President elect Barack Obama is now on the side of bailing out the auto industry. Well, only part of the auto industry. Executives of Honda Motor Co., Toyota and Nissan have stayed out of the bailout debate.
Obama is in favor of rewarding incompetence with a plan that cannot possibly succeed. The “Big Three” automakers cannot retool in time to make a turnaround in a reasonable length of time. The automakers say they need four years to retool. Four years are needed, because the Big Three have never made significant upgrades to their infrastructure. GM CEO Wagoner told Congress that his company had failed to convert its plants so they could build more than one type of vehicle.
In contrast, Toyota can change its product line on a dime, by reprogramming – not retooling. Toyota’s infrastructure is miles and years ahead of the U.S. automakers. Toyota is computerized, and Toyota is profitable. In 2008, with GM had sales of $182 billion and a loss of nearly $39 billion, while Toyota with sales of $230 billion, had a profit of $15 billion. GM hasn’t posted an annual profit since 2004.
Obama has reduced the argument for the auto bailout to Palinesque logic – telling us that it is necessary to preserve jobs.
Provide jobs? GM is noted for laying off thousands of its workers.
Toyota will not layoff workers in Texas and Indiana, even though the factories they work at are shutting down for 14 weeks. Instead, Toyota, in keeping with a purported corporate policy of ‘no layoffs’, will assign the workers to training and various other activities to provide work and income for them during the shutdown. This move could cost Toyota up to $50 million.
The “No Layoffs” policy of Toyota is an example of a human resource policy intended to show workers they have no need union representation. In an industry that is heavily unionized around the world, Toyota has been quite successful at keeping unions out of their factories.
If jobs is what it is all about, as Obama asserts, why not learn from Toyota? Why not sell GM to Toyota?
Judging by its profits and loyalty to its workforce, Toyota has demonstrated that knows how to run an auto company while GM does not.
The sale of GM to Toyota is the best solution – it is the road to success – not Obama’s road to nowhere.