RSSNo bailout yet, maybe the Big 3 should save themselves
Dec 12
Senate Drops Automaker Bailout Bid
High five to the Senate Republicans. Who would have thought I’d ever say that?
It still doesn’t sound like the auto companies want to use this money for anything other than “surviving until SUV demand returns.” I wish someone in power would realize this is stupid.
Dec 12, 2008 @ 08:11:57
I am appalled that the senate turned this down.
obviously they don’t feel their jobs in jepordy.
when the trickle down effects come,
and this nation imports everything from China,
and we have no jobs to purchase those items with…
will the senate ask for another raise?
will they who voted against, ever have to work with their hands?
maybe the entire U.S. can migrate south of the border..
becoming less than third country citizens…
and look forward to the coming of the end of the world.
Dec 12, 2008 @ 08:15:28
Still waiting for some alert reporter to write this bit of truth:
The auto companies will not be viable unless the unions agree to wage cuts.
…or any sentence linking viability to the wage cuts. Even better, once again comparing the hourly wage/benefits of UAW American workers ($70+) to American workers at Toyota, other plants ($35+).
The plan failed because the companies would go on failing under it.
Dec 12, 2008 @ 08:27:27
Did I read somewhere that these companies are “begging” for a bailout? I have only this to say, they certainly missed their moment to shine when they got rid of GM’s EV1 electric car!!
Now what?
Enough said…
Dec 12, 2008 @ 08:34:53
@frustrated citizen:
Do you not think it’s short-sighted for a government to prop up failing and unsustainable companies? Effectively what you’re saying is that we should ditch the market economy and force everyone in North America to buy a North American car. Even people who choose to purchase a foreign vehicle will still be paying the American car companies.
The Big 3, as we know them today, are going to be gone no matter what we do (aside from the government giving them billions every year, which I don’t put past them). I’d argue it’s hurting everyone more, in the long term, to continue this charade. The UAW needs to accept it’s wage and pension cuts and then the Big 3 need to do very serious retooling once freed of that burden.
I’m not saying it’s fair, but for the average UAW worker, taking a 25% pay cut (for example) is a lot better than the inevitable 100% cut if the companies collapse.
Dec 12, 2008 @ 08:48:54
comparing the hourly wage/benefits of UAW American workers ($70+) to American workers at Toyota, other plants ($35+)
That’s not a valid comparison. The $70+ per hour is a bogus figure which includes retirement and health benefits for workers who are already retired. The figure for the Toyota employees, of course, does not.
The GOP are killing this package because they hate unions. The banking industry gets $500 billion so they can pay 6 and 7 figure retention bonuses to their senior employees. But of course, those banking executives aren’t unionized. And while everyone agrees that it’s the management in the automotive industry who have made bad decisions, the bailout fails because Republicans aren’t happy with the concessions they get from the line workers.
The automotive industry in the U. S. employs about 3 million people if you include spin-offs. Say hello to full-blown depression if it’s simply allowed to fail. And don’t think that Honda and Toyota will simply pick up the slack because many of their suppliers depend on business from the American companies as well. When the suppliers fail then the international automotive companies have problems too.
But by all means, let’s bash the union workers and make them pay for other people’s mistakes.
Dec 12, 2008 @ 08:50:48
You’re right, Wendy, the UAW screwed themselves. They’d rather see everyone unemployed than work for fair wages.
“A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.”
Perhaps if one of the car companies goes under, it’ll make room enough in the marketplace for the others to make a profit for once. There are too many car companies in the market now that competition is fierce even in good times, let alone a recession when noone can afford to buy.
The government bailout would be a Faustian bargain anyway. With them running Detroit, we’d all be driving ugly little beige hatchbacks.
Yet I still think they’ll get the money. It just won’t come til Jan 21.
