UAW Contracts Put Detroit On Road to Ruin, and A $50B Bailout Would Only Be The Down Payment
A bailout might avoid any near-term bankruptcy filing, but it won't address Detroit's fundamental problems of making cars that Americans won't buy and labor contracts that are too rich and inflexible to make them competitive (see chart above of the $25 pay gap between the Big 3 and Toyota/Honda, data here). Detroit's costs are far too high for their market share. While GM has spent billions of dollars on labor buyouts in recent years, it is still forced by federal mileage standards to churn out small cars that make little or no profit at plants organized by the United Auto Workers.
Rest assured that the politicians don't want to do a thing about those labor contracts or mileage standards. In their letter, Ms. Pelosi and Mr. Reid recommend such "taxpayer protections" as "limits on executive compensation and equity stakes" that would dilute shareholders. But they never mention the UAW contracts that have done so much to put Detroit on the road to ruin (see chart above). In fact, the main point of any taxpayer rescue seems to be to postpone a day of reckoning on those contracts. That includes even the notorious UAW Jobs Bank that continues to pay workers not to work.
A Detroit bailout would also be unfair to other companies that make cars in the U.S. Yes, those are "foreign" companies in the narrow sense that they are headquartered overseas. But then so was Chrysler before Daimler sold most of the car maker to Cerberus, the private equity fund. Honda, Toyota and the rest employ about 113,000 American auto workers who make nearly four million cars a year in states like Alabama and Tennessee. Unlike Michigan, these states didn't vote for Mr. Obama.
But the very success of this U.S. auto industry indicates that highly skilled American workers can profitably churn out cars without being organized by the UAW. A bailout for Chrysler would in essence be assisting rich Cerberus investors at the expense of middle-class nonunion auto workers (see chart above). Is this the new "progressive" era we keep reading so much about?
If Uncle Sam buys into Detroit, $50 billion would only be the start of the outlays as taxpayers were obliged to protect their earlier investment in uncompetitive companies.
~From today's WSJ editorial Nationalizing Detroit
48 Comments:
Uhhh yea, those labor costs are a wee bit high to be competitive.
There might be a little flaw when you account for the insane cost of insuring health for an american worker as opposed to a foreign one, but even then the wages alone are probably not where they should be.
what happened to the comment that was posted about the high hourly costs of wall st. firms that were bailed out?
"Anonymous", I know it's off-topic, but have you stopped to consider why our health care insurance costs are so "insane"?
Let me suggest a few reasons:
1) Medicare/Medicaid -- There are now over 100,000 pages of rules and regulations that govern these two programs. On average, a doctor that accepts Medicare patients spends over one full day per week on nothing but paperwork and employs, on average 1.5 additional office staff to help him with it. That's a 20% increase in the doctor's costs right there. But by law, doctors cannot charge Medicare patients more for the same services; so everyone else has to pay more.
2) In addition to the regulatory burden described above, Medicare/Medicaid/SCHIP reduce (or eliminate) any pressure on the patient to shop for the best value. When it is someone else’s money paying the bills, the incentive to find the best deal is gone. What’s more, since reimbursements for these programs are fixed, there is little or no room for doctors or hospitals to compete on price.
3) Emergency rooms are required, by law, to treat everyone who shows up, regardless of their ability to pay. Studies show that between 30% and 50% of those seeking treatment there never pay. Those costs have to be recovered by charging more for those who DO pay.
4) State insurance mandates. These are state laws that require health insurance policies to cover things like mental health care, treatment for alcohol abuse, treatment for drug addiction, in vitro fertilization, contraceptives, etc. The people that sell these services lobby the state legislature to pass a mandate requiring all policies to carry their pet service. There are now some 2000 of these state mandates. The law requires that ALL policies cover these things and that ALL policies be priced the same, whether the purchaser wants that coverage or not. Thus, everyone’s policy is made more expensive because of a handful of purchasers who want these benefits.
These are only a few of the ways in which government is distorting the healthcare market.
@michael
tl;dr
but I think it has something to do with the fact that no one "shops" for health care. Finding deals and market price control has no bearing on the price we pay. We don't really feel as thought we are paying the actual cost anyway seeing as how we never see a bill and the insurance co. pays for most of it. Obviously those of us who are smart enough relaize we are paying for it one way or another, but it is akin to a casino wher you play with chips instead of bills.
