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6/5/2008
Wigderson: Politicians pointing fingers in Janesville
The General Motors plant in Janesville is closing in 2010 and the politicians are doing what politicians do best: pointing fingers, posing for pictures, issuing press releases. If they have given us a reason not to look to them for a solution, perhaps we should thank them.
For seven years in the 1990s, my day job was working for a mid-sized trucking company as a logistics planner/dispatcher. The company lived and died on automotive freight because it paid well, especially just-in-time freight.
July was always a tough month for the trucking industry because that was when the auto industry would do their temporary shut downs to re-tool at the plants for the coming year. Every year the trucking company where I worked would lay people off, scramble for non-automotive freight, and generally lose money with the hope that the expanded opportunities of the next year would cover the losses for the current year. “Why don’t we diversify?” Because when the auto industry was up and running, there were never enough trucks and drivers to be had to cover all the available freight. The trucking company essentially lived life like the ancient farmers along the Nile River waiting for the flood to subside.
Eventually the company folded (fortunately, after I left), the victim of its own decisions, unable to compete with each cycle of climbing fuel prices and living with the turmoil of the auto industry. General Motors Janesville was the company’s biggest customer. When it thrived, the trucking company thrived. There are going to be a lot of companies that thrived when General Motors Janesville thrived that suddenly will have to either find new business models or else fold. It’s a rough economic world out there, and living in high-tax, anti-business Wisconsin doesn’t help.
I had to shake my head in wonder when I saw blogger Mike Mathias blaming the downfall of the plant in Janesville on the lack of universal health care. I mourn for the days when progressives like Mathias were against government (paid for by us) subsidizing big, bad corporations like General Motors.
But while Mathias may miss the larger picture, Governor Doyle may actually have this one right. He said,
“GM made it clear that this was a plant that they were invested in. They brought Barack Obama here just months ago. It was clear that this plant was the pride of GM.
“But, it should have been obvious long ago that the future was not where GM was headed. Bad corporate decisions kept these lines turning out gas guzzlers as fuel prices went from 2 dollars to 3 dollars and now to 4 dollars per gallon.
“Now we stand here, carrying the burden of those bad corporate decisions – failed leadership that culminated in a calculation that left out the very heart of this company, the workers who built it.”
Sometimes business leaders make bad choices, and there are economic consequences. General Motors is trying to fix theirs before it gets out of hand and brings the company down. The difference between the trucking company that once kept General Motors moving and General Motors itself is the tragic scale of the loss.
James Wigderson blogs regularly at Wigderson Library and Pub.
COMMENTS
James,
Very well written and poignant. I would also add that we all(Americans) made bad decisions. We all knew the party would end but right up until the end (and I believe it is the end of big vehicles for those who don't need them)we insisted that fuel economy standards were anti business. GM and the unions were more than happy to have their bloated operating costs (yes, including healthcare) so long as the profitable big cars still lined their coffers. Meanwhile, the non-US manufacturers patiently planned for the future, building their profitability on a solid consistent philosophy. So here we are, the miracle of the market has adjusted and chosen the winners for now. The sad part is that it didn't have to be so. Capitalism is very wasteful, tremendous resources are lost when the weak perish and the strong survive. But, unlike evolution, the participants have it within their power to foresee the future and plan and instead of being wasteful. Companies can be more efficient through that planning. GM and Ford didn't plan. They went after short term profits. But didn't Wallstreet in the process? Didn't we all? Does the average American think of overseas oil as being "our oil". I'm afraid so.
dave allen (Thu Jun 05 12:40:33 2008)
emily matthews (Fri Jun 06 12:44:24 2008)
Dave, as a developer, aren't you going after short-term profits?
I'm tired of seeing farms turned into wasteful subdivisions fille dwith irresponsible people who let their dogs loose to chase livestock, or who imagine they have a "right" not to smell manure.
Due to govt interference, farmers' income went from 60% parity down to 20-something now. Gov't would like to stranglwe us to death; no wonder so many small farms are folding due to over-regulation. WI has lost a massive amount of farmland. The US now importss more food than esports it.
So, aren't developers making a "bad choice" by wastefully eating up our farms?
emily matthews (Fri Jun 06 12:49:41 2008)
Emily,
Firstly,I only develop commercial property, not homes. But would I develop homes? Yes of course. Would I comply with the law? Absolutely. If there is an issue with development the laws should change. I'm sure you know however that farming is complicated. The loss of family farms is in part, a consequence of industrial agriculture. Family farms cannot compete in commodity pricing with mega farms. The developer has nothing to do with putting family farms out of business. I say this because I know of many grateful farmers who couldn't compete and were happy to sell to a developer, making far more than they could by farming. They were lucky because they had a way out. The unlucky ones are the farmers who can't compete but have only farmland. They will lose out to the mega farms. Simple economics Emily. By the way, as a developer I don't get subsidies to keep me in business, farmers do.
dave allen (Fri Jun 06 16:38:06 2008)
Emily,
Now to the first part of your post. Why do you attack me so? If you disagree with my position on short term vs long term profits for GM please say so and state your reasoning. I do not believe that any large industrial enterprise can survive for a long time on a perpetual short term profit view. Do you believe it to be otherwise? If so, please state your reason and connection to GM.
dave allen (Fri Jun 06 16:42:28 2008)
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