The Week - NR / Digital Articles - National Review OnlineThe entire handling of GM and Chrysler was a complete debacle. And yes, George Bush is partly to blame for this. W, we needed you to be like you were with Enron, "Sorry we're not going to bail you out." Instead, we got “I’ve abandoned free market principles to save the free market system”. Really didn't work out well there did it? Both companies should have gone through reorganization (before January 2009 would have been nice, before the Obamaites could screw it up like they did). Now we have an institution of American capatalism turned into a governemnt bureau. And it needs another bail out. Any surprise there.
General Motors sells the electric Volt for $40,000 and loses about $50,000 every time it makes a sale, because that $40,000 car costs $89,000 to build. The solution GM has hit upon (you have to be a government-run enterprise to think this way) is to sell it for $30,000 instead. GM is offering additional $10,000 discounts on a car nobody wants, but the problem is: Nobody wants it. GM should just close the production line — in fact, that is what GM is doing abroad, shutting down factories in Europe because nobody there wants GM’s non-electric cars, either. The Democrats made the GM bailout the centerpiece of their economic case at their convention in Charlotte, boasting that the intervention saved more than a million jobs. This ridiculous claim assumes that without GM every single automotive job in the United States would have been lost: not only those at GM and other U.S. firms pinned down under the morbidly obese autoworkers’ unions, but at Honda, Toyota, BMW, etc. An automaker that cannot sell cars at a profit is not a business, and it is altogether mysterious that it has become a talking point.
Now there is hope with out there with our motorcycle industry.
Lest the GM debacle have you fearing that no American company can successfully cobble together a motorized vehicle, consider the case of iconic motorcycle manufacturer Harley-Davidson. H-D is a business that has been through hell but never been offered a bailout — the motorcycle industry doesn’t have that kind of political clout — and so it has had to do what GM hasn’t: get better. H-D is predicting a 16 percent operating margin this year, which it achieved by investing in robotics and embracing cutting-edge inventory and production techniques to replace an assembly plant that the Wall Street Journal referred to as “an industrial museum.” But to get that done, H-D had to go thermonuclear on its main union, telling the workers at its York, Pa., facility that they were going to make concessions regarding work rules and flexible production or the plant was going to move to Kentucky, where the extortionate power of unions is much lower, a fact that has attracted such manufacturing heavyweights as Toyota. Harley’s employees decided they like building motorcycles, and, though there are 1,000 fewer workers there today than there were three years ago, the company is moving into the future on solid ground, having consigned nostalgia to the design and marketing departments.
There it is. The Obama regime took over GM not to save the auto industry but to save the UAW. If the purpose was to save the auto industry why hobble it with unsustainable contacts with the UAW? I think we all know the answer. Hopefully a Romney administration lets GM become a private company again and it goes through reorganization supervised by a bankruptcy judge. And the UAW leadership screams when they are told the laid off workers will not be getting 90% of pay and benefits anymore.
This is not the 1950s and our major industry needs reform. But bureaucrats cannot do it. So I voted for true reform a couple of days ago.
And as a proud HD rider, thanks Harley. Hopefully people at the Big Three watched you and got a few ideas.
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