One of the major problems faced by the US auto industry (and virtually every sane person agrees) is that its decades of acquiescence to the United Auto Workers has resulted in pension and health care benefit costs that are unsustainable. For each car that GM manufactures, it must spend $1,500 for employee health care costs! Regardless of what one may think about the competitive value of GM cars compared to Honda and Toyota, GM cannot afford to compete with Japanese auto makers as long as its labor costs stretch into the stratosphere.
It’s no wonder that GM and Ford are laying off approximately 60,000 workers and closing one manufacturing facility after another.
Yet, at the same time, Japanese and Korean auto companies are building new plants in right-to-work states and are hiring as many employees as GM and Ford are terminating.
Without the burdens imposed by the unions, the Japanese and Korean companies will produce the finest quality cars at a cost significantly lower than costs in Detroit. And the situation will become even more dire for Detroit when China introduces a $10,000 car into the US market next year.
If an example of the negative effects of run-away unionization were ever needed, the Detroit auto industry has presented such an example in spades!