Dec 12, 2008 @ 08:52:00
Why are we using the word bailout, they are requesting a low intrest loan from the government. We already had a 25 billion dollar package working its way through congress, when Paulson decided to rescue all his cronies in wall street with a true bailout for the companies who started this credit freeze, with companies that were playing hot potatoe with investment packages with no real product.
The News Companies have also put such a spin on this, while all the car companies,even foiran are in a downturn. How can we compete with them when thier governments are paying thier healthcare and retirement plans. Not IN The News! Also GM has 18 Models that get over 30 miles to the gal.
Industry needs to be a part of our National Security of this country. The Air Force is already having problems with counterfeit computer chips not made in America. We’ve industrilized all these devoloping countries at such a fast pace, its thrown the whole world on tilt.
The unions have been helping for decades, 40 hr work week,over time pay and many other benifets. They set a standard of living which other companies had to acknowledge, now Walmart is. Who can afford to live with their standards?
Buy American Products!
Dec 12, 2008 @ 09:03:39
Right on Wendy, I can’t believe the Government is considering bailing out more Fat Cats! Oh wait, yes I can, birds of a feather. Your figures are a little off, the adverage wage for an autoworker is about $28, but you add ALL the benefits they receive and it adds up to about $70 per hour! I would kill to make the $28 with NO benefits! That’s just part of it, Chrysler’s CEO Robert Nardelli has only been with them since August 2007, that year he stepped down from Home Depot with a $210 million severance package. GM’s CEO, Rick Wagoner graciously offered to work for $1 in 2008 to help the company after making $14.4 million in 2007. Then there’s Ford’s Alan Mulally who was compensated last year with $21 million, which worked out to $10,000 per hour!
Come on Washington WAKE UP, these are outrageous amounts of money. Are you so out of touch with the adverage person that you can’t see how that compares to $6.55 per hour and NO benefits. Knock them all, workers included down to minimum wage and cut their benefits and I’ll bet that will pay for the bailout! That’s the way most of us live, why isn’t good enough for these GREEDY screw ups that didn’t learn anything from the 70′s and continue to produce these GAS GUZZLERS!!?
Dec 12, 2008 @ 09:18:29
@pogge: The wage comparison is partially valid since the Big 3 are on the hook for that “rolled-up” hourly rate per employee. They put themselves in that position. The Japanese companies employees pensions are not necessarily paid for by the government. I don’t know about in Japan itself but here in North America their employees have private pensions.
@Rob: Each “bailout” needs to be considered in isolation, for the most part. The financial one, while not necessarily a great idea either, at least made more sense because the effort was to save the financial system itself, not a particular company.
Also @Rob: I’ll buy American products when they are what I want. Why should I feel any special allegiance to a large multi-national corporation? I work in the tech industry and know that the Big 3 had no issues firing technical staff in the US and replacing them with people in India or China, so why should I give them the same respect they wouldn’t give me?
Lastly, I think there’s a misconception about what happens if the auto companies don’t get their bailout money. If they run out of cash they will most likely enter bankruptcy, which means they’ll finally have the leverage to renegotiate some of the crazy union contracts. I imagine there would be some layoffs but I’d guess the vast majority of employees would stay on. This same scenario played out in the airline industry and everyone seemed to come out better in the end.
Dec 12, 2008 @ 09:27:00
The wage comparison is partially valid…
I don’t think arithmetic works that way. You either have numbers you can compare directly or you don’t in which case trying to make the comparison anyway is disingenuous.
If they run out of cash they will most likely enter bankruptcy
80% of Consumers Won’t Buy a Car from a Company That Files Bankruptcy
If they enter bankruptcy, chances are they’ll never come out.
