To Michigan governor: If it ain't broke, don't fix it

Rick Snyder doesn't help his state or the auto industry when he ignites a war among his constituents.

By TheStreet Staff Dec 24, 2012 1:40PM

Image Detroit copyright Vladimir Pcholkin, PhotographerBy Ted Reedstreet logo

 

Add it all up and GM (GM) had a good year, capped by the government's decision to exit the business after fixing it.

 

Yes, the government takes a loss of about $15 billion on fixing GM and Chrysler. But the loss would have been multiplied many times over if the two automakers had failed.

 

So far this year, GM has made $4 billion, Ford (F) has made $4 billion, and Chrysler has made $1 billion. The Detroit Three employ thousands of people, including 34,000 added in Michigan since 2009, and investors with good timing have gotten rich. Ford shares rose 334% in 2009. This year, Ford is up 7% while GM is up 31%.

 

The GM makeover extends, of course, to products. In January, the Automotive Press Association is likely to select the Cadillac ATS as the 2013 North American car of the year at the Detroit Auto Show.

 

"This is the first time anybody has eclipsed the BMW 3 Series" in ride and handling," said Karl Brauer, CEO of Total Car Score and a press association member. "No one would ever have imagined that a GM car could overcome a BMW car." In 2010, GM introduced the Cruze and showed it can also compete in the compact market. This year, Cruze is the ninth best-selling U.S. car.

 

GM, like many companies, has problems in Europe. But it prints money in the U.S. and its future seems positive thanks to the bailout, assuming that it seeks continuous improvement and doesn't fall back into its old ways. Hopefully, Dan Akerson, a press-shy CEO in an intensely followed business, can assure that, even if he refuses to talk to reporters about it.

 

This brings us to the subject of Michigan Gov. Rick Snyder and the state's Republican legislators, who recently rushed to approve surprise right-to-work legislation in a lame duck session. Right-to-work legislation is mean-spirited. It enables workers who don't pay union dues to have union protections.

 

Michigan still has a high unemployment rate of 9.7%. The rate is declining but remains two points above the national average. Nevertheless, Detroit has staged a miraculous comeback, the Detroit Three are doing well in the U.S., if not quite as well as Toyota (TM), and the mood at the Detroit Auto Show will be upbeat.

 

The United Auto Workers union bears some -- not all -- of the responsibility for the decline of GM and the industry that led to the 2008 collapse. But the union also gets some of the credit for the industry's resurgence since then. It showed that unions and companies can work together to salvage their joint future.

 

Last year in Wisconsin, Gov. Scott Walker eliminated many public workers' union rights, basically giving up on any meaningful projects for the state in order to fight a war with half of his constituents. Evidently he inspired Snyder. Of course Walker, unlike Snyder, could say he was pursuing the goal of reducing state spending. This goal is widely shared. Snyder's goal seems more along the lines of helping the national Republican party to undermine a source of Democratic support. That goal is shared only by other Republicans.

 

The strange thing is that many companies and governments have realized that the best way to deal with unions is to negotiate with them, not pass laws to attempt to destroy them. This is what Boeing (BA) did in 2011. While South Carolina politicians were trying to dismantle labor laws that have existed since 1935, thinking that was how they could protect Boeing's Charleston 787 plant, Boeing sat down for serious negotiations with the International Association of Machinists and signed a deal in six weeks. Then everybody shook hands.  

 

"We were approached with a deal you couldn't really turn down," Mark Blondin, aerospace coordinator for the International Association of Machinists, said at the time.

 

By the way, whenever Boeing competes with Airbus for contracts, the IAM is among its most effective allies. 

 

On Wednesday, the first poll of Snyder's approval rating since he signed the right-to-work legislation showed a sharp drop. The poll by a Democratic firm, Public Policy Polling, said Snyder's approval rating is 38%, down 28 points from a poll in early November.

 

The message seems clear, Gov. Snyder: Many voters don't want a governor who is more interested in fighting than leading, who puts national politics above state interests, and who chooses to spend his political capital to fix what is not broken.

 

More from TheStreet.com

12Comments
Dec 24, 2012 1:55PM
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So pi$$ on the constitution, the law, the investors, the tax payers.......as long as the automotive industry was fixed?  Bull$hisd.......The government has NEVER fixed anything.

Dec 24, 2012 5:46PM
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What hypocrisy! The author complains that right to work employees get union benefits without paying dues? Sorta like the 47% who pay no income taxes getting equal protection under the law, right? Don't hear democrats complaining about that do you?

 

And what about where those union dues go, huh? Straight into the coffers of democratic politicians; don't hear the author mentioning how unfair it is that independent or republican aligned union workers are forced to donate to democratic causes.

 

I worked in the automotive industry for more than a dozen years; been in all those plants in Detroit. No comparison with the non-union transplants, whose workers are far more efficient than those drunk on the job UAW workers.

