It would be tempting to criticize Chrysler Group and General Motors Co. for rewarding hourly and salaried workers with generous bonuses.
But there was nothing untoward about this decision. Even though the automakers needed government help to survive, they still have to run their businesses on sound principles. And the principle here is sound: Both GM and Chrysler are trying to be competitive and reasonably generous without raising fixed costs, which inherently build in a level of inflexibility and raise the breakeven mark.
Chrysler and GM have to run their businesses for tomorrow, and that means retaining talent and providing adequate rewards. Spending enough money now is the way to make money in the future. And their profits are the engine that will repay the U.S. taxpayer.
When it comes to bonuses for hourly workers, GM and Chrysler are investing in the same employees who played ball during the contract negotiations of 2007 and helped the company restructure during bankruptcy.
Surely the debate this summer during the UAW's contract negotiations with the Detroit 3 will focus squarely on fixed costs. The UAW will be looking for raises; the automakers will offer profit sharing in lieu of raises.
In a tepid recovery, the only guarantee is that a lower breakeven means a greater chance for long-term survival.