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Poor engineering in the auto industry was not caused by unions. The unions are basically assemblers -- how does the assembly line create engineering problems? I

Poor engineering in the auto industry was not caused by unions. The unions are basically assemblers -- how does the assembly line create engineering problems? I have no love for unions but what you say is way off-base. Anyway, if you want to look at excessive compensation and benefits in the auto industry, look a little higher. And at any rate, they only got what they negotiated, so if you want to blame anyone, blame management for poor negotiating, poor planning and just generally screwing up. Finally, if unions ruined the auto industry, why is Ford doing well relative to GM and Chrysler? I drive a foreign car at the moment, but my next car will be a Ford because they did not take bailout money, and they make excellent, reliable cars (nowadays).

dreamux 16y ago
I agree with you and @jrwoodruff that management also deserves blame; their focus on short term metrics stops them from negotiating reasonable contracts (if they don't strike this quarter I get my bonus, etc.) As for the assemblers preventing innovation, its much harder to pump cash into R&D when your assembly costs are twice that of your competition. And as for ford doing well relative to GM and Crysler, you're basically saying they're doing good compared to bankruptcy. I like ford (especially their current lineup), but they've fallen a long way from their massive dominance of a few decades back. To be clear, I agree with you (this reply seems a little ranty), the entire auto industry is a mess; a large part of these inefficiencies I feel comes out of dealing with unions - and I see the same things happening with teachers.
- rjbond3rd 16y ago
  I hear you. But to put your last statement another way, a large part of these inefficiencies comes out of having to create unions in the first place, to counter the abusive employment practices of management. I think it's a two-way street. Auto unions are corrupt now, but they were obviously created as a reaction to some pretty bad behavior from management. The worst, most unnecessary, most counter-productive unions, in my limited experience, are at universities :)
yummyfajitas 16y ago
The unions are basically assemblers -- how does the assembly line create engineering problems? Work rules. Anyway, if you want to look at excessive compensation and benefits in the auto industry, look a little higher. $3 million + worthless stock options ($15M at the time of issue) is not that high. http://www.mlive.com/business/index.ssf/2009/03/gm_ceos_2008_compensation_valu.html http://www.mlive.com/business/index.ssf/2009/03/gm_ceos_2008... Lets compare that to what some Google employees earn: http://www.oochoo.com/2010/11/google-offers-3-5-million-dollars-bonus-to-an-employee-to-stay-with-company/ http://www.oochoo.com/2010/11/google-offers-3-5-million-doll...
- rjbond3rd 16y ago
  Sorry, I don't understand your comments. 1. Work rules created the quality problems? The quality was engineered right out of the cars through cost-cutting and bad priorities. 2. 2008? American car companies got into trouble decades before 2008. 3. Google is profitable, whereas GM and Chrysler failed, took bailouts, never punished their own management, same as the bankers. 4. Paying $3 million for failure is acceptable? Okay, so why is paying $50k to a line worker "too much" then?
  - yummyfajitas 16y ago
    Work rules contribute to quality problems when they eliminate the flexibility to restructure the factory. Further, increased costs also contribute to quality problems. Toyota can pay $1600/car to improve quality, GM needs to pay that $1600 to their workers. Regarding 3), Wagoner's comp was cut from $14.9M to $3M as a result of his failure. $3M is very little for an executive at his level. Even $14.9M is not that high for a CEO of a company as big as GM. Lady Gaga earned $62M in the same time period. Regarding 4), GM is saddled with legacy costs of $1600/car. The CEO's pay of $3 million works out to be $8.35/vehicle. http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm http://www.businessweek.com/magazine/content/05_19/b3932001_... http://www.gm.com/investors/sales-production/press-release.jsp?id=/content/Pages/news/ca/en/2009/0105_Sales_December.html http://www.gm.com/investors/sales-production/press-release.j... Suppose the next best alternative available for CEO would only demand $2 million. If Wagoner could increase profits by $2.78/vehicle more than the next best option for CEO, his pay is well worth it. Do you seriously think you can get a competent CEO, capable of running GM, for less than $1 million?

dreamux 16y ago

I agree with you and @jrwoodruff that management also deserves blame; their focus on short term metrics stops them from negotiating reasonable contracts (if they don't strike this quarter I get my bonus, etc.) As for the assemblers preventing innovation, its much harder to pump cash into R&D when your assembly costs are twice that of your competition. And as for ford doing well relative to GM and Crysler, you're basically saying they're doing good compared to bankruptcy. I like ford (especially their current lineup), but they've fallen a long way from their massive dominance of a few decades back. To be clear, I agree with you (this reply seems a little ranty), the entire auto industry is a mess; a large part of these inefficiencies I feel comes out of dealing with unions - and I see the same things happening with teachers.

rjbond3rd 16y ago
I hear you. But to put your last statement another way, a large part of these inefficiencies comes out of having to create unions in the first place, to counter the abusive employment practices of management. I think it's a two-way street. Auto unions are corrupt now, but they were obviously created as a reaction to some pretty bad behavior from management. The worst, most unnecessary, most counter-productive unions, in my limited experience, are at universities :)

yummyfajitas 16y ago

The unions are basically assemblers -- how does the assembly line create engineering problems? Work rules. Anyway, if you want to look at excessive compensation and benefits in the auto industry, look a little higher. $3 million + worthless stock options ($15M at the time of issue) is not that high. http://www.mlive.com/business/index.ssf/2009/03/gm_ceos_2008_compensation_valu.html http://www.mlive.com/business/index.ssf/2009/03/gm_ceos_2008... Lets compare that to what some Google employees earn: http://www.oochoo.com/2010/11/google-offers-3-5-million-dollars-bonus-to-an-employee-to-stay-with-company/ http://www.oochoo.com/2010/11/google-offers-3-5-million-doll...

rjbond3rd 16y ago
Sorry, I don't understand your comments. 1. Work rules created the quality problems? The quality was engineered right out of the cars through cost-cutting and bad priorities. 2. 2008? American car companies got into trouble decades before 2008. 3. Google is profitable, whereas GM and Chrysler failed, took bailouts, never punished their own management, same as the bankers. 4. Paying $3 million for failure is acceptable? Okay, so why is paying $50k to a line worker "too much" then?
- yummyfajitas 16y ago
  Work rules contribute to quality problems when they eliminate the flexibility to restructure the factory. Further, increased costs also contribute to quality problems. Toyota can pay $1600/car to improve quality, GM needs to pay that $1600 to their workers. Regarding 3), Wagoner's comp was cut from $14.9M to $3M as a result of his failure. $3M is very little for an executive at his level. Even $14.9M is not that high for a CEO of a company as big as GM. Lady Gaga earned $62M in the same time period. Regarding 4), GM is saddled with legacy costs of $1600/car. The CEO's pay of $3 million works out to be $8.35/vehicle. http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm http://www.businessweek.com/magazine/content/05_19/b3932001_... http://www.gm.com/investors/sales-production/press-release.jsp?id=/content/Pages/news/ca/en/2009/0105_Sales_December.html http://www.gm.com/investors/sales-production/press-release.j... Suppose the next best alternative available for CEO would only demand $2 million. If Wagoner could increase profits by $2.78/vehicle more than the next best option for CEO, his pay is well worth it. Do you seriously think you can get a competent CEO, capable of running GM, for less than $1 million?