
Who shot General Motors?  (Labor unions, in 1950.) - cmcginnis
http://www.nytimes.com/2008/07/10/opinion/10lowenstein.html?em&ex=1215921600&en=8f3b119b78542876&ei=5070
======
gahahaha
From <http://delong.typepad.com/sdj/2008/07/denpartment-of.html> regarding
this article.

"When GM offered the UAW more lavish benefits, it did so in order to induce
the UAW to accept less generous wages. The money that GM paid in the 1990s and
2000s to fund pension and retiree health bnefits was offset by wages that GM
did not have to pay in the 1960s, 1970s, and 1980s. Lowenstein appears to want
to live in a world in which GM (a) gets a break on its wage costs in the
1960s, 1970s, and 1980s; and can do so (b) without having to pay any money to
fund pensions in the 1990s and 2000s."

Bad management screwed GM, not not the Unions. GM ought to have set aside the
money saved on wages to meet these future obligations. That they did not do so
is just one of many examples of their management incompetence.

------
biohacker42
As a libertarian immigrant, I don't care for unions. Please no Ayn Rand jokes,
I can't stand her.

So while the unions are certainly a big part of the problem, the
responsibility is ultimately with management. It is ALWAYS management's fault.

It doesn't matter if it is GM or a start up, it's management. If you are
considering going to work for a startup, the management should be the most
important factor in your decision.

GM's management could have changed the company culture to be as efficient and
productive as Toyota's. It's not like Toyota made a secret of how it works.

GM could have seen the decline of proven and easy to access oil reserves, and
the rise of the middle class in the BRIC countries and done the math. They are
in the car business, so they _ought_ to have seen what's coming.

But no, crap giant gas guzzlers. The unions didn't do that, it was management.

~~~
josefresco
GM didn't buy their own SUV's, Americans did. So while we're all quick to
blame GM for cashing in on SUV's we all did the dance with GM in the 90's
which got them drunk with success and profit.

That being said (and to counter my own point), the first Toyota Prius came out
in 1997, and I don't think I need to tell everyone what gas cost then.

------
sachinag
I think this is a pretty misleading OpEd. It would be crazy to think that
management broke fiduciary duty here (as the article implies, with the
references to legislatures/taxpayers).

It was twenty years before GM saw competition from the Japanese (in the wake
of the oil crisis), and it's hard for us to see six months out in our own
companies. Any rational shareholder, were they so smart, could have dumped GM
in 1973. And, really, 1950 to now is two whole generations (generally defined
as 30 years). Fiduciary duty means a "reasonable person" standard. While, yes,
it would have been better now if they had the government take on these
obligations then, it's clearly not unreasonable for GM to have decided
otherwise.

Second, and more interestingly to me, is that it was in GM's _interest_ to
bear health care costs. GM needed to attract and retain skilled labor (which
is why they compensated them so well in the Treaty of Detroit). Bearing
healthcare costs, as a flush company with two full decades of prosperity ahead
of it, provided a competitive advantage in attracting and retaining labor
versus other fields that these workers could have gone into, such as plumbing,
construction, or the like.

I'll leave the historical nature of the Big Three's political biases to
others.

------
edw519
Make cars people want.

~~~
josefresco
It's kind of tough to succeed when your workers (with the same skills) get
paid 2-3x what competing car companies pay. Profit margins are just as
important to a company's success as demand. See Internet math of the late 90's
for a perfect example of what 1000000 * 0 equals.

~~~
edw519
_Profit margins are just as important to a company's success as demand._

On what planet?

Wanna buy a buggy whip, a cassette player, or a 5.25" floppy disk drive? All
marked up 100%, but still good prices.

~~~
jcl
You wouldn't happen to have better examples? These only reinforce his point --
which alternately worded is: "Demand is just as important to a company's
success as profit margins".

~~~
edw519
_You wouldn't happen to have better examples?_

No. These weren't "examples". They were caricatures.

Because the statement is absurd. What difference do your margins make if no
one wants to buy your stuff?

We're all so good at tech and so used to eyeball driven apps that it's easy to
lose sight of the single most important fact of business: sooner or later
_someone_ has to be a _customer_.

I never entered the "labor vs. management" debate here because it's a complex
issue that won't easily be resolved here (or anywhere else). Instead I offered
a play on pg's "Make Something People Want," slightly modified for Detroit.

I don't know whose fault it is (nor do I care), but face it: hardly anyone
wants Detroit's cars. They've delayed the inevitable by bolting 4 door bodys
onto pickup truck chasses for 15 years now without preparing themselves for $4
gas. Duh.

Look out your window right now. After the first 100 Camrys, Accords, and
Altimas drive by, do you see anything from Detroit that you'd rather have?
Neither does anyone else. _That's_ Detroit's biggest problem, so I'll restate
my original, they need to "Make Cars People Want".

I know this is Hacker News (thus the questioning about the applicability of
this post). We must not forget that the business aspect is just as important
as the tech aspect.

No matter what your other financials are, without demand, you have no sales.
Without sales, you have no business. Then all of this is just one big hobby.

~~~
hugh
Last month, GM sold 262,329 vehicles in the US alone. Toyota, in second place,
sold 193,234. Ford and Chrysler took the third and fourth spots, with Honda in
fifth. You can't claim that "hardly anybody" is buying Detroit's products.