Dec 12, 2008 @ 09:40:38
It’s not only union wages which have hurt the autocompanies – its also the work rules. When a company has to pay 4 hours OT to bring in a union electrician to change a light bulb while the person needing light stands around doing nothing we have a huge problem. While most union workers want to work hard and do whats right – there is a small but very vocal minority which only looks more and more benefits, unproductive work pay (e.g. Autos “Jobs Bank”), etc. This is true in Automotive as well as most government unions. E.G. – Union contracts which allow 8 paid minutes to get from office to their cars, sick time policies which allow you to take accumulated sick time when your retire – so people retire a year early at full pay, protectionist policies which prevent a capable non union manager from helping out when needed. Workers AND management need to act as if they owned the company – with fiscal responsibility – ethical responsibility – and a long term outlook.
Dec 12, 2008 @ 09:43:55
@pogge: The issue isn’t arithmetic, it’s a subjective call whether they are valid comparisons or not. I personally think they are, as they both represent “the amount of money the employer is responsible to pay per hour for one employee”. I agree it’s not a perfect comparison but it’s still useful to see the order of magnitude of employee costs between them.
However, for the Big 3 the larger issue is the pensions and health care costs for its retirees, as I believe this dwarfs the benefits paid to active employees.
I personally don’t believe consumer sentiment would be as bad as the 80% reported in that poll, although I agree it would be damaged. I’d bet a similar poll before the airlines went bankrupt would have said the same thing. The Big 3 would need to spend a lot of effort and money to make people believe in them again.
But, in the end, is that a good argument for propping up those companies? Not a chance. “If we give them the opportunity to fail, they will actually fail” should be a good indication that it’s an unsustainable business.
Dec 12, 2008 @ 10:00:06
The immediate problem for the auto industry is the same as the immediate problem for the financial industry: credit. People can’t get credit to finance their purchases so they’re not buying cars. That’s not the fault of union workers. But sure as the sun rises in the morning, when people have an opportunity to bash organized labour, they do it.
And by the way, I’m self-employed and I’ve never been a member of a union. But I live in a community where applications for EI benefits are up 96% on a year over year basis and it’ll be worse next year when one plant closes and another one cuts back from three shifts to two (and that appears to be the best case scenario). Some of my neighbours are headed for hard times and watching people appear to take some joy from it because the people paying the price are union workers is a little hard to take.
Dec 12, 2008 @ 10:05:00
I just read that UAW President Ron Gettelfinger doesn’t think the Union is the problem, yet they’re “begging” for help and refused to take a pay cut. They won’t even consider it until 2011. I don’t think the Government should even be talking to these people until they are willing to change their ways! They just want the American public to give them money so that they can go on business as usual!
Dec 12, 2008 @ 10:11:21
There are several problems, that I can see, with this “loan” for the auto industries.
1) The companies are paying union workers outlandish rates for poor quality work. American cars CANNOT compete with the well-made foreign cars….
2) This $14 Billion dollar bailout will NOT be a drop in the bucket – some say it will take nearly $200 Billion in reality
3) We will be putting good money after a bad deal…until the auto industry cuts back – and should be by organized bankruptcy – there is no end to the money gobbling gas guzzling madness….
I don’t know of many people who can honestly say that Chrysler SHOULDN’T go under. Of all the auto industry vehicles, there’s is the worst. Let them fail…let Ford restructure…(at least there is some hope for them without the bail out money)….and GM….get it together.
I hate it that many WILL lose their jobs, regardless of the Billions that will probably be loaned to them….but, unless these companies realize that just because the product is American, the quality isn’t there – and the prices are way overrated.
Just like millions of people have to completely restructure their lives due to loss of jobs – so should these private companies. Cut back, make due, and get it together….
Dec 12, 2008 @ 10:14:11
And, damn yankee2 – you are right on the money!!
Dec 12, 2008 @ 10:37:40
I feel bad for all those people that will be out of work and all the families that will be affected I think that the gov’t really screwed up big on this one .
Or even if they would have suppled the car companies with a gov’t contract to help them out something or pressure other countries to by some of the cars something!!!!
Dec 12, 2008 @ 10:50:04
You said “I’d bet a similar poll before the airlines went bankrupt would have said the same thing. The Big 3 would need to spend a lot of effort and money to make people believe in them again.”
