It wasn’t the union insisting on GM, Ford and Chrysler to base their lines on big bulky cars gas inefficient cars when people wanted fuel efficiency. PS Ford has the same union and for most of the last 50 years has had similar union conracts and didn’t need a DIME of bailout money. The failure is on GM’s management.

That is relative pennies in the grand scheme. GM’s issue is old GM vs. new GM. Old GM didn’t want to fight with the union and promised the union legacy costs beyond the capability of new GM. Now new GM is stuck holding the bag. Classic Stage One Thinking as you would say.

Mitisubishi builds cars in America using UAW labor. And notice my above post. I specifically mentioned legacy costs. But that’s not the fault of the new workers of current GM management.

And it doesn’t mean that the UAW should be blamed at every turn either.

Aren’t the UAW workers at Mitusbishi the ones at the former Chrysler facility in Normal, IL? That’s a plant that has produced cars for both companies, like the ’95-’99 Dodge Avenger and Mitsubishi Galant.

Mitsubishi isn’t a good example of success. They’ve always struggled to make a profit with the car business in the US.

First of all, people wanted trucks and SUVs. That’s why nearly all manufacturers were building them. They were the most popular vehicles on the road.

The worst thing that ever happened to GM and Ford was again, the government, specifically the CAFE policy. CAFE was supposed to be about fuel economy, but due to UAW lobbying it was implemented in such a way to protect union jobs. The law was implemented with a two-fleet rule to appease the UAW.

CAFE’s disastrous effect is pretty simply and obvious to explain…

CAFE’s two-fleet provision required that vehicles produced by a domestic manufacturer in the US must meet the required mpg average exclusive of vehicles produced by that same manufacturer outside of the US and then imported was the single most destructive thing to happen to Detroit.

CAFE would have been fine if there was just one mpg average that all cars sold by a manufacturer had to meet, regardless of where they built the car.

This caused Detroit to manufacture small cars in the US at a loss. All those millions of Escorts and Cavaliers made no money for Ford and GM, even though they sold great. To lose less money on each unit, they cut corners and produced these cars that, while reliable, fell short of cars from Honda or Toyota. The sensible thing for Detroit to have done, and that any business would have done, would have been to move small car production out of the US, but then they would not have met CAFE standards on their profitable larger cars. They had to keep making less competitive small cars domestically because of CAFE. Their small cars were less competitive because they were losing money on every one of them. When you’re losing money on every unit sold, you’re going to cut corners to try to minimize that loss. If they built small cars as good as the Japanese, they couldn’t bring them to market at a profitable and competitive price.

The unions knew that the Detroit had to build small cars in the US regardless of the loss per car. They had to build them in the US to balance off the lower-mileage, higher-profit vehicles. Thus, CAFE destroyed the industry’s bargaining position with the UAW. I wouldn’t want to see the jobs shipped out of the country, but without CAFE, Detroit could credibly have threatened to close those factories. The unions could have either agreed to more reasonable wages at those factories, or lost the jobs.

When you consider the importance of the automobile industry, CAFE may well have been the single biggest industrial disaster in US history.

CAFE might have been a well-intentioned law, but it was perverted by special interests (the UAW). If it was about fuel economy, why was this provision put into the law??? They put in the multi-fleet rule to prevent the domestics from outsourcing, effectively cutting their legs out from under them in labor negotiations.

Cars are a big interest of mine, and the misconceptions about the domestic industry that so many Americans have just drive me up the wall.

Management’s biggest mistake was caving to the unions, but it they don’t, they lose billions in strikes. CAFE, like I was talking about above in that long-winded thing above, totally cut the negotiating legs out from under the Big 3.

The whole union concept is warped. Why should a line worker assembling high-price, high-profit trucks make the same wage as a worker building low-cost, low profit compact cars? It takes basically the same amount of labor hours to build each, but one product brings in far more money than the other. They should be paid what their labor is worth. If the small-car guys don’t like making less then the truck guys, move to where the big truck plants and try to get a job there. People at the offices in my own company outside of Pittsburgh make more than I do here. I don’t begrudge them that, I’m free to leave my job any time I want to look for more money.

I’ll never get why the Big 3 workers don’t leave the UAW. Don’t they see that the import workers in the US make just as much money and work for strong companies? The UAW has tried to organize at Honda, Toyota, and other plants for decades and has always failed.

Should taxes be lowered? Yes. Americans pay too much tax.

I have mixed emotions about the estate tax. If one person makes a lot of money with a business and then passes it along to his children when he dies, it is frequently not possible for all of the siblings to make a living on the business once the profits are split amongst the children. It isn’t a viable business model and the parent should have sold the business while he was still alive and split the money up amongst the children and let them try to make their way in society without having something handed to them. Children should not be guraranteed a living because their parent had a business. If the parent wanted to create a bunch of lazy people, and this country has a lot of rich lazy people, he should have created a trust and let the kids have some money while forcing them to find their own way in life.

There is an old saying, “The first generation builds the business. The second generation runs it into the ground and leaves the mess to the third generation.” It isn’t that the second generation may be bad businiess people. It could be more about the realities of splitting profits in a small business when there wasn’t much money being made anyhow. I own a small business and make a good living at it. If I had to split the profit amongst three children, they wouldn’t be able to make a living off of it. I didn’t have it handed to me and the children shouldn’t have it handed to them.

I guess what I am saying is people shouldn’t give their kids a business when they die. No matter how well intentioned it might be, it may not make a lot of sense. They should sell everything before they die, give what they want to the kids in the form of a trust or in cash payments while they are still alive.

Many small businesses can’t survive once more than one person is taking the profits. They are going to be sold sooner or later so the owner should sell them before the kids run them into the ground and there is little value in the business at that point.

Here is an even better idea. Instead of giving the kids the business, make the kids buy the business off of you before you die. Let them go to the bank and ask for the money to buy the business off of their parent. At that point, the children will have to think about the annual revenues of the business, overhead and profits before they take over. They might also learn that hard work and smart accounting builds a business and not handouts. A good banker can tell the siblings whether or not their business is viable or not. If it isn’t, the siblings can go to the parent and say, “Thanks but no thanks.”

What if one of the kids doesn’t want to own the business? Why should the parent saddle the kid with the responsibility? Maybe the kid became a doctor or something.

It’s really an issue of estate planning.

There are probably 100 times more that never made it past the second generation.