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Wonder why auto makers are in trouble?

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July 17, 2007 - 10:18 am

EAP - Have you drawn the same conclusion as I have? Unions are killing our economy. Unions have outlived their usefulness – legislation and case law exist in every province and territory in Canada that provides all of the protections workers need. Unions are a millstone around the neck of consumers and governments that are dragging us all down. They must be outlawed before they do any more damage.

EAP

PS: The Big Three Killed My Baby

July 17, 2007 - 1:24 pm

Gar - Bravo EAP. I totally agree. For the economy to grow at acceptable rates in the near and medium term future, we need to improve efficiency. I big step towards that would be to get rid of unions.

July 17, 2007 - 8:44 pm

Dave - Interesting, but “apples v. oranges” and I suspect intentionally misleading. And my guess is that “Dr. Mark J. Perry … a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan” is fully aware of the distortion he is publishing. That makes him dishonest!

However, his assertion that the UAW have priced themselves out of the semi/unskilled labor market is correct. But the numbers, while probably correct are not comparable. Perry has the average salary of a university professor posted but, that is the salary, not the total employment cost to the employer. However, the “standard cost” per hour of labor for the auto companies on the other hand reflects the employers’ total cost per standard assembly line labor hour. That cost includes the employee’s salary, the employer’s share of Social Security, Medicare, Company Health, education, holiday, overtime, standard downtime, and most importantly, retiree health benefits for both those UAW members still working and those already retired. It is the latter cost that is really killing the North American auto companies and those of you who have been reading the business press, as I am sure our esteemed professor does, will know that.

Incidentally, Ford and GM are both making money in Asian markets. Anecdotally, GM and Ford products are held in higher esteem in China than are the the Japanese brands – some of that preference has a historical factor and a cultural factor in it.

Lastly, “fixing” their labor costs is not the only problem North American auto manufacturing operations face; the other is quality, which is an engineering design, management, and labor problem. Without fixing that issue, buying a “big three” product is like buying an early Korean Hyundai – a repair bonanza/nightmare! That is even if lower labor costs make teh cars “cheap,” they will still be expensive!

July 20, 2007 - 7:02 am

Dan - The inclusion of the professor candle wasn’t necessary to make the point, and to have it straight salary without benefits just weakens it.

The shocking comparison should be the Big 3 vs. their competition.

Someone’s standard of living is going to have to change.

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