CAR TALK

How the Unions Killed Detroit

By jacking up prices.

What’s actually to blame for the deep debt plaguing Detroit? Peter S. Boyer writes in this week’s New Yorker that it was the long-held arrangements with unions and workers, which began in 1937, when the U.A.W. became the sole bargaining agent for the nation’s autoworkers. While foreign car manufacturers might not have matched General Motors, Chrysler, and Ford in wages in the early 1980s, they played it smarter—specifically, Nissan built its first plant in a place with fewer union workers, whom they also paid less. “The fact that the Big Three couldn’t run a factory the way Nissan did in Smyrna [Tennessee] partly explains why, in the current crash of auto sales, Detroit finds itself in starkly more dire condition than the transplants,” writes Boyer. The pensions and benefits were what caused “the labor costs of a G.M. vehicle [to be] roughly fifteen hundred dollars more than what it cost to produce a car in the transplant factories.” As G.M. hinges its hopes on the all-electric Chevy Volt, Boyer writes, “If the Volt redeems even a portion of its promise, it will be a remarkable, and most unlikely, achievement.”