Tuesday, December 13, 2005

GM Chairman's Comments

There is a vocal and influential group of people in this country who have tirelessly repeated the mantra that "manufacturing doesn't matter" as an 'intelligent' response to those of us who have voiced concern about the continuing decline of manufacturing in the United States.

At one time, manufacturing accounted for 30%+ of the jobs in this country; now it accounts for less than 10%. At one time, manufacturing accounted for 40%+ of the GDP--now it is less than 12%.

Rick Waggoner, the Chairman of GM, mentions a few other benefits which flow from an active and vibrant manufacturing base: [scroll down to the second set of green arrows to find the WSJ opinion-piece excerpts]

"Manufacturing generates two-thirds of America's R&D investment, accounts for three-fourths of our exports, and creates about 15 million American jobs....Together, GM, Ford and DaimlerChrysler invest more than $16 billion in research and development every year -- more than any other U.S. industry."

On "legacy costs:"

"Some argue that we have no one but ourselves to blame for our disproportionately high health-care "legacy costs." That kind of observation reminds me of the saying that no good deed going unpunished. That argument, while appealing to some, ignores the fact that American auto makers and other traditional manufacturing companies created a social contract with government and labor that raised America's standard of living and provided much of the economic growth of the 20th century. American manufacturers were once held up as good corporate citizens for providing these benefits. Today, we are maligned for our poor judgment in "giving away" such benefits 40 years ago."

Let me remind you that PJBuchanan said this a couple of days ago:

To the economic patriots of the Old Republic, trade policy was to be designed to benefit, first, the American worker. They wanted American families to have the highest standard of living on earth and U.S. industry to be superior to that of any and all nations. If this meant favoring American manufacturers with privileged access to U.S. markets and keeping foreign goods out with high tariffs, so be it.


What we want -- after we take the actions we are taking, in product, technology, cost and every area we're working in our business today -- is the chance to compete on a level playing field. It's critical that government leaders, supported by business, unions and all our citizens, forge policy solutions to the issues undercutting American manufacturing competitiveness. We can do this. And we need to do it now."

I highlighted in BOLD RED the catch-phrase. Waggoner doesn't mention Red China's currency manipulation (although he mentions that of Japan,) nor does he elaborate on the night/day difference between Red China's working conditions and those in the US.

As manufacturing declines in influence here, other statistics seem more meaningful:

The BLS' Employment Cost Index shows the purchasing power of all workers’ wages and benefits fell -1.4% in Q3 and by -1.5% yr/yr. Wages alone fell by -2.3% in Q3 and by -2.4% yr/yr.

The 'little matter' of manufacturing's demise is NOT 'little.' Manufacturing DOES matter. And the Bush Administration's shilly-shallying around on trade policy, like its head-in-the-sand approach to illegal immigration, has resulted in very serious negative consequences for US citizens--even those NOT employed in manufacturing.

About time someone pays attention, and I'm happy to see Waggoner stepping up to start the ball rolling. One hopes that George & Co. are paying attention.

HT: Disgruntled.


Neo-Con Tastic said...

To start, was there a president before GWB? Why are all the fingers pointed at him? You yourself being a Milwaukee native should know that this decay has been in motion for a few decades now. Take a stroll downtown and look at all of the dilapidated factories that have turned into financial service firms, realtors, and computer consultant/developers. There are numerous reasons why manufacturing has left the US.

For starters, the emphasis of the college degree has created (in most cases) a more talented, specialized worker. Degrees have been promoted continuously and nowadays, anyone can get a degree. Between student loans, GI bills, and lax applicant restrictions, everyone is getting a degree, in turn prompting more white-collar positions and the demise of the blue-collar positions.

Another major factor is the stigma put on manufacturing by the MSM, Hollywood, and society itself. The new perspective of the manufacturer is this ‘caveman’ mentality, putting a derogatory outlook on the middle-class manufacturer. This in turn creates an animosity for the position. Put it this way – who aspires to be a manufacturer?

Also, don’t forget our wonderful border security. With the lax monitoring, we’ve had an influx of immigrant workers. These workers gravitate to the lower-end jobs ‘that no American wants’ creating a push towards manufacturing positions. Now, with more eligible workers looking for work, the demand increases, in turn lowering the necessary salary to fill the position, making the position even less attractive. I know you’ve been in this industry for years and you undoubtedly have friends that have been in the industry for decades. Reflect on the demographics of the manufacturing employees of the’60s and now today - you cannot deny the drastic change.

Now, consider the American’s undying lust for the lowest price. We encourage Wal-Mart and other retailers to get the lowest price; forcing them across international waters. Red China saw their opening and pounced on the opportunity. Sure there is currency manipulation, slave labor, and other atrocities but we can’t change that. These types of issues are an international problem that requires influence and regulation, policing that the US shouldn’t get involved in. Also, the idea of higher tariffs and more trade restrictions might cause a backlash towards America, something we can’t afford right now. That’s just at the retail end. Take Komatsu for example – self-explanatory.

