No bailout for Detroit!?

[Harlan Huckleby]

I see that the Republicans have blocked the money to keep GM afloat.

I hear a lot of you republicans talk big about letting GM and Chrysler die, but I think you are not realistic about the consequences.

The asian markets are crashing tonight on news of the non-bailout.

My brother analyzes manufacturing companies and recomends acquisitions for a big corporation, he knows business and markets. His opinion on auto bailout is that it is essential - not to save GM, which he thinks is unlikely, but to delay their bankruptcy by a year or so. He thinks the economy is dangerously close to a depression-like state, and 30 billion or so is money well spent to delay the shock of a GM failure now. In a way this is an optimistic viewpoint, in that he thinks the economy will be less fragile in as soon as a year.

[HarveyWallbangers]

Bill Clinton agrees. He said the economy should turn around in 12-18 months.

[Kiwon]

Cheers to the Republicans! They finally got something right.

"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.
.................................................. .................................................. .

Union balks and $14B auto bailout dies in Senate

Dec 12, 1:19 AM (ET)

By JULIE HIRSCHFELD DAVIS and KEN THOMAS

WASHINGTON (AP) - A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency aid before year's end.

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

The breakdown left the fate of the auto industry - and the 3 million jobs it touches - in limbo at a time of growing economic turmoil. General Motors Corp. (GM) and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. (F) says it does not need federal help now, but its survival is far from certain.

Democratic leaders called on Bush to immediately tap the $700 billion Wall Street bailout fund for emergency aid to the auto industry, whose fate - along with that of the roughly 3 million jobs it touches - was in limbo.

Majority Leader Harry Reid, D-Nev., called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

GM said in a statement it was "deeply disappointed" that the bipartisan agreement faltered. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said. Chrysler also said it "will continue to pursue a workable solution to help ensure the future viability of the company."

The White House said it was evaluating its options in light of the breakdown on Capitol Hill.

"It's disappointing that Congress failed to act tonight," Deputy Press Secretary Tony Fratto said in a statement. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

That bill - the product of a hard-fought negotiation between congressional Democrats and the Bush White House - was virtually dead on arrival in the Senate, where Republicans said it was too weak in its demands on the car companies and contained unacceptable environmental mandates for the Big Three.

Thursday's implosion followed yet another set of marathon negotiations at the Capitol - this time involving labor, the auto industry and lawmakers. The group came close to agreement, but it stalled over the UAW's refusal to agree to the wage concessions.

"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.

The Senate rejected the bailout 52-35 on a procedural vote - well short of the 60 required - after the talks fell apart. Just 10 Republicans joined 40 Democrats and two independents in backing it. Three Democrats sided with 31 Republicans in opposition. Reid also voted "no" for procedural reasons.

Congress is not scheduled to return for legislative work until early January.

Some Senate Democrats joined Republicans in turning against the House-passed bill - despite increasingly urgent expressions of support from the White House and President-elect Barack Obama for quick action to spare the economy the added pain of a potential automaker collapse.

"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.

Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson.

The stunning disintegration was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.

It wasn't immediately clear, however, how the auto aid measure might be resurrected, with Congress now set to depart for the year.

Democratic House Speaker Nancy Pelosi called Senate Republicans' refusal to support the White House-negotiated bill irresponsible and urged the Bush administration and the Federal Reserve to provide short-term relief for the automakers. "That is the only viable option available at this time," she said.

Congressional Republicans have been in open revolt against Bush over the auto bailout. Senate Minority Leader Mitch McConnell of Kentucky joined other GOP lawmakers Thursday in announcing his opposition to the White House-backed bill, which passed the House on Wednesday. He and other Republicans insisted that the carmakers restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the United States.

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. (TM) at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

Republicans also bitterly opposed tougher environmental rules carmakers would have to meet as part of the House-passed version of the rescue package, and the Senate dropped them from its plan.

The House-passed bill would have created a Bush-appointed overseer to dole out the money. At the same time, carmakers would have been compelled to return the aid if the "car czar" decided the carmakers hadn't done enough to restructure by spring.