How did you arrive at $73.20 per hour. Break it down for us. How much is your pay? Its a safe bet your way over paid for what you do!How do you feel aout $150 billion bailout of AIG?
Yes, UAW workers are overpaid, but your $146,400 comment is deceiving. That includes the full cost of pension, health care obligations, etc.
It's easy to blame the Detroit management of being stupid, but a closer look shows an industry that's been hamstrung for years by federal labor laws that favor the union in a big way. Whenever Detroit seriously tried to rein in these costs, they faced the threat of devastating strikes. This recurring scenario effectively prevented them from paying their workers the correct market wage.
Unions do have a legitimate function (ensuring worker safety, etc.), but our labor laws need to be rewritten to reflect business realities; right now our laws legalize blackmail against the very businesses that provide our jobs.
"Yes, UAW workers are overpaid, but your $146,400 comment is deceiving. That includes the full cost of pension, health care obligations, etc."
I don't see how that's deceiving at all. When it comes to cost of labor, whether that cost comes in the form of hourly wages or in the form of any of the legal obligations you mentioned is irrelevant. Even if their entire wages came in the form of benefits, the monetary cost is so high that Detroit is basically trying to swim with its feet in a cement block...
The $73 per hour labor cost estimate is legitimate and will last through 2008 and 2009. The figure will substantially drop to around $50 per hour in 2010 when the VEBA fully kicks in. That's only $2 per hour more than the transplants.
That’s assuming, of course, that GM can fund the VEBA, and that GM can last that long. It might be a good time for GM workers to be seriously thinking of life without GM. Personally, I consider possible Social Security and GM pensions and health care payments a supplement and not a supplant for my future financial security.
HOW MUCH DO YOU MAKE PER YEAR??PROBABLY ALOT MORE THAN THE AUTOWORKERS AND YOU DON'T DO ANYTHING BUT COMPLAIN AND BITCH ABOUT US. TOYOTA AND THE REST OF THESE TRANSPLANTS BROUGHT THESE CHEAP WAGES OVER WITH THEM, WHY SHOULD WE IN THIS COUNTRY STOOP TO THEIR LEVEL OF COMPENSATION, WHY NOT FORCE THEM UP TO OURS AND THEN WE'LL SEE WHO CRIES FOR HELP OR RUNS BACK TO THE HOMELAND. DON'T RAG ON AN INDUSTRY THAT HAS HELPED KEEP PEOPLE EMPLOYED FOR OVER 100 YRS.IF THE AUTO INDUSTRY IN THIS COUNTRY FAILS, NOT ONLY WILL THE AUTO WORKERS SUFFER BUT THINK OF THE TRICKLE DOWN FROM THIS.WHY DON'T YOU COME DOWN TO THE SHOP FLOOR AND WORK WITH PRODUCTION WORKERS AND THEN BITCH ABOUT THE PAY....
detroit executives make the point that they are at a disadvantage versus japanese imports due to nationalized healthcare in japan... but they fail to mention that japan has the world's highest corporate tax rate (so, yes, toyota is indirectly paying plentry for healthcare).
Hey PhD guy! You're a smart guy, what percentage of a Cadillac's price is labor? AND what percentage of a Lexus' price is labor? Now, What percentage of each vehicle's price is executive salaries and bonuses? You're a smart guy, huh?
Mr. PhD guy! How much will it cost the country to screw the the "over paid" union workers? You know, since you're a PhD, the 3 million workers in related industries that supply the Big 3 who will loose their jobs! Darn, ain't you the clever one Mr. PhD guy! Sure you didn't buy your degree on Khao San Rd during spring break? Thanks Mr. PhD guy!
Mr PhD guy! I'll bet you'll really be angry about Merchant Marine ship Masters making 202,000 a year! How dare they! Work six months a year And six months vacation! Just isn't right is it? How dare they! After all, that's 3240 hours a year at $62 an hour!
Come to think of it I'll bet you'll be really really angry when you discover that the guy flying your over paid PhD butt around works 1200 hours a year max for his $175,000! Thats $145 an hour! How DARE he!!!
