It is sad to say but yesterday’s bankruptcy filing by General Motors was a good thing.  It should have been done thirty years ago when the Big Three faced their first challenges of competition from foreign auto makers.  The reason why I think it is a good thing is because it finally allows GM to restructure the company without pandering to the unions.

Up until now, changes were piecemeal because any large-scale changes would bring down the wrath of the unions.  When I mean the unions, I don’t necessarily mean the rank-and-file workers but the union leadership.  The ones who make twice as much as the workers without doing any of the hard labor.  They would not allow pay cuts and benefit reductions necessary for the U.S. automakers to compete globally because if they did, the members would wonder why they need a union in the first place.  Instead, over the last three decades hundreds of thousands of workers permanently lost their jobs because GM, Ford, and Chrysler could not reduce costs other than closing plant.  The leadership was not doing this to protect the membership but to protect their cushy jobs.

One of the worst union demands were the job banks.  This was where GM would pay thousands of auto workers to do nothing.  In other industries, the workers are laid-off, which allows a company to cut costs.  Not with the auto industry.  This was nothing more than the unions extorting money from the shareholders of GM.  How was this any different from the mafia who force construction companies to give members of the mafia phony jobs?  If the construction company doesn’t comply, the mafia breaks some knees.  If GM doesn’t comply with the job bank then the autoworkers will go out on strike.

The only way for American businesses to compete in a global economy is for them to have the flexibility to change with the times.  Up until now, the unions prevented the Big Three from changing with the times.  As one commentator said last night, we finally have a chance to see who is right.  The auto executives blamed the unions for much of the problems; while the unions blamed the management.  GM’s management now has a chance to restructure the company in such a way as to make it profitable–without having to worry a lot about labor strife among the workers.  GM’s CEO said they will no longer produce say 15 new lines of cars in a year, where maybe five are popular sellers, while the other ten are mediocre.  In the future, all the cars of a new line will be top-of-the-line.  If they succeed, it could very well lead to the demise of the UAW and unions in general.