Krugman: Always Low Wages. Always.

http://www.nytimes.com/2005/05/13/opinion/13krugman.html?hp=&pagewanted=print

Last week Standard and Poor's, a bond rating agency, downgraded both Ford and General Motors bonds to junk status. That is, it sees a significant risk that the companies won't be able to pay their debts.

Don't cry for the bondholders, but do cry for the workers.

Standard and Poor's downgraded GM and Ford sooner rather than later because it believes that the public is losing interest in S.U.V.'s. But the companies were vulnerable because they still pay decent wages and offer good benefits, in an age when taking care of employees has gone out of style. In particular, they are weighed down by health care costs for current and retired workers, which run to about $1,500 per vehicle at G.M.

So the downgrade was a reminder of how far we have come from the days when hard-working Americans could count on a reasonable degree of economic security.

It doesn't matter how well or how badly you treat your workers.
THAT is the issue. Stupid, short-sighted management.
NOT coddling the workers.

Toyota has been making the news with the Prius, which continues to
sell faster than they can build them.
GM has been making the news by sending the EV-1's to the crusher
in spite of considerable public outcry. They have belatedly announced
some "hybrids" that do little more than shut the engine off at stops,
and are currently begging Toyota to license their hybrid technology.
GM's small cars suck, and always have. GM is really a truck company.

But Ford builds better trucks than GM. They even build a hybrid SUV
with essentially the same tech as the Prius (and they have licensed
Toyota's hybrid technology). They have been selling these for almost
a year, but hardly anybody knows about them. Most people who want a
hybrid SUV are waiting for Toyota to do it (even though this time,
the Ford is smaller, lighter, and gets better mileage than the upcoming
Toyota or Lexus SUVs).
I am happy with my Ford Escape Hybrid, and I wish the people who built it well.

Buses. They build pretty good buses, and diesel-electric hybrids
make sense there. GM is working on that:


http://www.gm.com/company/gmability/edu_k-12/9-12/fc_energy/hybrid_allison.html

GM obviously has considerably lobbying clout, which they are currently
bringing to bear to get out of their pension obligations.

They should instead be pushing for the massive expansion of local bus
service, and getting the Federal government to help those agencies buy
newer, cleaner and more fuel-efficient buses. Those agencies are more
likely to "buy American" than the average consumer, and GM would be
well-positioned to benefit.

Diesel-electric hybrids are not new, trains have been using them for years.

They fully bought into the iron belt industrial model and did what everyone thought would work. But, and no astonishment here, the corporations are run by idiots. What do people want? More Pontiac Aztecs, (recently voted the most ugly car of all time)? No, they want Toyotas, Nissans and Hondas.

Its a dinosaur industry cranking out dinosaurs for people to go significantly in debt to own and to put ever more scare gas into, somehow believing that the best is yet to come.