At Slate.com on Friday, Felix Salmon called the Ford Motor Company "heartless" for its plans to phase out most of its car models, because "The losers, of course, will be the workers." Saturday, Ford responded that no jobs will be lost at its Chicago Assembly plant in converting it to light truck production. Salmon posted that response at the end of his column, but in three days he and Slate haven't changed their "heartless" — and baseless — assessment.
Why shouldn't Ford (or General Motors, or Chrysler) be able to sell cars profitably? (In mid-April, GM laid off 1,500 workers at its Chevy Cruze plant, while Chrysler is selling fewer than 20,000 cars per month.) The reason is that the Japanese and other competitors have far lower cost structures and far more flexibility in deploying workers.
The traditional Big 3 could have fixed that in 2009, but didn't. That's because the Obama administration refused to allow the industry shakeout which could have enabled the traditional Big 3 to become fiercely competitive over the long-term to happen.
Instead, the federal government bailed out GM and Chrysler, forcing them into "abusive" managed bankruptcies in the name of preserving United Auto Workers members' wages and benefits.
Despite frugal public poses, the UAW was able to tell its active GM workers when its post-bankruptcy contract was renegotiated that they would suffer "no reduction in your hourly base pay, no reduction in your health care, and no reduction in pensions." Ford, which avoided a bailout, was in no position to attack its high union contract-driven cost structure alone.
The traditional Big 3's car problem is more obvious because the market is shrinking, but, as seen above, the companies are also losing light-truck market share. That loss has continued into this year. When overall industry light truck sales flatten out, as they eventually will, their cost structures will make them extremely vulnerable.
Salmon then, in effect, blamed the capitalist system for this "heartless" outcome:
The above table exposes the idea that Ford or the other two members of the traditional Big 3 have "won in trucks" as sheer fantasy. The supposed victory by the Japanese companies in sedans is hardly assured, given that they have so many other feisty non-Detroit competitors. Finally, given the data seen above, it's ridiculous to believe that the Japanese Big 3 have any intention of abandoning trucks.
Ford responded on Saturday:
If there will be no net change in employment, how is Ford being "heartless"? It isn't. Yet Salmon and Slate have not changed either their headlined assessment or their assertion that Ford workers will be "the losers."
Cross-posted at BizzyBlog.com.