Mr PhD guy, you need to get your priorities straight. In a free market, like you freepers love so much, a worker gets paid what someone is willing to pay for their labor. Come on now, you're a freeper aren't you? Perhaps you're just angry you spent so many years sucking up to department heads you hated to get you PhD and no one will pay you what you think you deserve. Well, PhD guy, Perhaps you should "improve your skill set"!
HOW DARE YOU SIR!
Hey Mr. PhD guy! How much do you make? OK, now give half of your gross back to your employer every check! Kinda nice feeling isn't it!
While you're angry with working stiffs making "outrageous" salaries you should go after the cops making 140k a year and firemen making 120k a year. You'll really hit the roof when you find that they can retire after 20 at 90%! Many city cops retire after 20 with 90% and go to work at the sheriff's department or state police while collecting their pensions and retire from there with another 90% pension!
Boggles your Phd mind doesn't it! How DARE they! How dare a mere worker unit make more than a PhD guy! HOW DARE THEY!
PhD guys are so much better, so much smarter and therefore so much more entitled!
I am not an economist so can you explain the attachment to me?
What exactly does "selected workers" mean?
How do we know that the DaimlerChrysler estimates for the other companies are accurate?
I do believe that the UAW makes the American companies pay more for their employment costs, but want to make sure this is accruate, not just the big 3s spin of things.
As a consumer, Toyota and BMW didn't bring their "cheap wages here" they bought lower priced, higher quality vehicles here.
The UAW has consistently sought compensation packages that have put their employers at a competitive disadvantage. They have fought new facilities that would have increased productivity. They have used their money to buy influence in the Democrat party and pushed legislation that hamstrung their employers in negotiations. All of this has been their right, but now they must accept the responsibility for their choices. There is no job security outside the health of the company you work for.
It is not my responsibility as a taxpayer to provide you with a job, certainly not at the ridiculous level of compensation you've extorted out of the shareholders of the automakers. It is not fair for me, as a consumer, to have to pay more for an inferior product simply to prop up your standard of living. It's immoral to tax others so that the Democrat party can pay off the unions for their political support. It's time the unions got a clue. If they are unwilling to bring their compensation packages in line with the American automakers competitors, it's time to let these companies fail.
I am a Michigander that sees the effect of a failing automobile industry.
Any non-auto worker in this state could see the writing on the wall years ago. The American auto industry is going to fail and the adversarial attitude of the unions is probably the biggest reason why. There should be no complaining from its membership as the companies slide farther and farther into the abyss of failure.
Auto workers owned the golden goose for a long time. That they choked it to death squeezing out one last egg is not my fault as a consumer.
Please, auto workers, bury this goose in your own back yard, not mine.
Why should those making $28 an hour be forced through Washington to give money to support those making $73 an hour?
It's interesting to note that the current administration has refused to bail the Big Three out, advising them to look at bankruptcy as a real alternative to finally set their houses straight the right way. What most people seldom realize is that there's over $2000 tacked on to the retail price of every new car made by the Big Three just to cover benefits for retired workers.
And the primary reason Japanese cars manufactured in America are cheaper is because they've only been here since the 80's so the tacked-on retirement benefits amount to half of what the Detroit Troika are forced to cover. They're also better at automating their assembly lines.
I for one would love to retire from a job that would grant me such incredible benefits when I retire.
Is it too much of a stretch to understand that it's already quid pro quo time for the coming Obama administration and the Democrats to pay their union cohorts back for their unwavering support during this election?
Re: While GM has spent billions of dollars on labor buyouts in recent years, it is still forced by federal mileage standards to churn out small cars that make little or no profit at plants organized by the United Auto Workers.
Federal mileage standards prevent GM from churning out small cars at plants organized by the Trabajeros Automovil de Mexico?
anonymous said:
HOW MUCH DO YOU MAKE PER YEAR??PROBABLY ALOT MORE THAN THE AUTOWORKERS AND YOU DON'T DO ANYTHING BUT COMPLAIN AND BITCH ABOUT US.
At my last job, I earned $16K per year with no fringes. The most I have ever earned in a year is $17K and I have never had fringe benefits.
Sooner or later all this bailing and printing money to buy bad assetts, bail out insolvent and un-productive companies who use goverment backed extortion to steal the taxpayers money will lead to the default US debt. With each day and each dollar we are that much closer to the day of reckoning. Tic-Tic-Tic
The problems facing Detroit automakers are monumental.
