Yes, Detroit Can Be Fixed
Thread Starter
Banned
Joined: Mar 2001
Posts: 1,938
Yes, Detroit Can Be Fixed
Opinion: Detroit Can Be Fixed
In today's Wall Street Journal, Holman W. Jenkins Jr. has an idea for how a new administration could help reshape Detroit's auto makers. In one word: deregulation. All Washington needs to do is allow auto makers to meet current fuel economy standards with any mix of autos made in domestic or overseas factories.
Under the nonsensical “two fleet” rule that now applies, manufacturers meet the standards separately with their "domestically" and "non-domestically" produced fleets. What does this have to do with making sure U.S. consumers get good mileage? Nothing. It's a handout to the UAW at the expense of the companies and their customers.
How dumb is the two-fleet rule? Nissan, in a petition for its removal, points out international brands may actually minimize the domestic content in their U.S. cars so they can continue to count as "nondomestic." Through deregulation Detroit would finally get what every international competitor and just about every other business has – normal leverage over labor costs. Auto jobs wouldn't automatically flee offshore. The Big Three would rather hire high-quality U.S. workers – but on the same terms that Toyota or Nissan or BMW do.
Let's not kid ourselves that a taxpayer rescue would be anything but a down payment on a never-ending bailout. Instead, let's level the playing field with sensible, achievable legislation.
In today's Wall Street Journal, Holman W. Jenkins Jr. has an idea for how a new administration could help reshape Detroit's auto makers. In one word: deregulation. All Washington needs to do is allow auto makers to meet current fuel economy standards with any mix of autos made in domestic or overseas factories.
Under the nonsensical “two fleet” rule that now applies, manufacturers meet the standards separately with their "domestically" and "non-domestically" produced fleets. What does this have to do with making sure U.S. consumers get good mileage? Nothing. It's a handout to the UAW at the expense of the companies and their customers.
How dumb is the two-fleet rule? Nissan, in a petition for its removal, points out international brands may actually minimize the domestic content in their U.S. cars so they can continue to count as "nondomestic." Through deregulation Detroit would finally get what every international competitor and just about every other business has – normal leverage over labor costs. Auto jobs wouldn't automatically flee offshore. The Big Three would rather hire high-quality U.S. workers – but on the same terms that Toyota or Nissan or BMW do.
Let's not kid ourselves that a taxpayer rescue would be anything but a down payment on a never-ending bailout. Instead, let's level the playing field with sensible, achievable legislation.
Full Article:
Yes, Detroit Can Be Fixed - A CAFE tweak can bust the UAW labor monopoly.
By HOLMAN W. JENKINS, JR.
Originally Posted by The Wall Street Journal
For that guy elected yesterday, a puzzle is how Detroit's auto makers should be reshaped by the hand of government -- with a taxpayer bailout or by letting bankruptcy judges take charge? Both fixes have their fans, yet neither would really solve the industry's essential problem.
Here's a better idea, one you haven't heard before, involving a contemporary curse word seldom used in the debate over the auto makers: "deregulation."
No, Washington wouldn't have to find the courage to amend the labor laws to end the Detroit Three's captivity by the UAW. Nor would it have to repeal the CAFE rules that are now a sacred cow. It would simply have to allow auto makers to meet the fuel economy standards with any mix of autos made in domestic or overseas factories.
Under the nonsensical "two fleet" rule that now applies, manufacturers meet the standards separately with their "domestically" and "nondomestically" produced fleets. What does this have to do with making sure U.S. consumers get good mileage? Nothing. It's a naked handout to the UAW at the expense of the companies and their customers.
How dumb is the two-fleet rule? Nissan, in a petition for its removal, points out foreign brands may actually minimize the domestic content in their U.S. cars so they can continue to count as "nondomestic."
How dumb is the rule? Chrysler might not be unraveling today if not for the two-fleet rule, the real genesis of the Hail Marys it's been throwing in all directions to find an electric car or a small-car partner or to merge with GM. Chrysler has a perfectly salvageable business making trucks, minivans, muscle cars and Jeeps -- doomed only by the lack of enough small, fuel-efficient cars to roll out of a UAW factory with a Chrysler emblem slapped on.
