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Homework answers / question archive / Do you think GM or Ford could have been more on top of market trends? How much is just foreign competition and how much is just bad management? Also, how much of it is government policy? Foreign producers do not pay health costs--over $1000 per US made vehicle--because foreign government fund health care, not the industry, for their workers
Do you think GM or Ford could have been more on top of market trends? How much is just foreign competition and how much is just bad management? Also, how much of it is government policy? Foreign producers do not pay health costs--over $1000 per US made vehicle--because foreign government fund health care, not the industry, for their workers.
2. Do you see any correlation between the loss of unions and the lack of wage gains over the past two decades. While GDP has grown more than 3% over the past few years, real wage gains have been stagnant. Has labor lost its power in the market place? Are all the gains going to the investor class? CEOs?
Both of these companies have floundered in recent years, but recently received impressive scores on a JD Powers survey (see http://www.detnews.com/apps/pbcs.dll/article?AID=/20060809/UPDATE/608090446)
Ford and GM's credit are in tatters. Ford is attempting to restructure by cutting salaried jobs, closing plants and offering early retirement to hourly workers. This plan makes more sense than GM's recent move, which involves giving puts to Fiat. This would force GM to purchase the remaining 80 percent of the Italian auto company in 2004. Fiat would hardly be a feather in GM's cap, and will cost the company dearly. I would have to say Ford is the winner here, but only because the competition is so obviously incompetent. Of course foreign competition is the root cause of their troubles. Faced suddenly with declining market shares, US automakers face a difficult situation from which no company could easily recover.
Certainly the cost of employee benefits have made it harder for US automakers to compete. The United States' closest economic rivals have mandatory national health care systems. For example automakers in the United States and Canada pay taxes to help finance public health care but here they also pay about $1,300 per midsize car produced for private employee health insurance. Automakers in Canada come out ahead, according to recent news reports, even after paying higher taxes.
2. Although unions are waning, it isn't clear to me that this is a cause of lower wages, or if they are both the result of something else, such as increased productivity. Because of the rise in worker output per hour, companies have been able to meet rising demand without having to lure new employees or retain existing ones with higher wages. This also takes power away from unions. The gains from the increased productivity are going to executives and shareholders. Average pay for top US CEOs and board chairmen has soared from $479,000 to $8.1 million in the last quarter century, as measured in annual surveys by Business Week magazine.