The House approved its plan late Wednesday on a vote of 237-170.

A pair of polls released Thursday indicated that the public is dubious about the rescue plan.

Just 39 percent said it would be right to spend billions in loans to keep GM, Ford and Chrysler in business, according to a poll by the nonpartisan Pew Research Center. Just 45 percent of Democrats and 31 percent of Republicans supported the idea.

In a separate Marist College poll, 48 percent said they oppose federal loans for the struggling automakers while 41 percent approved.

http://apnews.myway.com/article/20081212/D95106M80.html

[Oscar]

I don't know what to think about this bail out thing. I've spent my entire life in the automotive field as a mechanic. I know a few guys that work at the GM plant in Kansas City and one that works for Ford down there as well. My friend down at Ford is making 46 dollars an hour! To me that's huge money. I asked what the thought about taking a cut in pay to keep things going? His reply was that he had no problems with it as long as the "big boys up top" took one as well. That made me think......Who exactly are these people and what do they make a year?? Also, if there were a plan to lower wages (I'm all for) how do we know who exactly takes the cut? I think the cuts should start from the top and work there way down. I'm just really confused by the whole thing.

[texaspackerbacker]

I am conflicted on this. I was with the House Republicans going against the tide on the big financial services bailout--$700 billion or whatever because it was not IMO gonna affect common people anyway--just a big con to line somebody's pockets on Wall Street.

The automaker bailout--a mere $15-20 billion--might have been the same thing, but it seems to me, there could be consequences that are really felt by a lot of people by not doing this bailout.

That assumes two things, of course: one, that they really are that bad off, and it's not just a sham, and two, automaking wouldn't continue in this country without significant reduction--just under different ownership--foreigners or bargain-hunting investment companies picking up the pieces for pennies on the dollar.

If the latter happens, the workers land on their feet--a good thing, but a whole lot of GM, Ford, and Chrysler stockholders--a large cross-section of Americans--get screwed--in favor of either the foreign companies or the Wall Street sharks.

The last I heard, the automakers were NOT asking for a giveaway, merely a "bridge loan" to get them through some hard times--similar to the Chrysler in the late 70s. I really don't see a problem with that--especially for a tiny fraction of the financial bailout and many times greater benefit.

[Iron Mike]

My friend down at Ford is making 46 dollars an hour!

Do you realize that the average hourly wage for a Physician's Assistant is $37.00/hr??? That's right, a person with an advanced degree who makes decisions about medical care, prescribes medications, etc. makes about $10/hr less than your friend.

I have a great idea.....let's pump MORE $ into that system. :roll:

[sheepshead]

Not a nickle until the UAW is out of there.

[Harlan Huckleby]

Not a nickle until the UAW is out of there.

I suspect this is exactly where some republicans are coming from. They think that the presence of unions is the problem, and the solution is simply to crush them.

My dad was a labor negotiator for a big company for about 30 years. So he spent most of his career trying to break or outmaneuver unions. He says the obvious truth that the foreign car plants in this country (non-union) are far more efficient because they were able to cherry-pick a fresh, younger, cheaper work force. But my dad is not so foolish to think that a whole industry would be better without unions - its the THREAT of union organization that keeps management on its toes, it is healthy and important to keep unions alive at some level of activity.

BTW, my dad does not particularly blame UAW for the the auto-industry mess, even though the labor contracts are obviously a big part of their dilemma. His view is that the companies signed the contracts.

The idea that our country would be better without any unions is mental. Or at least it shows an ignorance of history. The world may have changed a lot in the last 150 years, but human nature has not.

It appears that the Republicans have been shaken by the market collapse today. Bush (who earlier spoke of not throwing good money after bad) is now saying maybe they can divert money from the bank bailout to the auto companies.

[Harlan Huckleby]

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

I don't see why this article says the Republican Senators broke sharply with Bush. Bush made comments that were negative towards the automakers this past week, my impression was he was against the bill.

The way this article characterizes the Republican position, I don't have any problem with their vote. I wonder if this story really has things right.