There’s a small difference. Airline tickets in general are next to impossible to get a refund for if you cancel, even if you booked before the company declared bankrupcy, so you take the flight anyway, crossing your fingers for the few hours you’re onboard, kissing the ground when you arrive and then never flying with that airline again.
Compare that to buying a car. If you buy the extended warrantee, you’re betting on the company being around for 5 more years to honor it. If you buy a hybrid car or some other new fuel technology, you’ll have to get the extended warrantee because noone but the dealerships know how to service it.
Buying a car is a long term investment. You buy a car planning on having it for 3 years minimum. So if you have any doubt in the longevity of the manufacturer, you’d be pretty stupid to buy their cars. At least wait til after the bankrupcy goes through so you can see how bad the cuts will be and whether the quality and service will suffer.
Dec 12, 2008 @ 11:07:33
To be clear, I have no issues with union workers at all and with unions in general. Most union workers serving under crazy rules as mentioned by DamnYankee2 don’t enjoy it, they think it’s ridiculous. Many unions are perfectly reasonable. The UAW, however, is the perfect example of what happens when a union gets way too powerful. Perhaps their contracts made sense back in the 60s and 70s, when car manufacturing was a high-margin business, but the inability to renegotiate those contacts due to the new realities is the primary reason the Big 3 are done.
And again, I understand that the loss of some jobs will be painful (although I still argue the Big 3 won’t go away, but will need bankruptcy to restructure and survive). But, as a simple analogy, over the last 5 years how many IT jobs have gone to India and China? Probably millions in North America alone. Does my industry get a government bailout? I’m not claiming this is of the same scale, but the truth is that the government cannot be responsible for guaranteeing employment to it’s citizens, otherwise just call ourselves communists and get on with it.
Dec 12, 2008 @ 11:38:19
I thought the financial bailout was poorly and hurriedly constructed. I have the same beef with the auto industry loans/bailout. It needs to be a viable industry. The clock has run out; they do not get 1-2 years til their next contract to figure it out.
However, the Union worker and their wage/benefit package should be considered for cuts only after the pretty packages for the retirees are reexamined. Remember, retirees outnumber workers at these companies 3:1. And the retirees should only have to shoulder some of the burden once management’s excesses have been taken into account. Everyone will have to take a hit, sadly, but if I worked for the Big 3, I would rather have a fair wage/benefits that matched the industry standards than lose my job completely.
Also, look at the language in the Congressional proposition yesterday, which was poorly reported on. The government had agreed to back warranties for bankrupted car companies if the deal went through. “Noone will buy a car from a bankrupted company” argument does not work if the media would emphasize that the government has agreed to back those warranties if the company cannot. They should be asking consumers, “Would you buy a car from an American company in bankruptcy as long as you knew the government would insure the warranty work if needed?”
Dec 12, 2008 @ 11:39:00
Oops, retiree to employee ratio is 2:1. Bad typo.
Dec 12, 2008 @ 13:02:08
You know, one thing nearly every government in the industrialized world agrees on right now is that what’s needed is economic stimulus that gets the public spending again. Public works projects that employ people, whatever it takes.
What is *not* needed is massive pay cuts for workers so that they will avoid spending money. That is precisely the kind of thing that will worsen the recession. Meanwhile, the longer term problem with the economy is precisely that too much money is going to the very rich so that they can invest in financial pyramid schemes (which are now blowing up in all our faces) and not nearly enough is going to actual people who work for a living. What’s needed for the economy to function well is lots more unionized workers making enough money to have a bit to spend and maybe some savings, not fewer.
Finally, there have been a lot of contracts under the bridge for the UAW since the 60s and 70s. Since that time, there have been plenty of pay cuts and benefit cuts; the contracts now already aren’t anything like they were then, so I really don’t know what everyone is going on about. Since then industrial productivity has also increased dramatically. So if they could afford the wages in the 70s, why not now? Labour costs per car are dramatically lower than back then. And the car industry is heavily capital-intensive–labour accounts for a very small percentage of a car’s cost in the first place.
