Just like this bailout. This was written for the American Taxpayer, everyone was given a script, everyone rehearsed their lines, and if the American people believed the doomsday scenario, they will go along with it. Most Americans were against it, and they did it anyway, and $700bn will be pocket change by the time they are finished. Give them an inch and they will take a mile for all their Wall Street buddies. Just like we have seen the last 8 years.
Just like the people who believed Bush for 2 terms. He and Cheney, Old Man Bush and Reagan. 20 years of lies so they could keep their circle of friends, like the Contract with America was promoted to sound good, but every aspect of it imo would work against the working class. I hope America can learn to separate itself from that Regime...........Forever!, even though some may have liked Reagan in reality he was every bit as big a liar as Bush and Cheney, and broke the backs of most unions. He was for the rich.
I believe in Unions, unions that work, not the mediocre who are little more than moral support, good Unions that can work with the companies and the workers to make sure they aren't underpaid, and get the well deserved protection. Without unions companies can make it unbearable, who are prone to step over the line, and there is no mediation other than the Labor Board. When companies are suffering like these 3 a shakeout needs to occur from the top and work its way thru middle management, and the workers need to be able to make concessions so the companies can work at trying to right themselves.
Steve McDonald examines what he believes is the real problem with the auto industry in this country and what needs to change for it to be a viable business model. We will take a break on our look at the auto industry tomorrow so that we may enjoy Thanksgiving with our families.
The Bailout of The UAW
By Steve McDonald
The UAW holds the key to the success of the U.S. auto industry.
The recent Senate hearing with the CEOs of the big three car manufacturers was better than most sitcoms. The CEOs were unable to answer questions about how they plan to pay back the loans, or just avoided the question, or how long the loans would keep them afloat, or how they would change their business models to avoid asking the taxpayers to bail them out again. It went on and on.
The CEO of GM was asked how long GM had to pay the employees of a plant that had been closed. His answer, “I don’t know.” How long do you think you would be working for him with answers like that? The senator who asked the question shook his head in disbelief and muttered, “Unbelievable!”
The whole time the panel questioned the CEOs about how they were cutting costs, how they plan to make their operations profitable and how they were reducing their pension liabilities, the answer was sitting at the end of the table; the President of the UAW.
Autoworkers of the big three are paid significantly more money and benefits than employees of Honda and Toyota in plants in this country. Not in Asia, but here. Honda and Toyota are profitable, the big three are back for more free money from you and me.
It is so simple. GM, Ford and Chrysler cannot be profitable with the labor agreements they have in place. It is impossible. No one bothered to ask the UAW president about this. He and his members are the answer.
The real issue isn’t will we bail them out, of course we will. A Democratic congress and a Democrat in the White House will not jeopardize a half a million blue-collar jobs, not if everyone knows they are doing it. If they could sneak it through, maybe, but not if everyone is watching.
The real question is how will congress explain to the unions, who were a big part of Obama winning the elections in Michigan, Ohio and Pennsylvania, that they have to take pay cuts for there to be any chance their companies and jobs will survive, even with the bailout.
What we have is a bottomless money pit or guaranteed failure for GM and Chrysler. Ford still has a chance.
Congress and the President-elect have a huge problem. Go the bail out route and have to do it again in eight months if the credit markets don’t loosen up. Or, don’t bail them out and have a bankruptcy that will shake this country at its very roots. Or, face the music and force the UAW to make the needed changes.
The political ramifications are so huge for any of the options, the most likely scenario is they will blame Bush and come up with some half-baked solution that just pushes the problem down the road for someone else to deal with.
Some would argue that the big three have been making cars no one wants, and that’s why they’re in this mess. Partially true, but no matter what cars they make and sell, they can’t be competitive if they don’t see some change in their labor and pension costs.
Even if the big three have an epiphany about the type of vehicles people want, and are willing to buy, if they magically shift gears and come out as the world leader in new alternative technology cars, put the huge technological advantage this country enjoys to work to make significant improvements to cars and then sell it to the rest of the world, they still won’t be competitive.
What this bailout amounts to is subsidizing the difference between the cost of the union contracts the big three have compared to the union contracts Honda and Toyota have.
The big three and the UAW signed these agreements in very different times than what we have now. Globalization, Japanese auto makers in Ohio and Indiana, a worldwide labor market that is putting pressure on wages everywhere and products being manufactured in other parts of the world at a fraction of our costs.
The issue is quite simple. Adapt or die. We cannot afford to continue to subsidize 1950s style management and union thinking. This is a fight we need to win and it will require sacrifice from more than just the taxpayers.
After the Bailout, The Detroit 3 Still
Have Work To Do
By Christian Hill
Perhaps I am being too optimistic, but I think the government bailout of the Detroit 3 is a foregone conclusion. In the interest of the entire country and the national economy, the government simply can’t let the automakers fail. There is no denying the business model is broken, but hopefully steps will be taken to change that.
So what does the future of the American automobile industry look like? Will all three survive, or will GM absorb Chrysler? No one knows for sure. But one thing is evident: drastic changes must be made. Continuing as is, and keeping the status quo, will surely result in each of the automakers being on the brink again in a few years. And if that occurs, there is no way the government can save them again. Chrysler lining up for a handout twice in 30 years is bad, but GM and Ford holding out their hands twice in a few years is unacceptable (at their current monthly burn rate, even the bailout money won’t last long).
So what changes can be made, and made quickly to save the companies? Here are a few that would make significant impacts.
Trim the fat. There is no need for GM to have eight divisions and 76 different models. By comparison, Toyota has three divisions and 32 different models.
Close plants and eliminate jobs through consolidation. This would take serious concessions from the UAW since it violates agreements, but paying the costs to get it done now will save the rest of the jobs. After all, if GM goes out of business, all plants would close and all those jobs would be gone.
Eliminate the job bank. Talks are underway to get rid of this dinosaur. It basically guarantees laid off workers full compensation and benefits for not working.
Eliminate dealerships. Again, there are costs involved with this, but it is necessary. There are over 15,000 domestic car dealers, outnumbering import dealers 3 to 1. Some of this may be handled through attrition this year, but buyouts are needed.
Will this cure what ails the Detroit 3? Not entirely. There are many other battles to be fought, such as with the UAW. But to continue to operate as they are now only guarantees failure again.
There’s no reason that the companies can’t rebound after the bailout and become leaders once again. When Chrysler was bailed out by the government in 1979, they made great initial strides. The K car saved the company, and they also created the minivan segment.
Innovation brought Chrysler back from the brink, and the Detroit 3 need to innovate to survive this. Electric cars or alternative fuel vehicles could lead them into the future, and establish them as real players again. GM has their “Flex Fuel” vehicles which can run on E85 (still a debatable solution), the Volt is an electric hybrid, and Dodge (Chrysler) has shown electric vehicle concepts (Dodge EV). More innovation is needed, but at least they are moving in that direction. I would hope that with their backs against the wall, they break archaic processes and really stretch their creative minds. Bland econo-boxes just aren’t going to bring buyers back.
I also find it interesting that Chrysler created the minivan, which saved the company after the bailout. The minivan morphed into the SUV, which the Detroit 3 relied on so heavily for profits, and has proven to be what may kill them. So what once saved them has almost become what kills them.
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