[Kiwon]

It appears that the Republicans have been shaken by the market collapse today. Bush (who earlier spoke of not throwing good money after bad) is now saying maybe they can divert money from the bank bailout to the auto companies.

I read the same thing.

However, if Bush is talking this way then it proves that the Senate Republicans got it right.

Bush has been MIA for months now. The country needed leadership and he's struggling to cross the finish line at the end of his 8 years. Treasury and the Fed have done nothing to create confidence anywhere in this economy.

He should have pointed out and took on the authors of the whole mess, the Dems, over the Fannie and Freddie bailout. But he signed the emergency, have-to-have-it-now-bailout and look what good it did.

It's all a sick joke now.

The government has meddled enough in the auto industry with the CAFE standards, fuel blends, and on and on. For them to basically nationalize and assume administrative control via a "Car Czar" is ludicrous. Once they get in, they will never get out. Bureaucrats and environmental ideologues with no practical expertise will determine which type of cars should be built and the labor unions will never be pressured to seriously reform. The Dems will ensure that they have their votes via preferential treatment.

The free market works. Companies fail, reorganize, and emerge again to compete if they are worthy. It's a myth that any company is "too big to fail."

Detroit has failed itself. No bailouts for the UAW and its members. They'll probably get their money one way or the other anyway but it's a mistake and just postponing the inevitable.

[GrnBay007]

The idea that our country would be better without any unions is mental. Or at least it shows an ignorance of history. The world may have changed a lot in the last 150 years, but human nature has not.



:bclap:


I say help them out.....BUT, also cut wages a reasonable amount according to the cost of living....AND it includes union members AND management wages. To include management in the cuts will bring about solidarity. It's needed, esp. in tough times.

[Harlan Huckleby]

For them to basically nationalize and assume administrative control via a "Car Czar" is ludicrous. Once they get in, they will never get out. Bureaucrats and environmental ideologues with no practical expertise will determine which type of cars should be built and the labor unions will never be pressured to seriously reform.

I pretty much agree with this, when I started hearing about this "Car Czar" it sent shivers up my spine. The auto companies have made some bad decisions, but we're supposed to believe that an appointed governement official would be wiser!!??

And listening to Nacy Pelozzi talk tough was chilling. I think she is a very stupid, dangerous person, I really do. She is EXACTLY the wrong sort of person to be steering anything right now, she's vindictive and rash.

I am not worried about pressuring unions to reform. They are not stupid people, they can see their self-interest is tied to making the companies more competitive. Truly, unions are the least of the problem. The companies and unions can and will trim the excesses.

The auto companies need some cash to limp along for a bit while the economy stabilizes. Whether they break apart or survive intact in the long run is not critical.

[texaspackerbacker]

Definitely correct about the government meddling--for the fiction of manmade global warming, etc.

Definitely correct about the role of the UAW in holding up the companies (as in bank holdup).

The latest is that Bush may use part of the already appropriated bailout funds--the $700 billion. It's ironic--or something--that Bush really DID split with House Republicans to ram through the big bailout--what is this TARP acronym anyway? Now, on this mini-bailout, which is a lot more oriented toward common people, he balks.

Nobody in this or probably any forum has stood with Bush more than me. However, I have seen a pattern of behavior of union-breaking and siding with the Wall Street big wigs over good normal Americans. That is a form of elitism that rivals nanny-state over-taxing and over-regulating inflicted on us by the political left. Bush has literally saved this country with his security and defense policies. His tax cuts have America back from 9/11 to the highest levels of prosperity. He has, however, displayed this disturbing tendency toward the eltiism from the right that I spoke of.

Bailing out the automakers with TARP funds, basically countermanding the Senate rejection, would be the right move. The UAW would be saved--not necessarily a good thing; The workers would benefit, although they probably would not suffer horribly even if the Big 3 were allowed to fail, as undoubtedly, about as many vehicles would still be made in America--mostly in the same factories by the same people.

So what would be the difference? If the companies fail, the stockholders--generally NOT Wall Street big wigs, but a cross section of literally millions of Americans--would suffer the most.

