Give me a break...

[bdeutsch]

First, I am no expert on manufacturing automobiles. But, the first time the Big 3 spoke with the House panel, there was a macroeconomist who was invited to sit with them. I honestly do not recall seeing him after the first session.

During the discussion, he was asked bluntly whether he thought it was a good idea to float the Big 3 a loan to keep them alive. To answer that question, he produced a chart that compared the relative cost of manufacturing a car at each of the Big 3 compared to the cost of manufacturing a like unit at American Honda, Toyota, etc. Of the Big 3, only one (honestly do not remember if it was Ford or Chrysler) was competitive with the Honda or Toyota benchmark. I do remember however, that the two who were not competitive, were not competitive by a very large margin. GM being the most inefficient of the two by a very large margin. He replied that until all of the Big 3 are able to at least match the cost of the benchmarks, that in his opinion, a loan was a bad idea.

While we can sit here forever and debate who is entitled to what and argue whether it is labor or management that is the problem and as heartless as this sounds, it all comes back to unit costs. If you are a commodity, and your unit cost is higher than your competitors, unless there is some kind of a perceived value that justifies the higher cost (which is difficult if your product is perceived as a commodity), you are more than likely headed towards some serious problems.