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Automakers and unions

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1. Do you think GM or Ford could have been more on top of market trends? How much is just foreign competition and how much is just bad management? Also, how much of it is government policy? Foreign producers do not pay health costs--over $1000 per US made vehicle--because foreign government fund health care, not the industry, for their workers.
2. Do you see any correlation between the loss of unions and the lack of wage gains over the past two decades. While GDP has grown more than 3% over the past few years, real wage gains have been stagnant. Has labor lost its power in the market place? Are all the gains going to the investor class? CEOs?

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1. Both of these companies have floundered in recent years, but recently received impressive scores on a JD Powers survey (see http://www.detnews.com/apps/pbcs.dll/article?AID=/20060809/UPDATE/608090446)

Ford and GM's credit are in tatters. Ford is attempting to restructure by cutting salaried jobs, closing plants and offering early retirement to hourly workers. This plan makes more sense than GM's recent move, which involves giving puts to Fiat. This would force GM to purchase the remaining 80 percent of ...

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Capital to Labor Ratio

In an effort to stop the migration of many of the automobile manufacturing facilities from the Detroit area, Detroit's city council is considering passing a statute that would give investment tax credits to auto manufacturers. Effectively, this would reduce auto manufacturers' cost of using capital and high-tech equipment in their production processes. On the evening of the vote, local union officials voiced serious objections to this statue. Outline the basis of the argument most likely used by union officials. (Hint: Consider the impact that the statue would have on auto manufacturers' capital-to-labor ration.) As a representative for one of the automakers, how would you counter the union officials' argument?

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