The Packard Plant on the eastside of Detroit
And so yesterday came the word that the City of Detroit has declared bankruptcy, surprising no one. But perhaps we should look at how we got here.
If there has ever been a love affair it’s been between the American people and our cars, and they came from Detroit. And if we are honest a great deal of American power did as well. Even as early as the Civil War it was remarked that Americans were a race of mechanics and tinkerers, that trend accelerated with the guys like Henry Ford, the Dodge Brothers, Walter Chrysler, and yes, James Ward Packard.
From the 3.5 million square foot plant above, designed by Alfred Kahn, including the first use of reinforced concrete in Detroit came things you know of; The Liberty engines which powered the US Air Corps in the 1920s, the Merlin engines (designed of course by that other luxury car maker, Rolls Royce) that made the P-51 pursuit plane the scourge of the Luftwaffe with its combat range all the way to Berlin from England, the engines in John Kennedy’s PT-109 came from here as well, as of course did General Patton’s staff car, along with many other things.
When they weren’t making America the preeminent power on earth, they were building one of the world’s great motor cars. Almost all of us are too young now to remember that confident slogan, “Ask the man who owns one.” Here’s the plant in better times:
That’s Detroit in a microcosm, from possibly the most productive and profitable city in the world to a ruin in 68 years. How did that happen?
If you are my age, you remember with great fondness American cars from the 50s and 60s, great hulking brutes of steel (real steel, so much so that Smith and Wesson developed the .357 Magnum because the .38 Special could not dependably penetrate American coachwork in the 1930s), and enough horsepower to drag England across the Atlantic. Legendary in song and story, and that’s before we even mention Motown. Do you remember when we stood around and laughed at the little, silly looking cars like Volkswagen, and Citroens, and Volvos. Ok, I’ll admit there was a romance attached to things like MG-TCs and Jaguars, probably because you had to be rich, because we all knew that a car with Lucas electrics couldn’t be depended on in the rain.
But you know every few years the UAW would threaten to strike one of the Big Three, and sometimes did, and management would cave, and give the union what it wanted because, well “we are Detroit and nothing can touch us.” And the Europeans got better, and the Japanese showed up, and American quality became atrocious (especially on Monday and Friday) and then gasoline got expensive, and the bloom came off the rose, pretty much for ever. And now car guys talk about Mercedes, and BMW, and Porsche, and Toyota, and American cars all look alike, mostly like a poorly made Nissan. The American auto industry staggers on, with GM owned by the taxpayers, and the government essentially gave Chrysler to Fiat, living off their truck lines. Mostly because nobody else in the world has ever figured out how to build a proper 3/4 ton pickup, if they ever do, we’re in real trouble.
And that is the trouble with a monopoly, they don’t work. If you have a monopoly (with the sole exception of one backed by government guns; read that as crony capitalism) you will get lazy, and think, why should I work hard to give my customers something better, what are they gonna do without me. Sooner or later somebody does. Until the late forties we used coal for domestic heat, and even cooking, today you can’t buy it, it’s easier to buy a buggy whip than a ton of coal. (Yes, you can get a trainload easily enough). But for heat you use electricity, natural gas, liquified petroleum or oil. Why? Convenience, mostly.
But part of the reason that American car makers are no longer competitive is directly related to their years of glory, legacy costs. You see back in the day when everything was perfect, they gave their union members almost anything they wanted, not excluding featherbedding. And when most of it went into the dustbin of history they were saddled with a ridiculous amount of benefit payments to people who hadn’t worked there in years, maybe decades. These are the people who benefitted when Obama screwed the bondholders in the bailouts. But bondholders are people (sometimes one step removed, but the point holds) too.
But the thing is, this thinking is contagious, not only the car manufacturers and their unions believed it would go on for ever. So did the governments, like Detroit. But when the combination of Unions, bad management, and poor products killed most of the automobile industry, it also killed Detroit which had been for years a company town. And now it has the same problem, it can’t pay its bills because of the promises it made, mostly to its unions. It’s so bad that in Detroit, which not surprisingly is one of the most crime-ridden cities in America, the police response time is 57 minutes, compared to the national average of 11 minutes. And so the bankruptcy.
But there’s still another outfit in trouble – the United Auto Workers, yep the UAW itself is going broke as well. The Rat tells us
Before we get to the UAW’s survival plan, let’s face facts: The United Auto Workers has been a sideline spectator to the only growth in U.S. auto industry for more than 30 years. The union has not only failed to attract new members, it has also failed to organize factories of foreign automakers. As a result, it has been forced to sell assets and deplete its strike fund just to survive - and of course, to fund the salaries and benefits of top union officials. Nothing ever changes with these people, does it?
In 2010, the UAW collected over $274 million from its members. Unfortunately, it paid out more than $275 million in salaries, benefits and expenses. Of that $275 million, the union paid out nearly $50 million for the combined salaries and expenses of its officers and employees; 24 of the top 25 UAW officers were paid in excess of $100,000 in salary and expenses. Add in $71 million for officer and employee benefits, and the grand total exceeds $120 million.
So, how much did the union spend on behalf of rank and file members, you ask? $39,269 -spread between 376,612 members. Do the math: That’s about ten cents per member.
Continue reading Can The UAW Do For Foreign Automakers What It Did For Detroit?.
That would be almost funny, if it wasn’t so sad to look at the pictures of so many
American dreams in ruins.
Even today
Ask the man who owns one
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