Unions are the problem with the auto industry, according to Mitt Romney

Former Massachusetts Governor and presidential hopeful Mitt Romney has written an op-ed in the New York Times about the auto industry. Gov. Romney is uniquely qualified to comment on the industry…not only due to his personal knowledge of the business but also because his father was the president of American Motors. I was expecting, then, something that was thoughtful and insightful; unfortunately, this article included the same old Republican talking points. It could have been written by Newt Gingrich or Rush Limbaugh.

In a little less than 900 words, Gov. Romney summed up the problems of the auto industry in one word…unions. Unions are the sole problem. Not once in the article did he mention anything about management. He did not mention anything about healthcare costs. The problem was simply labor costs. The former governor mentioned that American automakers spend the extra $2000 per car. Other car manufacturers like BMW, Honda or Toyota don’t have to pay this expense.  Unions are the root of all evil.  That’s Romney’s argument in a nutshell.

Nowhere in Gov. Romney’s article does it mention anything about CEO pay. He doesn’t mention that the CEO of General Motors, G. Richard Wagoner, is getting paid about $14.4 million per year. That is not much when compared to hedge fund managers who made hundreds of millions (some times billions) of dollars per year…but when you compare that to less than $1 million per year that the CEO of Toyota takes home everything comes into focus.

Gov. Romney, like many other Republicans, argues that America does not need to bail out the auto industry. Instead, America needs to let the auto industry go bankrupt. Once they file for Chapter 11, the auto industry can renegotiate contracts and refocus on their product.

Lee Iacocca , 1979, received loan guarantees from the United States government. His Chrysler Corporation began to produce smaller, cost-efficient cars. The Dodge Aries and the Plymouth Reliant are examples.. In 1983, Chrysler introduced the minivan to the United States. Because of these innovations, Chrysler was able to pay off its loans seven years ahead of schedule. (Iococca’s silence is troubling.  I hope that he isn’t sick.  I hope that he will weigh in on this subject.)

I will not pretend to know all the ins and outs of Detroit. What I will tell you is that throughout the 1980s and 1990s they pumped out a series of cars that were unreliable, expensive and guzzled gas. During this time, Toyota and Honda chipped away at their market share by delivering small, cost-efficient and reliable cars. There is no doubt that mistakes were made both by management and labor throughout this time. For too long Detroit has continued to rely on SUV and truck sales which have large profit margins. A new model needs to be developed. Detroit has to figure out a way to develop cars quicker and faster. Detroit needs to innovate. Detroit needs to develop several types of new cars. These cars should include electric cars and hydrogen cars. There should be new fuel-efficient cars. We need to be more and better hybrid cars. The reliability of American cars should be unparalleled. Detroit should not expect Americans to buy a new car every 3-4 years. Americans don’t make that kind of money anymore.

The American auto industry must take risks. In the past, the auto industry was making way too much money to take any risks. They never sqw the need to do so. They were forced to embrace seatbelts, safety glass, anti-lock brakes and other innovations. In my opinion, small divisions should be set up to take risks, while they alll design and research auto safety to see if it all works.

Finally, Detroit needs to look at several problems and work with labor unions and the government to fix these problems. These problems include (but are not limited to) healthcare costs, pension costs…labor costs. If Detroit can build a car that is as good as a Mercedes, Audi or BMW…I don’t mind paying the extra $1000 – $1500 more if I know the workers are being well compensated.

0 Responses

  1. Building a better car should be key to this bailout-bankruptcy. Here’s how: GM should be forced to fire all of the freaking geezers in their top management, the short-sighted dinosaurs who have fought every fuel efficiency directive from the government. Instead, they concentrated their efforts on trucks and SUVs while exploiting a tax loophole to sell these nightmares to the public. They fought tooth and nail over every safety initiative that had to be forced upon them. Whenever I see someone from the higher echelons of American car manufacturers, all I see are old coots desperately out of touch with the modern era, guys still telling AIDS jokes and pinching their secretaries’ asses while they struggle hopelessly to open email attachments and curse the day Hee Haw went off the air. There’s nothing wrong with being old. Hell, I’m old but I believe whole-heartedly in innovation, especially for myself.

  2. Union-busting is the strategy beneath GOP refusals to “bail out” automakers.

    Hardly a surprise Romney blames the UAW for management’s disastrous products-line decisions and wanting taxpayers to re-tool them for cars the public would buy.

    My cynical side tells me Ford, GM and Chrysler management is on-board with that union-busting strategy, too. Shed of the unions, the Big Three’d tear up their labor contracts and instantly have a far easier time attracting capital.

    Henry Ford prospered building cars. Willard “Mitt” Romney has prospered putting Americans in the unemployment line. A little research into his Bain Capital career shows Romney’s biggest-selling product has been out-of-a-job American workers. It’s a sordid story. I think it’s amazing that preening jerk thought we’d be crazy enough to elect him president. He’ll be back in 2012.

  3. For those GM employees concerned about their retirements don’t fret the Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of nearly 44 million American workers including those at GM.

    The only problem is that the taxpayer is the Pension Benefit Guaranty Corporation. Keep GM and its employees working or pay for their retirements.


  4. I heard an idea on the NPR that instead of giving the money to executives give the money in form of a rebate paid on each vehicle already made and sitting on a lot. say for 10,000 dollars. It would help get rid of the overstock and pay off the bills that have accumulated. It helps the little businesses get ahead. But they have to rework the plants to make more gas economical cars. They know how to do it they did it in the 70’s.

    But people that need a new vehicle would be helped in this also. Otherwise the dealers can’t sell the SUVS and they will just sit there while the big shots get more money to do what. They have to get the already built models sold. That is what the government did to help new homeowners they gave them $7500 to buy a new house to help everyone win.

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Errington C. Thompson, MD

Dr. Thompson is a surgeon, scholar, full-time sports fan and part-time political activist. He is active in a number of community projects and initiatives. Through medicine, he strives to improve the physical health of all he treats.


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