The American Automobile Industry Should be Allowed a Merciful Death

Published in Dongfang Daily
(China) on 17 December 2008
by Lam Hang Chi (link to originallink to original)
Translated from by Alan Kwok. Edited by Sonia  Mladin.
Lam Hang Chi: the American automobile industry shouldn’t be saved; it is now a “retrograde production instrument”


American Congress’s discussion on saving the top three automobile manufacturers i.e. General Motors, Ford and Chrysler came to a dead end last Thursday, East Coast time. It then triggered a huge fluctuation in the stock market. Worrying that the crisis over these three will bring in an enormous unemployment problem, The Department of the Treasury is planning to stop the tragedy from happening before Congress resumes early next year. On the one hand, it is going to offer a grant from the 700-billion “Troubled Asset Relief Program” (TRAP) and on the other hand, the Federal Reserve will make an exception by giving loans to the three manufacturers. After all, the last thing the U.S. government wants to see is three American icons closing down and an increasing unemployment rate.

The U.S. senate voted against the 14-billion so-called bridge loan that could probably help the three manufactures hold up till next March. The decision seems to be not caring at all and not considering the whole picture but if you look closer, you will see that the opposition is not completely unreasonable. If this is what we use to attack the Republicans' lack of mercy, it will be unfair then. In fact, the condition suggested by the Republicans on this grant makes sense in two ways. One is that the creditors of the three manufacturers will claim the loan back at a 33% off. Two is that the union members will have to cut their wages to the level of those of non-members. UAW, however, didn’t agree and the negotiation ceased.

As the three manufacturers are at the edge of bankruptcy, it is not a harsh condition to have the creditors reclaiming at a price of 33% off. To ask union members to give up high wages seems to be the only way to boost the three manufacturers’ competitiveness and to save their cost.

Below is the average hourly salary (basic salary with welfare) of American automobile workers:
1. Ford: $70.51 ($141025 annually)
2. General Motors: $73.26 ($146520 annually) and
3. Chrysler: $75.86 ($151720 annually)

For workers of Toyota, Honda and Nissan, their average hourly salary is $48 ($96000 annually). According to the comparison made by Professor M. Perry from University of Michigan, the annual salary of professors in American universities was $92973 in 2006. In 2006 workers of UAW with the average education level up to high school were making 57.6% more money than university professors and 52.6% more than non-UAW members…perhaps it is meaningless to make such comparison as better education doesn’t necessarily help one make more money. Nevertheless, such high salaries of UAW members are making their employers less and less competitive to low-salary industries. If UAW members can lower their salaries to the level of the non-members, there is still a chance for manufacturers to survive. 18 foreign automobile manufacturers who didn’t talk to the UAW are building new factories in the U.S. This tells us that if the union gets too powerful, it will bring more benefits to its members but will in turn stop them from career opportunities.

Apart from salaries, political factors are also taken into consideration. Toyota settles in Kentucky, Nissan in Tennessee and Honda, Mercedes and others in Alabama, senators of these states are mostly Republican and they do not want to subsidy union members thus inviting in competitors from overseas for the three local manufacturers.

While the media is occupied by the voice of “saving the automobile industry,” why is it that a large issue of saving the manufacturers is not mentioned? The decline of America’s piano making industry is a good lesson to learn from.

From 1870 to 1930, apart from their houses, the most important property of American families (should be more specific to say middle class families) was the piano. Way before hi-fi was born and became popular, the piano was the only musical instrument of many families and importantly, it is a symbol of elegance and good education. “Pushing-on” families all had pianos and it hence became an inseparable part of American families, social life and religious activities. At the time, the market's needs made New York, Boston and Chicago major locations where pianos were made. Piano advertisements were everywhere like cosmetics ones today. In addition, piano stores, tuners and tutors were also very abundant. The piano making industry and jobs derived became a pillar to America’s economy. From 1890 to 1928 (before the Great Depression), pianos' annual sales volume boosted from 172,000 to 364,000. These goods were not just a majority in the domestic market but were also sold overseas. The advantages from their production scale soon helped them occupy half of the world market.

