Stop Blaming the Unions in the Auto Bail-out

[Decker]

Congress and the Bush administration are currently considering whether to spend $25 billion to rescue Detroit automakers. The proposal has generally been met with stiff resistance from conservatives, who have increasingly been pinning all the blame for the crisis in Detroit on labor unions:

Sen. Jim DeMint: “Some auto manufacturers are struggling because of a bad business structure with high unionized labor costs and burdensome federal regulations. Taxpayers did not create these problems and they should not be forced to pay for them.”

Sen. Jon Kyl: “For years they’ve been sick. They have a bad business model. They have contracts negotiated with the United Auto Workers that impose huge costs.The average hourly cost per worker in this country is about $28.48. For these auto makers, it’s $73. And for the Japanese auto companies working here in the United States, it’s $48.”

Gov. Arnold Schwarzenegger: “You know, if you pay the auto workers or the benefits and all of those things, are maybe too high. … We have, like, in America, you sell a car, and you have $2,000 of each car just goes to benefits. So I think that there’s a way of reducing all of that, make them more fiscally responsible.”

Unions do not deserve the blame placed on them by the right wing. In fact, unions have repeatedly made concessions to auto executives over recent years. Contrary to Kyl’s claim, new auto employees earn $25.65 an hour.

Big Three automaker CEOs and executives based their business model on a future of cheap oil, fighting fuel efficiency standards despite warnings against such a strategy. Detroit manufactured, as Tom Friedman pointed out, oversized gas-guzzling SUVs that reduced their competitive edge.

Financial firms AIG, Merrill Lynch, and Bear Stearns did not have unionized workers but still suffered economic collapses. Frozen credit markets and a spiraling recession were major contributors to Detroit’s current state. Today, the Center for American Progress urged Congress “to support legislation to grant a $25 billion bridge loan to the U.S. auto companies to ensure that they avoid bankruptcy” provided the automakers provide health and retirement security and invest in clean technology.
http://thinkprogress.org/2008/11/17/unions-auto-bailout/

Why is it that any phenomenon that benefits the middle and lower class as a whole is targeted by rightwingers as THE problem.  From Soc. Sec. to this topic, unions, they are decried as a problem.

I, for one, am glad that the 'every man for himself' tact is dying on the vine.  It's too divisive a notion in these troubled times.

[Tre]

Mismanagement includes the ridiculous wages they pay.

If people want to keep their jobs, they're going to have to accept significant pay cuts. 

[Decker]

Mismanagement includes the ridiculous wages they pay.

If people want to keep their jobs, they're going to have to accept significant pay cuts. 

$25 an hour is 50,000+ a year.  That's the average household income in the US.

Have you seen the geometric explosion of executive compensation: million dollar bonuses, golden parachute agreements, golden handcuff agreements?

The execs are pocketing the cash while asking the rank and file to take pay cuts.

Don't seem right to me.

[headhuntersix]

The unions are very much to blame. The southern non-union factories are doing ok without union involment. The green dipshits are also strangling the car companies as well. They're building very expensive green cars that nobody wants, at a loss. The management is to blame, in short, their all to blame. If they want to survive, they all will need to take a cut, sell what people want and maintain some sorta quality control. Its 1980 all over again.

[Decker]

The unions are very much to blame. The southern non-union factories are doing ok without union involment. The green dipshits are also strangling the car companies as well. They're building very expensive green cars that nobody wants, at a loss. The management is to blame, in short, their all to blame. If they want to survive, they all will need to take a cut, sell what people want and maintain some sorta quality control. Its 1980 all over again.

The same thing will happen that always happens.

The elitest owners and executives pocket the profit and cut the wages and benefits of the working class producers.

One might call that extreme opportunism...or they are all a bunch of well-fed parasites.

[headhuntersix]

Yeah well...Detroit isn't in the business of employing people, its in the business of selling cars. If those elitist owners didn't exist u'd be feeding ur horse. Gimme a break. They failed because they're bad businessmen, shortsighted unions and ridiculous green standards emposed by Uncle Sam.

If Congress wants to ease the immediate burden on Detroit, it could also ease the onerous fleet-mileage standards (CAFE rules) that force the companies to make cars domestically that are unprofitable. A mere tweak would help a lot -- for example, simply allow Detroit to meet CAFE standards by counting the cars it makes at home and abroad. This alone might save Chrysler from bankruptcy. But Congress won't budge on that simple change.


