GENERAL MOTORS production workers have now ratified their new contract, and the United Auto Workers have signed a similar one with Ford. The wage increases are moderate, at least by past standards, and job security is apparently improved. Both the companies and the union are gratified. The Reagan administration, you can safely assume, is much relieved not to have a strike running during the election campaign. Just about everybody seems to be happy. What about the public interest?
The companies can afford these raises only because of the wave of artificial prosperity being generated by the import quotas that the administration has imposed on their leading competitors, the Japanese automobile companies. The quotas allow the manufacturers to charge more for their cars than they could in an open market. That constitutes an invisible but real tax on the consumer. Some of it goes into company profits to support -- let's hope -- modernization. Some goes into employee benefits to cushion the impact of competition on the American industry's labor force.
But why do American workers have to be protected from new competitors? The answer is that the people who work in the Japanese auto factories not only get lower wages, but their productivity is higher by a dramatically wide margin. Wages alone are not crucial. Auto workers in Japan are paid at about the same rate as those in Britain, but the British are no great threat to American producers. The difference is labor productivity. High productivity justifies high wages. There was a long period when American auto workers were the most productive in the world, but that is unfortunately no longer true. The Japanese companies now build a car with one- third less labor than the American industry does. It's not the pattern of high wages that has got the American auto makers into trouble. It's the combination of high wages and mediocre performance.
The American industry suffers from having had too much success over too many years. In that long period of dominance, it seems to have acquired ingrained habits and traditions that now are making adaptation difficult. Raising productivity is management's job, and management is making only slow progress in closing the gap with the world leader.
One of the industry's traditions is a sharply adversary relationship with the union. Another is the annual raise in wages, enforced by the threat of strikes. This time the raise is not large. But to the extent that wages rise at all, the American companies become more vulnerable to their rivals. That, in turn, makes them more dependent on political intervention in the form of the import quotas that the Reagan administration has been providing.