Soon, when Wall Street collapsed in 1929 and the Great Depression followed, American people were not into music and joy anymore. They no longer had money to buy pianos and manufacturers went bankrupted one after another. Although economy gradually revived after World War II under the economic transformation, domestic piano making industry de facto entered the dead corner. Foreign brands such as the Japanese ones in 1970s and 1980s followed by Korean and now Chinese, they are economic and of decent quality thus have become consumers’ choice. The U.S. economy made some quick self-adjustment during the economic transformation so it was not hurt much.

Half a century ago, if the government saved the piano making industry, it would have probably lasted for a little longer. Less competitive products, however, will just not help the economy. More importantly, during those times, foreign piano making industries were developing and they would have definitely put the American one in a difficult situation. It is the same story with the automobile industry now.

The fall of America’s automobile industry will only give the U.S. economy more to do like the piano making industry did before. It will not be for a long term. If the three tycoons cannot survive under the current harsh situation, then let them have a merciful end. Indeed, this rather reasonable idea will not be acceptable to the government and politicians. High unemployment rate means that the government is incapable; the government officials will no accept that. Politicians funded by workers’ votes will not accept that. The government and politicians will therefore figure ways out to save the three tycoons and they will not hesitate even if it needs a tremendous amount of tax. Either Bush or Obama will definitely save the three tycoons. They, however, need to carry out upside-down revolutionary reformations (at least the salaries of union members should be lowered down to that of university professors). Otherwise, pouring large amount of capital or imposing penalty income tax on automobiles will not be helping but slowing down the development of the U.S. economy.


美国国会就拯救通用、福特、克莱斯勒这三大美国汽车制造商的谈判,于美国东部时间上周四破裂,导致股市大幅波动。不过,由于担心三大汽车巨头倒闭可能引致的庞大失业问题,美财政部打算在明年初国会复会前阻止悲剧出现,一方面会从7000亿(单位:美元,下同)的“问题资产解困计划”(TARP)中拨款,一方面则由美联储破例直接向车厂贷款。毕竟,布什政府不希望在其任内见到三大巨头倒闭、失业率飞升。

参议院否决可令三大巨头苟延残喘至明年3月的140亿所谓“过渡贷款”(bridge loan),看似不顾全大局亦欠人情味,然而略略探究一下,便可看出反对派不无道理,仅以党争抨击共和党议员见死不救,有欠公允。事实上,共和党人提出批准这宗拨款的条件并非不合理,举其荦荦大者,其一是三大巨头的债权人6.7折收回贷款,其二是工会会员必须减薪,减至与外国车厂雇用的非工会会员相同的水平。全美汽车业工会不接受,谈判因此破裂。

由于三大巨头已濒临破产,要求债权人6.7折收债,不算苛刻;至于要工会会员放弃高薪,看来亦是唯一可以提高三大巨头竞争力的节流办法!

统计显示,在2006年,美国车厂工人平均时薪(工资加福利)如下:福特70.51元(年薪14.1025万)、通用73.26元(年薪14.652万)、克莱斯勒75.86元(年薪15.1720万)。而丰田、本田和日产工人的时薪均为48元(年薪9.6万)。据密歇根大学经济系教授佩里(M.Perry)所做的比较,当年美国大学教授的平均年薪为9.2973万。平均学历为中学毕业的汽车工会工人比有博士学位的大学教授的收入高出57.6%、比非工会工人高52.6%……也许这样比较薪金并无意义,因为学问好不等于收入高,不过,工会成员薪金太高,已令车厂无法与低薪同业竞争,只要工会成员拿与非工会成员相同的薪金,美国车厂还是有生存机会的。目前有18间已签署工人不参加工会协议的外国车厂正在美国兴建厂房,可见工会太强、为会员取得太多利益反而会扼杀其会员的就业机会。