And come January 20, Barack Obama is promising to overturn a Bush Administration refusal to grant California a waiver to impose its own new anticarbon automobile rules. This would doom Detroit without huge subsidies, forcing the entire industry to retool merely to supply cars to the California market. The California plan would demand a 23% reduction in greenhouse gas emissions from new autos by 2012 and 30% by 2016. The Bush Environmental Protection Agency has refused to grant the waiver, arguing it is better to have a uniform national standard.

All of this shows that Democrats don't merely want to save jobs. They want an entirely different American auto industry that serves goals other than selling cars to consumers. The green lobbies have disliked Detroit for decades -- for resisting fleet mileage standards and having the audacity to make SUVs, trucks and other vehicles that people have wanted to buy but that violate modern environmental pieties. For the greens, the bailout is their main chance to remake Detroit according to their dictates.

This means that if a bailout proceeds Americans would be signing up for much more than a short-term financial fix, a la Chrysler in 1979. Once Congress starts investing in its green visions for Detroit, it isn't likely to give up easily or stop at $50 billion. If the Environmental Motor Company's cars don't sell well enough to earn a profit, then something else would have to be done to vindicate the investments. Taxpayer loans and other subsidies would have to float the companies until Americans wise up or Congress forces consumers to buy them. Taxpayers should get ready to own a piece of Detroit for a very long time.

The more realistic alternative to this utopian green vision is to let GM or Chrysler file for Chapter 11 like any other company that can't pay its bills. The immediate costs would be severe, but at least bankruptcy would provide the political and legal means for them to evolve into smaller, more competitive companies. Taxpayers shouldn't be asked to finance a green industrial policy promoted by lobbyists and Congressmen who know nothing about what it takes to make a car -- much less make a profit.

[Tre]

I don't believe that unions are inherently evil, because there have been periods in our history when they've been necessary in some industries.

The auto workers unions, however, have outlived their usefulness. 

It's really a problem when the federal government could do a better job of managing an auto company than the auto 'experts' can.

[headhuntersix]

No not evil, but shortsighted.

[Tre]

Yep - pricing themselves out of a job doesn't seem very wise.

[Decker]

Yeah well...Detroit isn't in the business of employing people, its in the business of selling cars. If those elitist owners didn't exist u'd be feeding ur horse. Gimme a break. They failed because they're bad businessmen, shortsighted unions and ridiculous green standards emposed by Uncle Sam.

If Congress wants to ease the immediate burden on Detroit, it could also ease the onerous fleet-mileage standards (CAFE rules) that force the companies to make cars domestically that are unprofitable. A mere tweak would help a lot -- for example, simply allow Detroit to meet CAFE standards by counting the cars it makes at home and abroad. This alone might save Chrysler from bankruptcy. But Congress won't budge on that simple change.
And come January 20, Barack Obama is promising to overturn a Bush Administration refusal to grant California a waiver to impose its own new anticarbon automobile rules. This would doom Detroit without huge subsidies, forcing the entire industry to retool merely to supply cars to the California market. The California plan would demand a 23% reduction in greenhouse gas emissions from new autos by 2012 and 30% by 2016. The Bush Environmental Protection Agency has refused to grant the waiver, arguing it is better to have a uniform national standard.

All of this shows that Democrats don't merely want to save jobs. They want an entirely different American auto industry that serves goals other than selling cars to consumers. The green lobbies have disliked Detroit for decades -- for resisting fleet mileage standards and having the audacity to make SUVs, trucks and other vehicles that people have wanted to buy but that violate modern environmental pieties. For the greens, the bailout is their main chance to remake Detroit according to their dictates.

This means that if a bailout proceeds Americans would be signing up for much more than a short-term financial fix, a la Chrysler in 1979. Once Congress starts investing in its green visions for Detroit, it isn't likely to give up easily or stop at $50 billion. If the Environmental Motor Company's cars don't sell well enough to earn a profit, then something else would have to be done to vindicate the investments. Taxpayer loans and other subsidies would have to float the companies until Americans wise up or Congress forces consumers to buy them. Taxpayers should get ready to own a piece of Detroit for a very long time.

The more realistic alternative to this utopian green vision is to let GM or Chrysler file for Chapter 11 like any other company that can't pay its bills. The immediate costs would be severe, but at least bankruptcy would provide the political and legal means for them to evolve into smaller, more competitive companies. Taxpayers shouldn't be asked to finance a green industrial policy promoted by lobbyists and Congressmen who know nothing about what it takes to make a car -- much less make a profit.

They are bad businessmen b/c idiot americans buy SUVs which guzzle gas, (a finite resource), and they build those stupid trucks to meet demand.

