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© 2007-11, William Swelbar.

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Entries in auto industry and airline industry (3)


Musing on Cars, Planes and Readers

I remain captivated by the auto bailout talks and have quickly become a big fan of Senator Bob Corker, the Republican Senator from Tennessee. His preparation for the hearings is evident each and every time

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Planes and Automobiles:  Why?

Those that say that there are few similarities between the cultures and structures of the US airline and auto industries either have their head in the sand or refuse to accept the reflection in the mirror

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Autos and Airlines: 30 Years Later - No Time for Bailouts

I can hear it now, time to bail out the US airline industry. After all, the US economy and the US airline industry are inextricably linked.

As we were deregulating the US airline industry thirty years ago, the government was bailing out Chrysler. Hell, this industry went back and hired a CEO from that period as a savior and that sure as hell did not work. And thirty years later Chrysler is first on the list of potential casualties in the auto industry just as US Airways, United and American are for legacy airline companies.

We have talk of propping up Freddie and Fannie. We have propped up Bear Stearns. We have talk of the need to prop up at least one other financial firm. We have negative real interest rates that have contributed to speculation in the oil and other commodity markets. We have a weak dollar relative to other currencies. From this blogger’s perspective, we have unhealthy everywhere. Airlines, Autos and Steel = Yesterday. Heidi Moore of the Wall Street Journal writes tonight Deal Journal - WSJ.com : Auto Makers & Washington: So Who Isn't Too Big to Fail?. Answer: No One.

Steel has found its way: many, many fewer employees but a much healthier industry. But to buttress that analysis, it must be recognized that the steel industry ultimately won the regulator’s permission to allow a structural construct to be held in the hands of a few firms. Autos: many, many fewer employees who finally negotiated a contract that emulates the times where employers cannot be responsible for all things Roosevelt-like. But is it too late? Airlines: an industry not asking for a bailout but an industry, through bankruptcy, that made it abundantly clear that the costs of pensions, retiree health and work rules written when the jet aircraft was first introduced could not be afforded under the anti-trust-created destructive competition that persists. Yet there is no sign of leadership that is willing to embrace change - despite the harsh lessons taught by autos and steel.

Any way you cut it, labor has played a huge role. All of this talk of lost jobs is just a legacy industry doing what it has done historically - and that is compounding the inefficiencies deemed efficient in the up cycles. Leverage can be good; leverage can be painful. There is nothing bad about this. Yes, it hurts. But through all of this recent history, many bountiful, well-paying jobs remain in the airline industry.

But, if labor is more concerned about jobs, then isn't it about time that we start to differentiate between those employees that remain today and the industry of tomorrow? There will be another day – just not today. For unenlightened leaders and their blind followers there is history to read – and not to be forgotten.

Maybe the steel industry is the model. Maybe the regulators will appreciate that an industry where market strength is held in the hands of a few will employ more people; and even Americans.