Car Industry Crashing Everywhere
When thinking about the prospects of some kind of bailout for US automakers, it’s important to understand that problems in the car industry are, at the moment, worldwide. Toyota, the biggest and most successful firm in the business, is looking at taking a huge hit. Under the circumstances, the outlook for Detroit’s embattled firms looks even worse. They’re not, in other words, one quick fix from viability — they’re the sick men of an industry that’s in big overall trouble. Simply put, much more capacity exists to make new cars than there is demand to buy new cars. Propping up failing manufacturers isn’t going to solve any broader economic problems. Helping the people or even the geographical areas affected by the liquidation of the weakest car firms would be a reasonable course of action.
But trying to help them by helping the firms themselves is going to be costlier and ultimately slower in terms of putting people in a sustainable situation.
79 Responses to “Car Industry Crashing Everywhere”
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November 8th, 2008 at 5:19 pm
I agree, the aid should be bottom up, not top down, but I think that there needs to be a whole reconditioning of the Detroit and Ohio areas. I have a cousin who was laid off of from a plant in Zanesville, Ohio, and he’s in some retraining program at a local community college. I hope that these programs are helping the people learn new trades and are giving them enough time to adjust. Much like welfare to work, many programs are time limited and don’t give people enough time to complete a degree or certificate program that would be applicable to the new (changing) economy.
November 8th, 2008 at 5:31 pm
Yes, exactly right. The same logic applies to the financial industry. So why is our taxpayer bailout plan focused on saving the existing banks and financial institutions? We need a finance industry and we need an auto industry (somewhere in the world), but we shouldn’t be spending taxpayer money to prop up an outdated system.
November 8th, 2008 at 5:38 pm
If you read the Economist’s 2004 special report on the car industry it gives you a good idea of why the auto industry is in this mess. You’re right the main problem is excess capacity. To solve this problem the government should help these companies lay-off employees (i.e. deal with the unions) and consolidate. And for all those people hurting, help them get back into the workforce and reallocate to areas with jobs. Simply dumping cash into Michigan is not a sustainable solution.
November 8th, 2008 at 5:42 pm
If we can help them produce cars that will actually sell (which seems to be what Obama has in mind), then it’s worth considering; just keeping them alive to falter again later, not so good. Save the Detroit Pistons!
November 8th, 2008 at 5:52 pm
“…Simply put, much more capacity exists to make new cars than there is demand to buy new cars. Propping up failing manufacturers isn’t going to solve any broader economic problems…”
Right on all counts. But I’d look past helping the Big 3 if they’d do their part – trim executive pay, suspend stock dividends, and rewrite labor contracts (e.g. get rid of the ridiculous “legacy” benefits). If Reid, Pelosi, and Obama just give them what they want with no strings attached they’ll be making a huge mistake and it’ll be resented by taxpayers.
November 8th, 2008 at 6:02 pm
If we can help them produce cars that will actually sell (which seems to be what Obama has in mind), then it’s worth considering
Because you and some non-specialist bureaucrats know what cars sell. GM, Ford and Chrysler are not failing because they made some stupid management decisions. These companies simply could not have made cars like the Japanese or Europeans. Just look at Project Yellowstone (1999) and you can see the labour-management relationship which made producing certain types of cars impossible. This same relationship also made cutting capacity near impossible.
November 8th, 2008 at 6:23 pm
I have a good friend in Michigan who was laid off and was placed into a program that sent him to community college. Now he has two trades he can’t find work in. Re-education is a feel-good fix that everybody talks about and sounds real good in theory but doesn’t work.
November 8th, 2008 at 6:32 pm
Apparently, the, er, progressive Democratic leaders of Congress don’t agree with Matt. From today’s New York Times:
Pelosi and Reid Urge White House to Aid Automakers
Progressive President-elect Obama is on board too:
November 8th, 2008 at 6:32 pm
So what’s your suggestion, sheesh? Those auto manufacturing jobs just aren’t coming back.
November 8th, 2008 at 6:34 pm
Policy makers have to make re-training work for the new economy. In welfare to work, it is time limited, doesn’t lead to degrees, so often the people get retrained for low wage jobs. If these plants close, what are the people going to do?
November 8th, 2008 at 6:34 pm
Not too surprising that the Dems aren’t going to let Detroit go under. Politically it’s just not doable, especially at the beginning of a new administration.
