The genesis of this problem goes back 30 years during the whole wage-price control initiative back in the early 70's where the only leverage a lot of these unions had was in negotiating post-retirement benefits, to which the auto industry obliged. Of course, the energy crisis soon hit, opening up the auto market to foreign competition becuase the domestic manufacturers were too slow to adapt. Thus, the rosy outlook that was used to justify these postponed concessions no longer held. Now it's 30 years later and a lot of that work force is retiring, the foreign manufacturers have gained even more market share and the chickens are coming home to roost.
I consider the lack of any substantive, proactive response to this impending problem an indictment on GM and Ford's management teams. Thus, while I loathe the pain that GM and Ford retirees will incur as a result of the bankruptcy process, I also think that the restructuring of their management and manufacturing portfolios will result in companies better suited for the transition to hybrids, EVs and fuel cell vehicles. For example, a forced downsizing of their businesses might necessitate the abandonment of many SUV models in favor of more fuel-efficient designs since that's where the money might be if high fuel prices continue. Programs for alternative fuel vehicles will also become more profitable assets in their R&D portfolios under such a scenario, and more money would be diverted to them, resulting in better designs that could be brought to market sooner at cheaper prices.
The point is that these very rapid shifts can only occur under the purview of the bankruptcy process. The steel industry came out of its bankruptcy process a leaner, better managed industry. Will the same be true of the auto industry?
