GRUNHERZ: Miko, if the unions were the chief cause of this problem why are trucks and SUVs so profitable on a per unit basis for US automakers, they are built in the same plants by workers with the same extravagant union contracts.
Some cars are more profitable than others, but if you compare how much the pension and other benefits are contributing to a car made in Detroit compared to the one made in Alabama, you will see that the domestic companies are saddled with a hhuge extra cost - which prevents the from lowering the price.
Of course we can argue that workers should get lavish retirement packages, but the public apparently does not share that belief - buying more cars bilt in the south and fewer built in Detroit.
The car models change from year to year but the pension liabilities and labor costs are persistent. The GM and Ford have been losing market share for decades - they could not have been producing crappy models all that time.
Some models are bad, some are great - and promply matched by the competition.
What competition does different is not just the models but opening plants in areas where union influence is smallest. So it's not just my academic opinion but of the companies who make a lot of money because it is correct.
They may have extra problems because of designs and may get some relief if better designs are adopted but unless some miracle happens or grvernment intervenes to take care of their liabilities, they are headed towards bankrupcy withing a decade.
You may be very surprised to find out that GM makes money not in manufacturing and selling cars but in financing - it's a profitable bank formally linked to a failing car maker.
miko