November 8th, 2008 at 6:49 pm
What’s needed is a graph that shows executive/board pay, union pay, and market share for the past 20 years. I’m positive it will demonstrate an industry that has not had a business model that produced anything of value. Possible solution…let the US auto industry produce all millitary vehicles while they restructure and get their act together. People get to work and the tax payer gets something of value in return.
November 8th, 2008 at 6:52 pm
Not too surprising that the Dems aren’t going to let Detroit go under. Politically it’s just not doable, especially at the beginning of a new administration.
But you think they should, right? It’s funny how lefties suddenly transform into economic libertarians when the issue is government assistance for giant corporations they despise. They temporarily forget all their usual “progressive” economic principles and start preaching the creed that the government should stay out and defer to the market, that capitalism is about creative destruction, that taxpayers shouldn’t subsidize inefficiency and wastefulness, etc., etc.
November 8th, 2008 at 6:53 pm
Accepting that there are huge structural issues with the future of auto manufacturing, there are two issues:
1) What conceivable alternate retraining/transition/assistance is necessary to bring about a “soft landing” for the millions of people and the not-insignificant regions associated with auto manufacturing?
2) Is the long term solution necessarily the best thing to pursue at this moment? Any transition in this matter is going to hurt, and it’s going to hurt bad. Is it worth considering an option that does not resolve the issue, but offers some amelioration while postponing the need for a final solution until we aren’t in the middle of a financial meltdown?
November 8th, 2008 at 7:16 pm
“It’s funny how lefties suddenly transform into economic libertarians when the issue is government assistance for giant corporations they despise.”
It’s funny how some on the right think that the only stated principle of the left is the idea that the government should do everything, and that any divergence from this principle constitutes hypocrisy or contradiction.
There’s plenty of economic neoliberalism in the American left, and there always has been, from the New Deal to welfare reform. But the idea that “taxpayers shouldn’t subsidize inefficiency and wastefulness” does face a serious exception–for the left, at least–when it comes to the sick, the old, children, and the disabled. You’re seem to be howling about that, which says a lot.
Aside from all that, it’s a dubious claim that the American left hates the auto industry. It has a poor environmental record, but it is among the most unionized industries in the country, and provides some of the best blue-collar jobs in the world. Besides, Demcoratic leaders understand at the very least the aesthetics of the party of FDR refusing to bail out a large industrial sector right after they plowed hundreds of billions into the financial sector.
November 8th, 2008 at 7:34 pm
Colatina,
Well, make up your mind. If the American left, who you seem to now be speaking for, doesn’t hate the U.S. auto industry, and realizes that allowing that industry to collapse would cause enormous economic and social dislocation, with the loss of thousands of high-paying union jobs, why are Matthew and company proposing to just let that happen, as if they have suddenly embraced laissez-faire capitalism?
November 8th, 2008 at 7:35 pm
retool a few of those plants to produce military vehicles
We will need to produce tens of thousands to replace all those destroyed, damaged or left in Iraq and Afghanistan.
November 8th, 2008 at 7:49 pm
It is not just the auto industry–folks just aren’t buying anything (look at the October retail figures) because they don’t have jobs, their incomes have stagnated, they’re losing their homes, their mortgages have ballooned, their retirement has evaporated, and the economy is so crappy that it just doesn’t make sense to take on additional debt right now. The government can’t bail out every industry separately. The stimulus needs to be from the bottom up: better unemployment, create jobs by building infrastructure, better education and student loans, etc. If people have decent education, decent jobs, and decent incomes they will be able to buy stuff again.
November 8th, 2008 at 7:55 pm
Did I mention that I have nothing substantive to add, and in order to continue trolling, I’m going to lurch from position to position in order to remain an insufferable contrarian bullshitter?
November 8th, 2008 at 7:59 pm
I am insane.
November 8th, 2008 at 7:59 pm
Well said, Matthew. There isn’t a government solution to overcapacity.
I view this as a first test of my worries about Obama. What happens when the politically expedient option doesn’t have empirical support. It’s corn ethanol all over again.
I think the correct way out is to.
1) Offer large grants to develop green vehicles. The big 3 should apply, but they should not be guaranteed money based on their past failures.
2) Offer rebates to buyers of high fuel economy vehicles.
3) Invest in infrastructure in the hard-hit areas.
November 8th, 2008 at 8:12 pm
Three miles to the gallon?!
I say, “Let ‘em crash.”
