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Editorial: Bitter medicine / General Motors makes painful cuts to save itself
Friday, November 25, 2005

Long the biggest player in America's auto industry, General Motors plans to cut 30,000 jobs and production by a million vehicles a year, its chairman and CEO Rick Wagoner said this week. The economic impact here will be keen, with the loss of 600 jobs at GM's stamping plant in West Mifflin. The symbolic impact, that the United States may be losing its ability to compete, will resonate throughout the nation.

Yet the downsizing of GM is long overdue, and some industry observers fear it will not be enough. The mounting woes of American auto makers raise a number of questions, one of which is: Who's to blame? As it turns out, there are several directions for an accusatory finger to point.

A generous share can be apportioned to the auto makers themselves. From the time of Henry Ford, the U.S. auto industry has felt that it knows what is best for the motoring public. For decades, its manufacturing arm and its lobbyists resisted improvements in quality and in fleet fuel standards.

Obviously the public shares some blame, too, by buying into the idea that big cars are good and fuel-efficiency standards are bad. When change finally came to Detroit, it found that younger customers had altered buying habits in favor of nimbler, often better-performing cars from foreign manufacturers.

For a long time Detroit was able to live with such competition, aided by the willingness of government to build ever more highways. Eventually, however, that advantage has eroded. It doesn't help that the United States, unlike foreign competitors, doesn't have a health-care system that relieves manufacturers of that component of cost, which is roughly $1,500 for every vehicle GM builds.

The industry has often been criticized for a tendency to buy labor peace at the cost of generous non-wage concessions. Auto workers may now take a more realistic view of what the companies can afford, but any negotiations could be painful and prolonged.

For all of its difficulties, the auto industry still accounts for a large chunk of the nation's economy. If the Big Three, or any one of them, falters, all Americans, including those who drive imports, will feel the adverse economic effects.

First published on November 25, 2005 at 12:00 am