THOMSON: Coal in the stocking

• Article
• Comments ()
• Click-2-Listen
• Videos

By John R. Thomson

COMMENTARY:

Henry Ford would be ashamed. His successors in America's largest industry groveled and begged Congress for $34 billion in "loans," which have little chance of repayment. When Capitol Hill balked, a resigned, poorly informed President Bush granted "only" $13.4 billion - original plans for $17.4 billion changed when less than $15 billion remained in the Troubled Asset Relief Program.

Inventor of the practical automobile - he called it the quadricycle - at the end of the 19th century, Ford founded the first automotive company, innovated other industries (film making, aviation) and actively supported the U.S. at war. He accepted capital in return for shares in his ventures; but never considered handouts, particularly from government.

Using autumn's $750 billion financial sector TARP program, opposed by more than 70 percent of Americans, President Bush has granted General Motors and Chrysler funds (61 percent opposing) that will prolong the companies' inefficient misery until the next crisis - analysts predict mid-2009 - and simultaneously extend America's economic crisis. Worse, no substantial binding demands were made of the companies and their unions.

GM and Chrysler executives and workers get a bonus that does nothing to improve the companies' weaknesses, but most Americans get coal in their Christmas stockings -- $45 added to every citizen's share of America's national debt, equivalent to $75 for every taxpayer.

The American automotive industry's long, complicated and painful decline need not have happened. Internationally proving the point, Ford - which founded its first overseas manufacturing facility in England in 1911, eight years after founding its first U.S company - remains a European industry leader. In Brazil, where the company pioneered the market in 1919, Ford boasts arguably the world's most innovative and cost-efficient manufacturing facilities. GM's Chevrolet brand has led the Colombian market for 25 years through management innovation and sound marketing.

Chrysler disinvested internationally during 1980s and '90s crisis-filled years. A $1.2 billion government loan guarantee in 1980, repaid in 1983, resulted in no significant restructuring and only prolonged the company's chronic misery, despite huge additional government-backed benefits. A 1983 Heritage Foundation analysis prophetically concluded, "In the case of the Chrysler bailout, a big chunk of taxpayer money was committed to a shaky and inappropriate venture. Every American became an involuntary and uncompensated partner in a company whose future is still in doubt. The precedent established is extremely dangerous. On top of this, the bailout even failed in its purpose." (http://www.heritage.org/research/regulation/bg276.cfm).

From the beginning, Ford pioneered employee benefits. Most notable, the company doubled the average daily wage to $5 in 1913 and expanded black employment from 50 in 1916 to 1923's industry-leading 5,000. Henry Ford's sound management legacy continues: The company is the sole member of the Detroit-based industry to not receive government funds.

Following World War II, when Ford devoted its energies to manufacturing high speed boats and B-24 bombers, the Big Three dominated the industry worldwide. The good times seemed likely to roll indefinitely, with cars, executive staffs, pay packets and union "work rules" all becoming increasingly grand.

When business eventually slowed, the largesse did not. Union contracts included huge health and pension packages, making U.S. auto workers the country's highest paid blue-collar laborers, while white-collar employment inexorably grew. To keep the assembly lines rolling, labor agreements got progressively sweeter with every contract renewal.