auto industry

Will UAW Seek Foreign Help to Unionize American Workers?

by Ivan Osorio on January 18, 2011 · 2 comments

in Bailout Watch, Economy, Employment, International, Labor

America has a vibrant and successful auto industry — just largely outside of Detroit. For years, many foreign automakers’ American divisions have been successful at making cars profitably, while creating thousands of well-paying jobs. One reason for the foreign automakers’ success has been their ability to work without the burdensome work rules faced by the Big Three under their contracts with the United Auto Workers (UAW) union.

Apparently, UAW President Bob King doesn’t like that one bit. In fact, he seems to feel so strongly about it that he recently announced that for companies that resist its organizing efforts, the UAW “will launch a global campaign to brand that company a human-rights violator.” What might such a campaign entail?

One indication can be found in the Obama administration’s report to the bad joke known as the U.N. Human Rights Council — whose members include such human rights champions as China, Cuba, Libya, and Saudi Arabia. In the report, submitted in August 2010, the State Department strongly suggests that the degree to which the law facilitates unionization should be a human rights matter — and that the U.S. falls short in that area.

The UAW — or any other union, for that matter — likely would cite the State Department document in any complaint filed to the International Labor Organization, World Trade Organization, or any other international body — maybe even the ridiculous U.N. Human Rights Council. And King’s recent remarks indicate this is an option the UAW might well pursue.

King also recently acknowledged that the UAW is in trouble. Speaking to an audience of 1,000 union members at a Washington political action conference, he said, “If we don’t organize these transnationals, I don’t think there’s a long term future for the UAW — I really don’t.” With those kind of stakes, it would be surprising for the UAW not to take some drastic action.

The upshot of all this is that we could end up seeing the UAW ask international bodies composed of foreign governments — including some undemocratic ones — for help in unionizing American workers. Stranger things have happened.

For more on labor, see here and here.

No Fault Failure

by Michelle Minton on February 17, 2010

in Insurance

On Monday, the RAND Corporation released a comprehensive overview of the no-fault insurance system and documented how the one-time darling of insurance systems has fallen so far out of favor, simply because it failed to do what it set out to accomplish: higher availability of insurance with lower premium costs. The study, “The U.S. Experience with No-Fault Automobile Insurance: A Retrospective,” can be read in full at the RAND website.

The idea behind a no fault insurance scheme is that if you are in a car accident with another motorist, both of your insurance companies will pay out to their policy holders, regardless of who was at fault for the accident. The hope was that this would allow people immediate access to their insurance dollars without the months or years of costly legal wrangling that occurs in tort-based insurance states. No fault, however, limits an insurers ability to determine who was at fault, recoup loses from the guilty party, and makes determining the risk of individual policy holders very difficult (even if an insurer can approximate the likelihood of his insured causing an accident how are they supposed to gauge the riskiness of all the other drivers on the road that they’ll end up paying for?).

In the 1970s, many policymakers and analysts believed that no-fault automobile insurance was a superior innovation that would displace conventional, tort-based automobile insurance policies. Today, however, no-fault has lost much of its popularity among insurers and consumer groups, according to the report…

Policymakers believed no-fault insurance would minimize litigation and administrative costs, more fairly compensate victims of automobile accidents and be less expensive than tort-based insurance. In practice, however, premium cost reductions never materialized, in large part because of increased medical costs.

Injury costs under no-fault were only 12 percent higher in 1987 relative to tort-based insurance, but by 2004 costs were 73 percent more expensive under no-fault plans. In addition, those states that restricted lawsuits against other drivers actually had higher claim costs than states that permitted lawsuits.

Anderson said he and his colleagues believe medical costs increased largely because consumers who have no fault policies tend to use more specialized types of medical treatment and because medical costs may be more likely to be covered by auto insurance rather than medical insurance in no-fault states. There also is evidence of greater medical cost inflation in no-fault states.

While the study does call for more research before concluding why medical costs seem to have skyrocketed under the no-fault system, it is clear that forcing insurance companies and consumers into a one-size fits all policy that forces certain coverage and prevents legal recourse has not resulted in cost savings, but rather in unintended consequences.

picture via Autoinsuranceplans.com

Michigan’s population leak

by Michelle Minton on December 28, 2009 · 2 comments

in Bailout Watch, Economy, Employment, Insurance, Labor, Odds & Ends

In a preview to the 2010 census, Michigan learned this week that it was one of only three states to lose members of its population. Of course, since the state has seen a steady decline in population over the past four years this doesn’t exactly come as a shock.

Michigan lost 32,759 people between July 1, 2008, and July 1, 2009, a decline of 0.3%, while the nation’s population grew 0.9% to 307,006,550. Maine and Rhode Island also lost population.