Unions didn’t mess up the economy. If anything, lack of unions did. Unions also didn’t mess up the big three–management did. But of course if the big three don’t get bailed out it will be ALL THE UNIONS’ FAULT for being unreasonable and not agreeing to be scapegoats. What the??!! When I see management compensation capped at 5 to 10 times the income of a line worker maybe I’ll have some sympathy for looking at worker pay.
I’d also like to note that in our system, contracts are one of the most sacred things there is. Let a government violate a contract with a corporation, it will be sued for gajillions amid horror from the media. If corporations violate contracts with one another, there is litigation until the end of time. Apparently the only case where contracts aren’t supposed to be worth much is if they’re with actual people like, say, retirees. If the burden for the poor little megamultinational of living up to its contractual obligation by paying retirement benefits is too great, maybe the government should take *those* over rather than hosing hundreds of thousands of retirees.
Dec 12, 2008 @ 13:30:20
@Purple Liberal Guy: Ok, show me the hard facts proving that maintaining the UAW employees and retirees at their current pay levels will save the economy. That all sounds well and good, but where’s the proof, or even ancillary evidence?
Here’s a fact for you: Ford spends about $9B US per year on pension and health care liabilities. Guess how much Toyota pays? Zero. They contribute for each employee but they are not on the hook for the eventual liability. The employees still get good benefits and the company isn’t crushed under the liability.
Guess how much Ford’s profit was recently (well, I think this data was from last year or the year before): Zero. Toyotas? $9B.
Guess who has obviously been spending their profit on vehicle research to build better products that people actually want? This is as opposed to having to sell their vehicles at an almost $2,000 loss each just to move them out the door.
This sounds like an amazing business that I want my tax money going to prop up.
Based on some of the arguments I’m hearing in this thread it sounds like our government should be guaranteeing no one ever gets laid off. I work for a small company, think I’ll ever get that guarantee? Not a chance.
Dec 12, 2008 @ 14:10:39
Unions are no longer needed – and need to be eliminated.
They served their purpose, laws were put into place to protect workers, but bottom line, if the jobs not being done, correctly, they need to be fired, and bring in people who WANT to work – not sleep through half the shift….(and, they do it, too!)
The Big 3 have ALOT they need to restructure, and they need to do it without a bailout. They have poorly managed their companies and failed to consider the market, and where they needed to be going by staying competitive with other auto markets.
They set themselves up – and the UAW made the demands. It’s time for that to end. If they go bust, someone will be more than happy to buy the property and start fresh…and maybe make better, more dependable and affordable vehicles.
Dec 12, 2008 @ 16:46:07
“Based on some of the arguments I’m hearing in this thread it sounds like our government should be guaranteeing no one ever gets laid off. I work for a small company, think I’ll ever get that guarantee? Not a chance.”
Oh, too bad. Because you have no guarantee, no one (except bank execs) should have a guarantee.
I have a small business. I’d love a mini-bailout, because times are tough. But I understand that making 3 million people unempoyed in one fell swoop will cause economic disaster for everyone, for a decade at least.
Dec 12, 2008 @ 16:57:37
Javafreik, that’s one of the most ridiculous caricatures I’ve ever seen.
You know, the top 1% have a bigger share of the income and wealth pies than we’ve seen since the twenties. It is no coincidence that unionization rates have been declining (and your precious “laws put into place” eroding) as the amount of cream skimmed by the fat cats has been increasing.
And if the market were God we wouldn’t be in this mess in the first place.
Dec 12, 2008 @ 17:02:01
An American – Michael Moore gives a perceptive that appears to be missing here:
Senate to Middle Class: Drop Dead
Friday, December 12th, 2008
Friends,
They could have given the loan on the condition that the automakers start building only cars and mass transit that reduce our dependency on oil.