A few other problems I’ll list - considering my already lengthy rebuttal:

Six Sigma/Fit Sigma/Lean Sigma (We’re years behind)
American Entitlement (Thanks to socialism/liberalism)
Productivity (American Laziness)
Labor Unions (Death to America)
Health Care Costs (Damn baby boomers & sue-happy idiots)
Tainted Product Image (Big 3’s Biggest Problem)

Also, it’s easy to point out the errors without a plan for action. How does one resuscitate the industry? One of Kerry’s campaign points was his promise to rejuvenate this dying industry but he had no explanation of how to do it. I can point out flaws with America all day long, especially ones that have been in the works for twenty years. Fixing the problem is the challenge.

Dad29 said...

1) Yes. Clinton, who with Gingrich, assured Red China of MFN status.

2) Taxes in Wisconsin are particularly horrible.

3) The college degree has NOT "created" a damn thing. Some college graduates are actually talented; others are 'specialized.' As you note, "Anyone" can get a college degree. This is special?

But only <40% of the US labor force is degreed. Shall the rest be pitched into a bin and shipped off?

4) College degrees do not "create" the demise of the blue-collar worker. See above.

5) Nobody in their right mind pays any attention to Hollywood.

6) Illegal immigrants are deliberately hired by certain, ah, greedy employers. There are no "jobs Americans won't do" except for $4.00/hour off the books. IOW, there's plenty of criminals to go around here, and most of them are College Graduates...

7) I do not suggest that GWB get involved in "policing" Red China. I suggest that he acts as though he were the President of the UNITED STATES. No problem with instituting tariffs which penalize China for its atrocious record. No problem at all--unless GWB is a "Davos Globalist", as was his old man.

8) We are NOT "years behind" with Lean, and only Jack Welch thinks that SixSigma is a cure-all. People who actually work in factories understand that Lean works and 6Sig is a backup.

9) At this time, only 14% of US workers are represented by unions, and HALF of them are in Government work. Industrials? Hardly.

10) tariffs, plain and simple.

Disgruntled Car Salesman said...

A college degree is nothing but a piece of paper given to someone by an institution of "higher learning."

Yes, there is work involved in getting that piece of paper. Yes, it certainly deserves some merit. Yes, I recognize it and give praise to those who have received it.

No, I do not think that it is the end all be all of one's mark on their life and others.

Example 1 - My general manager who pulls down a 6 figure income has a college degree. He is in the business of selling cars. His degree is in music.

Example 2 - My new car manager who also pulls down a 6 figure income also has a college degree. He is also in the business of selling cars. His degree is in biology and chemistry.

Example 3 - My used car manager who pulls down an income within spitting distance of 6 figures does not have a college degree. He is, like me, from the school of hard knocks. Nobody has an eye like him in regard to cars. And although some of his negotiating skills and closing abilities are a tad archaic, he is one of the best around.

Off the topic a bit here. Neo, our mutual good friend whom was in your graduating class received his degree but continued there after in the manufacturing community. Oops, that rubs the grain on your little theory.

I agree Neo that Hollywood has a bit of a hand in the way people think. I also agree with Dad that people who listen to Hollywood aren't too bright. But unfortunately with a generation of children being raised by the television, this glory crap is being hammered into their skulls. Ultimately hardwired.

Although there may be no glory in the manufacturing industry any more, the money is still good. A highly skilled worker can receive upwards of $30/hr.

But therein lies the ultimate catch 22. How can we afford to pay this worker and still compete?


Plain and simple. What you don't seem to understand Neo is as clear as day to the likes of myself and Dad. The US is the consumerous glut of the world. We hold all the cards. We buy the product. Therein we can manipulate the market.

Walmartism is a problem. Cheaper doesn't always mean better. Product quality aside, cheaper also means sacrificing someone in our countries economy.

Your good buddy whom you graduated with would beg to differ on this next part. He would have you believe that manufacturing can go away and make room for more highly skilled marketing, business, engineering and service postions in the states.

WRONG! Although the service positions are inevitable, engineering is being outsourced as well. I question how many more marketing and business firms can be set up before they put each other out of business.

So, we eventually get back to GM. How do we save GM and the manufacturing community?

Product quality and desirability are on the rise over in the "Tubes." I am not worried about that.

But, you have a jaded consumer market whom will be tough to convince.

The government can manipulate this by instilling heavier tariffs on imported products to give us the "unfair" advantage that we deserve.

Neo, you speak of a "backlash" against the country. What? Is Red China going to nuke us?

Let 'em try. The military, scratch that, the power of our country is too great.

To close, we hold the cards. We are the consumerous glut. Isn't it time we get rich off of ourselves?

Neo-Con Tastic said...

I'll agree to disagree. I think all of our arguments are reasonable and knowing us, we won't agree. See my post for the day on how a degree is "just a piece of paper" and how big of a threat China really is.