Auto comeback celebrated, but there’s a cost

Obama visits GM plant

DETROIT - President Obama visited a General Motors in Hamtramck and a Chrysler plant in Detroit Friday to celebrate the comeback of the two auto companies. But the comeback has come with a cost.

The president received enthusiastic receptions from workers at both plants. Over a thousand at Chrysler's North Jefferson plant gathered to hear him.

At GM's Hamtramck plant, where the new electric Chevy Volt is being made, Obama told cheering workers, "It's estimated that we would have lost another million jobs if we had not stepped in."

He was referring to the government loans that saved auto jobs and enabled the two auto companies to keep afloat after their 2009 bankruptcies. The auto bailout package was passed despite the objections of most Republicans.

At last month's United Auto Workers convention, outgoing UAW President Ron Gettelfinger said, "We must never forget there were several right-wing conservatives in Washington who wanted us to fade away. Let's be clear, the contempt for the UAW was so great that some were willing to let the industry collapse to destroy us."

Right-wingers are still bellyaching about federal monies that have been used to save jobs. Western Michigan Republican Congressman Peter Hoekstra, who is running in Tuesday's Republican primary for governor, used Obama's trip to Michigan to again criticize the cost of the president's federal stimulus package.

But these right-wingers have no answer for today's problems in the auto industry, where the situation is far different from a year ago. The dust has settled but it came at a cost.

In 2010, the companies have become much "leaner." It was only 30 years ago that GM had 395,000 hourly employees. Today that figure is closer to 50,000. Also thinned out were many parts companies, white collar jobs and car dealerships.

Michigan has lost 800,000 jobs since 2000, and 250,000 Detroiters are unemployed. New hires at the auto plants now start at $14 an hour. Previously they started at $28.

Auto analysts report that GM's fixed cost per vehicle will drop from $10,400 last year to $7,280 this year and to $5,772 by 2012. Chrysler's reduction likely is in the same range

Through such steps as restructuring labor contracts and reducing over-capacity by closing plants, auto companies are able to make profits even with a much lower sales volume. This phenomenon is being seen in other industries too. Profits are climbing even as sales remain far below previous highs.

Ford Motor Co. earned its biggest quarterly profit in 12 years and it expects its North American employment to grow by 2,000 people. But this is after shedding more than 100,000 workers in the preceding decade.

While all this is good for the companies, what about the "leaner" working class that has been created? How much can be purchased with those leaner wallets?

Michigan's unemployment rate remains above 13 percent. Many unemployed have received job training for new jobs but those new jobs are few and far between and, if found, usually pay much less.

The problem is great, and many here note that one union by itself cannot solve it. AFL-CIO President Richard Trumka has outlined a five-point program that labor and working people can unite behind: invest in infrastructure and green jobs, implement fair trade policies, change our tax policies, enact comprehensive immigration reform and reform our broken labor laws.

That's a program that will also help autoworkers.

Photo: President Obama visits the General Motors plant in Hamtramck, Mich., July 30. (whitehouse.gov)

 

 

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  • For every move that involves great sums of money, it involves high costs. However, the move that the Obama administration made saved these two great auto companies. If these two auto companies dive into bankruptcy, the impact will be far greater to America. America will lose its reigns as one of the top car or auto companies. GM and Chrysler have the America stamp, and letting these both slide will lay off hundreds of thousands of jobs. I am glad that the administration did this move. To me, my faith is restored to such great statesmanship.

    Posted by Thomas, 01/04/2013 2:03am (2 years ago)

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