除了薪酬,当然不能漠视政治因素。丰田厂设于肯塔基州、日产设在田纳西州,而本田、奔驰等在阿拉巴马州,这些州的参议员大都为共和党籍,他们不希望以纳税人的钱补贴汽车工会会员,令三大巨头成为其选区车厂的竞争对手。

在传媒铺天盖地的“拯救汽车业”的声音中,为什么要救车厂这个大问题反被忽略。在这方面,美国钢琴业衰落的过程,极具参考价值。

在1870至1930年间,美国家庭(应该指中产阶级)最重要的资产,除了住宅,便是钢琴,在音响器材尚未普及的年代,钢琴是家庭中唯一的音乐工具,且象征文化修养,因此“努力向上”的家庭,都非置钢琴不可。钢琴成为美国家庭、社交及宗教生活不可分割的部分。因应市场需求,纽约、波士顿和芝加哥成为钢琴生产重镇,钢琴广告有如今日的美容广告,无处不在,而钢琴零售店、校音师及教琴师亦成行成市,钢琴工业及其衍生行业成为美国经济重要支柱之一。在1890年至1928年(大萧条前),美国钢琴年销量从17.2万部上升至36.4万多部。美国生产的钢琴不仅占据大部分本土市场份额,而且销往全球,以其规模生产带来的价格优势,很快占据世界市场近半份额。

可是,1929年华尔街大崩溃及接踵而来的大萧条,令美国人无心享“乐”、无钱购琴,美国钢琴厂纷纷倒闭。虽然二战后美国经济转型,慢慢复苏,但本土钢琴业还是逐渐衰落了,因为外国钢琴——上世纪七八十年代是日本,之后是韩国,现在是中国——经济实惠,大受美国消费者欢迎。然而在这种产业转移中,美国经济很快做出自我调整,并无任何损失。

半个世纪前,面对外国竞争,如果美国政府救助钢琴制造业,或许能令其茍延残喘,然而其缺乏竞争优势的产品只会带来经济浪费;更重要的是,与此同时,外国钢琴制造业的发展不会停滞,这只会加深美国钢琴业的困境。现在的汽车业亦是如此。

美国汽车工业的没落,其实与钢琴制造业一样,对经济只会带来“阵痛”,不会造成长期痛楚。无法在剧烈市场竞争中生存的三大巨头,便让它们“安乐死”吧。当然,这种理性提议不会为政府和政客所接受。高失业等于政府无能,官员不能接受;靠工人选票支持的政客不容许这种情况出现。政府和政客因此必会设法拯救三大巨头,即使因此虚掷巨额税款亦在所不惜。因此,美国政府,无论是布什还是奥巴马,救助汽车三巨头势在必行,但先决条件是三巨头应进行翻天覆地的革命性改革(至少应把工会工人的收入降低至等同大学教授),若不如此,大量注资甚至征取惩罚性汽车进口税,不但无济于事,最后还会拖缓美国经济向前的步伐!
This post appeared on the front page as a direct link to the original article with the above link .

Hot this week

Spain: The New American Realism

Ireland: US Tariffs Take Shine Off Summer Economic Statement

Taiwan: Tariff Showdown Doesn’t Shake Confidence

Germany: Nerve-Wracking Back and Forth

Turkey: Conflicting Messages to Syria: US Supports Integrity while Israel Attacks

Topics

Spain: The New American Realism

Mexico: Trump vs. Cuba: More of the Same

Ireland: US Tariffs Take Shine Off Summer Economic Statement

Israel: Epstein Conspiracy: When the Monster Has a Life of Its Own and Rises Up

Spain: Another Threat from Trump

Canada: Negotiating a Business Deal without Trust

Taiwan: Tariff Showdown Doesn’t Shake Confidence

Related Articles

Germany: Trump’s Tariffs: China Acts, Europe Reacts

Australia: As Trump Turns His Back on Renewables, China Is Building the Future

Indonesia: US-China: Tariff, Tension, and Truce

China: US Chip Restrictions Backfiring

Thailand: US-China Trade Truce Didn’t Solve Rare Earths Riddle