Nancy Pelosi went on record supporting a bailout of the Big 3 automakers yesterday, saying that bankruptcy is “not an option.”
Precisely why this should be true is left hanging. After all, Chapter 11 bankruptcy – the only kind under contemplation – doesn’t mean that the companies will close their doors. It merely merely means that they will be shielded from creditors while they restructure their business along more profitable lines.
But if the Big 3 were going to innovate their way out of the red, they would have done so already. The $34 billion they’re asking for will not by itself make the companies more competitive, it is designed to “bridge” the companies over their current hardships – precisely what Chapter 11 was designed to do. And precisely what the “plan” currently being offered by auto industry executives in return for that lucre will probably not do.
We’re forced to assume that anyone qualified to rise to the position of Speaker of the House knows what “bankruptcy” means, and if, as she says, “everyone is disadvantaged” by bankruptcy why does it remain federal law?
We are left with the conclusion that she thinks most of us are too stupid to understand what bankruptcy means, which leads us to think that the proposed bailout is really about preserving the fading dream of a middle class lifestyle for relatively highly compensated, unionized assembly line workers for as long as possible, while avoiding having to make executive-level decisions under the scrutiny of an outside court. That may prove to be a compelling social good.
But if it is, why isn’t it being argued that way?
so why exactly isn’t it being argued that way?
good chance that its because she’s a dick.
If Chapter 11 bankruptcy isn’t a good solution, then maybe Congress should be thinking about modifying this part of the code. For example, maybe there should be cases under which the government guarantees the warranty claim reserve, to minimize consumer fear of buying from a company in reorganization. The key thing is, a legislative body is supposed to be about laws that embody *general principles*, rather than doing the executive and/or judicial job of dealing with individual cases.
It’s not being argued that way because the bailout is designed to one the Democrats’ voting constituents union workers (the UAW). NONE of this money will go to bring innovative new products demaned by the free market…..NONE.
Jason nails it; the Dhimmicrat Party knows that it can keep the unthinking rank-and-file union members in their voting bloc by doing whatever benefits the union bosses – who will then convince the line workers that whatever is good for the union bosses is good for the workers. The typical workers think, hey, da union got me a three dollar an hour raise! But they never stop to think… hmmm… where does that money come from? And they never make the connection between their raise, and the fact that bread, milk, beer, fast food and anything else in the marketplace, costs more because of it.
I’m waiting for Pelosi the oracle to proclaim that the solution is for the US Mint to simply print up a few billion more hundred dollar bills and give them to the auto industry predators.
Then the Dhimmicrats will be free to move on to the next big thing – socialized medicine for everyone, accompanied by mandatory euthanasia for older folk with costly diseases.
Bankruptcy [Chap. 11] is the grown-up way of saying “we goofed and it’s not working.” Now, if they’d do that, they could cowboy up and fix what’s wrong. If we keep bailing them out, they’ll never learn and never be functional, profit-making businesses again. Bankruptcy is not dissolution; it’s forced re-organization into a more profitable mode. It’s worked for Continental Airlines and other large businesses. It could work for the Detroit auto manufacturers, if they’d let it. But they’d rather whine and beg, like all the other businesses in Washington right now who think they should be bailed out too, “’cause the other guys are getting some, where’s mine?”
Disgusting, isn’t it?
Marianne
The irony is that the bailout will only perpetuate the noncompetitive position of the Big 3.
Of course bankruptcy is an option, finally it will be the only option. What is never mentioned and it “drives me nuts” is the “Pension Benefit Guaranty Corporation”, which was created in 1974 and currently protects 44 million American workers and retirees. I’m sure the UAW insisted each of the big 3 donate money to this over the years…If anything congress should sweeten the PBGC’s pot with the $25 Billion funds.http://www.pbgc.gov/…here is what Ford is doing in Brazil…there’s no UAW there…http://info.detnews.com/video/index.cfm?id=1189
The Congressional Clown Posse has set the precedent for passing mega-billion dollar “rescue” packages based on “the sky will fall if we don’t act within a few days” rhetoric.