By the end of the decade researchers estimate that Michigan will have lost 20% of its jobs. And the situation isn’t likely to improve. Michigan politicians continue to demonstrate their lack of understanding about how markets work and why jobs and thus residents are exiting the state for friendlier lands. It isn’t a lack of government funding but rather a glut of government intervention that is driving competition, business, jobs, and residents to other states. For example, as I have written about in the past, Michigan’s solution to the high cost of car insurance in the state is not to examine and solve the mechanisms that drive up the cost of writing insurance in the state, but rather to mandate companies simply charge less and take less of a profit. This ignores the fact that insurers in Michigan are making smaller profits than other states and more controls simply add incentive for insurance companies to leave the state, taking jobs and access to insurance with them.

The Auto Bailout We Need

by Iain Murray on February 19, 2009 · 1 comment

in Deregulate to Stimulate, Economy, Energy, Politics as Usual, Precaution & Risk

The automakers have come back for more taxpayer money, which is exactly what we warned would happen when the first bailout was granted last year. The restructuring plans merely represent an attempt to acheive the results of bankruptcy, with the taxpayer picking up the costs. What is needed is not more taxpayer money, but a way to make US automakers competitive again. As I said in my recent Detroit News piece, we can do that through a simple, cost-free, program that will remove burdens Congress has unfairly placed on the US auto industry. These include:

• Repeal federal fuel economy requirements. They restrict consumer choice by insisting that fuel economy take precedence over safety and impose restrictions on design that reduce the competitive advantage of Detroit automakers. If a reduction in fuel use is a necessary policy goal (I would contend it is not, but that’s an argument for another time), there are other policy options that would not impose direct costs on the automakers or restrict consumer choice. One is to remove the absurd “two fleet” rule that uniquely hampers U.S. automakers by prohibiting them from counting their foreign-made vehicles toward their fleet fuel economy average. Moreover, by reducing the weight of vehicles, high fuel economy mandates remove the single most cost-effective safety design feature of all, so this bailout measure would also save thousands of lives each year.

• Reduce the burden of safety legislation. There are too many safety rules that are counter-productive, such as mandated air bags, which have proved dangerous to children and people of less-than-average height. Consumers should be free to pick from a menu of safety options that allows them to take their own circumstances and preferences into account. This does not mean that automakers should be free to build cars that explode on ignition. There is a range of safety considerations, from safe to extremely safe. The United States is requiring too many “extremely safe” features while perversely reducing safety though fuel economy requirements. Again, the Detroit manufacturers feel these more intensely than other manufacturers because of the sort of vehicles they have specialized in.

• Halt the march of further design regulations. My colleague Wayne Crews has identified 22 new regulations that were being pursued last year that would increase the costs of designing and manufacturing new cars.

• Remove artificial barriers to merger through too strict interpretations of antitrust law. Federal antitrust authorities have stopped attempts at a merger of General Motors and Chrysler because the two firms together would have a dominant position in the “light truck market.” Yet the recent oil price spike proved that customers easily substitute passenger cars for light trucks, showing that there is no such distinct market. If GM and Chrysler could merge, there would be plenty of scope for eliminating inefficiencies, which would allow the merged company to compete more effectively.

• Allow automakers–and, indeed, all firms–to repatriate foreign profits without double taxation. This will provide a much needed injection of funds. No other country handicaps its own companies in this way.

• Suspend particulate matter regulations emanating from California — but imposed on the United States. These regulations prevent automakers from selling in America the kind of high-mileage diesel-powered cars that sell well in Europe and meet all European emissions requirements. This will immediately reduce fuel usage and reduce the Detroit companies’ research and design costs, which must now go toward meeting California standards. Moreover, because the cars already meet European Union environmental and safety standards, there would be no significant reduction in those protections.

With such a “liberate to stimulate” program in place, US automakers will be able to regain their place as world leaders. Instead, we see GM begging Congress for $8 billion to design cars as fuel-efficient as ones they already sell in Europe. This is absurd and must end.

Deregulate Detroit

by Iain Murray on January 13, 2009 · 1 comment

in Bailout Watch, Energy

I have an expansion of my original “deregulatory bailout” plan for Detroit in The Detroit News today. I’m also quoted in their editorial on how energy policy needs to catch up with the auto industry’s – and, it seems, consumers’ (if polls are to be believed) – enthusiasm for electric cars. The Detroit News, by the way, remains the best place to get news on the industry’s design plans – see the box to the right of the editorial, for instance.

Federally Sanctioned Propaganda Machine

by Gary Howard on December 11, 2008 · 1 comment

in Bailout Watch, Economy, Intellectual Property, Nanny State, Odds & Ends, Privacy, Regulation, Tech & Telecom

 

Apple's 1984 "Big Brother" commercial.

Apple's 1984 "Big Brother" ad

An article over at Ad Age brings up an angle on the whole auto industry bailout probably not considered much before.  The fact that a yet-to-be-appointed “car czar” will have control over a multibillion dollar advertising budget for the big three.  Under the guise of “oversight,” this would effectively “Create World’s Most Powerful Marketing Exec[utive].”  

The draft rescue plan for Detroit sent to the White House by Congress yesterday calls for the appointment of a “car czar” who will oversee the Big Three automakers’ expenses over $25 million — which, by extension, would include media buys. Based on Advertising Age’s estimates of spending by General Motors Corp., Chrysler and Ford Motor Co., that would give the as-yet-unnamed car czar control over some $7.3 billion in marketing spending in the U.S. alone.

