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Saturday, May 21, 2011

Even in the Business Section the Times cannot tell the truth

The New York Times business section contains a lengthy article about auto manufacturing in the USA. Basiclaly the article contrasts Livonia, Michigan with Georgetown, Kentucky. Livonia has lost auto related employment at a drastic rate in the last decades. Georgetown has picked up a Toyota plant and a host of related industries. Livonia is dying while Georgetown is booming. The Times points out that Toyota located itself in the South as did nearly all the other foreign car companies who have set up plants in America. And what is the reason for that locational preference according to the Times? I kid you not, the Times says that Toyota went to Kentucky in order to get a "fresh start" for its facility. Apparently all of the other manufacturers were after fresh starts as well.

The real truth is that Kentucky, like the other southern states, is a right to work state. That means that a non-union company like Toyota can operate there without the weight of the state falling on it to unionize its workers. Toyota had seen the enormous costs imposed on GM, Ford and Chrysler by unionized workers, costs that gave Toyota a major advantage in the car industry. Toyota and the other companies located themselves in the South so that they could avoid having similar costs forced upon them. This is not rocket science, there are countless studies done to document the difference in costs and the corresponding competative advantage held by the foreign manufacturers.

The Times, however, cannot bring itself to mention in the article that the reason that Livonia is dying and Georgetown thriving is the union. Indeed, the Times cannot even bear to mention that some people think that the union is the reason for these different outcomes. To say the least, the Times is in denial.

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