November 8th, 2008 at 8:12 pm
“Large grants to develop green vehicles” would be “helping the firms themselves,” which Matthew rejects.
“Rebates to buyers of high fuel economy vehicles” isn’t going to do much for U.S. automakers or their employees. The primary beneficiaries would be U.S. consumers in the market for a new car, and foreign carmakers like Toyota, Nissan and Honda.
November 8th, 2008 at 8:12 pm
While overcapacity of cars is likely to remain, overcapacity in mass transit is not.
Perhaps, with the right incentives, the dinosaurs of the auto industry could redirect.
Even better would be innovation in mass transit, which, along with government incentives, would make mass transit more affordable and attractive.
November 8th, 2008 at 8:23 pm
Even better would be innovation in mass transit, which, along with government incentives, would make mass transit more affordable and attractive.
In most American metropolitan areas, you can buy an unlimited-use monthly transit pass for around $50-80. Even less if you’re elderly, disabled, or a student. The average monthly cost of running a car is something like ten times as high. If mass transit struggles to attract riders when it’s ten times cheaper than driving, it probably wouldn’t do much better if it were eleven times cheaper.
And of course, reducing or eliminating transit fares would mean an increase in already-astronomical subsidies, which would mean higher taxes or cuts to some other area of government budgets.
November 8th, 2008 at 8:35 pm
Re: Re-education is a feel-good fix that everybody talks about and sounds real good in theory but doesn’t work.
One problem here: you retrain some middle-aged, or even 30-something, person and send him/her out to compete for entry-level (=lower pay) work against a bunch of 25 year olds. Guess who’s more likely to get hired?
Re: What conceivable alternate retraining/transition/assistance is necessary to bring about a “soft landing” for the millions of people and the not-insignificant regions associated with auto manufacturing?
Problem is, there is no such conceivable solution. Car-haters like Matt are talking about improverishing millions of people across a broad region of the US and Canada. Even a wingnut on the Right would pause long before assenting to that policy. The only humane and politically doable thing I can see here is to keep the auto industry on life support and downsize it very gradually, mainly through attrition as older workers retire and die (early retirement with full benefits can speed that process). And along the way of course we should also green-size it, supporting the development of new technologies to replace fossil fuels. Detroit (in the larger sense, and including the foreign auto-makers) will never employ anywhere near the people it once did. But let’s make that transition slowly even if it costs a pretty-penny to do so. Better that than create a large festering economic sore in the nation (and the nation next-door) where Barak Obama will be forever remembered the way our grandparents remembered Herbert Hoover.
November 8th, 2008 at 9:30 pm
Idle curiosity, Mixner — what do you think should be done about the auto industry? I know it’s not like you to actually take a position, but give it a shot.
I honestly don’t have one, which is why I don’t go around attacking other people’s ideas. Though I’m leaning towards JonF at 26 (though there’s no reason to preserve the interests of the current equity holders and management).
November 8th, 2008 at 9:58 pm
Idle curiosity, Mixner — what do you think should be done about the auto industry?
I think there should be some kind of rescue package. I basically agree with what JonF said above. I don’t really care what happens to the U.S. auto industry over the long term. It wouldn’t surprise me if 20 or 30 years from now the global auto industry is dominated by Chinese and Indian carmakers. But the U.S. auto industry is simply too important at the moment to let it just fail. It would also be a political disaster for Obama to take Matt’s position.
November 8th, 2008 at 10:12 pm
I find Yglesias’s attitude on this question completely bizarre. If you were looking at a whole lot of poor Africans who were facing potential famine a year down the road, you could either put in place some giant humanitarian relief effort that would funnel food to them after their lives collapsed, which basically guarantees relief camps and the wholesale destruction of their society and economy; or you might look around for some key underpinning structure in their existing economy and society which, if you could just help that structure, might keep them in their villages, with their society still healthy, while avoiding famine. Maybe you’d find that temporary subsidies for their corn could do it, or whatever. By spending a small amount to protect their fundamental industry, in other words, you save yourself having to clean up the mess of seeing their entire society collapse.
So we have a bunch of Michiganders who are about to face massive socioeconomic disruption caused by a worldwide economic crisis. Is there some big social and economic structure which, if we could just help it through the tough times, could hold their entire society together and avoid catastrophic disruption? Hm, what could such a structure be? If only there were some big industry that many of them worked for which, if we just reorganized it for sustainability, would have massive positive knock-on effects in supporting other local industries and social institutions.
