General Motors, and what is left of Chrysler, are back asking for another government bailout. And Americans who recognize that an auto industry is a good deal more vital to the country’s future than those bankers who are using taxpayer billions to retrofit their executive washrooms will be inclined to sympathize with the plea.
But before another bailout check is inked, wouldn’t it make sense to get the auto giants – even if they are not so giant anymore – involved in addressing what really ails their industry?
No, it is not autoworkers. Members of the United Autoworkers union have given concession after concession after concession in order to save an industry that their union leadership called for modernizing – with the development of smaller, fuel-efficient cars – more than three decades ago.
And, no, it is not entirely the visionless management of GM, Chrysler and Ford, although it frustrating to recall the opportunities missed by CEOs who rejected smart union advocacy on behalf of the industry’s long-term future in favor of ever-bulkier SUVs, schemes to turn from manufacturing to financial services and, when it came time to balance the books, factory closures and layoffs.
The truth is that U.S. auto firms are being battered by a global economic collapse that has undermined car sales everywhere, leading to demands for government bailouts in every country where cars are made. But the even greater truth is that U.S. firms have been hit harder than many of their competitors by stalling car sales.
That’s because it costs more to make cars in the United States. Even though U.S. autoworkers have accepted pay cuts and efficiency schemes that mean they make less than autoworkers in many other countries, the enormous expense imposed by this country’s for-profit health care system places an extreme burden on firms that manufacture vehicles in the U.S. How extreme? It is estimated that health care costs add as much as $1,400 to the cost of a car made in an American plant.
So a new bailout, without a serious focus on health care reform, is at best a temporary fix, as three Democratic House members from the hard-hit manufacturing states of Ohio and Michigan explain in a new letter to GM CEO Richard Wagoner, Jr.
“You have convincingly articulated the effect of health care costs on GM’s competitiveness for years. Though the Voluntary Employee Beneficiary Association agreement with the United Auto Workers (UAW) has provided some short-term relief of health care costs by relinquishing financial responsibility for retiree care, the health care costs of current employees remain. Unless those costs are controlled, financial relief will be temporary,” write Ohio Representatives Dennis Kucinich and Marcy Kaptur and Michigan Representative John Conyers.