05 October 2007

Jerry Flint

Jerry Flint is a columnist for Forbes, who wrote a wonderful piece there this week called, simply: Quackery.

His subject, General Motors, a company with a long history of "resorting to gimmicks to resolve labor issues or just to get out of a sticky spot."

He gives two cases in point: one from the company's recent past, the other from its VERY recent past (one might say, from its specious present).

1) A few years back, GM decided that it was paying too much money to those of its workers who, in its Delphi subsidiary, made various auto parts: its power trains, its HVAC, etc.

It 'solved' this problem by spinning off the subsidiary -- making Delphi a theoretically separate company. But to avoid trouble with the union for this bit of domestic outsourcing, it had to give Delphi various guarantees. The guarantees have undermined the reason for the spin off, and as Flinto says GM has since given billions to those same workers. The whole notion of a spinoff was a gimmick, a bit of quackery.

2) The present. Late last month, GM settled with the auto workers union after a brief strike. The stickiest issue was health care for retirees.

The solution was the creation of a health care trust, funded by the auto companies but managed by the union. I've discussed this before, and expressed some of the same skepticism that Flinto expresses here, although he is more forceful on the subject than I was: http://cfaille.blogspot.com/2007/09/after-brief-strike.html

Says Flint, "It doesn't reduce any costs. The health care bill would remain the same" and although that eliminates the medical liability from the balance sheet, "What difference will that make if GM fails to make sexier cars?"

Precious little, surely.

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Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.