From an English perspective, American industrial might is something to be admired. But America’s giant carmaker General Motors (GM) is in serious trouble. A Peter Pan-like fantasy of forever extendable ‘financing’, or living on ‘the never never’, is taking its toll.
Detroit has long been the centre of the American auto industry; now, however, various factors are combining to make profitability in the Detroit area hard to find. One of the parts suppliers for GM, once itself a part of the GM group, is close to bankruptcy, an issue which will radically affect the profit margin of GM, through delayed or cancelled orders. In terms of business systems, several different issues seem to be involved. To begin with, the global economy, in particular cheap labour and parts from the East, are undercutting the American auto industry’s ability to maintain its market share. GM’s share of cars bought in the US has been slipping for sometime. Also, however, there appear to be archaic, and inevitably unprofitable, expectations in terms of salary from the workers. The much-vilified new president of the parts supplier quipped in one public speech that it was no longer economically feasible to pay $65 per hour for someone to mow the lawns.
Paid for nothing
It’s not all a joking matter. Astonishingly, the unions have managed to negotiate a situation where there is a kind of giant holding room where unemployed union workers are kept, unable to do anything by way of work at all, still paid at the same rate as if they were employed, until the car line picks up again and more work is required. In practise, this means that people are being paid to do absolutely nothing. The tedium of this giant warehouse holding room, with people deliberately staying up all night before hand so they can hopefully sleep through the boredom of the day, is a spectre that might appear in a kind of Margaret Thatcher horror movie.