November 8th, 2008 at 10:15 pm
Mixner,
Why exactly is the US Auto Industry too important to fail?
I say we just give everyone who lives in the region a nice chunk of money so they can move to an area with a functional industry. This seems like a nice way to take advantage of low real-estate prices.
We then give a credit to all of the people involved at any vocational school or university of their choosing.
Finally, liquidate the auto-companies in order to fund the company’s remaining pension liabilities, and have the federal government pick up the remainder of the tab.
November 8th, 2008 at 10:18 pm
Industrywide, I don’t think the problem is so much overcapacity as it is the sharp, sudden collapse of demand.
We’re facing dire economic circumstances. A lot of people can’t or aren’t buying things, and cars are expensive things. When you’re struggling to pay the mortgage, bills, health insurance, etc, it’s one thing to splurge on a DVD or a night out. It’s quite another to drop $20,000+ on a new car.
The best way to fix the auto industry? Simple. Get the economy going again.
November 8th, 2008 at 10:34 pm
The cost of mass transit is peanuts next to the cost of owning, maintaining and fueling a car. Affordability isn’t the issue so much as time and convenience.
If you live in a relatively dense, compact urban environment, mass transit is great. But for the rest of us, it literally adds HOURS to the daily commute.
Most American cities are too decentralized to make mass transit a desirable option outside of downtown areas. Short of Star Trek-style transporters or a massive restructuring of urban and suburban living, I don’t see that changing anytime soon.
November 8th, 2008 at 11:18 pm
As a former Michigander, I must say that I think people are underestimating how deeply the auto-industry is interconnected with the state’s economy. If the Big 3 were allowed to fail, it’d be like letting the financial industry collapse in NYC. Ford, GM and Chrysler would take a lot more with them than just auto manufacturing. There’s a reason governor Granholm was invited to be a part of that economic team. It wasn’t just for show.
November 8th, 2008 at 11:22 pm
At some point people, you cannot continue to outsource the means of production. But then again, when Matt and others live in the biggest government supported community in the world (Washington, DC), I find the lack of compassion for other communities which are hurting right now (because of the free-trade policies supported by the very likes such as Matt Y) to be utterly sad, hypocritical and myopic.
Oh – quick fact ~ 1 in 10 jobs is directly or indirectly tied to the auto industry. So before you want to let them fail, better figure out what taking 10% of the country, wiping out their earnings potential will do not only to those regions, but to all other industries within this country.
November 8th, 2008 at 11:47 pm
One of the common complaints about the U.S. economy is that we don’t actually manufacture much of anything anymore. Cars are one of the few things we still do make.
From what I can see, Chrysler is already pretty much done; Daimler wrote the value of the company down to nothing, I believe. Ford & GM are going to need major overhauls to survive. If we had universal health care, it would probably go a long way towards making them viable financially. The real problem, from what I can see, is clueless management, particularly at GM. Those guys haven’t made a right decision in years.
November 9th, 2008 at 12:15 am
Just letting them fail is PI (Politically Impossible), as much as the management of these companies deserves it. Others have pointed out the tremendous regional economic damage that would ensue. It still looks like throwing money down a rat hole. We really don’t know how much the capacity problem is a transient function of the financial implosion, it might not be unlikely that coming out of this downturn, the overall size of the car market may not fully recover. So part of the rescue, has got to involve some capacity reduction. Perhaps this physical plants and industry expertise can be converted to building other things we will need. Mass transit, and perhaps even wind turbines, and components for solar thermal power plants come to mind. It is a heavily engineering dependent industry, and I would hope we could retain the overall capability of the region -and its human resources. Of course the management, and stockholders of the corps shouldn’t be given a free ride, but we are talking about a pretty large and crucial region. And a lot of manufacturing capability we shouldn’t lose here. Hopefully the government share of the restructuring cost will be lower than the welfare cost of letting them fail.
November 9th, 2008 at 12:22 am
Well – it seems to me you can help auto manufacturing in general in the US by doing more to provide incentive for manufacturing the automobiles here in the US or Canada.
People may not like to hear this, but tariffs on foreign built automobiles (including Mexico Maquiladoras (to hell with NAFTA) is one way to decrease capacity of cars sold in the US.
There is the argument that if you do this, it will limit foreign markets to US products. Really? We are still the largest consumer, and since China realizes that it has not decoupled from the US Consumer demand, it seems we continue to have bargaining power.