Check out what a Deutsche Bank analyst says as quoted in Daniel Howes' column in today's [11-11-08] Detroit News.
'....Deutsche continued: "Without government assistance, we believe that GM's collapse would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers, and sectors of the economy.'
There was an excellent book called the Death of Detroit written some 5 years ago. The author pointed out that Toyota and others were headed by engineers and their focus was on the customer and the quality of the car whereas Detroit was headed by accountants focused on how much profit they could make from each vehicle hence the larger the more profit. As all unions do their's demanded always more for less. They are no different here in Canada where they are demanding the same taxpayer help. The non-union car companies are still doing well here.
Toyota and the others moved to the bible belt away from the Detroit area and built flexible lines with highly trained and well paid non-union workers.
When I was in Kansas city airport in July I was astounded at the thousands of new Ford SUVs sitting on paved lots never to be sold. Look around you and count the percentage of the Big 3 to the other car manufacturers like Honda. People are buying value and have been for a long time.
Let the market decide and if these companies fail they fail. Remember all the companies that provide the parts supply the other non-union companies to and these successful car companies will expand into the larger market.
The truly sad thing is that whereas the union employees of the Big 3 will suffer the huge public employee unions grow larger each day as private union and non-union companies shrink and are affecting our whole society. A primary school teacher here now makes $94,000 plus rich benefits.
To Bosunj and others who don't understand who gets what and why.
People are paid according to the value of the work they do or the service they provide.
Unions distort that rule and therefore distort our economies.
Few people can become competent pilots. It's a valuable skill and therefore, more money.
Going to sea for six months and being away from family and friends is a hardship that few will endure and therefore, more money.
Working on a production line is work that can be learned by almost anyone in very little time. There line ups of people willing to take that fast tract to a well paying job in a car company.
The big three have ignored a basic rule of economics for too long. They have operated the same way as always while ignoring the competition who have now driven them to back of the line.
Yes Mr. Union Man, in your world there would be no competition and you would be able to produce cars on the order of the Lada. Remember that piece of junk that the non-competitive car industry of Russia tried to sell the world?
The original purpose of unions was to protect children and other workers from being made slaves and from working in horrid dangerous situations ... Not to guarantee a high school drop out a lush life with all the fringes.
Get real man. No one said life is fair. All things come to an end eventually and right now it's the end of the high paid union worker in the US auto industry.
Maybe it's not too late to get some new skills. Maybe even you can learn to do something that has value to others who might pay you well for that service.
The Phd guy you are slagging is without doubt a very bright and hard working man. You don't get several degrees by drinking beer in front of a TV.
Live in the USA is pretty easy and much is taken for granted. However, reality can bit anytime and shit can happen to anyone. It is wise to not live paycheck to paycheck. But to employ some deferred gratification and save some money for the rainy day that usually comes when you are least prepared.
Anyone can protect themselves from economic disaster by being smart, saving money, living within one's means, continuing to learn new skills in case the old ones become redundant.
Your parents should have taught you that. Your schools should have reinforced it. Failing that, you, as an adult, should have figured it out for yourself.
Most of the people who are suffering in the economy of today are those who live high on the hog during the years of plenty and put away nothing for the current famine. You only have yourself to blame if you are now sweating the rent.
You mock the Phd because you don't understand his message and you are currently living in fear.
hello birdy,
You have any important message, and I wish more people would listen to that type of wisdom. How can you explain to a GM/UAW member that no cash exists for them, but AIG can get $150 billion? There’s a lot of cans of worms being opened out there.
Walt,
Thanks for your note. I don't think AIG (or anyone) should get bailed out either.
This bail-out mentality is the private sector selling their souls to the devil.
Entropy is the word for today. The USA is slipping and sliding away.
Obama will try to spend his way to success, but his presidency will be a disaster. Marxist come in like lambs then when it gets ugly the heavy hand is applied. Wait and see.
Here in Canada we are at least 25 years head of you on the road to total government control. The only thing that makes it work here is that we are a tenth of your population with ten times the natural resources. IE there is still enough to go around.
What I see in the US and Canada is overly indulgent parents (big government) unable to control spoiled, bad children (the citizenry).
I fear one day the children will murder the parents and burn down the house.
For the angry auto workers who may not own a dictionary.