For 30 years, to make and sell the large vehicles that earn their profits, the Detroit Three have been effectively required to build small cars in high-wage, UAW factories, though it means losing money on every car. (That -- not some perverse desire to make bad cars -- is why they skimped for decades on styling, engineering and materials in their family sedans.)
Sure, this bullet would be far from silver and would still cause pain. The UAW might declare war to stop production from being shifted offshore. The Big Three might have to pay billions in job buyouts to use their new freedom. Since 2005, they've had some leeway under NAFTA to shift "domestic" production to Mexico and haven't done much about it.
But here's the key: Detroit would finally get what every foreign competitor and just about every other business has -- normal leverage over labor costs. Auto jobs wouldn't automatically flee offshore. The Big Three would rather hire high-quality U.S. workers -- but on the same terms that Toyota or Nissan or BMW do.
Let's not kid ourselves that a taxpayer rescue would be anything but a down payment on a never-ending bailout. The bailout already is never-ending: Chrysler was already rescued once. Forgotten are the Reagan-era import quotas that inflated the price of every car sold in America to help prop up the Big Three. If hooked up to Washington life supports today, Detroit's first assignment would be to "protect jobs" -- job protection guarantees being one of the Big Three's fatal errors in the first place.
Here's a better idea, one you haven't heard before, involving a contemporary curse word seldom used in the debate over the auto makers: "deregulation."
No, Washington wouldn't have to find the courage to amend the labor laws to end the Detroit Three's captivity by the UAW. Nor would it have to repeal the CAFE rules that are now a sacred cow. It would simply have to allow auto makers to meet the fuel economy standards with any mix of autos made in domestic or overseas factories.
Under the nonsensical "two fleet" rule that now applies, manufacturers meet the standards separately with their "domestically" and "nondomestically" produced fleets. What does this have to do with making sure U.S. consumers get good mileage? Nothing. It's a naked handout to the UAW at the expense of the companies and their customers.
How dumb is the two-fleet rule? Nissan, in a petition for its removal, points out foreign brands may actually minimize the domestic content in their U.S. cars so they can continue to count as "nondomestic."
How dumb is the rule? Chrysler might not be unraveling today if not for the two-fleet rule, the real genesis of the Hail Marys it's been throwing in all directions to find an electric car or a small-car partner or to merge with GM. Chrysler has a perfectly salvageable business making trucks, minivans, muscle cars and Jeeps -- doomed only by the lack of enough small, fuel-efficient cars to roll out of a UAW factory with a Chrysler emblem slapped on.
For 30 years, to make and sell the large vehicles that earn their profits, the Detroit Three have been effectively required to build small cars in high-wage, UAW factories, though it means losing money on every car. (That -- not some perverse desire to make bad cars -- is why they skimped for decades on styling, engineering and materials in their family sedans.)
Sure, this bullet would be far from silver and would still cause pain. The UAW might declare war to stop production from being shifted offshore. The Big Three might have to pay billions in job buyouts to use their new freedom. Since 2005, they've had some leeway under NAFTA to shift "domestic" production to Mexico and haven't done much about it.
But here's the key: Detroit would finally get what every foreign competitor and just about every other business has -- normal leverage over labor costs. Auto jobs wouldn't automatically flee offshore. The Big Three would rather hire high-quality U.S. workers -- but on the same terms that Toyota or Nissan or BMW do.
Let's not kid ourselves that a taxpayer rescue would be anything but a down payment on a never-ending bailout. The bailout already is never-ending: Chrysler was already rescued once. Forgotten are the Reagan-era import quotas that inflated the price of every car sold in America to help prop up the Big Three. If hooked up to Washington life supports today, Detroit's first assignment would be to "protect jobs" -- job protection guarantees being one of the Big Three's fatal errors in the first place.
Registered User
Joined: Mar 2006
Posts: 427
From: Perrysburg, OH
Some wise thoughts. Too bad nothing will be done about it and we will probably continue to just bail them out. I for one hate unions. I worked through college at UPS and saw the amount of lazy the older guys who had been there 10 or more years had. In '04 I was leaving once and saw a guy get into a Terminator Cobra so I said, "nice car, is that an '03?" He scoffed at me and said "I'm a driver, this is brand new". I'm an electrical engineer now and still can't afford a new Mustang GT, let alone a Cobra, yet this guy that sits on his *** in a truck all day can. 
