The LA Times has a heartbreaking article on the closing of an Ontario-based BMW parts and supply plant. For years, the plant has received internal BMW awards for quality and efficiency.
Now, there’s a few things about the LA Times’ opinions that I don’t agree with – such as the notion that being treated right keeps turnover low, which assumes that turnover is a bad thing. However, a company has a strong incentive to “turn over: (i.e. fire) incompetent or lazy workers, as well as to change the types of jobs it has in response to changing demand and technology. When unions prohibit such changes, it is hardly the win-win situation portrayed by the LA Times.
Ultimately, the decision to close the BMW plant, which put hundreds of blue-collar workers out of a high-paying, stable job with good benefits, is an economic decision made by BMW in response not just to the recession, but long-term policies. The average income of a person who purchases a new BMW is $196,000 a year (8-series), $175,000 a year (7-series), and $120,000 a year for the 5-series. (Statistics here.) Some of those numbers sound an awful lot like the “rich” that Obama wants to tax more – in fact, about half of 8-series purchasers fall within the category of “rich” people whom the Obama Administration wants to raise taxes on.
As a lot of us conservatives keep saying, wealthy people provide jobs (directly or indirectly) for the non-wealthy. BMWs are but one example. The recent desire to increase CAFE standards to 56 or 62 mpg also harms the high-paying jobs in luxury car companies. Don’t listen to me on this one, though; listen to Rick Snyder, Michigan’s “One Tough Nerd”, who cautioned the EPA that increasing fuel economy requirements can and will cost American jobs. The fuel economy increases through 2016 will cost the auto industry $51 billion. The auto industry estimates that the 2025 CAFE standard will add at least $6,000 to the cost of each vehicle. (Government estimates are lower, but the government also estimated that the Big Dig would cost $2 billion.)
While luxury car buys can more easily absorb that additional cost, those (potential) buyers will likely find that their cars no only cost more, but lack the features that they want in a luxury vehicle, such as horsepower, size (as with a Cadillac or a Lincoln Town Car), or safety (e.g. Volvo’s famed steel cage). (Yeah, I know that Volvos aren’t luxury vehicles, but they aren’t Kias, either.) Ultimately, this all means fewer luxury vehicle buyers, fewer upper-middle class people who are the primary buyers of such cars, and, therefore, fewer cushy, well-paying, blue-collar jobs. You can’t lift some people up by quashing others down; economically, such actions only end up hurting everyone – the targeted group to be “helped” in particular.