Then americans complain about the cost of gas going up.  Idiots.

So the government responds by tinkering with the CAFE standards (SUVs are classified as trucks--less efficient more gas guzzling).  http://enhs.umn.edu/5105/suv/suv.html

The elitest owners/executives still claim their millions while asking the unions to continuously cut back on wages and benefits....and the kicker is that the unions have been caving to the demands.

GM CEO Rick Wagoner earned $9.3 million in salary and bonus in 2006, nearly double what he earned in 2005.

While UAW members finish voting on a new contract with General Motors that includes a cost-of-living freeze, union negotiators have moved on to Chrysler, with Ford Motor (F) next.

Chrysler's new CEO, Bob Nardelli, became a symbol of corporate excess when he left Home Depot early this year with a $210 million severance package. Ford's new CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.

http://www.usatoday.com/money/autos/2007-10-09-auto-exec-pay_N.htm

Don't cry about the plight of the executives, they're cleaning up at everyone elses expense.

[BayGBM]

No bailout.

My initial impulse was to bail out the automakers.  The ripple effect of one or more of them going under or bankrupt would be horribly painful, but maybe it’s time for some pain.  We can’t put it off forever and as the CEOs flap their tongues before congress it is clear that they still do not get it.

As one of their congressional interlocutors observed, there is something wrong when three CEOs fly in to Washington DC on three private jets (by definition a luxury) asking for taxpayer money.  Couldn’t they have “jetpooled” together and come in on one private plane?  Couldn’t they have downgraded to a First Class ticket on a commercial flight?  They all talk about “scaling back” “reorganizing” and “changing the way they do business” but if they can’t set the example with their own perks what possible incentive do we have to believe that they will be any more responsible with taxpayer money?

And, yes, the unions are to blame too.  The writing has been on the wall for some time; when you hitch your future to a sinking ship and continue to demand more from that ship, you have only yourself to blame when the shit hits the fan. 

[Decker]

....
And, yes, the unions are to blame too.  The writing has been on the wall for some time; when you hitch your future to a sinking ship and continue to demand more from that ship, you have only yourself to blame when the shit hits the fan. 

I would agree with this to an extent.

[Soul Crusher]

$25 an hour is 50,000+ a year.  That's the average household income in the US.

Have you seen the geometric explosion of executive compensation: million dollar bonuses, golden parachute agreements, golden handcuff agreements?

The execs are pocketing the cash while asking the rank and file to take pay cuts.

Don't seem right to me.

The benes and salary average out to 72 an hour per employee.

[Decker]

The benes and salary average out to 72 an hour per employee.

new auto employees earn $25.65 an hour.

General Motors Corp., ..., paid its production workers an average of $27 an hour
http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx


Auto companies will hire replacement workers for people taking buyouts or retiring. The new production workers for the Big Three will be paid $14 an hour — about half of what their counterparts currently earn — in accordance with the contracts negotiated last fall.
http://www.autoobserver.com/2008/02/help-wanted-autoworkers-at-14-an-hour.html

The problem is not that benefits per se, the problem is that everyone should have the same health benefits but the runaway costs of private coverage have made this into a gigantic problem. 

The U.S. automakers are moving more production to Canada where a national health care program provides coverage for workers and their families for less than one-fifth of the cost of health benefits on the U.S. side of the border.
http://www.workinglife.org/wiki/The+Auto+Industry+Crisis+is+a+Health+Care+Crisis+(April+15,+2005)

[headhuntersix]

This is one issue of many. Healthcare isn't the only reason...and why is healthcare so hi...nutbag trial lawyers like Edwards.

[Soul Crusher]

new auto employees earn $25.65 an hour.

General Motors Corp., ..., paid its production workers an average of $27 an hour
http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx


Auto companies will hire replacement workers for people taking buyouts or retiring. The new production workers for the Big Three will be paid $14 an hour — about half of what their counterparts currently earn — in accordance with the contracts negotiated last fall.
http://www.autoobserver.com/2008/02/help-wanted-autoworkers-at-14-an-hour.html

The problem is not that benefits per se, the problem is that everyone should have the same health benefits but the runaway costs of private coverage have made this into a gigantic problem. 

The U.S. automakers are moving more production to Canada where a national health care program provides coverage for workers and their families for less than one-fifth of the cost of health benefits on the U.S. side of the border.
http://www.workinglife.org/wiki/The+Auto+Industry+Crisis+is+a+Health+Care+Crisis+(April+15,+2005)

When you add in the cost of health care, pension, SS, workers comp, etc, it comes out to $72 an hour.