Thread Starter
Banned
Joined: Mar 2001
Posts: 1,938
It might be if GM was the size it actually needs to be to produce the number of vehicles and produce mix that it can reasonably sell and wasn't being strangled by retiree pension obligations and the like.
Thread Starter
Banned
Joined: Mar 2001
Posts: 1,938
The two fleet rule was (and still is) part of the original CAFE standards enacted in 1975 and was a rule designed to protect the UAW/domestic manufacturers and like most protectionism goals, backfired.
Registered User
Joined: Mar 2001
Posts: 13,713
From: The Golden State
Some wise thoughts. Too bad nothing will be done about it and we will probably continue to just bail them out. I for one hate unions. I worked through college at UPS and saw the amount of lazy the older guys who had been there 10 or more years had. In '04 I was leaving once and saw a guy get into a Terminator Cobra so I said, "nice car, is that an '03?" He scoffed at me and said "I'm a driver, this is brand new". I'm an electrical engineer now and still can't afford a new Mustang GT, let alone a Cobra, yet this guy that sits on his *** in a truck all day can.
You were working at UPS while you were in college, and you are jealous because a driver at UPS had a new Mustang which as a college student you couldn't afford???!
It's sad every time I hear about some young person who simply because they have a college degree or are going to college feel they have to have some automatic privilege of earnings over someone else who doesn't. Reality doesn't work that way bud, and the sooner you realize that about life, the sooner you can focus your life on enjoying what you.
To be honest, the WORST people that I've worked with or hired were those people who because they are in or just got out of college, they have that privileged attitude over those that don't. The work ethic just isn't there as a group and there's that resentment of those around in the same position making the same or better money. That sounds alot like the view you possesed in your post. I don't know when that changed in the US (I spent most of a decade out of the country), but I don't particularly like it.
So what if a guy driving a truck can afford a brand new car and you can't. It's completely silly for you to complain about something like that because it's obvious the guy had seniority there over you and therefore got paid more than you.
Also, I'm betting the guy isn't repaying a gazillion dollar college loan. That guy might be better at managing his money than you. Maybe that guy has no kids going through college. Maybe his wife splits the household bill. You don't know that person, know nothing about him, yet use that as an example of unfairness of unions. Go to a military base and you'll see plenty of new cars. I also had a buddy in the Coast Guard that had a brand new Terminator Cobra and he had a GED. Big frigging deal.
If you into electrical engineering simply to make more money than someone else who doesn't have a degree, you're in for a rude awakening. An electrician that's been on the job for a number of years is capable of making more than a mid-level electrical engineer... without college.
The wife came from a different country at 25, has zero college, and she makes almost 10 grand more than me working alot less hours with alot less responsibility and stress. However, I like what I do, I'm good at what I do, and I'd probably be bored in her job. If you want the money that driver gets, then be a driver.
My advice: If you got your degree because you like what you're doing, then you got it for the right reason. Otherwise, you're going to always be a malcontent everytime you come across someone who makes more than you who you feel doesn't "deserve" it.
Registered User
Joined: Aug 2004
Posts: 178
Judging from the article it sounds like this guy is all in favor of making it easy for the big 3 to ship their jobs out of the country . That's a big problem in this country already. We're currently losing jobs at the rate of 5000 a MONTH! 
At this rate it soon won't matter how cheap a car is because we'll all be working at Wal-Mart or McDonalds & couldn't possibly afford a new car! 
At this rate it soon won't matter how cheap a car is because we'll all be working at Wal-Mart or McDonalds & couldn't possibly afford a new car!
Registered User
Joined: Mar 2000
Posts: 162
From: St. Louis, MO
the current cafe isn't hurting them and thus has no bearing on anything.
Thread Starter
Banned
Joined: Mar 2001
Posts: 1,938
Judging from the article it sounds like this guy is all in favor of making it easy for the big 3 to ship their jobs out of the country . That's a big problem in this country already. We're currently losing jobs at the rate of 5000 a MONTH! At this rate it soon won't matter how cheap a car is because we'll all be working at Wal-Mart or McDonalds & couldn't possibly afford a new car!
