Posted by
Big Daddy on Tuesday, January 30, 2007 5:26:36 PM
Great
column by Daniel Griswold in today's L.A. Times predicting some soft-shoulder coddling on the way for auto makers.
Griswold makes the salient point that domestic car companies have crippled themselves by dancing to the tune of unions operating under archaic business models. The resultant bloated bureaucracy and lifetime payrolls for retired or unemployed workers have eaten profits like a cancer. Reforms are possible but it won't be easy for car makers to extricate themselves from their self-imposed Gordian knot.
They can blame unfair trade practices and currency manipulation all they like, but the last time I checked it's consumers who determine profitability for any company. Give customers a product they want at a price that reflects that value and no competition in the world will succeed.
Instead of looking overseas, perhaps auto companies should look closer to home and ask why consumers have stopped frequenting their showrooms. Stuck in a stodgy business model does not lend itself to keeping pace with the constantly-changing desires of an increasingly mobile and fickle consumer base. No longer loyal to one brand of car as our fathers and grandfathers were (to this day my dad will not shell out money for anything but a Ford), drivers today shop around for the best value as they do for cell phones mp3 players and employers. The can do this because not only are choices more numerous than ever, but access to information detailing the value and reliability of products can be easily obtained.
But never fear, car makers. Our newly-minted lefties in Congress are just itching to cuddle up to an easily emotionalized issue that begs for government intervention. When you think about it, who better to perpetuate a worn-out, counterproductive form of doing business than our political leaders?