Dec 24, 2012 6:41PM
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What a bunch of liberal crap.  Union membership is in steep decline and America is better off as a result.  If unions delivered such advantages to their membership, workers would CHOOSE to join them.  I join organizations and pay dues to those who deliver a benefit for my patronage.  Union bosses, with their bloated salaries and perks, have little incentive to negotiate in good faith with management.  Hence the state of our education system.  We spend almost $34K per child per year in my town and the results are mediocre at best.  When you dig into where the $ are spent, a huge chunk goes to teacher pensions and benefits.  Meanwhile dues collected from teachers go to reelect union sympathizing politician who negotiate larger benefits for the teachers.  Walker is right on point when he limited collective bargaining powers in the public sector unions.  Why should my tax dollars go to support a public employee benefit and pension system that is far more generous than anything offered in the private sector?
Dec 24, 2012 4:59PM
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Yes to Synder and the constitution and kicking the **** of labor unions and the liberals!
Dec 25, 2012 10:41AM
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Big business is not allowed to fail by their supporters in government.  Therefore they have no reason to act fiscally responsible.  If GM and others had been allowed to "fail" real leaders might have stepped in and redirected the resources into production that would benefit the industry in a positive manner addressing the future.  Instead they are just more of the same and we taxpayers are stuck with the results.  Government has no business interfering with the market place.  The best rise to the top when they know they alone are responsible for success or failure.  Government interference distorts reality.

Dec 25, 2012 9:48AM
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"Right to work" just means you cannot be forced to join a union.  Unions can still exist.  However, you have the CHOICE as to joining them.  The Unions will have PROVIDE a service members are willing to PAY for.  No longer can union big shots live as high on the hog.  They now have to compete for business.

 

This should be done all over.   Personally, I would NEVER join a union.  They have been thugs in the past.  They donate their members dues to socialists/democrats/communists.   These Marxist organizations will eventually fail, if the have to compete  in the FREE market.

 

Unions make shoody, overpriced, poor quality goods.  They protect workers who's substandard work creates these products.   If you see a union label, or union help, go elsewhere.

Dec 25, 2012 9:35AM
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Very few, if any, facts in this article. Mostly an opinion article. Stating that the auto bail in the end saved money in the long run is yet to be seen. The reason is the government has had to bail out Detroit automakers more than once over the years. Given the big 3s track record, do not assume it will not have to be done again.
Dec 25, 2012 6:58PM
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I believe Snyder will be a "one time" Governor that will have acccomplished little in the long run....

Much like Wisconsin.....There was a back door, behind the scenes movement of Politicians and some very wealthy people, performing a coup de grace in a lame duck session of the Legislature......

It was done extremely sneaky...Maybe in the wrong State ??

Dec 24, 2012 6:36PM
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So TBTF is alive and well! I guess the US Constitution and justice for all only applies to long term citizens with mega enterprises qualifying as the privileged receivers of government support.  It's really amazing how all the wealthy have their hands out for bailouts and tax welfare when they screw up but raise hell when somebody wants to raise their tax rates. That OK let the class warfare replace welfare and we'll see how they like it.
Dec 24, 2012 10:37PM
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Isn't it a shame that when one peals back the skin on all the negative union talk there is racism raising its' ugly head again.Why is the corruption in unions so mucn worse than the corruption on wall street, or the corruption at the top of big corporations, or the corruption in government, or the corruption in the military?  There are still too many in the GOP, the NRA, and the USA who are more worried about the color of skin of the POTUS than the general welfare of our nation  mentioned in our constitution.  The GOP has managed to keep the sheep, tools, and un-educated on the right still believing that the POTUS was not born in this country.  Is it ironic that the billionaires, millionaires, and the elected officials they have bought and paid for have not been able in over 5 years to prove this lie that they continue to beat like a dead horse?  In most business they would have been deemed failures, but they keep beating the drums to keep their tools stirred  up for their personal wealth and power.  These tools are so ignorant about their manipulation by the wealthy that they also believe that the gov. they have been taught to believe is worthless is the same group they use to control our nation and its legal system.  Without our gov. to fight wars, pass laws, and hand out tax money for the benefit of big corporations the rich would not be so rich or powerful.  They even buy information services ie. T.V., radio, and internet,and media to divide our nation with their special issues ie. race, religion, abortion, immigration, gun rights, etc. to keep control of our national agenda.The rich have many citizens believing that in this nation we are free to do everything except think for ourselves. They use and abuse some as if they were still slaves, and the rich are still the slave-masters.

 

Dec 24, 2012 4:41PM
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Rick Snyder kicked labor right in the groin last week and most people arn`t smart

enough to know it.If I lived there I`d move so fast your head would spin.

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