At this rate it soon won't matter how cheap a car is because we'll all be working at Wal-Mart or McDonalds & couldn't possibly afford a new car! If you tax business enough and/or if a union like the UAW demands high enough wages, where do think the jobs (and the businesses themselves) are going to go?
Registered User
Joined: Apr 2000
Posts: 2,224
From: CNY
That article could be rewritten, shortened, and retitled; "How to Kill the UAW".
It's clearly a thinly veiled attempt at bashing the UAW and the American worker. Look at the source, the Wall Street Journal. These people are more worried about short term profits, share prices, and profit margins. They couldn't care less about the workers.
And why am I not surprised by the person who posted the article.
Thank God the dems won. Hopefully, we'll see less benefits for Wall Street and more for the average American.
It's clearly a thinly veiled attempt at bashing the UAW and the American worker. Look at the source, the Wall Street Journal. These people are more worried about short term profits, share prices, and profit margins. They couldn't care less about the workers.
And why am I not surprised by the person who posted the article.
Thank God the dems won. Hopefully, we'll see less benefits for Wall Street and more for the average American.
Thread Starter
Banned
Joined: Mar 2001
Posts: 1,938
While changes have been proposed (and I think are still held up in the courts) that would remove the requirement, currently, as far as I know, manufacturers have different CAFE standards to meet based on country of origin/parts content of the vehicles; by law, they are considered two separate fleets.
This rule has artificially required domestic nameplates like GM to build small cars here (that they can't build at/make a profit on) to protect UAW jobs. Conversely, transplant nameplates often have to import parts from overseas to meet this arbitrary rule/parts content requirements...parts they would rather produce HERE (and thus support jobs here).
Obviously, you can disagree with the author's opinion all you want but to claim that the two-fleet rule isn't in effect is absolutely wrong; it is most definitely in effect and has been since 1975.
I suspect you are confusing this with with separate requirement for trucks vs cars; a requirement removed, if memory serves, in '96.
Registered User
Joined: Feb 2003
Posts: 658
From: Madisonville, Louisiana
Some people are going to be really mad reading this story. It's very naive to think that the unions are to blame for ALL of the big three's problems. Its silly to think that changing that one section of CAFE would have a large affect on the fortunes of the big 3 also.
Slow down a little and read the post before you go all preachy on people. He does say that he can't afford it now that he is an electrical engineer. I can relate to this situation. As a mechanical engineer I get a little ticked when someone who doesn't work hard makes more money than I do just because they are part of a union. There are a lot of people that I work with that never went to college that make more money than I do. I have no problem with that because almost all of them work very hard for their money and are very good at what they do. I've worked at jobs before where that wasn't the case. People who didn't work hard and were not good at what they do made more money than some who worked hard and were very good at what they do. Maybe its just us crazy people.
Justin, let me get this straight:
You were working at UPS while you were in college, and you are jealous because a driver at UPS had a new Mustang which as a college student you couldn't afford???!
It's sad every time I hear about some young person who simply because they have a college degree or are going to college feel they have to have some automatic privilege of earnings over someone else who doesn't. Reality doesn't work that way bud, and the sooner you realize that about life, the sooner you can focus your life on enjoying what you.
To be honest, the WORST people that I've worked with or hired were those people who because they are in or just got out of college, they have that privileged attitude over those that don't. The work ethic just isn't there as a group and there's that resentment of those around in the same position making the same or better money. That sounds alot like the view you possesed in your post. I don't know when that changed in the US (I spent most of a decade out of the country), but I don't particularly like it.
So what if a guy driving a truck can afford a brand new car and you can't. It's completely silly for you to complain about something like that because it's obvious the guy had seniority there over you and therefore got paid more than you.
Also, I'm betting the guy isn't repaying a gazillion dollar college loan. That guy might be better at managing his money than you. Maybe that guy has no kids going through college. Maybe his wife splits the household bill. You don't know that person, know nothing about him, yet use that as an example of unfairness of unions. Go to a military base and you'll see plenty of new cars. I also had a buddy in the Coast Guard that had a brand new Terminator Cobra and he had a GED. Big frigging deal.
If you into electrical engineering simply to make more money than someone else who doesn't have a degree, you're in for a rude awakening. An electrician that's been on the job for a number of years is capable of making more than a mid-level electrical engineer... without college.
