America’s  current economic woes did not come out of thin air. Its not only a matter and question of economics , interest rates , banks and the bailout and tarp funds.  It goes much deeper and was a long time coming.

Take for example this auto magazine article – or a mild press release , published in Oct 1992 dealing with  BMW’s announcement to open its American factory in North Carolina.  You have to remember that this is a highly subsidized announcement -  each state made great pitches , offers and tax saving inducements to the firm , to relocate ( move from where Germany ?), to the chosen US state.  Its more than amazing at how much is spent on these deals , whether it was in North Carolina or the Southern US states to build what are in effect “Screwdriver Plants”.

The greatest amount of value added is in the home country – be it Japan for Toyota or Nissan , or in this case Germany for BMW.  The really high paying jobs and skills are offshore , not in China at low dollars but rather back at “Head Office”.  Its only the mundane low paying jobs so to speak that are offered , after all of these great subsidies.  When one figures out the cost per worker, including all subsidies , to the American taxpayers you have to wonder if it would not just of been better to have paid the workers – or assemblers – just to stay home or go duck hunting.

Interesting – hidden in the middle of the press release gushing article – inside the paragraph dealing as to why BMW execs choose North Carolina over others ,  “not the least was easy access to air, rail, and highway routes , is the statement “And while initially up to 80 % of the components will be imported from Germany…… there is a good possibility ( although not probability) , that some type ( not types), of manufacturing capability ( not plural), may be added in the future.

And you think that your boss is a moron.

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Its an old refrain of inept management  – who indeed are pigs at the trough for their god given perks – to find services and information packages .  “This is here to help you – to make you more efficient ,  productive etc etc.”

All true but the hidden agenda may well be to maintain and enlarge the execs / sales managers / supervisor’s  means to get another job in the industry.  After all if they are not “experienced”  “familiar “  with the alphabet soup of the day their days of promotion to another or better or escape hatch job – while the going is not too bad – are somewhat limited.   “Are you experienced with  gobbledygook number x 2009 …..No then come back and see us when you are.”   Guess which exec or employee pushes for that new computer program / management tool /  monitoring program ?

The most amazing part is that once in place , after all the preparation and high priced staff in place to lecture willing or captive employees on the merits of the program , that upper management , supervisors and bosses are totally inept at any simple comprehension of  the basis of the whole program and its concepts.

For example on the plane , with plenty of scotch , they may glance over an add in a magazine ( which they borrow off the plane , after all they paid a business class fare) , which states that the “phone is the most underutilized tool of most employees – let your fingers do the walking…” .  One may well ask what about the internet and the mouse in this day and age of the year of 2009.   At meetings , in interviews and on meetings in the field ( as an observer only there to help) , the exec/  supervisor boss may well spout this phrase incessantly .  However at the same time he may well admonish staff for using the phone too much.

Its not a case simply of trying to cause trouble and prove whose boss , of incompetence or even stupidity.  People go back to what they “grew up under “  and what they know.  Alcoholics or children of alcoholics and dysfunctional homes often go right back to the same behavior they knew and grew up under .   Why – they know it works , its rock solid and after all it feels “best”.

In the same way and manner most managers no what the program is , or what the new flavor is – which has been bought or cost a fair amount of money of resources to purchase and implement will always go back to “more of the same “.   Count on it.  Its a truism of life.  Get with the program.

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Its an interesting tale of  viewpoint and perspective

Some of the times it is not only management and upper management that should be blamed – workers and their leaders – in the case of the auto industry and specifically the American domestic auto industry that should be examined

Although it can well be said that upper managment in the American car industry was “clueless”  and “devoid of reality”  the case can well be made that for many years it was not the upper execs ( at the top floors dining on fine china in the executive dining rooms), were not making the decisions on auto productions – levels , standards and models .

The decision were being made either by politicans – with their demands and standards – be it safety , fuel or otherwise with the input of the unions chaneling upper management with all their demands – pay and benefits.

We all know of the $ 85 dollar an hour forklift operators, and all the benefits and costs that the automotive companies were saddled with.

