[Mb-civic] Making US manufacturing work - Robert Kuttner - Boston Globe Op-Ed

[William Swiggard]

  Making US manufacturing work

By Robert Kuttner  |  March 25, 2006  |  The Boston Globe

GENERAL MOTORS and the United Auto Workers stunned Wall Street and the 
labor movement this week by proposing the ultimate buyout package. GM 
proposes to pension off every one of its 131,000 GM and Delphi workers 
in the United States, with cash bonuses of up to $140,000 for taking 
early retirement.

Who would make the cars? A new generation of lower-paid workers. It is a 
mark of GM's fragility that the UAW considers this about the best deal 
the union can get.

GM lost $10.6 billion last year. Its bonds are now classified junk. The 
stock market values the entire company at just $12.4 billion, a fraction 
of Toyota's $177 billion. Wall Street reacted to the prospect of this 
daring desperation plan by bidding up GM stock -- by exactly one cent.

GM once made nearly half the autos sold in America; it now sells about 
one in four, many of them imports. What went so wrong? And what does 
this say about the future of US manufacturing and trade unionism?

For starters, as a frequent renter, I conclude that GM makes cars 
consumers don't want. Compared with Japanese, Korean, and European 
competitors, the steering is slushy, the instrument panel needlessly 
confusing, and the feel cheesy. The reliability ratings are less than 
impressive. With a few nice exceptions, the designs are weird. Even the 
latest Caddy looks like it wants to be a Hummer.

Ever since the abortive Corvair, GM executives have been promising to 
learn from the competition, but they never do. Meanwhile, GM is stuck 
with a once-proud social contract that was defensible in the era of 
scant imports and a Big Three monopoly: GM would pay good health and 
pension benefits, as well as decent wages. But GM's foreign competitors 
live in nations with universal health insurance, giving domestic 
automakers a cost disadvantage from the get-go.

Even so, total labor costs for automakers are actually about $10 an hour 
higher in Germany, which manages to compete by making terrific cars. If 
GM management were not such a mess, its workers would not be paying the 
price.

There is a larger story here. The United States is also needlessly 
losing manufacturing jobs because it hasn't figured out how to compete 
globally. This is partly a story of lazy management, but partly of 
misguided public policy.

Mostly, it is not a story of overpaid production workers. Since 1973, 
total productivity of the US economy is up about 70 percent while the 
median wage of nonsupervisory workers is up about 10 percent, according 
to the nonprofit Economic Policy Institute (on whose board I serve). 
Economist Robert Gordon recently calculated that nearly all the fruits 
of that productivity went to the very top income brackets.

In autos, however, workers in Mexico and China with comparable 
production equipment and skills are paid less than one-10th the US wage. 
To stay in the game, the United States will have to compete smarter.

Yet the United States lacks sensible trade, industrial, technology, and 
labor-market policies to revive domestic manufacturing. Its policies are 
crafted mainly for the benefit of corporations that want the lowest-paid 
workers, regardless of where they are located and whether their home 
governments play fair. Consequently, America welcomes imports, whether 
or not the government of the exporting company subsidizes industry to 
capture market share, steals intellectual property, and honors basic 
labor rights.

Some have proposed smart strategies to reclaim competitive industry and 
good jobs in the United States. A plan by Senator Barack Obama of 
Illinois would relieve automakers of the ''legacy costs" of retiree 
expenses in exchange for Detroit's commitment to put serious money into 
state-of-the art hybrid cars. This idea is disparaged in some circles as 
''industrial policy," as if Japan, Korea, and China did not have 
industrial policies.

The next generation of workers, which will include much lower paid GM 
employees (assuming there is a GM) faces the most unequal distribution 
of wages and opportunities since the Gilded Age a century ago. 
Unionization of the expanding service sector, most of which can't pick 
up and move to China, would help defend wages. But the United States 
shouldn't abandon manufacturing altogether.

Automation means manufacturing will never have the share of jobs that it 
once did. Still, it's not too late to save US manufacturing and at least 
some good industrial jobs. But that will take radical revision of both 
management thinking and of the official free-market ideology.

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2006/03/25/making_us_manufacturing_work/
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