Welcome to GM: ‘Green’ Motors Corporation
December 2, 2008
Today the Big Three automakers are going to be submitting a “credible restructuring plan” to Congress in a last ditch attempt to win government aid to save their failing companies. More hearings will undoubtedly be held, and more scorn will be heaped on the CEOs of the companies.
“Outmoded business structure,” “weak and ineffectual management,” “excessive executive compensation” will be the catch phrases. And the three phrases are right, true, and correct. Everyone knows that the quality of American made cars is near laughable. There has never been an American car parked in my family’s garage. Apparently we were never willing to take our chances for the sake of patriotism. Yet this Detroit debacle should lead us to some uncomfortable realizations.
The United Auto Workers is the union that represents all hourly employees at the Big Three. Now I know that they are just representing the blue collar man and helping him get a fair shake, all of this just at the expense of helping to run the company that employs them into the ground. It isn’t a coincidence that plants run by Toyota and Honda, all with nonunion workers, haven’t had to lay off any workers and aren’t seeking any sort of a bailout.
The fact is that the UAW, like the Big Three, is an outdated institution. Its leaders believe that it can operate roughly the same way it did in 1950, when UAW signed its first contract with GM. While everything might have been fine then, when Japan and Germany had collapsed after World War II, but in today’s global economy, unions rob companies of the necessary competitive edge that they require to survive. The uncomfortable truth is that UAW needs to reform as much as those automakers do.
And that brings us to that other harsh truth. Those same lawmakers that sit behind the bench and tut-tut at those nasty CEOs have played significant role in this drama as well.
This is because in the name of the environmentalism, these same politicians have for the past years been placing undue burden on the auto manufacturers by mandating the mileage standards their cars have to meet.
The Energy Independence and Security Act was passed in December 2007 and mandated that the Corporate Average Fuel Standards for all companies reach 35 miles per gallon by 2020, a 40% increase. And the companies cannot use their advanced hybrids, such as the Prius or Volt, to achieve these standards.
It might sound great at first to set higher fuel economy standards. Yet people conveniently ignore the fact that Congress has no right telling companies what they must make.
In this case, these automotive engineers in the Capitol believe that they know what is best for automakers. They even loaned them $25 billion to help retool old factories and expand or establish manufacturing facilities. The caveat is that all cars made as a result of receiving any of this funding must be 25% more efficient than required by law. Also, funding can only be given for future projects, meaning that it cannot be used to help with the Big Three’s current economic woes since Democratic leaders have refused to remove the green strings attached.
All of this for the ongoing “green revolution.” It seems to me that this revolution has started to become more and more like the French version. Whether it’s oil companies, coal companies, car companies and all their employees, you have to wonder who is going to be led to the guillotine next.
They say that the three are too big to fail. And now with Congress likely to perform another massive government intervention, those same auto engineers are now going to have a stake in those companies, and Pelosi, Reid, and the gang will be able to carry out their dream of the new, green Detroit, and will be able to make cars according to how the green lobby wants them made. Of course, those will never make a profit, which means the whole cycle will have to be repeated again to prevent them from failing, when in fact they can, and should, go bankrupt and recover without stiffing the taxpayer for the bill.
But instead we will get the new and not improved at all Green Motors Corporation, subsidiary of Congress and Greenpeace.
Jordan is a junior in MCB and does not drive American and probably won’t for a long time.