The Chrysler Canary - Introducing A Whole New Hybrid

Numerous recent articles, including this one from the WSJ, have reported Chrysler's ongoing attempts to find someone - anyone - (GM, Renault, Nissan) to merge with. To date, the talks have failed for a variety of reasons. Certainly, the other US auto makers are equally frail. All of the articles cite the cost of retiree health care and worker benefits (e.g., "job banks") as barriers to any deal. The UAW is in a position to disrupt, if not quash, any merger deals. It is interesting to note, however, those parties not mentioned in any deals: major Japanese auto makers (Toyota, Honda). Neither of these companies have the burdensome union contract costs to build into their cars. And, it would appear, they are not anxious to add nearly $4,000 to the fixed cost of every car they make. Those companies considering any mergers already have "big labor" contracts. Of course, we've seen the Daimler-Chysler movie and we know how it ends.

Chrysler is the canary in the US economic coal mine. The UAW contracts are so ingrained that they have become entitlements. These entitlements, and that is the right word, have become so burdensome that the companies can no longer be competitive on a national scale, let alone globally. Even as private organizations, the car companies cannot shed them even when faced with almost certain death.

As the US moves toward a hybid economy in which the government assumes the obligations of private business including "universal healthcare," we should look in the bird cage where Chrysler is barely kicking. As we take the Michigan model to a national scale, how can anyone believe that burdening the entire economy with Detroit-style entitlements will do anything to help the economy grow and create jobs? We've seen this movie, too. It's called "Old Europe."

Health Care Posted by Boulder Refugee at October 21, 2008 11:48 AM