Having gotten away with it once, and flush with the power of joy and change, they are eager to do it again. And again. And yet again. Nothing buys votes like good old fashioned spending on whatever.
Pelosi and crew are now nothing but out of control spendocrats, clueless as to the causes or cures for what ail us, and unwilling to accept blame, only to claim they have the plan to fix everything.
They will NEVER be able to pay for the largess already bestowed, and care not how to pay for that, let alone future bloated spending.
The 9% approval rating for Congress comes from people who are even more stupid than the ones in Congress.
Spikker of the 9% House…truth to power, dudes…word.
Pelosi was dropped on her head when she was a baby. Aforementioned posts nail it as pandering to the UAW. Fact is, most of the products coming of the lines in Detroit are crap. Bad mileage, poor craftsmanship, and a half life when compared to the Asian cars. I’m done with the lot of ‘em until such time they put a product worthy of my investment. The UAW line workers make near twice what CONUS foreign line workers make. Until such time that the big 3 re-negotiate their contracts to come in line with sanity, they’ll never find their way out of this mess.
Let ‘em go under for a few dunks, file Chapter 11, and see what happens.
Oh, and Pelosi needs to dummy up.
But the banks deserve a bailout…
I will be the contrarian voice here and I admit I’m a little closer to the action.
One of the key reasons bankruptcy will cause tremendous downside is that it will cause demand for “Big Three” vehicles to plummet even further. Folks will have even less confidence in buying a GM vehicle and it will be impossible to reorganize with volumes in the cellar. Also, many suppliers will be sucked into the same quagmire. It’s far more pervasive than the big three and stretches beyond the limits of four Midwestern states.
Lee is partly right. The big three, both management and unions, screwed up mightily with high level incompetence, non competitive labor rates and legacy costs which may approach $2K per vehicle (The Japanese will eventually catch up on some of that as their plants / workforces age).
I disagree on quality and reliability though. The big three have narrowed the gap and JD Power ratings support this. As well, many blame Ford/GM/ Chrysler for building gas guzzlers but Honda and Toyota also went down the same path to some extent.
Draconuian measures are warranted, compelling products needed and marketing inmproved.
If the economy was robust I would say bankruptcy may be an option. Vehicle builds at a 16M rate in North America would still support a lot of reorganization activity. 10M to 11M vehicles-not so much.
Given the tenuous state of the economy I would argue a strong NO to bankruptcy reorganization. That will further poison an already weakened economy.
One last thing. How could such huge sums be directed to Citigroup and AIG with compartively smaller arguments from Congress (compared to the big three)
imho.
Ultimately the consumer will rule..
Alway has…always will
“which leads us to think that the proposed bailout is really about preserving the fading dream of a middle class lifestyle for relatively highly compensated, unionized assembly line workers for as long as possible, while avoiding having to make executive-level decisions under the scrutiny of an outside court.”
You done broke the code. It is always about political power and leverage for madam Pelosi.
I agree with Wilco. At this point bankruptcy for the big three would have far reaching effects in the further destruction of capital. Many trillions have already gone down the drain because of “mark to market,” predatory short selling, and fear. The bankruptcy of the auto companies and the many inter-dependent dealers, suppliers, pension plans, etc. might tip the country into a deflation not seen since the 1930s. We do not want to go there. Unfortunately, we are not being well led nor informed by our representatives in Washington during this process. Very few people understand what is actually happening because our reps either don’t get it themselves, are trying to play the angles for political gain, or they believe the masses cannot handle the truth. To Bush’s credit he has tried to point out that this is a reliquification of the financial system, but the MSM just loves the word “bailout,” because it engenders populist rage in the masses.
If the big three can actually execute realistic plans for slimming down and redoing their employee contracts, a bridge loan would make perfect sense. In fact, if the banks weren’t so tight with their money right now, a consortium of banks could do the loan and supervise the restructuring. That would, in fact, be preferable, but isn’t in the cards right now.
