Friday, December 12

US car makers

It's like watching British Leyland all over again.

The BBC is reporting that the Senate bail-out for the US car makers Ford, GM and Chrysler has failed after the United Auto Workers (UAW) union refused to cut wages next year to bring them into line with their Japanese counterparts.

The union must be believing that the three companies will linger on until Obama takes over, and then they can get what they want.

But that'll just leave them needing another bail out, and another. The US taxpayers aren't going to like the idea of subsidising inefficient companies to pay their employees more than the going rate, either.

The danger for the union is that if they keep demanding pay better than the Japanese companies give, they'll end up either as many of the British Leyland employees did - with no job at all, or working for the Japanese anyway.

The car industry is over-supplied, and based on the perpetual churn of new products to the consumers - the former is impossible to maintain, the latter may turn out to have been a late 20th century phenomenon that cannot hold as strongly any more. I suspect that Ford will survive, Chrysler is doomed - the question is what will happen to GM?

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