Who would benefit? Well, the assets of the automakers would be sold at fire-sale prices. To whom? Either the foreign auto companies or to those Wall Street big wigs I have spoken of--hedge funds, Warren Buffett-types, the vultures now circling our auto companies.

Given those choices, I'd prefer siding with the stockholders.

[swede]

Reading this thread, what I love about these times is that they have become so scary that everyone is having to do a gut check about what they believe in.

Our government is starting to be run like a bad PTA with conflicting stupid ideas adding to the turmoil and stupid leaders grabbing microphones. I believe that.

Unions are corrupt entities. Period. I should know since I belong to a teacher's union that has all the political nuance of the Japanese mafia. I believe that.

I wonder where the shareholders have gotten to? Shareholders were supposed to protect the elegant self-interest of the free-market system. Once again, corruption, obfuscation, and executive greed are ruining businesses in this country. I believe that.

Government is usually a big part of the problem and rarely part of any solution. I believe that.

[Freak Out]

If it gets to the point of total collapse Bush and his Admin will step in and give them money out of the 700 B that they have to spend.....count on it.

[Harlan Huckleby]

Unions are corrupt entities. Period.

This is like saying that the auto company management is corrupt. Period. Or the government is corrupt. Period. Or the Catholic Church is corrupt. Period.

The "period" just means you don't want to deal with the complexity of the situation, close off your mind. Every human institution is corrupt, some a bit more than others, perhaps, but it is a reality of human nature that has to be managed.

[Harlan Huckleby]

If it gets to the point of total collapse Bush and his Admin will step in and give them money out of the 700 B that they have to spend.....count on it.

ya, that's what they are saying now.


I don't know, seems kind of like massive posturing. NOBODY wants to bailout the auto companies, it's just a miserable reality that has to be faced.

[LL2]

There are so many pros and cons to the auto bailout. The biggest pro is that if we do not bailout the Big 3 we could very well see another million people out of work and see the economy thrown into a recession. The economy is on really thin ice right now.

One of the cons is that we should capitalism and the free markets determine whether or not they survive - the survival of the fittest. Most companies that are run poorly and run out of money go bankrupt and close their doors. The thing with the Big 3 is that it is a sector that employs millions at the Big 3, their suppliers, dealerships, down to the mechanics that fix them. Not to mention the hundreds of thousands that depend on them for their pension checks.

it's interesting that Ford says they do not need bailout money...olnly if one of the other two go under. I thought Ford was in the worst shape of the 3.

My folks live in Michigan and they are feeling the affects of it already. They own two homes and they can't sell them. Their neighbors house two years ago sold for $325k, and they received a low ball offer of $235k recently. My folks home is a custom built home too!

As much as I'm tired of all the bailouts for people's stupidity at these companies I think the gov't needs to bailout the Big 3. If not, we will see so many companies go under it will not be pretty.

[SkinBasket]

One of the cons is that we should capitalism and the free markets determine whether or not they survive - the survival of the fittest. Most companies that are run poorly and run out of money go bankrupt and close their doors. The thing with the Big 3 is that it is a sector that employs millions at the Big 3, their suppliers, dealerships, down to the mechanics that fix them. Not to mention the hundreds of thousands that depend on them for their pension checks.

The very checks that have destroyed the industry. The UAW is worse than a parasite. At least a parasite has enough sense to let it's host live. The UAW has literally sucked the livelihood right out of the entire industry and killed the source of their income because they refused concessions and fought change for decades that would have kept the industry at least functional.

The threat of millions unemployed isn't as dire as some want to make it out to be. Even if all three go into bankruptcy, it's not as if this country will stop making, buying, and using vehicular transport. The demand may be lessened, but it will remain, as will the need for those workers to make them, sell them, service them, etc. Yeah, there will be troubled times if the big 3 need to restructure or consolidate or whatever the end result is, and the short term disruption would be bloody and awful, but in the end someone will make cars. Someone will build them. Someone will buy them. The sooner they do what they need to do to get the industry back on it's feet in a healthy manner, the sooner the job demand will be stabilized.