And that's just in the US. You wanna know what the top-selling car in Europe
is? It's the Opel/Vauxhall Astra -- a GM product -- with nearly half a million
sold last year. The Ford Focus comes in third, after the Renault Clio. In
Australia the top-selling cars are almost always GM's Holden Commodore and
Ford's Falcon.

If you think nobody's buying American cars, that might just be a function of
where you live (Northern California?)

~~~
edw519
I said "hardly anyone wants Detroit's cars". Remove trucks (yes, that includes
SUVs) and fleet vehicles from your figures.

~~~
hugh
I don't have the broken-down figures, but I'm sure GM would still be one of
the top two or three car manufacturers on the planet if you broke it down that
way.

Doesn't "top selling car in Europe" mean anything to you?

~~~
davidw
The European cars (like the Opel I have) are built by _highly_ unionized
European employees, though, right? The models Ford builds in Europe are pretty
good too.

------
aggieben
_The sorry decline of General Motors has proved Reuther right: the government
is the better provider of social insurance. Let industry worry about selling
products._

Huh? Seems to me that this just proved that the market is a better provider of
"social insurance" in the form of products people want (i.e., medical care at
market prices) than anything collective offered by either the unions _or_ the
government. Hasn't this guy ever heard of Social Security and it's looming
insolvency? Why don't the same arguments apply? Just think...how much easier
it would be for the government to prop up the financial sector temporarily
(not that I'm for that...just following the argument here) if it didn't have 3
limbs tied behind it's back by SS/Medicare/Medicaid?

------
josefresco
This article should be written about Chrysler, which many believe are in worse
shape than the other "big 2". The bankruptcy watch for me goes like this;
Chrysler, Ford then GM.

------
jhancock
This article is bunk and a clear propaganda effort. GM is dying because its a
big old company and big old companies die..and..because as a nation, the U.S.
does not protect its companies/citizens from the effects of global free trade.

The stock price is a different story. This article misses something important.
Was there some massive cover-up with GM's financials? No. The debt due to
pensions and such is not new information. If the stock buyers and analysts
didn't adequately project a meaningful market price based on GM's published
financials, who is to blame? Unions? No, the stock should be priced lower if
thats whats on the books. Don't blame unions for bubble markets and the
unfounded position that stock prices and company value should always grow.

------
rms
As far as I'm concerned, GM had it coming for illegally destroying the USA's
electric streetcar system.
[http://en.wikipedia.org/wiki/Great_American_Streetcar_Scanda...](http://en.wikipedia.org/wiki/Great_American_Streetcar_Scandal)
It's too bad, really, every city could have had public transportation like San
Francisco.

------
rudyfink
It seems insane to me that the overall editorial conclusion is "we need to do
more to fund public pensions". The entire rest of the article seems to be to
the point that "pensions are an artifact of sky-high prosperity that
ultimately rob the future". Maybe I am just misreading the article.

------
anewaccountname
How about the CEO's, management, etc. who "miraculously" brought employee
ownership of the company to around 20%! I'll let you guess how much of that
was owned by lowly union workers, and how much was owned by executives. Or is
it GE I am thinking of?

------
davidw
Err... the stuff in ()'s is your own editorialized point of view. But this
isn't really what I'd call hacker news in any case.

~~~
cmcginnis
"But none of G.M.’s management miscues was so damaging to its long-term fate
as the rich pensions and health care that robbed General Motors of its
financial flexibility and, ultimately, of its cash.

General Motors established its pension in the “treaty of Detroit,” the five-
year contract that it signed with the United Automobile Workers in 1950..."

~~~
davidw
You're right - there's nothing at all in there about hackers or computers or
startups.

And as for the contract, presumably it was also signed by management, not just
the union.

~~~
cmcginnis
"On-Topic: Anything that good hackers would find interesting. That includes
more than hacking and startups."

~~~
davidw
What you guys don't seem to realize or take seriously is that enough of this
stuff (Obama, Iran, unions, etc...) will drive the quality of the site down,
just like reddit.

"Non computer" stuff is often ok if it's just some random, interesting thing
that's "food for the brain", but when you get into politics and economics (at
least some kinds of economics) and stuff like that, it's just poison.

~~~
pg
There have always been a few stories like this.

I understand that to someone who saw what happened to reddit, the sight of
words like "Obama" or "Union" in a title is very alarming. But not all stories
with those words in their titles are boring political ones.

Don't worry, I won't let News.YC go down that road. I'll munge the voting
algorithm before I let that happen.

~~~
davidw
Thanks for keeping an eye on it.

I actually think that 'boring' isn't the problem though. Boring stuff is easy
to ignore. Political stories, on the other hand, are easy for everyone to have
an opinion on, and get excited about. This tends to draw people in who
otherwise might refrain from commenting... basically what happened to the
reddit community. There were initially some political articles with the rest,
and they were pretty good, and a decent mix of liberals and libertarians. Then
it hit a tipping point, and that stuff completely drowned out the rest of the
site.

I trust that you'll ensure that doesn't happen, but part of the equation isn't
necessarily better algorithms, IMO, but trying to foster a community spirit of
"let's avoid these things for the sake of the site's quality".

------
MaysonL
No, it's a clear case of assisted suicide, not murder.

