Originally posted by jp-
In contrast, the auto industry has to deal with physical inventory that is generated by multiple tiers of suppliers. When GM gets debt relief, Delphi is stiffed, Delphi's suppliers are stiffed, Delphi's suppliers' suppliers are stiffed, etc...what that translates to is MASSIVE job losses from the bottom up. To support an OEM operation like the Toyota plant in Canton, MS, it takes upwards of 250 suppliers / service firms (everyone from injection mold companies, to paint suppliers, to office supply companies, to cleaning crews, to communications companies, to food services, etc...) to keep the plant operational. Every time we let one factory tank, you can guarantee that there will be very painful financial and job loss problems for 2 shock circles - the most intense is within 75 miles of the plant, and the second is within 115 miles of the plant. Drive through lovely Flint, MI if you doubt it.
One key problem is Union labor. The average full price of labor for a union worker (salary+benefits+healthcare+amortized retirement / perpetuation of retirement) is roughly $64/hr. Shocking, isn't it?! The average full price of labor for a non union worker under the same considerations is $32/hr. Union labor is an unsustainable model. They have made some great advances for the cause of the worker, but that's about all I can say positively about them. The fact of the matter is that the US automakers don't make a car that is twice as good or twice as reliable or twice as fuel efficient to justify paying their workers twice as much.
We need the US auto industry to succeed for a lot of reasons. We need them to retool to help them succeed. We also need to understand, though, that for every Rover we buy, that's one less GM car sold to us, which means that we are voting on the outcome of this crisis with our dollars.
Comment