Monday, January 23, 2006

Ford joins GM on the layoff list, Daimler Chrysler shows it's not inevitable.

Last November, I blogged on layoffs announced by General Motors.

Today, Ford announced that it is cutting 30,000 jobs.

Note that the Ford cuts are occurring pretty much the same place as the General Motors cuts. None outside of North America, and within North America, almost all in the United States, with relatively few job cuts in Canada. The whole Ford list has yet to be announced, but so far, five plants have been announced: Windsor Casting in Canada, Batavia Transmissions in Ohio (both parts makers which have no further market with the shutdown of assembly plants) and three major assembly plants: The Wixom assembly plant near Detroit, the St. Louis assembly plant in Missouri and the Atlanta assembly plant in Georgia.

Now, I briefly addressed Ford's problems in my post last November:

then why IS General Motors in such dire straights, especially compared to foreign auto makers (not just Toyota)? For that matter, Ford is limping along as well, hamstrung in similar ways, and Chrysler has had a mild resurgence, and that only since being absorbed by Daimler-Benz, a German company.

In fact, I was a little off on Daimler Chrysler. It is not just having a 'mild' resurgence, but its U.S. sales are up by a healthy 5% (including both sales of Chryslers and of German imports).

Now, there has certainly been mismanagement at both GM and Ford, which banked too heavily on bigger and better SUV's, even as consumers were finding that both the payments and the fuel prices on SUV's were no longer so affordable. But there is more here than that.

Conservatives will blame unions, and the associated contracts. However, that ignores the fact that Daimler Chrysler is doing so well (they have UAW unions in the United States, and in Europe they have arguably even stronger unions and workplace laws that include more vacation time and higher pay than in America.)

What we should recall is very simple. Health care. Foreign auto manufacturers (remember Diamler Chrysler makes a lot of cars in Europe) don't have to worry about either paying health insurance premiums or paying someone to administer their plans. And without healthcare on the table, unions and management already start labor negotiations much closer together.

About fifteen years ago, foreign governments were accused of 'subsidizing' their auto, steel and other heavy industries by American manufacturers. And they were, if you call their national healthcare plans a 'subsidy.' Our lack of one adds over a thousand dollars to the price of a new GM or Ford vehicle, and that is why American manufacturers are hurting, and increasingly closing plants in the U.S. (and just as in the case of GM, the Canadian plants are less likely to be closed than plants on this side of the border).

The fact is, America is a very rare bird when it comes to healthcare, in fact unique in the world. We are the only nation that doesn't have a national healthcare system, but in which a majority of our population is covered by private healthcare (most nations with only private healthcare are third world, poverty stricken nations, where only the privileged few can even afford a doctor; And developing countries that can afford for more than these few citizens to have health care, still opt for socialized medicine (like Mexico.)

Now, conservatives have a very specific solution. They would like for workers to pay part or all of their health premiums, claiming this would restore America to competitiveness in the world economy.

Well, that depends what kind of competitiveness you mean. Apparently they mean competitiveness against impoverished nations where people do in fact purchase their own healthcare, if they can afford it. Yeah, we could compete economically with Chad! They obviously don't mean competitiveness against countries like Germany and Japan, where most of the cars that have been chasing GM and Ford out of the market are made. Apparently, they can't even look at Daimler Chrysler (a hybrid company with half its workforce under national healthcare) and figure it out.


jen said...

thanks Eli, for posting on this.

You've been tagged with a meme:

Anonymous said...

Hey, Eli!

Tag, you‘re it!

Oh, Jenny, jinx! (Sorry! I didn't know!)

shrimplate said...

The smart money's on Chad.

Chad the country, not Chad the guy who was into wrestling in highschool.

Anonymous said...


How do you explain the success of Toyota? Japan does not have a national healthcare system. I have a brother who works for Toyota in Indiana. He recieves a great health insurance package.

Anonymous said...


Apparently Japan does have a nationalized healthcare system. Although not a severe as that found in Europe. Sorry for my mistake.

That still does not explain the success of Toyota in the US vs. the failure of GM and Ford based on the argument in your post.

Anonymous said...

"And without healthcare on the table, unions and management already start labor negotiations much closer together." Thats the elephant in the living room, my friend. We need universal healthcare not only because we SHOULD have it but because healthcare is out of control and is weakening the economy in ways that even a conservapundit can contextualize.

Toyota has better resale value than doesn't it, and didn't it enjoy a boost from taurus (strong sales years running)and now, prius? Honda had the comparable Civic and they have a hybrid as well, but the others seemed to rely too much on their top selling SUV's which went the way of the market, no?

Anonymous said...


I don't see the connection between your second paragraph and us needing socialized medicine.

Eli Blake said...

Eddie, get your facts straight.

Japan does have a national healthcare plan that covers 100% of their citizens. They actually have six plans, but they are between the citizens, the insurers and the government, thereby costing Toyota not a dime.

Sounds to me that Toyota is much in the same position as Daimler Chrysler (plus the fact that as Lily mentioned, Toyotas are frankly better cars-- I've owned two and drove them for collectively half a million miles.)

Anonymous said...

How stupid are the American auto companies that they couldn't see this coming thirty-odd years ago when we had our first gas crunch and keep the market edge by making better, more competitive and more efficient vehicles? And, "oh, hey, we're losing some money here, let's take from our workers' benefit packages." Idiots! Again, it is the everyday American worker who will suffer because of corporate incompetence, greed and idiocy.

[FACT: A total ban on oil exports to the United States was imposed by Arab oil-producing nations, Oct. 19-21, 1973, after the outbreak of the Arab-Israeli war. The ban was lifted Mar. 18, 1974. Source: NY Times World Almanac and Book of Facts]