November 9th, 2008 at 2:11 am
Well, I live in a city with an auto plant slated to close. It’s been a soft landing in some ways — the plant already employs just about 1/6 of its peak employees. Some jobs were lost to robots, others to lower-paying outsourcers, and the plant just plain hasn’t had three shifts in a few years. The local economy will take a hit, but it won’t be crippling at a “Roger & Me” scale.
The company workers alredy get quite a good package of benefits including severance, 90% layoff pay, and government retraining/transition money. I want to imagine there’s something more that could be done but I don’t know what it is besides “wave magic wand to create jobs”.
There’s going to be enormous downstream pressure on the market. Assembly workers are mainly unskilled, so have limited options, like Wal-Mart or warehouse work. There are manufacturing jobs but not enough. Some of them have been starting businesses or relocating.
The local boosters had been pinning their hopes on the plant being retooled, some thinking that the company (or heck, anyone) could make a new green vehicle here. It seems a long bet to me, and that was before the credit collapse. But if there were federal funds, maybe it could happen.
The key to me is making the right package of incentives. Money for gas-guzzling SUVs that can only be bought with a house-as-ATM? Nope. Money for gas-sipper coupes? Sure. Money for golf cart NEVs? Oh yes. Basically, don’t let the industry go back to its old ways as fast as a Dodge Charger can burn rubber. It will be difficult to stop them if somehow we become a nation of Hummer-cravers again, but I don’t think the incentives are there anymore.
November 9th, 2008 at 7:29 am
Those jobs must be saved or we really will have Great Depression II. The “bank bailout” cost 1.2 trillion. Adding a carmaker bailout makes the total 1.25 trillion. And it saves millions of jobs.
The automakers do not need to be saved. But the jobs do. It may be necessary to save the automakers to save the jobs. They need to change to survive but that change (even in a perfect economy, etc) will take a while…
November 9th, 2008 at 8:10 am
jimBOB says today, and I have said before, the best way to spend any bailout money for the auto industry, especially GM, is to nationalize health care. This would help protect the workers should/when GM collapses and remove one of their major competitive disadvantages vis a vis Toyota.
It would be awesome for the rest of us too.
November 9th, 2008 at 9:15 am
It’s interesting that, in spite of all the blather, nobody seems to know much of anything about the big or little picture. I guess teaching “economics” as a propaganda tool for capitalism lacks a few essential vitamins and minerals.
For 30 years the American car industry has lived behind a protectionist wall called “safety standards”. Safe in their moated castle, Detroit can probably still “compete” with foreign companies, except, of course, that Detroit the City was used, abused, and thrown in the gutter like a two-dollar whore by the industry.
The worldwide trends are pretty obvious- the backside of peak oil will continue to accentuate the economies of rail transportation, while global warming presents a clear choice to anyone under 50- adapt, or die. The 20th century may still be twitching and grasping our ankles with palsied claws, but it’s over.
Do we need new cars? Well, if we do, they’re certainly not the kind we’re building. Do we need the industry? In the 20th century an automobile industry was a mainstay of a petro-steel economy, one that could quickly switch to the mass production of tanks, bombers, and weapons. Not a big need for any country in the 21st century.
What we need are dense walkable communities on rapid transit spines, comprised of highly energy-efficient buildings powered by renewable energy. Building this society of the future, as a model for emerging powers around us, would provide plenty of jobs and develop new industries and skills.
Or, we could continue our glidepath to third-world status, with our oligarchies blocking any meaningful change while we increasingly huddle in mega-slums of decayed housing and unemployment. I’m guessing that doing CPR on the American automobile industry would largely be money spent on the oligarchies that are the problem.
If the American people need help because the automobile industry is failing, let’s build a different industry.
November 9th, 2008 at 9:47 am
The process of re-organizing and redirecting housing patterns, transit patterns and lifestyle patterns will be difficult and slow. But its clear that our MacMansion suburban homes, dinosaur cars, hour-long one-car commutes and one-car per person assumptions need to be downsized. Over the past century huge amounts of infrastructure investment has been in car transport (streets, bridges, etc). Large experiments in community planning are needed. And, for some to work, large-scale changes need to be made. There aren’t clear, simple answers. But locking our thinking to the technology of transit and home building of the 20th century is both short-sighted and a road to disaster. We need to consider a broad array of options. We need to have the courage, smarts and monetary power to be able to experiment and fail in order to have the capacity to experiment and succeed.