According to Forbes (10/13/08) there is $11.5 trillion in checking, money markets, savings, CDs, and treasuries out there – scared money, waiting for the all clear before it gets put back into circulation. When the fear subsides and people start buying houses, cars, and stocks again the world will seem a whole different place.
The Big 3 and the UAW can KMA. I worked for GM (DDA & Cadillac) right after college (University of Michigan) for three years. Coming after being broke for eight years -4 years USAF, then 4 years of college; the pay and benefits were like manna from heaven.
The UAW was corrupt, inept and in many ways inbred then, and it still is. GM Management did not really care as long as they kept making money. They still don’t.
Thank Buddha that I beat tracks down to North Carolina and got away from Michigan.
I have been hearing for thirty years about how good the quality of the UAW Big 3 cars were; by golly, they were as good, well, o.k. , almost as good as Honda, Toyota, etc. Please
They have made their bed, let them lie in it.
Same arguments were probably made about buggy whips. Can’t let that industry fail -the sky will fall!
GM will not be allowed to fail. No president, in the end, would risk this massive shock to a fragile economy. Obama will not take economic risks for the sake of pure, free-market doctrines he does not hold. A rapid auto industry meltdown could cost up to 3 million jobs — sending the jobless rate as high as 9.5 percent. It might also result in a psychology of panic. I’m personally not involved with the automotive industry but still believe they are “too big too fail”.
Not the same as buggy whips.
.
I was pointing out to someone here at work that Congress is not taking into account what I call the “attitude” factor.
So Citibank lays off a couple thousand bankers/brokers. What are they going to do? Whine.
What are laid off, out of work auto workers going to do?
Kick someone’s ass…:)
Sorry Wilko, I think the buggy whip mentality is alive and well. Let the auto industry take their lumps and move one; or not. Bankruptcy is an option.
You say that you are “..a little closer to the action…, yet you are not “…directley involved with the auto industry….” Must remember to bring my decoder ring.
Too big to fail? Then it is too big to be allowed to continue exist (in its current mode). Let the marketplace work. Will it be pretty? No. Is it necessary? Yes.
The Republic will survive. Try to keep your hand out of my wallet.
re “she thinks most of us are too stupid to understand what bankruptcy means”
She may be right IVO your follow-on post.
b2
Not sure I agree with the reliability being all that much better, no matter what JD Power says… of course my opinion is skewed, I’ve been stranded in the desert with kids, dog, and wife and a GMC that threw a rod with <100K on the engine. Guy at the dealership we had it towed to told us there where two types of Vortex engines, those that lasted 300k, and those like ours. You had a 50/50 chance of what you got. My japanese truck has never left me stranded, and as long as I put oil and gas in it, it’s fine. No, the reliablility is still a question for many.
Just comparing what’s been written for this issue with respect to that of the Wall St. bailout way back in September -
http://www.neptunuslex.com/2008/09/15/undiscovered-country/
http://www.neptunuslex.com/2008/09/21/hyperventilating/
Aren’t both of these situations self-inflicted in that both industries saw it coming from a long way off and continued in a business-as-usual mode for as long as possible? Lending institutions purposely cultivated lots of bad-credit risks, while U.S. automakers manufactered lots of non-competitive products. Why bail out one and not the other?
Don’t bother trying to smack me around for the “non-competitive” remark. I ended up with a rental Chrysler Sebring to drive around S. Florida last winter. I started to think that somewhere there must actually be a Chrysler factory with a million monkeys holding a million wrenches, except that it can’t have been around for a million years.
An open letter on the auto “bailout”.
I am retired military and have been a vehicle salesperson and manager for almost 18 years. I have been with Ford dealerships for virtually the entire time and I am currently employed by a Ford Mercury dealership. In order to gain increased knowledge of the business, I have also become a student of this industry.
What is happening today to the automotive industry did not happen overnight, does not have a single source of difficulty and will not be corrected in the ways currently being advanced by congress. I will be the first to say the automobile industry has shot itself in the foot repeatedly, I remember the Edsel and Pacer. This is only one facet of the problem.
