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auto industry in the US « Previous | |Next »
December 26, 2008

An odd story about this, especially when the auto industry is in decline and dependent on public handouts to survive. By most most accounts, the Big Three US auto companies brought ruin upon themselves. The US is becoming the bailout nation.


What appears to be happening is that with the help of Nissan, Toyota, and BMW, the South is trying to replace Detroit as the center of U.S. automobile production, using low wages, anti-union laws, and low taxes to benefit from the outsourcing of industry from societies more advanced than the South, like Japan and Germany. A recession-plagued US is becoming a space for outsourcing.

the auto industry is central to the 20th century American mythos in that the American auto manufacturers are the backbone of American manufacturing and industrial might. Now Detroit and American car manufacturing is becoming a
rustbelt due to a corporate culture that was not geared towards innovation, nor towards making small, efficient cars. By all accounts the industry will use government funds to continue exactly as they were before.

| Posted by Gary Sauer-Thompson at 5:02 PM | | Comments (1)


Detroit outo labour cost is quoted as $70 an hour but that includes a huge army of retired workers and their pension and health insurance costs. Actual wages appear to be more like $28 an hour, with an agreement that future workers will be taken on at $14, about the same as Toyota, Nissan and Honda etc pay.

But the heart of the problem is that workers' superannnuation pensions were never funded and assumed would be paid out of future corporate earnings, and health costs, which in other nations would be met at least to a substantial degree by government, are industry's responsibility.

The real problem is that US-based companies make awful vehicles that nobody wants nowadays, at least not in volumes that keep their producers viable.

Ford is in a slightly better position because of its long-time tie-up with Mazda, resulting in some European Ford models that people do want to buy.