The Big Three American automakers have been battling to return to profitability for quite some time now. It’s staggering to think that General Motors could lose $39 billion in a single quarter in 2007 while producing cars—products so entwined with American culture that they’re practically synonymous with our way of life. This isn’t exactly Pets.com here.
But over time, the US auto industry eroded the loyalty Americans once felt for their Buicks, Cadillacs, Mustangs, and even their less glamorous Pintos. The industry resisted innovation in design, production, and technology, clinging to the past while competitors leaped ahead. They were blind to the future—worse, blind to the present—and now face the daunting task of clawing their way out of financial catastrophe, all while the indignity of being overtaken by a company called Tata looms.
One popular tactic is to shed well-payed unionized factory workers by plying them with buyout packages. As in “We pay you, you don’t work, and you get your health care through Medicaid like the rest of Detroit.” Since 2006, GM, Ford and Chrysler have teamed up with the increasingly-impotent UAW union to cut 80,000 blue-collar workers through buyouts, and Ford is particularly aggressive about getting rid of as many employees as possible, as was reported yesterday in the New York Times:
Employees with as little as one year of seniority can receive $100,000 cash, although they give up all health benefits after a six-month period. For employees at least 55 years old and with at least 10 years on the job, the payout jumps to $140,000. One buyout offer provides a worker four years of tuition reimbursement up to $15,000 annually, plus health care coverage over that period and a stipend equal to 50 percent of base wages.
Incredibly, some auto workers vow to hang onto their 80k/year Ford paychecks, unable to imagine that one day they’ll arrive at the Ford factory to find a non-unionized worker at their place in the assembly line. Silly, foolish autoworkers: Get out while the getting is absurdly lucrative. You know what I got when I was disemployed last week? Two weeks of pay, and I felt lucky, because there is no rule in capitalism that the cast-offs have to be cared for.
