Steven Rattner on the auto union
Jon Cohn has a terrific interview with Steven Rattner, a famed private-equity investor who helped the Obama administration with the auto bailouts (and has a new book coming out). You should read the whole thing, but I thought his take on the role unions had in GM and Ford's troubles was particularly interesting:
The unions were not the major reason why GM and Chrysler got into the position they got into. There are certainly issues around the labor situation, which I’ll discuss in a second, but to lay this all at the feet of the UAW, which I know some management teams have tried to do, is simply not fair. I’ll give you two data points. First, labor only accounts for only about 7 percent of the cost of a car. So, if you cut that to 6 percent, you’re going to make a bit more money, but this is not the biggest expense that an automaker has.
The second thing I would point out to you is that Ford was playing with exactly the same deck of cards. They had effectively the same UAW contract. They had effectively the same manufacturing footprint, up in the upper Midwest area. They had the same kind of dealer network issues that GM and Chrysler had. And yet while Ford certainly struggled for a while, they got through this and have been making good money for some time now.
So, what’s the difference between Ford and GM? I would argue the difference between Ford and GM is management. I don’t know what else to attribute it to. It’s one of the few cases where you actually have two examples that you can put side-by-side and it would be a very valid comparison.
He goes on, however, to detail the "excesses" and "inefficient work practices" that were present in their contracts. He also explains what he thought of Obama's leadership, and says that "to arrive in office facing the issues he faced without Tim Geithner, without Larry Summers, would have been kind of unimaginable."
As I said, it's worth reading the whole interview.
| September 21, 2010; 5:05 PM ET
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