The wheels are coming off from GM

The news:

“GM is getting hit by a perfect storm” (and that they are hardly at fault)

Really?

The truth is that the storm has been slowly forming for decades. People knew that their pensions where under funded, that the Japanese and Koreans are more efficient in assembling vehicles (and their unions are less militant), and most importantly, that the UAW (United Auto Workers) and other unions got away over the years with having negotiated ridiculous labor contracts (with help from the government). Unions left GM with little elbow room to adapt in technological changing times to more efficient assembly methods that required less human labor. It is because of UAW wheeling and dealing that it very hard for GM to cut jobs and adapt. GM has tens of thousands of employees currently not working. They are idle, waiting for a job opening, but still receiving benefits and pay from GM. This magnificent working environment was made possible by the wonderful UAW. Is this good or bad for the shareholders of GM? You decide.

Suddenly, the storm is here out everyone is is surprised. It was a ticking time bomb.

Whose fault is it?

• GM was at fault by accepting absurd labor contracts with the UAW for the past 30 years. They should have fought for the ideal that GM's only responsabilty is to that of it shareholders. Not surprisingly, when the shareholders are making money, the employees are generally better off and not loosing their jobs! On the first nine months of 2005, GM has reported losses of 4.1 Billion.
• The government is at fault for the support they lend to unions. (It is clearly a symbiotic relationship; the government supports the legitimacy of strikes and other union’s vicious tactics, and in return the unions support those political candidates who will support their causes. One bureaucratic monster helping another bureaucratic monster. )
• Above all, it is the Union’s fault that GM is in this perfect, but predictable storm. Some of the unions’ causes may be noble, but they have no right to intervene with the business’ owners will to make a profit in their plant. If there is someone willing to perform the same tasks as those unhappy autoworkers, under the same circumstances, that is a strong signal that a strike is not legitimate; and that it should not be protected by government.
• Although a subjective claim, it is also the executives' at GM fault for lack of creativity and making unattractive cars.

It took no genius to see that the only way avoid bankruptcy in the long term is to close plants and fire autoworkers. Today GM announced that it will cut 30,000 jobs to achieve $7 billion in cost reductions by the end of 2006. At last, creative destruction. This is the only way out, but still the Unions rather see the ship sink to the bottom of the ocean rather than to save the company. Keep in mind that this is the only way to avoid bankruptcy in the long run.

“Today's action ... is devastating to many thousands of workers, their families and their communities. While GM's continuing decline in market share is not the fault of workers or our communities, it is these groups that will suffer because of the actions announced today”

It was UAW’s noble causes to help autoworkers that ultimately led for 30,000 of them to loose their jobs. They won concessions in the short run but made thousands loose their jobs in the long run. The UAW has just proven how harmful they are and why they should not exist. They where the ones that planted seeds of GM own destruction and now should be held responsible to make sure that neither unions nor government interferes in the market place in the future.