Why a Pontiac Isn't a Lexus

Mickey Kaus explains how unions are crippling American car makers:

GM pays $31.35 an hour [in labor costs per car]. Toyota pays $27 an hour. Not such a big difference. But--thanks in part to union work rules that prevent the thousands of little changes that boost productivity--it takes GM, on average, 34.3 hours to build a car, while it takes Toyota only 27.9 hours. ** Multiply those two numbers together and it comes out that GM spends 43% more on labor per car. And that's before health care costs (where GM has a $1,300/vehicle disadvantage).

If you're GM or Ford, how do you make up for a 43% disadvantage? Well, you concentrate on vehicle types where you don't have competition from Toyota--e.g. big SUVs in the 1980s and 1990s. Or you build cars that strike an iconic, patriotic chord--like pickup trucks, or the Mustang and Camaro. Or--and this is the most common technique--you skimp on the quality and expense of materials. Indeed, you have special teams that go over a design to "sweat" out the cost. Unfortunately, these cost-cutting measures (needed to make up for the UAW disadvantage) are all too apparent to buyers. Cost-cutting can even affect handling--does GM spend the extra money for this or that steel support to stabilize the steering, etc. As Robert Cumberford of Automobile magazine has noted, Detroit designers design great cars--but those aren't what gets built, after the cost-cutters are through with them.