This country’s free trade, notice I did not say fair trade, policies have harmed every business from toys to military equipment. Why when our trading partners place limits on what we export to them, are there no limits what they export to us? For over 50 years we have accepted any and all foreign vehicles on our shores but very few Chevy or Fords in Tokyo or Seoul. I recently saw a report that in one year there were right at 700,000 Hyundai’s imported to the U.S. and Seoul graciously allowed the U.S. manufactures to send a total of 5,000 vehicles there!
Why does our country’s leadership do nothing when our trading partners artificially deflate their currencies? For as long as I can remember, the dirty little widely known secret is that the Japanese Diet has kept the Yen at an almost give away value. Guess what; by selling so many vehicles here the Japanese multiply their investments.
Ford, GM and Chrysler for over 100 years have built almost everything they have with hard earned capital. I will concede that there was some government assistance during World War II with the factories. When the off shore companies have come to the U.S. the states involved have fallen over themselves bidding for the assembly plants. Many of the states have given tax reductions or even forgiveness. They have paid to train the workers, purchased land for the plants and provided millions in infrastructure. Several years ago when both Ford and Chrysler wanted to build new facilities in Georgia, the state wouldn’t even talk with them. Just after that a Korean company thought they might want to come to the U.S. so Georgia almost gave them the keys to the state capital. Alabama must have given them the capital as that is where the plant was built! You will notice I called the Big 3 facilities factories and the foreign places I called plants. The reason is in many our facilities we can still manufacture a vehicle. Many of the foreign companies are strictly assembly facilities; they are like model car makers. They shake a box of parts that were most likely made off shore, glue and weld them together and they have a car.
I grew up in a union house and as a child marched in Labor Day parades with my father. I am not sure we still need unions. At one time there was a very strong animosity between unions and the industry. Students of the industry are well versed in the “Battle of the Overpass” in 1937 where some of Henry Ford’s thugs beat Walter Reuther and several others leading to the rise of the UAW. Those days are long in our past. I agree that the UAW has in the past been a partner with business. When things were going good, they should look out for their members. Now that times are difficult, they should look out for their jobs and once again partner with the industry. There is something inherently wrong with someone getting laid off and continuing to draw up to 95% of their pay for 2 years or more. For almost the entire time I was in the military, I was told I would have medical and dental care for life at military facilities. Conditions changed and now I have to go to a civilian doctor, have co-pays and have to fight with the provider to get anything done. Imagine the concept of medical care if the UAW represented our military and retirees. Working conditions and safety are now mandated by numerous federal and state regulations. What is the benefit today of the UAW other than adding to the cost of vehicles in both current pay scales but also in legacy costs?
I am all for safety and fuel economy in our vehicles but the left hand has to talk with the right hand. EPA sets fuel economy standards and NHTSA sets safety standards. Do these federal agencies even know of the other much less talk with each other? Lighter vehicles mean better fuel economy; heavier vehicles mean more safety. With EPA calling for more mileage and NHTSA wanting safer vehicles, the only people that are happy is the congress as it gives them twice the chance to hold hearings to abuse ALL manufactures. The latest is roof strength. I am not an engineer but in order to make the roof more “crush proof” we have to add stronger materials. If we go for brute strength, we go with heavy construction adding weight, instability and cost while reducing mileage. If we go for light weight strength, we add less weight while still losing mileage and increasing the instability and cost of the vehicle even more. Where is the balance? Today’s vehicles are the safest, cleanest and most fuel efficient. Is there room for improvement in these and other areas, sure there is. What I am saying is we need a coordinated effort to balance all of these factors.
