Wednesday, December 3, 2008

Speaker Pelosi's Regime, Combined with 'Kitchen Sink' Proposals, Will Extend Detroit's Decline


Maybe in all of the bluster and fluster surrounding the pleading - nay, begging - from the chief executives of America's automotive manufacturing firms the quid pro quo being proffered will seem reasonable. After all, the symbolism of discarding corporate jets and forgoing high salaries seems like a step in the right direction. But symbols are just that, and they masquerade as a panacea, obscuring the need for real organizational reform that must be undertaken to save America's automotive industry.

It would appear that Ford CEO Alan Mulally pulled the short straw for the role of Detroit's lead beggar. As Speaker Nancy Pelosi sits on her throne in this time when President Bush has no power and President-elect Obama has yet to be crowned, the rush of adrenaline must be sublime. Mulally, a man who actually does things, knows things, risks everything, comes to her Congress, begging for intercession. Her staff must have to conduct a morning wardrobe check and confiscate her tiara and ruffled collars before Madam Speaker enters the public sphere.

The kind of power-mad arrogance we have come to expect from Pelosi is trivial under ordinary circumstances. It provides a lot of wonderful material for political writers to show their comedic chops, but does not translate to having a real effect on public policy. Now, she is truly a gatekeeper and the politics of her party have shaped Ford's plan for revival in ways that will reduce the company's chances for survival.

In the interest of presenting a $9 billion loan request (the lion's share of the combined $34 billion requested by Chrysler, General Motors and Ford) that would get speedy Congressional approval, Mulally has proposed the following:

  • Mulally will work for $1 per year (methinks there is fine print therein)
  • Cancellation of all management bonuses for 2009
  • No merit increases for North American salaried employees in 2009
  • Ford will sell all five of its corporate aircraft
  • Acceleration of plans for plug-in electric and gas-electric vehicles

In the Democrat vortex that is now our federal government, the forces that govern a capitalist economic system - freedom of choice and the supply-demand curve - are going to begin clashing violently with the forces that govern the Democrat party - the Green cabal and the labor unions.

Capitalist markets operate organically, more like forces of nature than machines, and they do not make special accommodations for special interest politics. 'Green' economics is just another word for higher cost of production, resulting in higher prices. Research and development will eventually produce an affordably-priced vehicle fueled by some alternative source of energy, but mass-producing such technology is still expensive. All costs are passed along to the consumer in one form or another. 'Green' cars cost more, and unless the federal government is going to the next step of banning gasoline-powered automobiles, lower prices will tip the vast majority of buyers toward old-fashioned petro-cars

Given enough time, Detroit will get alternative-fueled cars to market, but it should not be a priority or condition at a time when simply surviving is the first priority.

Still, looking ahead to the probable realization of President-elect Obama's heavy-handed “New Energy for America” plan, Mulally has little choice but to play the hand he has been dealt, if only to buy a little more time. So, toss a promise to build 'green' cars in the plan even though following through will hinder the company's chances. In the current political climate, Ford really has little choice.

Most dangerous, though, are the concessions proposed by Mulally on the issue of employee compensation. Capitalism thrives on the concept of reward for merit, and Mulally intends to place a moratorium on pay increases given for good work? In a company with depressed morale, what will be the driving force to move ahead, to innovate? The effect of removing incentives is what occurs as a result of communism. Work hard, don't work hard; your value will always be the same as your co-worker. More to the point, who wants to stick their neck out and break a sweat if there will be no marginal reward?

In a company that suffers from a lack of innovation and low morale, incentives can provide a useful engine for the creation of new ideas. A company such as Ford should not be doing away with salary increases and bonuses, it should be finding ways to target them to enhance the effort of becoming relevant to consumers again.

But, white-collared workers voted too fervently for Republicans in the past few elections. So, throw them on the fire. Only a worth sacrifice will earn Ford the grace of Congress.

Perhaps more destructive than the salary concessions themselves is the decision to impose these restrictions only on white-collared, non-union jobs. Unions are not being encouraged (or coerced) by representatives of Pelosi's Congress to participate in the life-saving operation of employers of union labor. When labor unions ask their rank and file to strike, members understand the concept of shared sacrifice for the greater good, but not when the Man is the one with whom the burden is being shared.

For more than a decade, jobs have been lost overseas as a result of high labor costs at American auto plants. Union self-interest will eventually kill the host, thus depriving their membership of their livelihood. When that happens, there won't be enough fingers on the hands of union bosses for all the finger-pointing that will ensue.

In the meantime, Ford's white-collared sacrifices, unmatched by comparable offerings from the United Automobile Workers union (gathering today for an emergency meeting), are almost certain to create animosity and resentment between the working classes. Just what a failing company needs - more internal dissension and factional politics.

Even after the political tsunami in November, there are still a few conservatives and pro-business Republicans who either clung to the palms (congratulations to Sen. Saxby Chambliss (R-GA)) and fingers remain crossed for Sen. Norm Coleman (R-MN)) or stand safely on high ground. Now is the time to start performing the role of the opposition party that the Republicans will be for the next two years. Make the case that there are options, not a single way of resolving this, and thereby give Detroit a little political cover to avoid the groupthink that will doom their chances for survival.

Or don't. After all, the economy isn't going to be an issue with voters in the next election. Right?


1 comment:

  1. I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.



All posts may deleted at the sole discretion of the site's author. Posts do not necessarily reflect the views, policies, or opinions of the administrator.