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	<title>Minor Thoughts &#187; GM Plant Closes: Who&#039;s to Blame?</title>
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		<title>GM Plant Closes: Who&#039;s to Blame?</title>
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		<pubDate>Wed, 04 Jun 2008 03:15:47 +0000</pubDate>
		<dc:creator>Joe Martin</dc:creator>
				<category><![CDATA[Economics]]></category>
		<category><![CDATA[Barack Obama]]></category>
		<category><![CDATA[Jim Doyle]]></category>
		<category><![CDATA[unions]]></category>

		<guid isPermaLink="false">http://www.minorthoughts.com/?p=620</guid>
		<description><![CDATA[<p>This morning, General Motors announced that it would be closing four plants &#8212; including the Janesville, Wisconsin plant. Everyone was talking about the news today. Most of the talk centered around who to blame. The most popular candidates were President Bush; the evil, greedy managers of GM; and even President Reagan (!).</p>

<p><a href="http://www.madison.com/tct/news/index.php?ntid=289485">Governor Doyle&#8217;s opinion</a>:</p>

<blockquote>
  <p>&#8220;Bad corporate decision kept these lines turning out gas guzzlers as fuel prices went from 2 dollars to 3 dollars and now to 4 dollars per gallon.</p>
  
  <p>&#8220;Now we stand here, carrying the burden of those bad corporate decisions &#8212; failed leadership that culminated in a calculation that left out the very heart of this company, the workers who built&#8221;</p>
</blockquote>

<p><a href="http://www.madison.com/tct/top5/index.php?ntid=289620">Senator Obama&#8217;s opinion</a>:</p>

<blockquote>
  <p>&#8220;Unlike John McCain, I&#8217;m not in this race to extend the failed Bush economic policies; I&#8217;m in this race to end them,&#8221; Obama said. &#8220;I&#8217;ve proposed investing $150 billion over ten years in green energy and creating up to five million new green jobs. We&#8217;ll finally provide domestic automakers with the funding they need to retool their factories and make fuel-efficient and alternative fuel cars. And we&#8217;ll invest in efforts to make sure that the cars of the future are made where they always have been &#8212; in the United States. Because the fight for American manufacturing is the fight for America&#8217;s future &#8212; and I believe that&#8217;s a fight this country will win.&#8221;</p>
</blockquote>

<p>As I read through the various articles, I noticed a few hints about why American automakers might need funding to produce fuel-efficient cars.</p>

<p><a href="http://www.madison.com/wsj/mad/top//index.php?ntid=289624">High Labor Costs</a>:</p>

<blockquote>
  <p>In the past, costs generally were too high for Detroit automakers to turn a profit on small U.S.-built cars. But [Chief Executive Rick] Wagoner said GM has lowered costs enough with new labor contracts and other measures to turn a profit.</p>
  
  <p>&#8220;The direct answer is we need to,&#8221; Wagoner told reporters. &#8220;We believe we can build a car there profitably.&#8221;</p>
</blockquote>

<p><a href="http://www.madison.com/wsj/whatcounts/toptoday/index.php?ntid=289484">Generous Benefits</a>:</p>

<blockquote>
  <p>Fisher said some of the hardest hit residents will be those employed by suppliers and other businesses dependent on GM, noting that GM often has been called &#8220;generous motors&#8221; for its pay and benefits.</p>
</blockquote>

<p>That corporate generosity &#8212; often granted at the barrel of a UAW gun &#8212; destroyed GM&#8217;s ability to make a profit on small cars. Because of high labor costs, GM only earned a decent profit on the more expensive trucks and SUVs. With gas costing $4 gallon GM can no longer afford to keep producing gas hogs &#8212; or keep employing a pricey workforce.</p>

<p>Finally, it&#8217;s interesting to note that <a href="http://www.madison.com/tct/top5/index.php?ntid=289614">Senator Kohl believes only the government is capable of retraining GM&#8217;s employees</a>.</p>

<blockquote>
  <p>&#8220;With the announcement that General Motors plans to close this plant, thousands of skilled and dedicated workers face a stark future of employment and financial uncertainty,&#8221; Kohl said. &#8220;Secretary Chao seems to understand the severity of the situation and assured me that the Labor Department would take immediate steps to retrain workers at the plant. <em>Only then can these employees learn new skills necessary to finding new jobs.</em>&#8220;</p>
</blockquote>

<p>Silly me. This plant has been on life support for quite a while. I thought that the employees might have taken that as a warning sign to improve their own skills and start learning a new trade.</p>

