Originally Posted by
wmcdonald
Hey a union could probably help us out......like they did Detroit!
The biggest element of mismanagement was designing and selling poor products. Anyone who lived in Michigan in the 1970s remembers when Detroit began building truly terrible cars, like the Chevy Vega, the AMC Gremlin, the Chrysler Imperial, and the Ford Pinto; it was the beginning of what became a slow-moving train wreck.
[...]
Autoworker wages didn't make the Big Three uncompetitive by driving prices up; poor value drove prices down. As prices and quality fell together, consumers fled. The UAW's contracts were almost irrelevant. One way to show this is to compare the pricing of the competitors' vehicles with the size of the labor cost differential bargained by the UAW.
Labor costs make up only 10 percent of the cost of a typical automobile. Before the auto rescue, the Big Three paid $55 an hour in
compensation per auto worker while the Japanese paid only $46 an hour. (Company lobbyists and publicists inflated the total Big Three labor cost to $71 by attributing the unfunded pension and health benefit costs for decades of retired workers to the much smaller currently employed workforce; the legacy costs for Japanese transplants were only $3 an hour.) But even if, for the sake of argument, we accept the unfairly inflated $71 figure, the difference in the cost of a vehicle attributable to the UAW (the UAW premium) would be 30 percent of the average 10 percent labor cost, or 3 percent of total cost.
In 2008, according to Edmunds, GM sold its average large car for $21,518. Assuming GM sold its cars at cost, the UAW premium would have been only $645 (3 percent of $21,518). Did the UAW premium raise the selling price so high as to make GM cars uncompetitive with Toyotas? Not exactly. Toyota sold its comparably equipped average large car for $31,753--$10,000 more than GM.
It wasn't price that made GM cars uncompetitive, it was the quality of the product and the customers' perception of quality. [The Economic Policy Institute, Working Economics Blog,
5/24/12]
From:
http://mediamatters.org/research/201...d-labor/198343
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