Unless you have been living on a deserted island in the middle of the Pacific the past few months, you are well aware of the serious financial straits our country is in right now. The latest business to come under the microscope is the automotive industry, particularly the Big Three (Chrysler, General Motors and Ford). Why am I not surprised?
For years, the U.S. automotive giants have been blind to what is needed to stay competitive in a global industry, particularly with respect to the need for more fuel-efficient vehicles. By continuously pumping lobbying money into Congress, they have been able to effectively slow down the inclusion of technological advancements that have been available to increase mpg. As a result, U.S. automakers’ market share has been steadily dropping over the years. This is not a surprise to anyone; what does open my eyes, however, is the discrepancy in compensation between the U.S. Big Three and Japan’s Big Three (Honda, Nissan and Toyota).
According to Mark Perry, University of Michigan professor of economics, average hourly compensation for the U.S. Big Three is $72.31. For Japan’s Big Three, it is $44.20. Cost of living aside, this is a huge difference in compensation (wages, medical benefits, vacation, etc.) and is an example of why the U.S. auto industry is in such dire straits (a shrinking market and over-bloated compensation is a recipe for failure). Many of these highly compensated U.S. auto workers will be out of work in the not-too-distant future, as well as many employees of component and subsystem suppliers to the U.S. car makers.
Throwing more money into the automakers coffers is not the answer without guaranteed changes within the industry. We in the semiconductor industry are an integral part of automotive development, with semiconductor content in cars rising each year. We supply technology that can assist car makers in realizing more efficient vehicles for less money. However, more and better silicon isn’t the only answer. The serious problems in the U.S. automobile business have been years in the making and combine the greed and, yes, stupidity of U.S. auto industry management and workers along with, of course, the federal government. It’s going to take a lot of serious thought and compromise to right the U.S. automotive business and there are no guarantees that this ship will still not go down with all aboard despite rescue efforts.
December 6th, 2008 at 12:01 am
Sorry. The $72 number is a lie. At the Senate hearings the actual $20+ numbers were given in sworn testemony.
December 6th, 2008 at 12:04 am
The ‘Detroit 3′ as they are now called have made colossal management errors in what their manufacturing policies and design choices were. Workers don’t pick car models to build. Nor do they market cars that people don’t want to buy.
On the other hand foreign car sales have tanked as well.