American Heritage Dictionary
en·tro·py
n. pl. en·tro·pies
1. Symbol S For a closed thermodynamic system, a quantitative measure of the amount of thermal energy not available to do work.
2. A measure of the disorder or randomness in a closed system.
3. A measure of the loss of information in a transmitted message.
4. The tendency for all matter and energy in the universe to evolve toward a state of inert uniformity.
5. Inevitable and steady deterioration of a system or society.
As a consumer, Toyota and BMW didn't bring their "cheap wages here" they bought lower priced, higher quality vehicles here.
BMW/Daimler-Benz: Different audience and focus compared to the Big Three. Performance unlike what is seen in the Far East, but they don't generally try to aim low.
The "Transplanted" Imports: Stuff a bunch of cheap electronics in a compact, agreed limitations on performance, and/or have a overpriced for performance vehicle compared to Detroit.
(insert irrational Detroit hate, Far East manufactuer-driven market advocacy, and/or union complaints here)
You just want to see them die off, never mind what happens to the people. It is irrational hate that will reduce choice.
As a bit of a disclaimer, I am one of the many who will not buy from the Far Eastern makes in my lifetime, including rebrands. They serve a different market (excluding quality out of the comparison). They are also unwilling to make the "affordable performance" vehicles that Detroit makes quite well.
You can have your shot at a "un-free, Far Eastern oligopoly" when:
* Kia/Hyundai stops making near copies off of domestic and foreign models.
* All of them start doing some sort of affordable performance that isn't served by "4 cylinders under $25,000" and/or is built in some "offshored labor" country.
* When you can state what bailouts(including FTA's) that the Far East automakers have received, are receiving, and will receive.
I could tell a lot of horror stories about unions cause I grew up in Flint, Michigan but lets focus on management. The last time I checked GM was still the number 1 vehicle seller in the world...so the problem is not that they don't have cars people want. The problem is they made commitments to people in the 1950s-1970s when times were good...and they based it on faulty assumptions. I believe that management didn't fully understand the effect of government intervention on our medical system. Health care costs continue to grow at astounding rates due to subsidies and micromanagement by our government. My grandmother is in her 80s and still drawing pension/Blue Cross-Blue Shield on my deceased grandfather, who died 20 years ago. She is a big part of the reason they aren't profitable.
The bail out is just a little transfusion to keep the patient alive while it dies a slow death. We don't want to dump all those workers on the unemployment lines at one time. It's money well spent.
This is an honest question that I've always wondered: why haven't the "big three" just shut down in the union dominated states and re-opened shop in a right to work state or in Tennessee or Alabama like Toyota?
Don't understand the claims of inferior quality and low performance on the Asian cars.... I've worked on and driven Toyota, Honda, Datsun/Nissan, and others, for many years. They are well engineered, high quality cars that perform well, particularly when considering their cost and size. Sadly, the only "Big 3" cars that come close are the ones made/designed in the Orient and sent here as "American" cars. Ford/Mazda, Chev/Izusu, and a few other such rebrands. I had an Izusu diesel pickup years ago, low oil from a previous owner damaged gearbox bearings. The Chev dealer wanted close to $200 and three days to get the parts needed. The Izusu dealer had them on the shelf, $100. Same parts. Those trucks are still running strong after 20 years of service, get 35+ mpg, and command more than they sold for new when used. Another friend has a Chev S-10 he bought low miles used, late model, nothing but trouble, no one can figure out what it is, a miserable piece of stuff. He regrets the day he got suckered into buying it. Don't tell me about low quality, lack of performance, cheap cars. Sorry, the Japanese and now the Koreans have it figured out, and Detroit should hang their heads in shame and disgust for six months... then get off their thick ends and go ahead and beat them. Why did Toyota sell more cars last year than did GM? There is a reason..... drive a Camry, Avalon, even a Celica. Why do the kids want the Asian cars to hop up to insane levels of performance, turning them into "rice rockets"? Why were most of the cars on the International racing circuits winning with Toyota and Honda engines in them these past few years? And they do it all for far less money? Detroit NEED to go ahead and fail, the sooner the better.
lewsta,
Detroit doesn't need to fail, they need to improve.
Recent JD Power lists show some Detroit metal improving. What say you?
-------------
Another word for the day: inerttia.