For several years there has been a lot of talk about the auto industry building big gas guzzling trucks and SUV’s. Yep, sure have, guilty as charged. Even Toyota, Nissan and every other manufacture have built these things. Why were these behemoths built? Simple answer, that’s what sold and we couldn’t crack a door on what the public should have been buying. I want to share a little history about Ford’s vehicles over the years. In the 80’s they had Diesel Escorts and Tempos that got between 45 and 50 MPG and couldn’t give them away, the few people that did buy them loved them. In the 90’s we had the Ethanol and Methanol (E85/M85) Taurus, Sable and Ranger. We had trucks from F150 to F450, E150 to E350 along with the Crown Victoria that used LNG/LPG. We have had a battery Ranger. Ford even bought a company that built the Th!nk, a battery powered city car. Why don’t we have these offerings in the catalogue now? The public did not buy them, imagine the outcry of the shareholders had they continued to be built and drained resources. But, think if there had been enough of these vehicles purchased that we could have 20 years or more experience and development with them. Again, why did the industry build the big trucks and SUV’s? They built them because the John Q. and Mary Public’s wanted 4X4 SUV’s and 4 door pickups to take little Johnny and Mary to soccer and ballet. There was a study done several years ago that less than 5% of 4X4’s were ever used in the 4X4 mode. I am reminded of a customer I had in Florida that ordered an F350 dual rear wheel 4X4 1 ton truck. This truck had EVERYTHING that was offered including a snow plow prep package and power take off provision. Since the customer was a professional that lived in a downtown condo, I asked why the truck and the unusual options. His answer was to tow his boat, which was a bass boat, and if he was going to get something he wanted everything that was available. Friends, THAT is why we built those vehicles,. Those vehicles are what the public wanted and bought.
I think there is another factor that has not been addressed that impacts not only the automobile business but every industry. That problem is tort claims and product liability lawsuits. Over the years there have been innumerable suits against auto manufactures costing hundreds of millions of dollars in judgments and settlements and most likely an equal or higher amount in legal fees. When an industry meets OR exceeds federal mandated safety standards the industry should be exempt from suit on those items. What has happened to personal responsibility? Personal negligence should block legal recourse; if a person does not properly maintain their vehicle or fails to have recalls performed it is the owners fault, NOT the industry. As I said this is not just the auto industry, this is a pandemic problem in our country.
many of the manufactures were on the way back until the “credit crunch” hit and people just flat quit buying unless they absolutley had to.
We don’t want a bailout we only want to have a loan to let us get through these difficult times.
I cannot agree, my friend.
People buy Toyotas so they don’t have to worry about properly maintaining them.
The Big 3 have focused on building big cars where there is less competition and higher margins. Problem is that turf is getting smaller and smaller and smaller. Blaming the stupid customers is not the answer; there are all kinds of customers, and GM once understood this better than any other company in the world.
This is the winter of the industry, and even if the farmer decides to open the barn and feed the sick deer, their fundamental disadvantages will not have changed. They will remain sick and dying.
If a loan is forthcoming it should be contingent on consolidating the industry and rewriting the union contracts to match the deal that the transplants offer. That will never happen, as it would require too much sacrifice by both management and unions, and the dems will not hold their feet to the fire. They’d rather milk it until it dies over the next ten.
I had no idea just how overpaid they were. The UAW is the criminal here.
Some punk bolting on hubcaps makes many times more than highly educated and dedicated troops defending this nation. And they complain about it and continue to strike to get more bucks while voting in anti-american leaders to “share the wealth”!
According to Forbes:
Labor cost per hour, wages and benefits for hourly workers, 2006.
Ford: $70.51 ($141,020 per year)
GM: $73.26 ($146,520 per year)
Chrysler: $75.86 ($151,720 per year)
Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
“Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D., and 52.6% more than the average worker at Toyota, Honda or Nissan.”
Found it here: http://mjperry.blogspot.com/2007/07/uaw-pricing-themselves-out-of-market.html
Overpaid? Criminal? No. Not so.
The alleged UAW $70/hour wages bandied about are incorrect and misleading. In fact, the average hourly wages for workers at Chrysler, Ford, and General Motors were just $28 per hour in 2007, and comparable to Japanese firms’ autoworkers hourly wages in this country.
These $70+ amounts widely reported are not hourly wages, but are corporate total employee and non-productive retiree costs divided by actual workers’ hours. The inflated figure reflects benefits and pensions for long retired workers who no longer work nor receive hourly wages. The figures presented were designed to mislead, and are somewhat succeeding in the media.
