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The main reason why the auto makers had a hard time was the global recession. Unions had exactly nothing to do with it.
by AmVess 9y ago
The main reason why the auto makers had a hard time was the global recession. Unions had exactly nothing to do with it.
- kbenson 9y agoI think the inference is that automakers weren't able to respond appropriately or timely because they have contractual obligations to the the workforce.If cutting salaries is required to keep the company afloat, but that's not possible without a union negotiation, and the union has perverse incentives of some sort at play, that could cause real problems. I'm not saying that's what happened, but it's not impossible to come up with plausible situations that could lead to the situation described. I wouldn't be so sure to immediately discount the role of a union in how well a company fares a crisis, just as I wouldn't be so sure to discount the behavior of the executives. Each company probably had its own unique mix of problems.
- briandear 9y agoNot exactly true, GM had $51 billion in losses in the 3 years prior to the 2008 recession. Factories in Michigan were being shut down long before that with operations being moved to lower cost locations -- locations that were lower cost specifically because they were either overseas or right-to-work states. Claiming that unions had nothing to do with the automotive crisis is to misunderstand the automotive industry. The financial crisis was traumatic to the auto companies because even with a shift away from union manufacturing, the overall drop in worldwide demand was the straw that broke the camel's back. The auto companies were on life support before the global recession.