The auto industry may or not be part of a set of innovative solutions. It would be tragic if they are not participants.
November 9th, 2008 at 11:29 am
1) I don’t see any need to maintain the current auto industry. Much of the problem has been the fault of the $30 per hour additional cost of the United Auto Worker.
Given that the UAW poisoned the well, I don’t see why we owe them anything. Fuck them. Michigan becomes a huge slum? Ask me if I care.
It’s one thing to help people in difficulty through no fault of their own –we all owe loyalty to our fellow countrymen. But when people destroy an industry through greed and stupidity I think they deserve to suffer the consequences.
We can save the UAW assembly line worker via other jobs. I saw let the fucking union leaders starve.
2) Nor do we owe anything to the stupid Ford/GM management or to their shareholders. Let them starve as well.
3) What we do need to do is renovate this country to address Peak Oil. Which means mass transport, dense housing, electric cars and nuclear plants. Let those who want to be part of the solution prosper — let those whose focus on life is to cause problems die.
November 9th, 2008 at 11:29 am
The consensus seems to be that Chapter 11 is the way to go unless these companies can find private financing, but if that for some reason isn’t the solution, is there any way the government could guarantee the purchase of Ford or GM by one of the Japanese automakers or some other company, in the same way that it did it for Bear Sterns and JP Morgan? I guess this assumes that (a) Honda, Toyota, or Nissan would want to buy one of them and (b) it was in any sort of relative financial position to do so. But perhaps, if possible, this would be some sort of good compromise.
If anyone with any more sense of business than I have can tell me why what I am saying is obviously wrong for technical as opposed to ideological reasons, I’m all for it. I’m interested in finding a workable solution, not because I particularly care that these companies go out of business, but only because I can’t imagine that having two or three million people at risk for unemployment would be a good thing right now. (That’s the number of people, according to The News, that make their livings by the auto industry in some way.)
November 9th, 2008 at 11:37 am
What is that? A Google search seems to connect it to Airbus.
What industry was he trained for when he went back to school? That, among other factors like labor market conditions both locally and nationally, might reflect more on his success. I don’t think it necessarily means that retraining isn’t a solution.
November 9th, 2008 at 11:42 am
By the way, the idea that Detroit cars are all a piece of shit is wrong.
In my opinion, the Ford Crown Vic (aka Mercury Grand Marquis) with the police upgrade is one of the best deals out there — especially if you buy one that is two years old which has had the price knocked down by the massive initial depreciation. (Which is not REAL depreciation but simply reflects the depressed price from taxi companies and police departments dumping thousands of their used cars on the market. Find one from a rural police department –NOT a urban department — or a civilian owner. The problem with the urban police cars is that their engine may have almost three times the mileage shown by the odometer because of extensive idling. Plus the potholes exert wear and tear.)
The Crown Vic gives you almost the equivalent of the Lincoln Town Car but is almost $17,000 cheaper. There are REAL reasons why the REAL Mass Transport people — limo companies and taxi companies — like the Lincoln Town Car and the Crown Vic. Cheap simple maintanance and a life of 250,000 miles plus.
November 9th, 2008 at 11:52 am
Why would younger workers definitely have the edge?
November 9th, 2008 at 12:04 pm
It issurprising that US business universally condemms socialism — yet some of its best products come from the socialist-sectors of our country. Every year, Detroit produces millions of pieces of shit with glittering chrome that it sells to the dumbfucks. Yet it still builds a decent car like the Crown Vic –because police departments would kick its ass if it didn’t.
Similarly, the soldiers gear produced for the Army under the guidance of it Natick Mass Lab has superb quality and design — compared to the tons of overpriced crap you find in outdoor sporting stores.
And our outdoor fitters are paragons of quality compared to many producers of consumer goods. Go into any large urban shopping mall and what do you see? Enormous piles of overpriced shit that fails to meet the most minimal standards of good taste, design, or quality of materials.
The watches sold in Army PXs and used by many soldiers are the Casio G-Shocks. Available at Walmart for $60. And yet when measured against the 15 or so functional criteria that apply to a watch, the G-Shock is far superior to $5000 Rolexes and $1000 Omegas.
November 9th, 2008 at 12:08 pm
Re Brian J’s comment “Why would younger workers definitely have the edge? ”
——-
Because the employee model is the same as the car model.
Which would you prefer — a new model that has years of productive life left on it or a heavy used model prone to breakdown/service outages for repairs, with high maintenance costs and limited service life?