Although hourly wages are comparable for workers in US Japanese plants with Detroit’s, since the Japanese auto manufacturers are relatively new here in the US, they do not have the same legacy costs for retirees’ health costs and retirement benefits as the Big Three…. but over time, their non-productive costs will escalate too.
Labor contracts are not unilateral. They are a bilateral agreement with accountability for both parties.
Gee, I guess the UAW is lying then, flit.
In 2006, a “typical” unskilled assembly worker earned $27.81. A “typical skilled-trade” worker earned $32.32. That is straight pay. No accounting for overtime or benefits. Now, unless the UAW accepted paycuts in 2007 (and I am pretty sure that would have grabbed headlines as Detroit burned and the big three were shut down), that means that the LOWEST a card-carrying union man could earn was around $28/hour straight time. Factor in overtime, and that number goes up. And remember, we are talking about unskilled, uneducated workers here.
http://www.uaw.org/barg/07fact/fact02.php
For contrast, let’s look at Registered Nurses, who must have at least two years of college and pass an accreditation exam to be considered minimally qualified. What do they earn in Detroit (just to keep it fair)?
$27.63
Less than the unskilled assembly worker, about 85% of a “skilled-trade” worker.
http://www.payscale.com/research/US/City=Detroit/Hourly_Rate
So explain again how misleading this all is. Show me how their compensation is not grossly and criminally inflated. Go ahead. I’ll wait.
Link
i’m with flit#27 above on his point regarding that often bandied figure being the total loaded hourly compensation figure inclusive of benefits and retirees. concur entirely, people have been using that figure incorrectly (and in a misleading manner).
however, i DO still think that that figure as a loaded hourly rate IS still too damn high. yes, to some extent it is “skilled manual labor”. it is not, however, rocket science, nor is it pick and shovel brute strength work either.
i agree with flit also regarding the fact that a negotiated contract is a two way street. however, they are not mutual suicide pacts either. the management has kow-towed to UAW demands for ever increasing (never decreasing) benefits, knowing full well that they can bury such expense in the price of the behemoth soccer mom specials they spew out, and attractive financing/leasing options means uninformed consumers continue to pay top dollar in palatable bite size increments while never realizing they never have gained any capital equity because they just turn in the leased vehicle for another or use it as a trade-in for another over priced bucket of bolts.
In playing the “blame game,” I have long maintained that:
A. If a worker is significantly (grossly) underpaid, it is the fault of the worker.
B. If a worker is significantly (grossly) overpaid, it is the fault of the employer.
Flat,
I like my Suburban..it’s as reliable as my Toyota..maybe even more so and my wife and kids like it and they’re safe in it (what really matters). My driveway in’t paved and is 1/4 mile long. When it snows I gotta get out and I ain’t buying a plow. Gas is 1.66 gallon here and oil folks say it could reach $1 again..Even if you get 3 times greater gas mileage and drive the same 200 miles/week you save $12. BFD, I say. That’s <5 minutes at work…
I can’t stand blue zoners with ‘lectric toy cars or liberal pols telling me what I can or can’t drive. I like my GM product and ain’t ashamed to tell you. My Toyota ain’t little either…Enjoy your friggin tax break..You’ll need it to pay for the replacement battery!
Did anyone read the AC1′s diatribe? He makes a lot of good points..Despite all that I still feel that bankruptcy and reorg are just what the doctor ordered like Lex. Detroit is foul and needs purging. Ultimately, even AC1George will benefit I think..This bailout bidness is pure liberal voodoo econ101…
b2
Flit, your version of “blame” would work if there were a free market for labor. But when employers are REQUIRED by law to be a union shop, and when employees are REQUIRED by law to be union members to earn a living, then your b) is no longer true. Because when you do something at gunpoint (figuratively and literally), you can hardly be held to blame.
Regarding the pay numbers bandied about, I think it is safe to say the unions and their mouthpieces do everything to minimize the pay figures (like flit only quoting the lowest payscales, ignoring overtime, excluding exorbitant benefit packages) while employers overstate those numbers by the means outlined above. So the about the average pay for a UAW member lies somewhere north of $28 and south of $70-ish. But neither party really wants the truth known, so we are left to guess.
