This week was listening again (why oh why) to the Jim “the Soporific One” Engster Show on local public radio station WRKF Baton Rouge. His guest was Peter DeLorenzo of Autoextremist.com and The United State of Toyota: How Detroit Squandered its Legacy fame. Discussing the proposed government bailout of the “Big Three” automobile manufacturers based in Detroit – General Motors, Ford, and Chrysler.
Listen to a steaming MP3 recording of the program here. You do not have to register.
DeLorenzo supports the bailout. Period. Okay so far even though I believe he is completely and dangerously wrong.
More significant is the discussion of how/why the Big Three got to this point. Why are they in such bad shape?
According to DeLorenzo the main problem was poor quality control in the 70′s through early 90′s – which is when these automobile companies gained(?) their reputation for making cars of low quality. They “squandered their legacy”. And Americans are still stuck in that mindset. Hey they are making very fine cars now that are reliable and do not have the problems of the past.
What is the one word – well okay two – that DeLorenzo and Engster do not mention for the first several minutes?
Unions.
(And legacies – that is pension and health care and job security obligations to retirees.)
About $2000 of every car sold just goes to take care of pensions/benefits. It almost does not matter what they make. Or how good their cars are. Or how well they market their products. (I rented a Ford Focus once and I loved it. I still would rather buy a Toyota any day of the week and twice on Sundays.) In fact let us quote Mr DeLorenzo to reinforce this point:
Yet, the congressmen had to be reminded over and over again that Detroit had been restructuring and revamping since 2000, that Detroit hadn’t been operating in a vacuum, that Detroit does build competitive and class-leading products, that Detroit has pioneered new technologies, that Detroit is a viable, relevant, strategic industry that’s part of the crucial fabric of America’s manufacturing base, that the worst financial crisis in seven decades had wreaked havoc on their ability to do business, and on, and on, and on.
You don’t say! And still they are in trouble. Why?
And here comes this guy to say not only is this bailout absolutely categorically necessary for the American economy… but cannot bring himself to mention or discuss what some argue are the main reasons American car companies are in such dire straits. (And Jim Engster does not help either.) In fact he argues that automobile companies in other nations are supported by their governments. Perhaps and that is a point worth considering. But to discuss the “fifteen hundred dollar price advantage” that Toyotas have when they arrive here (because the Japanese government supposedly manipulates the value of their currency the yen) without mentioning once the unions/legacies issue… just boggles the mind.
So we can mention why Japanese cars have a price advantage… but not why American cars have a price disadvantage?!? Oh – and if the dollar is doing badly compared to other currencies then theoretically people will buy less imported products because they will cost more yes? And if – as DeLorenzo argues toward the end of the broadcast – the bailout means GM and Ford will survive in order to bring to America the amazing innovative vehicles they sell abroad? (And that part is true – about what they sell overseas.) Dare we ask why we do not see those cars being sold here?!? And why – if we do not address that – can we assume so casually that yes oh yes just wait a few years and we will see those fantastic cars here?
Finally… finally… the very last caller brings up the union/wages issue. Listen to DeLorenzo crash on this one. He complains that this is another example of an “unlevel playing field”. See – American car companies have to provide health benefits to their workers. Foreign companies do not – because the government provides national health care. (It is the first and only time De Lorenzo says a caller is “not entirely correct” and it is the fellow who brings up the union/wages issue. The fellow was not – he had a valid point but mangled it.)
Um… Pete? Mr DeLorenzo? What about the 100,000 American workers at manufacturing plants in America who work for Toyota, Nissan, and so on? They make more, have benefits, and still the companies shell out less per hour on labor – and in a nation that does not provide national health care. The comparison (and complaint) is problematic.
To DeLorenzo’s credit he acknowledges the difficulties involved with Congress attempting to run American car companies.
Not good Jim. Bad enough to have a guest who (in my opinion) grossly misrepresents the situation. Worse for you to let him get away with it.
PS. Mr Engster – any plans to have someone on your show to provide what some might call “another point of view”? When you have a conservative – you usually do that. So when you have someone passionately in favor of the bailout…
Just asking.
