Gunpowder Chronicle posted on November 12, 2008 9:24 PM | Rating:
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Senator Babs Mikulski doesn't get it. She is proposing sales tax and loan interest deductions on new vehicle purchases. But affordability of new vehicles is not the problem with the Big Three Automakers. The problem is that they are not building cars Americans want to buy. And the problem is that the auto manufacturers capitulated to the UAW a hundred times over the last thirty years. The result has been that they pay more people not work and pay more expenses on retirees than they do on workers. And Senator Babs just doesn't want to accept that.
Her proposal is attractive, but it won't do bupkus to save these companies. They have fundamental structural problems. They design crappy products. Their products aren't as reliable as the competition. They pay too many people not to work. The price of every GM car includes at least $2,000 in retiree health benefit costs. When Chrysler switched to Bosch electronics (due largely to the purchase of Chrysler by DaimlerBenz), the reliability of electronics in vehicles nose-dived. American cars have horrendous resale value.
What is really bizarre is that the problem isn't about American workers. Toyota, Honda, BMW, Saturn and Nissan all build large numbers of cars in the US, using American parts made by American workers. So what's the difference? Those companies don't rest on their laurels of one hundred years. They go out every day and design and build great cars that Americans want to buy.
And that is the problem that Babs isn't fixing.