But no matter what you guess, you still have entry-level, unskilled laborers earning MORE THAN A REGISTERED NURSE! I know you can’t justify it, tried to dodge it, and even have tried to blame the EMPLOYER for this, but that is nothing but bullcrud. Union (when forced on both workers and employers by government fiat), distort the market for labor, and have led to the destruction of most of industries they have held sway in. They killed steel, textiles, have decimated the airline industry, and are killing the auto industry. The only area where they don’t kill the industry is government (and that is the only industry where their numers continue to grow), but instead it just leads to shoddy government services (see public schools, DMV, SSA, etc).
I suggest that to understand the total costs to Big 3 of the unions you talk to anyone who has actually worked on the floor there.
The work rules are no ridiculously inflexible that the hourly wage costs are only the tip of the iceberg. If it takes GM three people to do the work of one at Toyota (and Toyota gets more efficient every year) then the wages are the least of their problem. The UAW is all about job guarantees and rigidity and doing the least amount of work possible for the most pay. That is directly at odds with the culture needed to be a successful manufacturer in the modern world.\
Take ‘em out and shoot ‘em and let a new GM rise from the ashes…
Bottom line is this: if they don’t lighten up their stance, instead of being United Auto Workers, they’ll be United in the Unemployment Line. So, not much more to it than that. They can’t compete with the Asian auto makers, no matter where your loyalties/love lies.
“Hey face, shutup, or no nose for you.”
What flit’s numbers are able to avoid is “non-cash compensation”. If UAW members can be paid for non working for two years at 95% of their previous pay (“job bank”), that money has to come from somewhere. It is like the employer’s unemployment insurance contribution — worker never sees it until they are paid it. But it has a direct cost per employee. Just like the seventeen paid holidays (you have seventeen holidays? I don’t) that are on top of the 17.5 days of vacation. Throw in tuition assistance, legal services plan, disablity coverage — all of those have a variable cost that has to be apportioned to each labor hour. So, in 2006, each labor hour cost Chrysler $75.86 — Salary — $29.15 (or 38%), Health Care — $20.14 (27%) and all of these other costs — $26.57 (35%) That $75.86/hr. direct labor cost isn’t what a worker sees in their paycheck, but a cost nonetheless.
I also laugh when the “if we had universal health care…..” canard gets dragged out. We have universal health care for all UAW retirees over 65 — it is called Medicare, and it isn’t good enough for these pampered annuitants. Unless it was made illegal to have supplemental insurance, you can depend upon the UAW striking for as good a coverage as they have today.
Flit lives in an alternate universe. When I was with GM, the UAW members would fight to get laid off as it meant a two year paid vacation and a guaranteed job when they came back.
I’ve personally seen UAW workers sabotage a line on Friday (to get off early), be fired by GM management, then be forced by the UAW to be hired back in on Monday. No harm, n0 foul.
So, no, I do not care one whit about the auto industry. Use Chapter 11 to get straight, or disappear. In any event, keep the heck out of my pocket.
BYW, I am on my fourth Camry and it runs as well as it did when I bought it 8 years ago (119,00 miles). I’d like to upgrade, but that is ego talking, not need.
What a bunch of morons. When discussing labor costs you MUST contrast burdened labor hours. You do not compare pay scales, you compare the burdened rate that industry charges for employee hours. Even the ever stupid USG knows that and applies it.
If it costs the company $70/hour or even $49/hour to pay a worker what is the burdened rate? In a union firm it is probably 6 to 1. In other words, for every $70/hour/worker the overhead and whatnot works outs to $200/hour. Unfortunately, the burdened rate for UAW plants is closer to $1000/hour.
Curtis, good point. Equally important is the qualitative aspect,thought impossible to pin down to any degree of exactitude.
Honda and Toyota did not get to where they are totally on cost.
The gentleman who made the point about if you’ve not been on the production floor you cannot understand the 19th centuary mentality of the UAW is exactly right.