Detroit's future

Chief Executive, The, August-Sept, 2005 by Howard T. LaMunion, Bernard Rosselli

I totally disagree with Mr. Holstein about the government needing to do more for GM ("Editor's Note," June 2005). The $130,000 a year autoworker--and the industry as a whole--has priced itself out of the market just as other unionized industries like textile, airline and information technology have done. As their products and services become commodities in the global marketplace, downward price pressures will no longer support high salaries, lavish benefits and other perks long viewed by these groups as givens.

I thought it was coincidental that GM launched its advertising program offering employee discounts to everyone the same week they announced they will cut another 25,000 employees. GM is trying to compete as a low-price player when they have a high-cost position being choked by union contracts, employee and retiree health care costs, dying brands and stiff competition. These are the ingredients for an implosion.

I predict they are on the path to bankruptcy and will want the government to step in like it did with the airlines after 9/11.

Howard T. LaMunion

CEO

The ConsulttUs Group, Inc.

Frisco, Tex.

I read the "Editor's Note" regarding GM and Ford, and I agree with your position; each point you raised is valid and probably can be expanded on. I would like to add something else of importance in this matter, but first I would like to clarify a point.

The pundits who continue to think that the automotive industry is not "high tech" really need a refresher course on technology. Detroit has not been responsible for all of the technological improvements we enjoy in our vehicles today, but they deserve some credit for their contributions. Domestic manufacturers have had their share of blunders, but some of the cars they are building today can be competitive on a global basis if given a fair playing field and better publicity. One only needs to look at the Cadillac brand!

One of your primary points was that the quality of economic activity of U.S.-based manufacturers and transplants is not equal. This takes on even more importance for the many tier two suppliers serving the automotive industry that would be severely hurt if GM or Ford were to go out of business. The stamping industry, for example, employs approximately 400,000 people in 1,200 companies that account for annual sales of roughly $40 billion. Their survival is largely dependent on GM and Ford maintaining a strong share of car sales. Rising costs for steel, energy and health care have already taken their toll on many automotive suppliers, but the demise of any domestic automotive manufacturer would have a catastrophic effect on this industry and many others.

I am not in favor of "protectionist" measures, and by many accounts the domestic manufacturers have not enjoyed the best reputations in their transactions with their suppliers, but in a market-driven economy all the players deserve a level playing field, and management, unions and our government should work together to assure that the field is level. That economist friend of yours who had no concern for the demise of GM or Ford should be asked the following question: What industry and what company comes next, and who will be left to provide meaningful employment at a wage that supports a lifestyle that is something other than a race to the bottom?

Bernard Rosselli

President

Stewart EFI, LLC

Thomaston, Conn.