It is depressing to watch our auto industry head for possible oblivion. After World War II ours was the only major automotive complex still standing. In Germany, France, Italy, Great Britain and Japan many industries were on their knees.
The seeds of our current problems were laid then. Everything we manufactured then we were able to sell both in the USA and abroad. There were no options. And at any price since there was no competition. This was true from just after WW II until the 1970s when significant numbers of foreign autos began arriving in the USA. However the effect was minimal until sometime in the '80s. The history of our auto industry is a classic example of what happens when an industry has an absolute monopoly and eventually has to face competition. I was around during those years and am witness, I must say, to a sorry story.
During those glorious years (for our auto industry for sure) the powerful United Auto Workers Union made demands that were, most rational persons would agree, unreasonable even for those times of unprecedented American prosperity. While management would profess to resist unreasonable contract demands, they would in the end accede (sometimes after a short "show" strike) as the union well knew they would. After all a serious strike would cut into corporate profits so why fight it when companies could just tack on the extra cost to the price of their cars. To the public it was a "take it or leave it, you have no choice." The inevitable downturn occurred both because of weak incompetent managements and powerful overbearing unions. Both share blame.
Were the union demands unreasonable? Of course. Example: in order to allow some limited factory automation the union required that any laid off worker, caused by automation, would receive 90 percent of his salary for life! Another example: besides some 30 days of paid vacation, union employees negotiated 30 days of sick leave which they proceeded to use as vacation days. There were many other equally unrealistic concessions granted to the union. Union employees were off from work 25 percent of the time. That is, they were off more than one day in five with pay! This sick leave of course quite regularly occurred on Fridays. It was said then that one should never buy an American car that was assembled on a Friday because often 50 percent of the assemblers would be unskilled replacements. Wage demands also rose precipitously. As all this progressed the quality of our autos, of course, were adversely affected. But then who really cared. The US was the only source of automobiles. Inevitably all this came back to haunt us.
I was a consulting engineer for most of my working life. I have been involved with companies where I was pleased that they had a union, so ruthless were those companies. Then there were companies that the union strangled often to collapse. Some unions and some managements did work well together understanding that the long term success of both was dependant on honest compromise. Today there are far fewer union employees than in the past. Most of this decline occurred in my working lifetime. Frequently many unions became corrupt and this contributed to their demise. But let's be honest, non-union companies also learned to be reasonable with their employees in order to fend off unions.
Would all this have occurred without the union pressure of the early 20th century? I doubt it. Where does this leave our auto industry? While Bush has provided the auto industry a reprieve (with $18 billion, as of late December), I do not think the auto companies will be able to pull together the pieces in order to comply with the Bail Out Requirements. The managements are too weak and incompetent and the auto unions too unreasonable. Chapter 11 will be the only recourse and it will begin in 2009, resulting over a few years, in a painful but successful, I believe, re-birth of our auto industry.