Jim Cramer: Bust the UAW - There’s No Reason To Build Cars In America Logan Murphy September 25th, 2007 CNBC host Jim Cramer has a message for the hard-working men and women of the United Auto Workers Union currently on strike: sit down, shut up and be happy with less so GM execs can stay rich. Today on Hardball, Cramer does his best tough guy act, fortunately Ross Eisenbrey, Vice President of the Economic Policy Institute is there to bring some sanity to the set. Eisenbrey reminds Cramer that the UAW strike is about keeping jobs in America and that this war against the working class isn’t just about unions, it’s happening to non-union workers as well. Cramer: “This is all about saving American manufacturing and the only way to do that is to break the UAW!” The UAW represents nearly 73,000 members at GM where it recently secured a tentative agreement that protects pensions and retiree health benefits, key issues in the dispute. The accord also includes pledges by GM to invest in its U.S.-based plants, a move the UAW sought to secure a new generation of good-paying jobs at the Michigan-based automaker. Cramer’s rant was cut short by Ross Eisenbrey, Vice President of the Economic Policy Institute, who reminded Cramer that the UAW strike is about keeping jobs in America and ensuring the promises made by companies to workers and retirees are promises kept. “This is a problem that every American worker has a stake in and they ought to be rooting for the UAW here,” said Eisenbrey. Matthews: ”Do you see a future five, ten years from now where we don’t have an auto industry in this country, Jim Cramer?” Cramer: “If you don’t break the UAW we won’t. There’s no real reasons to make cars here.” Taking his case a step further, Cramer delivered the strongest argument for changing channels: “If GM wins and they bust this union, I’m telling you you’re going to have a five-fold increase in this stock, and in the end - this is America - that’s what we care about.” The Decline of the 'Big Three' U.S. Auto Makers National Public Radio News General Motors, Ford and Daimler Chrysler -- dubbed the "Big Three' -- have dominated the U.S. auto market for decades. But now their collective grip is slipping fast, due to a "perfect storm" of poor business decisions, rising health-care costs and strong foreign competition. US AUTO INDUSTRY DECLINE: LESSONS FROM FORD AND GM Tanvir Orakzai in The American Chronicle There are many who believe that Ford and other American auto companies are dis-advantaged, because Toyota is supported by Japanese Government led incentives, such as government funded health care and subsidies etc. Ironically Toyota is made in America by Americans and only headed by Japanese vision. Some analysts mention that US should thank the Japanese and Korean auto makers for giving jobs. In fact problems are inherent specifically in the US auto industry, which is unable to keep its competitive advantage. For example figures suggest that in video games Japanese companies are beaten by US companies. Toyota on the other hand had a different way of working. The company did not share every penny among its workers like Ford did. Instead it offered premiums to workers. Ford and GM assumed that their system would work for all eternity, Toyota and other Japanese companies believed that it is unrealistic to promise benefits of future that is not certain. Thus instead of paying pension, they made payment on the basis of contribution being made during work, which did not put any burden on their financial system. Another problem since 2001 has been auto parts supplier pressure, which is coming from China. Japanese companies are setting up their companies in the developing world to meet the demand in China, India, South America and Southeast Asia. Ford has some plants in China and other Southeast Asia countries, and GM has also pledged to develop $130 million parts factor in Shanghai, however it is much more lower to meet the expectations of the demand. Japanese have made huge investment, such a Honda assembly plant in Thailand and Indonesia and Pakistan. American and Europeans companies have invested in Latin America, yet the growth in Asia has been ignored, where Japanese and Chinese companies are exploiting huge opportunities. The US and European market is on decline, while the market is on the rise in Southeast Asia. The problem with Ford GM and other local US companies is its size, history and total share of the market without any rival. The US automakers have dominated the US market for almost a century without a single rival, during which they little changed and whatever they made was sold. LESSON: The failure of US auto industry is from rising healthcare costs. The Japanese government provides healthcare, the US government doesn't. Workers must get healthcare. Unions have strike and bargaining power with corporations, and corporations have financial power with government. Unions push corporations to give healthcare, but US corporations don't push the government to give healthcare. The fault is with corporations and the government, not with unions.