as blatant.

[-] 2 points by shoozTroll (17632) 5 years ago

You're exception, not the rule.

That's why I thank God for you being here.

[-] -1 points by OTP (-203) from Tampa, FL 5 years ago

Making some of the ugliest vehicles out there isnt helping any.

[-] 2 points by GirlFriday (17435) 5 years ago


[-] -1 points by quantumystic (1710) from Memphis, TN 5 years ago

cars need to die.

[-] -2 points by freakzilla (-161) from Detroit, MI 5 years ago

How many cars does everyone here own? Are they American made? Thankfully I live where I don't have to own a car since I can walk and use public transportation. Better for the environment.