Detroit and Global Competition

With the annoucements recently from GM and Ford that thousands of employees will be laid off over the next several years as these huge global, Detroit-based corporations “re-organize” I can’t help but think that the auto industry is not going to sustain the economy of Southeast Michigan for very much longer.

In my opinion, this may be attributed to the following:

1.) Reduction of Trade Barriers (tariffs on imports) – Without tariffs on imports, it makes it much easier for countries to “dump” their products on U.S. shores.

2.) Agreements such as NAFTA – Good for competition, and consumers, but not so good for all American workers.

3.) UAW – Other countries, including some states in the southern U.S., have “right-to-work” rules in place and thus can generally pay workers less in wages and benefits as a result. One of the unfortunate casualties of global competition will be the downfall of the UAW.

4.) Health Care Costs – Most other industrialized countries have national health-care coverage, and thus employers are not required to subsidize employees health care programs.

5) Global Competition – U.S. companies and workers are now having to compete with the world and not just other U.S. companies.

6.) De-valued foreign currencies – With de-valued foreign currencies, especially those of Japan and China, these countries are able to sell their products for much less to U.S. consumers.

It appears to me that the middle-class is shrinking before our very eyes, and we will soon only have two classes: Highly-educated, well-paid employees, and uneducated, low wage earners who will be compenstated based on a global scale of earners around the world, including those in third-world countries.

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