The men from Detroit have come to Washington this week to make another pitch for a taxpayer rescue. Meanwhile, in the other American auto industry you rarely read about, car makers are gaining market share and adjusting amid the sales slump, without seeking a cent from the government, says the Wall Street Journal.
The root of this other industry's success is no secret, says the Journal. To put it concisely, the transplants operate under conditions imposed by the free market. Detroit lives on Fantasy Island. Consider labor costs:
- Hourly labor costs are $44.20 on average for the non-Detroit producers, in line with most manufacturing jobs, but are $73.21 for Detroit.
The international producers' made sure not to get saddled with such costs. One way was to locate in investment-friendly states. The South proved especially attractive, offering tax breaks and a low-cost, nonunion labor pool. Mississippi, Alabama, Tennessee and South Carolina -- which accounted for a quarter of U.S. car production last year -- are "right-to-work" states where employees can't be forced to join a union.
The absence of the UAW also gives car producers the flexibility to deploy employees as needed. Work rules vary across company and plant, but foreign rules are generally less restrictive. At Detroit's plants, electricians or mechanics tend to perform certain narrow tasks and often sit idle. That rarely happens outside Michigan. In the nonunionized plants, temporary workers can also be hired, and let go, as market conditions dictate. Not so at the union shops.
[No no no, it wasn't the unions: they were mismanaged...]
READ MORE
No comments:
Post a Comment