In May, the “CBS Evening News” blamed high gas prices for depriving little girls of access to public pools. Now it’s citing the rising cost of gas as the reason General Motors (GM) announced it will shut down three plants that produce trucks and SUVs.
“It’s not just here and it’s not just GM. Since 2005, the big three – GM, Ford and Chrysler – have had 70 plants and supplier shutdowns with a total loss of 149,000 American jobs,” CBS correspondent Cynthia Bowers said. “At the same time, foreign automakers selling more fuel-efficient vehicles are building five new U.S. plants that will employ 24,000 workers over the next three years.”
But Bowers omitted one detail: GM (NYSE: GM), Ford (NYSE: F) and Chrysler all have ties to the United Auto Workers (UAW) union, which forces those manufacturers into collective bargaining agreements with very expensive labor costs.
And, the foreign automakers that sell “more fuel-efficient vehicles” – which include Toyota (NYSE: TM) (opening a plant in Tupelo, Miss.), Honda (NYSE: HMC) ( Greensburg, Ind.), Volkswagen (FRA: VOW) (to be determined – but Alabama, North Carolina and Tennessee are in the running) and KIA (SEO: 000270) ( West Point, Ga.) – are building their new plants in places where the UAW doesn’t have a presence and won’t make them less competitive by raising overhead costs.
But instead of considering that as a factor, the “Evening News” report went after GM for not having the foresight to see this unprecedented rise in the cost of gasoline and the effects it would have on SUV sales.
“Today, many in this town of 65,000, including Wisconsin’s governor, want to know why GM did not react to the changing marketplace sooner,” Bowers said. “Did GM make the wrong call by sticking with SUVs for so long?”
“I think so,” Democratic Wisconsin Gov. Jim Doyle replied to Bowers’s question during a press conference. “Seems to me they had a big winning product in the product that was built here and they sort of decided, ‘We’ll run that out as long as we can possibly run it out and then when it isn’t making us any more money, we’ll just say good-bye to these guys.’”
As an August 2007 Investor’s Business Daily editorial pointed out, unions are a principal reason many Americans have lost jobs. “[I]t’s hard to fathom how a middle class could be created by an institution that has … forced many Americans out of the labor force because of the high wages it has compelled businesses, through the power of its government protection, to pay,” the editorial said.