Entrenched management and labor.
Years of bad habits.
Some managers building personal kingdoms rather than better products.
Some employees driving to their vacation cabin "up north" while their buddy clocks them in and clocks them out.
Big ships turn very slowly. I don't know if the Detroit ship can turn before it sinks.
My husband has worked for GM for a few short years beginning as a contract employee and is one of those that has been in many manufacturing sector jobs that range from shoveling sand, working with glass to steel to thermostats to gears, breathing asbestos working over hydrogen-fueled furnaces to front-line supervision and at a variety of wages and benefits and family needs that consumed those pays when least expected; we believe God orchestrates one person to push a broom and one to be the leader of the free world for His good pleasure and glory alone. It's all about Him and not all about us. Really, how well do we reflect His goodness these days when we each look in the mirror or listen to our conversations?
I began to give insight from being privy to what is really going on only those on the inside of some of those companies would know but decided it might be received other than intended(maybe Wade Hoyt, a spokesman from Toyota on Fox News a few minutes ago, can be one to hear concerning what is going on in Detroit because of benefits being paid to older and retired workers that WILL happen down the road with Toyota and other auto companies seeing as they have about the same expenses in manufacturing costs as the Big 3 but less in benefit payments due to having a younger workforce. Just like Social Security originally designed for those retiring at 65 with an expected life expectancy of 67 that now has problems because one or two or more live to 100 or more years...so be it for Detroit in times such as these. Shall Detroit throw under a bus those that gave their best to them? GM is already talking possibly cutting the workforce another 10% making that a total of 25%. The ripple outward is coming to a town near you.). Will say it isn't a good thing to pick up and run with judgment that comes from not being fully informed.
We can sit till the cows come home beating up each other and doing comparisons over who is worth what $$ and who made what mistake because we all are human and can have a degree of fear of the uncertainty in the present and future; maybe there even is a tinge of green envy in some eyes. I want to know how we all will work toward solution ~ how will you encourage someone else who daily puts one foot in front of the other? The hairdresser. The grocer. The refuse worker. The salesman. The $5 pizza guy. The repair person. A worker like my husband that on his salary provides in our home(with a wife dealing with slowly resolving chronic physical issues and a son that at a time without employment and dental insurance required $9000 for care that hasn't been fully addressed) for my 92 year old father that survived the Great Depression and worked in the Civil Conservation Corps that was part of Roosevelt's New Deal? Like my husband who supports 4 adults and one minor and right now isn't promised a job after the end of December and went through this same thing working for a company in 1998 that took operations to Mexico to workers he had to personally train. Like others he knows that support family that have undergone major surgery that insurance hasn't covered or family that has been without work. Many of your jobs have benefited from our spending and we've benefited from your jobs to many a degree, right? We are all in this ~ if we are community rather than islands-unto-ourselves thinkers. Someone yell out that there is something free here or there and we'll go in droves like sheep over a cliff to get our share(nothing is free so someone else must be paying for it?) but we'll also grab the bat to drive those hurting further into the ground? God, please have mercy on us and do begin with me.
Right now isn't the time to start fixing everyone else and tearing down everyone believing ourselves so perfect being out of this loop or that loop at fault or maybe not the fault; rather it is a time to build up one another and allow time for fixes lest the sky falls on us all and we then dare wonder how that happened and why we are staying in that down position for so long. We're America, right? America that invested millions to support this or that party with an election but greedy where the rubber meets the road with people living next door? If I could do it on a scale that would make a difference, I'd hand back something to my husband's employer to help them, mistakes and successes and all, because that employer invested in our family and has invested more than millions in our community and in this country. Imagine if we all thought similar? What hinders us? Pride? Or humility?
Here is a novel idea...if there is a stimulus check still unspent(right or wrong that stimulus check idea may be in your eyes) in your hand or if you have been graced with excess over needs supplied and even invested for a rainy day, use that stimulus check as given in your hands to stimulate the economy and retained jobs of others rather than believing it for your discretionary hoarding or other investment or this all someone else's problem. It's been reported that 20% was spent as intended and 80% was not while some have not even claimed the money to manage appropriately. And we dare declare the package didn't work? If you can, spend a few dollars rather than digging in the heels thinking the future is going to be gloom and doom more than this moment. Workers at Sears and Home Depot and LL Bean and elsewhere would appreciate it this holiday season that we label one of joy and peace with and love of mankind. If you don't ~ it will be gloom and doom(investigate one of several reasons of the Great Depression...people acting fearfully and excessively as misers). Be community minded from the bottom up with balance rather than extremes and let fixes from the top down come as they must and will. Clenched fists can't give blessings nor are they fitted to receive them. We don't need the government to work through compulsion for us to love others that are hurting, do we?