The wife came from a different country at 25, has zero college, and she makes almost 10 grand more than me working alot less hours with alot less responsibility and stress. However, I like what I do, I'm good at what I do, and I'd probably be bored in her job. If you want the money that driver gets, then be a driver.
My advice: If you got your degree because you like what you're doing, then you got it for the right reason. Otherwise, you're going to always be a malcontent everytime you come across someone who makes more than you who you feel doesn't "deserve" it.
You were working at UPS while you were in college, and you are jealous because a driver at UPS had a new Mustang which as a college student you couldn't afford???!
It's sad every time I hear about some young person who simply because they have a college degree or are going to college feel they have to have some automatic privilege of earnings over someone else who doesn't. Reality doesn't work that way bud, and the sooner you realize that about life, the sooner you can focus your life on enjoying what you.
To be honest, the WORST people that I've worked with or hired were those people who because they are in or just got out of college, they have that privileged attitude over those that don't. The work ethic just isn't there as a group and there's that resentment of those around in the same position making the same or better money. That sounds alot like the view you possesed in your post. I don't know when that changed in the US (I spent most of a decade out of the country), but I don't particularly like it.
So what if a guy driving a truck can afford a brand new car and you can't. It's completely silly for you to complain about something like that because it's obvious the guy had seniority there over you and therefore got paid more than you.
Also, I'm betting the guy isn't repaying a gazillion dollar college loan. That guy might be better at managing his money than you. Maybe that guy has no kids going through college. Maybe his wife splits the household bill. You don't know that person, know nothing about him, yet use that as an example of unfairness of unions. Go to a military base and you'll see plenty of new cars. I also had a buddy in the Coast Guard that had a brand new Terminator Cobra and he had a GED. Big frigging deal.
If you into electrical engineering simply to make more money than someone else who doesn't have a degree, you're in for a rude awakening. An electrician that's been on the job for a number of years is capable of making more than a mid-level electrical engineer... without college.
The wife came from a different country at 25, has zero college, and she makes almost 10 grand more than me working alot less hours with alot less responsibility and stress. However, I like what I do, I'm good at what I do, and I'd probably be bored in her job. If you want the money that driver gets, then be a driver.
My advice: If you got your degree because you like what you're doing, then you got it for the right reason. Otherwise, you're going to always be a malcontent everytime you come across someone who makes more than you who you feel doesn't "deserve" it.
Slow down a little and read the post before you go all preachy on people. He does say that he can't afford it now that he is an electrical engineer. I can relate to this situation. As a mechanical engineer I get a little ticked when someone who doesn't work hard makes more money than I do just because they are part of a union. There are a lot of people that I work with that never went to college that make more money than I do. I have no problem with that because almost all of them work very hard for their money and are very good at what they do. I've worked at jobs before where that wasn't the case. People who didn't work hard and were not good at what they do made more money than some who worked hard and were very good at what they do. Maybe its just us crazy people.
Thread Starter
Banned
Joined: Mar 2001
Posts: 1,938
That article could be rewritten, shortened, and retitled; "How to Kill the UAW".
It's clearly a thinly veiled attempt at bashing the UAW and the American worker. Look at the source, the Wall Street Journal. These people are more worried about short term profits, share prices, and profit margins. They couldn't care less about the workers.
And why am I not surprised by the person who posted the article.
Thank God the dems won. Hopefully, we'll see less benefits for Wall Street and more for the average American.
It's clearly a thinly veiled attempt at bashing the UAW and the American worker. Look at the source, the Wall Street Journal. These people are more worried about short term profits, share prices, and profit margins. They couldn't care less about the workers.
And why am I not surprised by the person who posted the article.
Thank God the dems won. Hopefully, we'll see less benefits for Wall Street and more for the average American.
While not the source of all problems, one of the major things strangling the domestic nameplates are unrealistic and unsupportable UAW wage/benefit requirements.
Last edited by Robert_Nashville; Nov 5, 2008 at 02:51 PM.
Registered User
Joined: Feb 2002
Posts: 1,024
My father was an engineer with GM working on anti-lock brake systems. He would bitch now and then that he had his masters and worked a stressful job while some of the union guys at the plant did very little, left their work at work, and made just as much if not more than him.