December 14, 2008 12:54 am If taxpayers are to bail out the automobile industry, then everyone involved in the car-building business should expect to make sacrifices. That means CEOs, managers, shareholders — and workers. When the House of Representatives passed a bailout plan last week for General Motors, Ford and Chrysler valued between $14 billion and $15 billion, Speaker Nancy Pelosi, D-Calif., proclaimed, "We call this a barbershop. Everybody's getting a haircut." The "haircut" included limits on executive compensation, a prohibition on paying shareholder dividends and even a ban on the operation of corporate jets. But the haircut for all didn't include much of a trim for members of the United Auto Workers, whose excessive compensation, benefits and retirement packages are a big part of the problem facing the Big Three. When the UAW refused to reduce compensation for its workers to that paid to employees in the U.S. plants of Japanese automakers, the bailout deal died in the Senate. That's probably a good thing. Without fundamental changes in the way the Big Three operate, a taxpayer-funded bailout merely delays the inevitable. It's keeping a sick patient alive until the money for life-support runs out. It does nothing to cure the illness. After the bailout failed in the Senate, President Bush promised his administration would act to prevent any failure of the automakers, possibly by using money from the $700 billion rescue package Congress passed for the financial industry. Again, throwing taxpayer money at the automakers without changing the way they operate solves nothing. The auto industry in the United States is far from dead, Detroit's woes notwithstanding. Japanese makers Toyota, Honda and Nissan, as well as some German and Korean companies, are thriving here. The Japanese companies make high quality, reasonably priced, fuel-efficient cars that people want to buy. That's precisely the kind of product line Congress thinks it can compel Detroit to make by legislating that it be so. That's impossible. Japanese cars are of high quality because executives and management refuse to let anything less leave their plants. And they are affordable because the Japanese companies do not face the enormous costs of union-mandated benefits and retirement plans. According to the Associated Press, workers at Toyota in the United States earn an average $30 per hour in wages, slightly more than the $29.78 the average UAW worker at GM earns. But gold-plated pension and health-care benefits boost total labor costs to $69 per hour at GM compared to $48 per hour at Toyota. Far from saving the American auto industry, the actions of the Democratic Congress may finally kill it altogether. To assuage their union supporters, Democrats in the newly elected Congress are likely to pass the misnamed Employee Free Choice Act. That measure would end secret-ballot elections for unionization in favor of cards signed by employees under pressure from union organizers. Workers at the American plants of Japanese carmakers have repeatedly rejected the UAW's organizing efforts. The Employee Free Choice Act would make the UAW's job easier. If that happens, forget about American automakers operating more competitively like their Japanese counterparts. Rather, the Japanese manufacturers would soon suffer the same fate as the Big Three, becoming bloated, inefficient companies making products no one wants to buy.
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