Mr. B

Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor?

There is plenty of blame for both management and the UAW. Both have made decisions that cumulatively crippled Detroit.

The UAW has garnered outsized cash and benefit compensation for its members. UAW leadership also refused to see that productivity and quality are the keys to maintaining that lifestyle. (Insert all of the bad things about unions here.) By failing to police itself, the UAW has failed its members.

Management's list of failures is equally impressive. Let's begin with the post-war era. Deming, the guru of quality and statistical process control, was dismissed when he brought the ideas of continuous improvement, metrics and inventory control to Detroit. The Big Three were selling everything they could make because WWII was over, consumer demand was pent up and the productive capacity of the rest of the world was destroyed by the war.

Deming went to Japan. Ultimately, the Japanese learned to build the highest quality cars for the money in the world. Detroit went on to "sell" cars and the Japanese and Germans "built" cars.

Now, the Big Three produce inferior products that many people do not want to buy. Current and legacy labor costs prohibit competitive pricing given the feature and quality deficiencies of the products.

It's a big, giant mess.

The government will probably cave in because it is afraid of what the impact will be on the Pension Benefit Guaranty Corporation.

The bottom line is that a bailout now will only postpone the inevitable and increase the cost of failure in the future, which will happen because roots causes will not be addressed by a bailout.

Let the Big Three fail. Management and labor will be restrucured along with the companies. The companies will emerge smaller with different cost structures and with some good fortune develop better products. It may be the only way to save Detroit in the long run.

Why should the taxpayers pick up the tab for negligence on both the part of management and labor?