Auto industry loses, Michigan gains

[JackDodge]

It's always helpful to see current problems from the viewpoint of history. From this vantage, the American auto companies almost appear to be worse for Michigan than WalMart ever could. Problems today that seem endemic are really caused by an industry that has long had its way.


EDITORIAL
Auto industry losses should eventually be gains for state


The odds are that neither General Motors Corp. nor the Ford Motor Co. ever will regain the market dominance they enjoyed in their heydays. But while we may wish the calendar could be rolled back to the 1970s, let’s say, that would be a mixed blessing at best.
The fact is that just as the auto industry has produced a lot wealth for Michigan’s economy, it also has caused distortions.
The question sometimes is asked, “Why did the Detroit area become the nation’s automotive capital?” The short answer is that nobody else wanted that business.
Grand Rapids, for example, fought for years to keep the auto industry out of that city. Indianapolis discouraged its growth there.
Why? It sounds delusional to turn down companies that could employ thousands of people at high wages. But it was the high wages they feared.
Other employers came to realize they couldn’t afford to match auto plant pay levels, even before the United Auto Workers union came along. And all employers, much of the time, are competing with each other for labor.
How could car companies be so generous? Because the value added per hour by putting parts together to make a vehicle is enormous. The work also was, and is, onerous. So automakers not only could afford high wages but typically had to pay them. Even before the UAW, autoworkers earned 150 percent of the average industrial wage.
As the auto and truck plants and their high pay proliferated in Michigan, many other manufacturers gradually disappeared. It was as urbanologist Jane Jacobs concluded: A huge enterprise, like a huge tree, harms everything in its “shade.”
In the ’70s, an employer in Pontiac complained in public to GM that he was being forced out of business because “you pay your sweepers more than I can pay my skilled people.”
GM also could be overbearing in other ways, such as demanding that newly hired workers start the next day. That left their former employers in the lurch.
It also must be noted that auto industry wage and benefit levels have heavily influenced those of public employees in Michigan — municipalities and school districts.
In the mid-1960s, Michigan voters approved a state income tax. They were told it was to improve services and ease reliance on other taxes. But at almost the same time, the state legalized collective bargaining for public employees.
Suddenly, the residents were told, “Surely you don’t want your (teachers, policemen, etc.) to be paid less than autoworkers!”
Most Michiganians accepted the argument without quite realizing that auto plant pay was exceptionally high compared with most other industries in other states. The end result is that Michigan’s public school employees are nearly the highest paid in the nation.
So a less dominant auto industry, helped to survive with a moderating of labor costs in the face of foreign-owned rival manufacturers, could return to prosperity. And the high-cost labor climate could moderate enough to once again attract other employment to the area.
For decades, it has been an oft-stated goal of many Michigan lawmakers and leaders to reduce our reliance on the auto industry. So what may seem now like a loss should be a gain in the long run.
THE OAKLAND PRESS
GOOD MORNING
This has the makings of a “Super” week.

[malorn]

Originally posted by JackDodge@Jan 29 2006, 07:08 AM
It's always helpful to see current problems from the viewpoint of history.  From this vantage, the American auto companies almost appear to be worse for Michigan than WalMart ever could.  Problems today that seem endemic are really caused by an industry that has long had its way.


EDITORIAL
Auto industry losses should eventually be gains for state
    The odds are that neither General Motors Corp. nor the Ford Motor Co. ever will regain the market dominance they enjoyed in their heydays. But while we may wish the calendar could be rolled back to the 1970s, let’s say, that would be a mixed blessing at best.
    The fact is that just as the auto industry has produced a lot wealth for Michigan’s economy, it also has caused distortions.
    The question sometimes is asked, “Why did the Detroit area become the nation’s automotive capital?” The short answer is that nobody else wanted that business.
    Grand Rapids, for example, fought for years to keep the auto industry out of that city. Indianapolis discouraged its growth there.
    Why? It sounds delusional to turn down companies that could employ thousands of people at high wages. But it was the high wages they feared.
    Other employers came to realize they couldn’t afford to match auto plant pay levels, even before the United Auto Workers union came along. And all employers, much of the time, are competing with each other for labor.
    How could car companies be so generous? Because the value added per hour by putting parts together to make a vehicle is enormous. The work also was, and is, onerous. So automakers not only could afford high wages but typically had to pay them. Even before the UAW, autoworkers earned 150 percent of the average industrial wage.
    As the auto and truck plants and their high pay proliferated in Michigan, many other manufacturers gradually disappeared. It was as urbanologist Jane Jacobs concluded: A huge enterprise, like a huge tree, harms everything in its “shade.”
    In the ’70s, an employer in Pontiac complained in public to GM that he was being forced out of business because “you pay your sweepers more than I can pay my skilled people.”
    GM also could be overbearing in other ways, such as demanding that newly hired workers start the next day. That left their former employers in the lurch.
    It also must be noted that auto industry wage and benefit levels have heavily influenced those of public employees in Michigan — municipalities and school districts.
    In the mid-1960s, Michigan voters approved a state income tax. They were told it was to improve services and ease reliance on other taxes. But at almost the same time, the state legalized collective bargaining for public employees.
    Suddenly, the residents were told, “Surely you don’t want your (teachers, policemen, etc.) to be paid less than autoworkers!”
    Most Michiganians accepted the argument without quite realizing that auto plant pay was exceptionally high compared with most other industries in other states. The end result is that Michigan’s public school employees are nearly the highest paid in the nation.
    So a less dominant auto industry, helped to survive with a moderating of labor costs in the face of foreign-owned rival manufacturers, could return to prosperity. And the high-cost labor climate could moderate enough to once again attract other employment to the area.
    For decades, it has been an oft-stated goal of many Michigan lawmakers and leaders to reduce our reliance on the auto industry. So what may seem now like a loss should be a gain in the long run.
    THE OAKLAND PRESS
    GOOD MORNING
    This has the makings of a “Super” week.

[snapback]199831[/snapback]

I have my reservations about today's UAW, but htey are one of the big reasons most workers have health insurance and certainly changed the mobility of the working class in this country.

My question is what exactly would the editors replace those jobs with? Most jobs, including governement work can be done cheaper overseas. If cost is the only determining factor what will the US economy be left with?