Socialism wins again - Detroit goes Bankrupt!

[Adak]

You bring up two important points:

1) The unions role in the US car makers.

2) The role of the upper management and directors.

I believe it's clear that upper management and directors were incredibly stupid and short sighted, on the whole.

The Ford Mustang for example, was planned to be the Ford "Carnation", and built something along the lines of the old "Cosmopolitan".

If memory serves, it was Lee Iacocca, when he was at Ford, who was able to kill the "Carnation", and bring in the support for the Mustang.

Because he knew cars, and he knew drivers, and what they wanted.

But I was focusing on the role of the unions in the destruction of the US car makers - and to the socialist policies of Detroit, that drove them to bankruptcy.

Originally Posted by tw

Detroit was heavily unionize in the 1950 and 1960s when Detroit was so innovative, became productive, and was profitable. What changed? By the 1970s, all top management was replaced with business school graduates. Top management in Detroit (ie Henry Ford) did not even have a driver's license. Top management was so ignorant that 2x4s were placed under the accelerator of the first Saturn. So that Roger Smith could not press that accelerator. Smith also did not know how to drive a car. So we should blame that on the unions?

In the 1950's, the unions were certainly popular in Detroit, but they weren't that strong. They weren't NEARLY as aggressive, or as organized, as they became in the 1970's and later decades.

Since 1981 the average number of days lost per worker each year to disputes was just over 9% of the number lost in the United States.
http://en.wikipedia.org/wiki/Labor_unions_in_Japan

When the UAW joined with the AFL-CIO, and finally found out they could, through careful targeting and close cooperation with all other AFL-CIO unions, close down ANY car maker that failed to yield to their wage + benefit demands (regardless of the sales and profits of that year), then it didn't matter WHO was the President of the car company.

Even Lee Iacocca, could BARELY keep Chrysler in the black - primarily helped in those years when he had concessions from the unions, AND had a good model car to sell.

When the unions can dictate what their salaries and benefits will be, to management, the company is doomed. Perhaps their greed will be restrained for a little while, but before very long, it will rear up, and swallow the company.

No doubt.

When the unions can strike, and close a business that is vital to the industry or the country, it's time to change the laws regarding unions.

I'm reminded of the FAA flight controllers strike in the 1970's. They were going to shut down every major airport in the country, if they didn't get their demands met. We had just had a disastrous 4 years under the Democrat Jimmy Carter, so our country was a complete mess - gas lines, our Embassy personnel held hostage for a year by Iran, etc.

And now the flight controllers want a raise, or they'll completely cripple airline traffic. Airline mechanics, pilots, etc., wouldn't cross their picket lines, since they were unionized, as well.

So Ronald Reagan fired every one of those flight controllers who wouldn't return to work. Support for them disappeared, almost overnight. Problem solved!

With the city of Detroit, it was their giving into their workers unions, instead of the UAW, but they were all AFL-CIO.

You simply can't give in, and you can't defer payments of the agreed upon pensions, etc. and hope to stay a viable city or company. We've seen that in city after city, and in company after company.