The US auto companies are in a fix because they produced over priced cars that people dont want.  Its that simple.

They cannot produce a cheap car and make money on it because the labor and legacy costs are too high.  They only make money on trucks and SUVS.

[JOHN MATRIX]

this '25 billion' is just monopoly money anyways

 

[Decker]

When you add in the cost of health care, pension, SS, workers comp, etc, it comes out to $72 an hour.


The US auto companies are in a fix because they produced over priced cars that people dont want.  Its that simple.

They cannot produce a cheap car and make money on it because the labor and legacy costs are too high.  They only make money on trucks and SUVS.

I think it's mismanagement of huge proportions and not worker pay.  Here's why:

In at least one case last year, workers for a foreign automaker for the first time averaged more in base pay and bonuses than UAW members working for domestic automakers, according to an economist for the Center for Automotive Research and figures supplied to the Free Press by auto companies.

In that instance, Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000, boosting the average pay at the Georgetown, KY, plant to the equivalent of $30 an hour. That compares with a $27 hourly average for UAW workers, most of whom did not receive profit-sharing checks last year. Toyota would not provide a U.S. average, but said its 7,000-worker Georgetown plant is representative of its U.S. operations.

Honda Motor Co. and Nissan Motor Co. are not far behind Toyota and UAW pay levels. Comparable wages have long been one way foreign companies fight off UAW organizing efforts.

http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx

[Decker]

This is one issue of many. Healthcare isn't the only reason...and why is healthcare so hi...nutbag trial lawyers like Edwards.

No, it's not trial lawyers that are to blame for high health care costs--that accounts for less than 3% of the costs.  It's the bureaucratic practices of private insurers with their paper chase and corporate jets, million dollar salaries, golf and stadium sponsorships etc that drive up the cost.

$0.3 trillion is spent on adminstration.  Much of this adminstration was caused by the insurance companies, which leads to the hospitals having to increase their prices, to cover it, which leads to higher insurance prices.
 http://kriswager.blogspot.com/2007/04/why-is-health-care-so-expensive-in-us.html

[Buffgeek]

Decker what is your opinion on the state of GM, Chrystler, and Ford vs Honda and Toyota of America?

Toyota and Honda of America have forged partnerships with their employees and kept the unions out.

Toyota made a contract with their fulltime employees that they would not lay them off despite the downturn. Even though this is costing them 300 million they are sticking to it.

Toyota has no leveraged assets and has 18.5 Billion in the bank.

[Soul Crusher]

Decker what is your opinion on the state of GM, Chrystler, and Ford vs Honda and Toyota of America?

Toyota and Honda of America have forged partnerships with their employees and kept the unions out.

Toyota made a contract with their fulltime employees that they would not lay them off despite the downturn. Even though this is costing them 300 million they are sticking to it.

Toyota has no leveraged assets and has 18.5 Billion in the bank.

Toyota and Honda make great products that people want to buy.

[Buffgeek]

Toyota and Honda make great products that people want to buy.

Yes I agree, but my point is they have managed to avoid unionization of their american workforce.

[Soul Crusher]

Yes I agree, but my point is they have managed to avoid unionization of their american workforce.

Unionization is a ticket to bankruptcy, lazi workers, and disaster.

Any business that decides to go Union should be making an immediate exit plan.

The unions of today, especially the trade and municiple unions, are helping destroy the country bit by bit.

The result in higher costs and lower productivity and service to the taxpayer and customer.

If the US auto companies want to survive, the UAW needs to be abolished asap. 

[Decker]

Decker what is your opinion on the state of GM, Chrystler, and Ford vs Honda and Toyota of America?

Toyota and Honda of America have forged partnerships with their employees and kept the unions out.

Toyota made a contract with their fulltime employees that they would not lay them off despite the downturn. Even though this is costing them 300 million they are sticking to it.

Toyota has no leveraged assets and has 18.5 Billion in the bank.

I don't know what kind of comparison you want.  I don't think the failure can be laid at the feet of labor.  I'm sorry, not when the counterparts in Japan are making roughly the same amount of compensation(including benefits).  There's a reason why the Japs have been kicking our ass for decades in the auto world.  It's management and superior products.

[loco]

I had always heard that cars from Asian and European companies, even if they are made in the US, are better than cars from American companies, and that the unions are the reason why.  Union workers, whether or not they are lazy, unskilled or unmotivated, they can't be easily fired.  But in a company where there is no union, you get to hire the best guys for the job and fire the ones who are not doing a good job.