Unions are extracting above clearing price wages from Ford and GM. The automakers will be destroyed.
Once upon a time, what was good for General Motors was good for the nation. In 1955, GM was the largest employer in the United States. GM employed almost 600,000 people. Today in the U.S., the company employs just 53,000 people. In 1955, GM had a 70% market share. In 2023, that share had fallen toUnfortunately, for shareholders of the Detroit Three and for the country, the future is very dark for the domestic vehicle companies.
Under the Biden administration, good, well-paying jobs for manufacturing workers is a primary goal. But that goal is receding from view and will never be realized. Manufacturing as a job creator is a dead end. A government policy goal of wages above the clearing price will destroy jobs and the employers.
Domestic nonunion plants owned by European manufacturers have a decided cost advantage. Equally important, vehicles imported from Mexico, where labor costs are almost 90% below U.S. levels, have a major cost advantage. Investment is going south of the border. The U.S. auto industry is highly cyclical. Today, the domestic vehicle market is seeing relatively strong demand, but recessions are inevitable. When the next recession occurs, the Detroit Three will hemorrhage red ink.
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