November 9th, 2008 at 12:44 pm
Obviously, the specifics matter here. A 55-year-old is definitely different than a 35-year-old even a 45-year-old. We can argue back and forth about what sort of qualities an employer might like once education and any sort of relevant experience is factored in, but we can’t say for sure.
But why is that our problem? We can’t force people to make the correct decisions in life as far as personal finances, for instance, but we can make sure the system isn’t stacked against them and/or they can recover from any problems if they take certain steps. In the same vein, we can’t force employers to hire certain workers, nor can we force potential employees to do much. What we can do is give them the tools to help themselves, if they choose. There’s no guarantee that a 40-year-old assembly worker will be hired as a medical assistant, but there’s also no guarantee that a recent college graduate is going to find an ideal career right away. I don’t have a problem giving them the opportunity to study in this field or some other field. If need be, perhaps they have to move or accept some other job until they find one that is suitable.
In other words, a lot of still left up to the workers themselves, but that is the way it should be. It’s not a magical solution by any stretch, but until it’s proven to be an incredibly large waste of money for years on end–as in, not effective for about 95 percent of those who use the system–worker retraining programs seem like a way to give people a chance to get back on their feet.
November 9th, 2008 at 1:15 pm
Re: Why would younger workers definitely have the edge?
I’m surprised you’d have to ask that question. We’re talking entry level of course so no one has previous job experience. Generally most companies prefer to hire younger workers because of A) generally lower healthcare costs and B) fewer family responsibilities distracting them from the job or making them unavailable for overtime or odd hours. Also, younger workers are less set in their ways and are easier to boss around. Many managers especially dislike having workers older than themselves precisely because an age difference can make the chain of command awkward. In some fields (i.e., IT) age discrmination is appalling rampant, and no one over 40 even need apply (of course there are laws about such things, but they are largely toothless, less effective than the speed limit laws in Montana)
November 9th, 2008 at 1:50 pm
I love the suggestion that the autoworkers should be retrained to work in another industry. Exactly what industry is it that they should be trained for? This country isn’t making squat. There are no other industries to put all those people in. Continued atrophy of any manufacturing base will doom us over the long run. You can’t be a power with a mere service economy. Not to mention the national defense aspect of losing the auto industry. Couple aid with concessions from both management and unions and you can have an industry the can survive.
November 9th, 2008 at 2:11 pm
Who can say for sure? The point isn’t to direct them to a specific industry, so far as I can tell. It’s to give them some help in letting them pick the new industry in which they want to work.
Which is what, exactly?
November 9th, 2008 at 2:26 pm
it seems to me you can help auto manufacturing in general in the US by doing more to provide incentive for manufacturing the automobiles here in the US or Canada.
Well, that would make the Japanese makers very happy. Ford is pretty much compelled to build the Fiesta in Mexico just to hit the $15k MSRP that would make it competitive in the US market, when it can sell the same car with a nicer spec for $22k in Europe.
And serial catowner is right about the soft protectionism of safety/emissions standards. Getting approval for a radically new platform is a long, expensive process that helped keep small cars — actual small cars, not microcars like the Smart but more akin to the Fit and Echo — from coming to market.
The big problem with restructuring the Big 2.5 is that the parts of the global business with potential market value are the foreign ops, but it’s the foreign ops that represent the long-term future of the US-based, US-headquartered industry.
November 9th, 2008 at 4:10 pm
Re: Who can say for sure?
If we can’t say what they should retrain for (i.e., we have no idea where there will be available jobs down the line) then how in the world can we retrain them? Retraining is usually pretty specific: you retrain for a specific sort of job. For a while, back in the 90s, everyone was retraining for network tech jobs, then we abruptly discovered that we had too many network techs and few employers wanted a 40 year old network tech anyway. I’m with those who say that, overall, retraining just doesn’t work. All too often it just trains people for more jobs that don’t exist.
November 10th, 2008 at 12:20 am
I was using “retraining” in a very broad, perhaps too broad, sense. I meant that displaced workers could be given the money and other types of support to use while they picked the field they wanted to work in and received the appropriate skills.
I have a vague idea of what you are referring to, but it’s hard to rely on anecdotes when talking about specific policies. So I ask, do you know of any policy papers that discuss this topic?
December 14th, 2008 at 10:17 am
TOKYO, Nov 19 (Reuters) – Nissan Motor Co
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