Summary: let's look at our neighbor and ask if we want them to prosper or fail and what role we each will play in either with our view being that of eternity rather than temporal. I want to be a friend rather than foe...even if I can't put money behind the heart and certainly because there is so much to learn that isn't yet understood falling so far short do I.
Life is just way too short.
The government imposed restrictive union-friendly labour laws on the Big 3 that made it all but impossible for them to keep their labour costs low.
The government, through CAFE standards, forced the Big 3 to make unprofitable, or less profitable, models, in order to comply with the arbitrary fuel mileage standards. Complying with the newer, stricter, standards will cost them even more.
There are many other factors involved, but these two factors are huge.
Given that their economic woes have been, to a large degree, caused by the government, why shouldn't the government pay for the government's mistakes? Why should the Big 3 be punished for following their rules?
The FIX needs to be deep and wide.
BAILOUTS ARE COMPLEX BEASTS
Here is a workable plan with common sense for the U.S. Auto Industry -
http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html
Do not leave it to Paulson or Congress to come up with a creative plan or consider taxpayers' interests.
There is much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW.
The government needs to get out of the Uncle Sugar job and quit trying to manage every aspect of the country. One of the things that started this mess was the govt. forcing banks and mortgage companies to make terrible loans.
Unions are digging their own graves and while they were once valuable I believe it is pretty clear that their day has passed. How can a union exist when it's pushing such concepts as the "Jobs Banks". If a company does not have jobs for all of its workers then having those workers sit by idle and get paid for that privledge is insane. To get those workers productive again the company has to somehow create new jobs when they couldn't keep the old one going? It's as crazy as the govt. paying farmers to not grow a product.
http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html
I would go for that. Bailout comes with a 25% wage cut across the board until the money gets paid back.
If the big three want the US taxpayers to make a sacrifice and lend them the money then demonstrate they are sincere take a cut.
But hold on, what about the UAW wanting 25 billion for retiree pensions and health benefits? Are US taxpayers supposed to fund that as well? A benefit that 90% of the taxpayers don't have, forget it, let them fill Chapter 11, reorganize and come back without the dead weight.
I have been self employed for my entire career and I have only my own savings to retire on. It will be a frugal retirement, but I preferred that to working a production line for the man and a union. That is living death to freedom loving entrepreneurial types such as me.
I have never asked for nor wanted anything from my government other than a safe, free place to make my own way through life.
I don't want to support anyone who will enjoy a more lavish retirement than I have earned for myself.
The bail-out philosophy distorts our economy and creates gross resentment.
Let the chips fall where they may and we have always have a healthy and brisk economy.
Spare the rod of reality and you spoil our way of life.
they faced the threat of devastating strikes.
and others complaining about pension and health costs.
Jeez, what a bunch of crybaby rightwingers. These were contracts entered into voluntarily. And GM had plenty of PhD professors helping them project these costs out.
How can all you rightwingers so adamant about personal responsibility and the sanctity of contracts then whine about management's decisions.
Soak the shareholders for their lousy choices of management. And kick the crappy managers out, and without golden parachutes.
The union workers had nothing to do with picking what sorts of cars would be made, or for dumping the EV1 and not selling hybrids for years. Those choices were made by the knowledge workers up in marketing, accounting, and economic forecasting, and the decisions were made by management.
Anon,
Both sides are guilty. I don't think anyone is excusing either side for their mutual greed.
I do blame management more because they were the decision makers as you rightfully state.
A pox on both houses. Neither side deserves a break.
The problem now is that we are all going to pay for this stupidity.
Union and management are equally to blame. The "innocent" is the US TAXPAYER. How can they be asked to shoulder the cost of bailing out the big three?
Arranged bankruptcy, renegotiate supplier contracts, labor contracts, and retiree health and pension. Stockholders, management and union suffer but in the end MAYBE the big three, probably big two, will emerge as viable and competitive auto makers.