If production slowed down workers were paid full bore almost not to work

You might think you were dealing with a government agency – a civil service organization

It was no wonder that “foreign “  autos even those made in the states cost less

Yet look at the qualifications of these union leaders – be it in the US or in Canada with the famous Buzz Hargrove.  What qualificiations do most of these individuals have other than they were good party ( nightime partying and drinking to either get the union appointments or to drink the auto execs under the table socially to have them agree to union requests / demands / blackmail)

Nothing is for nothing.  The costs that the car companies were saddled with had to come from somewhere. It was one giant game with the company “in bed with the union”  according to the viewpoint of the 85 $ dollar an hour fork lift drives.

What both forgot is who they were working for was the American consumer. The car that GM sold for x amount that was good value compared to the import that sold for X + 1000 dollars , should of had a sticker price relating to the actual price of the vehicle , or its constituent imported parts at the port of entry less tarrif fees , not those fees and taxes included.  Yet government was pieced off as well with increased levels of sales and import taxes collected.

Now that the unions will have a giant say as having substantial percentage of ownership of GM how are they going to blame upper management.  Its all in the viewpoint and the money you earn / take home / steal.

Original referenced viewpoint article: 

Outsourcing Top Management: The Lesson of Fiat-Chrysler
By: Dean Baker Monday May 4, 2009 8:20 pm  13
The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.

This big story was so easily missed because it runs against one of the main myths that our elites have cultivated about the US economy: that the country has a “comparative advantage” in highly skilled labor. In this story, the United States will continue to lose manufacturing and other “less-skilled” jobs as its economy becomes more concentrated in highly skilled sectors.

This story was convenient for our elites because it meant that the decline of manufacturing was a necessary, if sometimes painful, part of a natural economic progression.

It also justified the growing inequality in US society that benefited not just Wall Street bankers and CEOs, but also millions of doctors, lawyers, economists, and other highly educated workers. These people took their six-figure salaries as a birthright, even as the pay of less educated workers stagnated or declined.

While this story of the US becoming a high skills center in the world economy may have been comforting to the elites, and was widely promoted by economists and the news media, there was never much truth to it. Highly skilled professionals did well in recent decades not because they succeeded in international competition, but rather because they were largely sheltered from it.

Trade agreements like NAFTA were explicitly designed to remove any barrier that made it difficult to export manufacturing goods to the United States, thereby placing US manufacturing workers directly in competition with their much lower paid counterparts in the developing world. Most of these restrictions had nothing to do with tariffs. Instead the key issues were rules protecting investment in the developing world along with limits on the ability of the US to exclude imports through safety or environmental regulations.

There has never been any similar effort to eliminate the barriers that prevent professionals from the developing world from coming to the United States and competing directly with their US counterparts as doctors or lawyers or in other highly paid professions.

The economists and the media somehow failed to notice that professionals were intentionally sheltered from international competition and instead just trumpeted them as the winners in the global economy. We were just treated to a beautiful example of this double standard when the media and the economists got all huffy about the “buy America” provision in the stimulus bill that might have protected a few manufacturing jobs in steel and other industries.

While this provision was roundly condemned and eventually watered down, the buy America provision in the Treasury’s latest bank bailout bill went completely unnoticed. This provision requires that any investment manager taking part in the program be headquartered in the United States. Even though the argument against protectionism in financial services is identical to the argument against protectionism in steel, no one bothered to make the argument when Wall Street was the beneficiary of protectionism.

The end result of this protectionism for those at the top is a bloated overpaid sector of top managers, which is what we saw at Chrysler. If we compare wages for assembly-line workers in Europe and the United States, there would not be much difference between the pay of UAW members and their counterparts in Europe. However, there would be a very large difference between the multi-million dollar pay packages of the top executives at the US companies and their European counterparts. The pay gaps persist among the more highly paid engineers and management personnel.

Therefore, it was only logical that a bailout of Chrysler would seek to take advantage of the lower cost management and design skills available at a European car company like Fiat. In Chrysler, as in other companies, the high pay packages for these people are like an anchor dragging them down in international competition. If the US is to be competitive in the 21st century, we must either bring the pay of those at the top back down to earth or we should look to follow the lead of Chrysler and contract out for these services.

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