All the pundits are discussing GM’s downfall today. Some blame the current recession for killing the car business while others look to recent tactical blunders (selling off its financing arm GMAC, getting involved with Fiat, halting its EV1 electric car, crazy incentives) to explain how one of America’s most iconic corporations could end up effectively owned by Uncle Sam.
But for two commentators on opposite sides of the political spectrum, GM’s troubles started with how it dealt with its unions decades ago.
First, Paul Ingrassia’s Wall Street Journal op-ed:
The company signed generous labor deals during the 1970s, including the right to retire after 30 years with full pension and benefits, partly because it believed the contracts would cripple its smaller competitors, Ford and Chrysler. Then along came Honda, Nissan and Toyota, which didn’t have to deal with labor contracts at all. That was the beginning of the agonizing decline.
And now the alternative view from professional provocateur Michael Moore, who made his name critiquing GM in the film Roger & Me:
Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the lives of tens of thousands of hard-working Americans. The glaring stupidity of this policy was that, when they eliminated the income of so many middle class families, who did they think was going to be able to afford to buy their cars?
So who is right? Did those high paying union jobs cripple GM’s competitiveness? Or were American unions needed to preserve the middle class consumer base that could afford GM cars? Share your thoughts below.
Image by Flickr user “lacie babenco,” CC 2.0.