They could have given the loan on the condition that the automakers build cars that reduce global warming.
They could have given the loan on the condition that the automakers withdraw their many lawsuits against state governments in their attempts to not comply with our environmental laws.
They could have given the loan on the condition that the management team which drove these once-great manufacturers into the ground resign and be replaced with a team who understands the transportation needs of the 21st century.
Yes, they could have given the loan for any of these reasons because, in the end, to lose our manufacturing infrastructure and throw 3 million people out of work would be a catastrophe.
But instead, the Senate said, we’ll give you the loan only if the factory workers take a $20 an hour cut in wages, pension and health care. That’s right. After giving BILLIONS to Wall Street hucksters and criminal investment bankers — billions with no strings attached and, as we have since learned, no oversight whatsoever — the Senate decided it is more important to break a union, more important to throw middle class wage earners into the ranks of the working poor than to prevent the total collapse of industrial America.
We have a little more than a month to go of this madness. As I sit here in Michigan today, tens of thousands of hard working, honest, decent Americans do not believe they can make it to January 20th. The malaise here is astounding. Why must they suffer because of the mistakes of every CEO from Roger Smith to Rick Wagoner? Make management and the boards of directors and the shareholders pay for this.
Of course that is heresy to the 31 Republicans who decided to blame the poor, miserable autoworkers for this mess. And our wonderful media complied with their spin on the morning news shows: “UAW Refuses to Give Concessions Killing Auto Bailout Bill.” In fact the UAW has given concession after concession, reduced their benefits, agreed to get rid of the Jobs Bank and agreed to make it harder for their retirees to live from week to week. Yes! That’s what we need to do! It’s the Jobs Bank and the old people who have led the nation to economic ruin!
But even doing all that wasn’t enough to satisfy the bastard Republicans. These Senate vampires wanted blood. Blue collar blood. You see, they weren’t opposed to the bailout because they believed in the free market or capitalism. No, they were opposed to the bailout because they’re opposed to workers making a decent wage. In their rage, they were driven to destroy the backbone of this country, not because the UAW hadn’t given back enough, but because the UAW hadn’t given up.
It appears that the sitting President has been looking for a way to end his reign by one magnanimous act, just like a warlord on his feast day. He will put his finger in the dyke, and the fragile mess of an auto industry will eke through the next few months.
That will give the Senate enough time to demand that the bankers and investment sharks who’ve already swiped nearly half of the $700 billion gift a chance to make the offer of cutting their pay.
Fat chance.
Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com
Dec 12, 2008 @ 17:15:04
@jeff house: You know, you guys are just as bad as you say the people are who are pushing the $70/hour thing. If the Big 3 don’t get their bailout these companies are not going away. $15B is not even enough to get them through a year, so unless they make significant changes now they will be in bankruptcy in either case. And, after bankruptcy, they will retool and reemerge, hopefully as a stronger competitor but that’s up to them.
@janfromthebruce: Yeah I got that email from Moore as well. Sometimes he has good ideas, sometimes not. He makes valid points, and while I don’t agree with why the Republicans rejected the bill, I still think it was the right thing to do. No one in Washington or Ottawa, apparently, sees this issue beyond the political ramifications.
Dec 12, 2008 @ 17:19:00
The benefits packages of workers AND more importantly retirees need a reality check. A Delphi manager told me when they filed for bankruptcy it was the only way they could reign in the very high costs. For example employees/and retirees at that time could see any doctor they wanted with little or no out of pocket costs. The cost of benefits was higher than the cost of wages – and applied across the board. I have several relatives in the teaching business who have nearly as generous benefits. I myself “enjoy” health care insurannce. On a recent trip to the doctor my insurance paid all but $60 of a $63.29 prescription cost. I am accutely aware of the costs of medical coverage and use my beneifts wisely. Bottom line for us all is – we need to spend less than we make, we need to earn our keep (not have it legislated or negotiated), and we need to learn personal responsibility.