The most disturbing thoughts about this (particularly to those concerned with liberty) are provoked here: 

The car czar would wield a budget more than double those of AT&T, Verizon, Unilever and Johnson & Johnson, which round out the nation’s top five marketing spenders, and give the car czar more clout with media and agencies than such famed names in marketing as Walmart Chief Marketing Officer Stephen Quinn and Anheuser-Busch VP-Marketing Dave Peacock.

…If the bailout goes through, agencies that work for the Big Three will essentially be toiling on a government account, with all the associated red tape and strictures that involves.

So there you have it.  We should all be concerned about this for many reasons.  As mentioned, the large ad budget that comes with a czar-controlled U.S. auto industry will allow a government bureaucrat to wield unbalanced and unchecked influence over not only who gets ad contracts, but what media outlets get ad money. The czar can simply refuse to give business to an advertising agency who works for a foreign competitor of the big three (or a “non-compliant” corporation), or refuse to pay money to show ads on outlets that they deem “unfriendly” to the administration or its mission.   This will be an unequivocal disaster.  We have already seen the lengths to which administrations (and pre-administrations) have gone to influence and/or silence media they do not like.  What kind of power plays do you think are possible when the administration’s appointee controls a major source of media outlets’ ad revenue? Whatever it ends up being, it won’t be pretty.

Carmakers Recovery Assistance Program

by Iain Murray on December 5, 2008 · 10 comments

in Bailout Watch, Economy, Personal Liberty

While lawmakers consider whether or not to bail out an industry they holed beneath the waterline, perhaps they could learn from the history on another once-thriving auto industry, that of Great Britain. It’s a salutary tale.
[click to continue…]

America’s Other Auto Industry, the Successful One

by Cord Blomquist on November 20, 2008 · 1 comment

in Bailout Watch

CNN has a great story about the successful auto companies in America, namely those that aren’t named “GM,” “Chrysler,” or “Ford.”

Turns out, folks who work at and live near the Honda engine plant in Anna, Ohio don’t think the auto industry should get a bailout.  Local waitress September Quinn is quoted in the story as saying:

I don’t think they should bail them out because … obviously something’s not right in the way they’re running their business, and why should the American people have to bail them out if they can’t figure out how to do it right?

Quinn also had some insights into the problems that big labor unions have caused for the big three automakers.  As the CNN story reports:

“People agree with the unions because the workers want to be backed on everything, but then again, there aren’t people striving to do their job better,” said Quinn, whose father works at the nonunion Honda plant. “They’ve just got Papa Bear to back them up in any instance, and they keep their job. And you can do that, but I don’t know at the cost of what.”

That sort of common sense is a refreshing break from the doomsday rhetoric being spouted by domestic automakers and members of Congress.  Optimism is also present in the final quote of the story offered by John Lenhart, an officer with the Sidney-Shelby County Chamber of Commerce and a consultant with Plastipak Packaging in Jackson Center, Ohio:

The country’s got some ills, but we’ll heal up [ . . . ] We’ll be all right.

Check out the full story at CNN.com.

Hollywood Rep. to Wield Power Over Copyright Law

by Wayne Crews on November 20, 2008 · 1 comment

in Tech & Telecom

My colleague Cord asked me about proposing a tech agenda for Congress given the ascendancy today of Henry Waxman to Energy and Commerce Chairmanship; my immediate answer was “Adjourn.”

Anyway, the big news is that Rep Henry Waxman challenged John Dingell for Energy and Commerce Committee chairmanship, and won. E&C has jurisdiction over, well, everything.

Waxman has been a member of Congress since 1975, reminding us of the saliency of term limits. What matters, one might argue, is not that constituents have a right to continue electing a member to the House if they want to; but that the rest of the nation for whom he makes binding law never gets the opportunity to kick the guy to the curb. Nothing personal, but–33 years?

Anyway that’s irrelevant now:  Waxman’s focus will be health care, most assuredly, and energy policy also (have a look at President-elect Barack Obama’s platform for reassurance about this). Keeping Michigan’s Dingell in the E&C chairmanship would have meant that the Democrat’s favorite energy-and-renewable-mandate policies would have been blocked by the leading Michigan Democrat. So he obviously had to go. The auto industry is tough and can take a dose of Waxman, I guess is what they figure. Never mind all that business over the past couple weeks about a Detroit bailout; it’s Thursday, all that stuff was the other day.

But on tech policy: since the committee has jurisdiction over the Federal Communications Commission and the Chairman represents Hollywood, he is newly influential over copyright issues and broadcast concerns like “airtime” for candidates and obsure stuff like net neutrality (which is the idea that internet infrastructure belongs to everybody except those who built it). Watch for the “Fairness Doctrine” issue to re-emerge. If memory serves, this is the notion championed by Democrats who are upset that Oprah gave such an infusion of support to Barack Obama, so I think they’ll be trying to make her showcase some Republicans on her show. Pretty noble of the Congressman and the party.

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