Another South-North fight over labor

[Omaha Steve]

http://www.twincities.com/opinion/ci_11255945

By David Morris
Article Last Updated: 12/17/2008 06:03:52 PM CST

Watching Republicans block Congress from throwing a financial line to drowning American car companies was like watching a replay of the Civil War. Then it was the Southern slave-labor states versus the Northern free-labor states. Now it is the Southern non-union labor states versus the Northern union labor states.

The key Republican senators — McConnell from Kentucky, Corker from Tennessee, Shelby from Alabama, DeMint from South Carolina — all hail from states with foreign car companies that set up in that region in large part because of its anti-union stance. As conservative columnist David Harsanyi announces, "We're still going to buy cars, Madame Governor (Granholm of Michigan), but perhaps we will buy them from companies that have the temerity to say 'no' to unions."

The most patriotic of all regions believes it is better to be dependent on foreign corporations than on American corporations with union labor.

Certainly American car companies and their union deserve to be roundly criticized for their behavior. For almost three decades they bitterly fought against the public interest — against seat belts, improved fuel efficiency regulations and global warming legislation. They built poor-quality cars and arrogantly assumed we would dutifully continue to buy them.

But the two key criticisms by opponents of federal financial assistance are deeply flawed.

One regards the disproportionate reliance of U.S. car companies on the sale of UVs and trucks, a decision they came to regret as gasoline prices soared. I submit foreign car companies would have made the same decision if not for an accident of history. The Japanese entered the U.S. car market with inexpensive, small cars.

As they gained a foothold they scaled up and, in the last 10 years, embraced increased horsepower and size almost as fervently as did their American counterparts. Toyota, Nissan, and Honda all entered the big truck and SUV market in the early 2000s. The 2006 Lexus 470 SUV boasted an increase of 40 horsepower compared to the 2005 model. In 2007, even while running ads touting its environmental consciousness, Toyota introduced the Tundra, a full-size truck named after a part of the world that could disappear because of global warming.

The other criticism is that U.S. car companies cannot compete on price because of the cost of unionized labor. Actually, because of dramatic concessions by the UAW, wages of union workers are only slightly higher than those of non-union workers.

Another major component of labor costs is retiree benefits. Once again, Japanese car companies benefited by being late to the game. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. In any case, as David Leonhardt of the New York Times argues, "These retirees make up arguably Detroit's best case for a bailout. The Big Three and the UAW had the bad luck of helping to create the middle class in a country where individual companies — as opposed to all of society — must shoulder much of the burden of paying for retirement."

FULL story at link.