Hey, Mr. Union Man (or anonymous as you call yourself) are you even aware that a robot could do your job? Yeah, a robot that doesn't require vacation time or sick leave, doesn't demand medical benefits for the six kids he decided to have without my permission, and who will work 24/7s with no demands but a little juice from the power grid?
You UAW guys put yourselves out of a job. You made demands in an industry that you refused to allow to modernize and now you're crying because other Americans don't want to bail out your greedy asses. Perhaps you should have voted in someone beside Granholm who thinks the answer to a budget deficit is not to cut spending but to raise taxes.
Funny, the foreign car industry is locating in states with Republican Governors. Fancy that. States that have no state income tax like Texas and Mississippi. States that have balanced budget law.
Perhaps the UAW could dump that tony golf resort they have and sell it to Donald Trump. Hell, under UAW management it has lost $13 million in the last five years anyway.
I didn't hear you whining when ATT laid off thousands of workers, now did I? And those are your fellow union buddies, with the CWA being almost as corrupt as the UAW.
So until you learn how to fly a jetliner, you can continue to whine, but not on my dime.
News flash, rocket man, if the damn UAW leadership could run a business they wouldn't be living off your dues, now would they?
UAW workers are typically blue collar workers, why should they continue to reap the benefit of their past work if their past work no longer benefits the company?
As a Big 3 salary retiree I can tell you that the "changes" are too little too late. I could cite thousands of experiences with UAW supposed skilled trades that are too dumb to push a button, to actively sabotaging production. Example: sleeping in a hiding spot for two hours and when a breakdown appears , " it's my break time"
bad union, bad management
All sniping and platitudes aside. It seems somewhat simple to me regardless of my feelings as a taxpayer. Loan $25B now with the possibility of some profit upon return or loose at least $100B in future taxes in the next few years with the certainty of no profit and a further push in depression.
I am sorry for all those well-paid union workers but I honestly do not believe that the American tax payers owe you any money so that you can continue to live as you want. And stop saying that the "foreign" auto makers produce a lesser quality. That is a lie that has long been put to rest.
If you ever were to walk through a modern auto plant you would not be able to work in it. We have a Nissan plant down the road from us and they are fully automated, hiring only people who can operate the modern equipment. That is a big part of not only why they are cheaper to buy, but also better put together.
One of the reasons GM still sells so many cars is that they do most in Europe where they produce smaller cars with much better gas mileage. Why can they not do that here? Not enough profit to pay those high salaries. Go home and cry in your milk.
The greater the disance from Detroit the larger the number of buyers who resent UAW wages/benefits and buy foreign. Quality is not enough. UAW must go or significantly reconfigure. It's a simple marketing issue.
You keep blowing off comments regarding health care costs. The foreign auto companies(i.e. Toyota) do not bear that burden. That is why your post is misleading. Japan has universal health care so the burden isn't placed on employers. The real issue here is fair trade and a level playing field. The unions seem to be everybody's whipping boy. This is much more complicated.
another fact everyone ignores when talking pay scales, autoworker or not. It's the need of the job and desire to do it. I have been a soldier, cashier, stocker in grocery, management, and now an auto worker. See, everyone wants the rare cool jobs, professors, ceos, office worker on salary and so on on. No one says they want to work in a plant, or cashier or stock grocery shelves at 3 am. We pay the worst jobs the worst scale. Isn't that backwards America. All us Americans want what we want when we want it, we don't care that the guy with a family of four is struggling on 7 to 12 or 20 dollars an hour but we want those fritos to be stocked at 5 am and if there none we are irate, if the car you want to buy isn't in plentiful stock when we are in the mood to buy it, well stand back cause that would be unacceptable. yet all us lower class workers who make that happen. Us who try to get buy on 60 bucks of food a week, while girding our bodies down so those making much more money than us can have those conveniences and instant gratification. If one ceo who sign his name as 90 percent of his workday pulls as much as ten plus workers who are making his money for him in the trenches, maybe we are still attacking the wrong problem. Oh and if we want people to buy more "stuff" to keep our economy going, how do we do that when we are given less money. What stimulates an economy more. One rich guy buys one car and pays one set of takes on it, or a hundred guys buying a hundred cars
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