Wednesday, November 23, 2005

What Would Henry Ford Think ?

No hand-outs please

Bill Ford is now asking the federal government for subsidies to help the ailing US automakers. This is not a good thing. When government picks and chooses winners, the local economy suffers as resources are put towards uncompetitive industries instead of productive ones. Then, the overall rate of growth of the economy and wages are not what they should be (eg the poor dont get richer) due to this inefficient and wasteful investment.

Detroit does indeed have a problem. Its technological base has been "leap-frogged" by Asia's carmakers and it has to pay extremely high wages. The average wage in the USA is around $20 per hour, with another $15 for employer-paid benefits. The average autoworker wage is around $35 per hour plus an average of $25 for benefits. This is out of wack with the economy. Let's not make a bad situation worse by giving tax money to sustain the unsustainable. If the US companies (and unions) want to stay in the auto business, it's time to rethink our approach to 100+ years in this business. Change is part of life, and as a friend of mine said, no matter how painful the change is, "Life begins over and over again".