<p>And, yes, I do feel for these workers. I can sympathize with the fear that comes from losing a steady income and facing an uncertain future. In some measure, the future is always uncertain. I prefer to always plan for that uncertainty, as best as I possibly can. I never want to just assume that if I ignore the uncertainty &#8212; or appeal to Washington &#8212; that it will just go away.</p>
]]></description>
			<content:encoded><![CDATA[<p>This morning, General Motors announced that it would be closing four plants &#8212; including the Janesville, Wisconsin plant. Everyone was talking about the news today. Most of the talk centered around who to blame. The most popular candidates were President Bush; the evil, greedy managers of GM; and even President Reagan (!).</p>

<p><a href="http://www.madison.com/tct/news/index.php?ntid=289485">Governor Doyle&#8217;s opinion</a>:</p>

<blockquote>
  <p>&#8220;Bad corporate decision kept these lines turning out gas guzzlers as fuel prices went from 2 dollars to 3 dollars and now to 4 dollars per gallon.</p>
  
  <p>&#8220;Now we stand here, carrying the burden of those bad corporate decisions &#8212; failed leadership that culminated in a calculation that left out the very heart of this company, the workers who built&#8221;</p>
</blockquote>

<p><a href="http://www.madison.com/tct/top5/index.php?ntid=289620">Senator Obama&#8217;s opinion</a>:</p>

<blockquote>
  <p>&#8220;Unlike John McCain, I&#8217;m not in this race to extend the failed Bush economic policies; I&#8217;m in this race to end them,&#8221; Obama said. &#8220;I&#8217;ve proposed investing $150 billion over ten years in green energy and creating up to five million new green jobs. We&#8217;ll finally provide domestic automakers with the funding they need to retool their factories and make fuel-efficient and alternative fuel cars. And we&#8217;ll invest in efforts to make sure that the cars of the future are made where they always have been &#8212; in the United States. Because the fight for American manufacturing is the fight for America&#8217;s future &#8212; and I believe that&#8217;s a fight this country will win.&#8221;</p>
</blockquote>

<p>As I read through the various articles, I noticed a few hints about why American automakers might need funding to produce fuel-efficient cars.</p>

<p><a href="http://www.madison.com/wsj/mad/top//index.php?ntid=289624">High Labor Costs</a>:</p>

<blockquote>
  <p>In the past, costs generally were too high for Detroit automakers to turn a profit on small U.S.-built cars. But [Chief Executive Rick] Wagoner said GM has lowered costs enough with new labor contracts and other measures to turn a profit.</p>
  
  <p>&#8220;The direct answer is we need to,&#8221; Wagoner told reporters. &#8220;We believe we can build a car there profitably.&#8221;</p>
</blockquote>

<p><a href="http://www.madison.com/wsj/whatcounts/toptoday/index.php?ntid=289484">Generous Benefits</a>:</p>

<blockquote>
  <p>Fisher said some of the hardest hit residents will be those employed by suppliers and other businesses dependent on GM, noting that GM often has been called &#8220;generous motors&#8221; for its pay and benefits.</p>
</blockquote>

<p>That corporate generosity &#8212; often granted at the barrel of a UAW gun &#8212; destroyed GM&#8217;s ability to make a profit on small cars. Because of high labor costs, GM only earned a decent profit on the more expensive trucks and SUVs. With gas costing $4 gallon GM can no longer afford to keep producing gas hogs &#8212; or keep employing a pricey workforce.</p>

<p>Finally, it&#8217;s interesting to note that <a href="http://www.madison.com/tct/top5/index.php?ntid=289614">Senator Kohl believes only the government is capable of retraining GM&#8217;s employees</a>.</p>

<blockquote>
  <p>&#8220;With the announcement that General Motors plans to close this plant, thousands of skilled and dedicated workers face a stark future of employment and financial uncertainty,&#8221; Kohl said. &#8220;Secretary Chao seems to understand the severity of the situation and assured me that the Labor Department would take immediate steps to retrain workers at the plant. <em>Only then can these employees learn new skills necessary to finding new jobs.</em>&#8220;</p>
</blockquote>

<p>Silly me. This plant has been on life support for quite a while. I thought that the employees might have taken that as a warning sign to improve their own skills and start learning a new trade.</p>

<p>And, yes, I do feel for these workers. I can sympathize with the fear that comes from losing a steady income and facing an uncertain future. In some measure, the future is always uncertain. I prefer to always plan for that uncertainty, as best as I possibly can. I never want to just assume that if I ignore the uncertainty &#8212; or appeal to Washington &#8212; that it will just go away.</p>
<p></p>]]></content:encoded>
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