Using billions of dollars to delay the end of the current system, which has already proven itself with to be fatal to the industry, is akin to continuing to feed a dead man when the rest of the family is starving - or at least pretty damn hungry.

[Kiwon]

I've changed my mind...Detroit (Newspapers) need a bailout.

The market is too big to fail to not have daily home deliveries. The government must act now. Every American should have a newspaper delivered daily to his mailbox or on his front porch if he wants one. Some things are too sacred to tinker with.

Why can't anyone make the same argument to protect the industry they work in? Instead of letting a consumer-driven free market work, people are looking to the government to pick the winners and losers.

Government-mandated haves and have-nots.

Yes, a central government has many basic obligations to its citizens, but shouldn't its presence in one's life be as unobtrusive as possible?

The U.S. auto industry wouldn't collapse without a bailout; it would adapt and reinvigorate itself with human ingenuity because that's what humans do, especially Americans who cherish individual liberty.

If the government steps in to help the auto companies to avoid the pain of their own making then the Ford family and the Lions should rehire Matt Millan. He deserves another chance. He'll get it right one day. He just needs more time.

.................................................. ...........................................

Report: Detroit papers likely to cut delivery

Published report says Detroit newspapers likely to cut home delivery to 3 days a week

"The Detroit market would be the largest in the country to lose seven-day home delivery if the strategy is adopted, said Rick Edmonds, a media analyst at The Poynter Institute, a journalism think tank in St. Petersburg, Fla.

"I think doing nothing is really not an option," said Edmonds, noting the industrywide revenue slide. But there are risks, he said, especially if staffs are cut and loyal print readers find that a redesigned paper is just a "shell" of the old version.

"For some people, the newspaper is part of their routine," Edmonds said. "Those folks are not going to be happy if it doesn't come on Monday and Tuesday."

The Journal said home delivery would be limited to Thursday, Friday and Sunday, with an "abbreviated" print edition available at newsstands on other days. Readers would also be directed to the papers' Web sites.

The changes likely would mean major job cuts, the Journal said."

http://finance.yahoo.com/news/Report-Detroit-papers-likely-apf-13823480.html

[bobblehead]

Reading this thread, what I love about these times is that they have become so scary that everyone is having to do a gut check about what they believe in.

Our government is starting to be run like a bad PTA with conflicting stupid ideas adding to the turmoil and stupid leaders grabbing microphones. I believe that.

Unions are corrupt entities. Period. I should know since I belong to a teacher's union that has all the political nuance of the Japanese mafia. I believe that.

I wonder where the shareholders have gotten to? Shareholders were supposed to protect the elegant self-interest of the free-market system. Once again, corruption, obfuscation, and executive greed are ruining businesses in this country. I believe that.

Government is usually a big part of the problem and rarely part of any solution. I believe that.

I believe that giving money to a company that has proven itself to be uncompetitive in the open market is counter intuitive to anyone with a lick of common sense.

I would rather they give toyota and honda $14B and those companies buy up the assets of the failing businesses since they have proven more able to compete. As a matter of fact I OWN Honda stock and if you give the big 3 an unfair competitive advantage you are effectively STEALING from me and everyone who relies on any auto business NOT involved with the big 3.

[Kiwon]

what is this TARP acronym anyway?

Troubled Asset Relief Program (TARP).

$700 billion designated for banks, but hey, it slices and dices and can even be used to bailout mismanaged labor unions.

Makes for a great Christmas stocking stuffer. Order yours today!

[Iron Mike]

I say help them out.....BUT, also cut wages a reasonable amount according to the cost of living.

How about cutting wages a reasonable amount of $ according to the complexity of the job???

The average wage of a UAW automotive line worker is $28/hr. That's $3/hr more than the average hourly wage of a Registered Nurse. You know, someone with a college degree that delivers patient care and can administer medications to a patient?? What happens if an RN makes a mistake?? Some person might die. What happens if an automotive line worker makes a mistake?? A part gets taken off the line and sent to the scrap bucket.

What's a reasonable wage for someone that sits on an assembly line and watches a robotic arm tighten bolts???

IMO, not a lot much more than my son, who's a cart pusher at WalMart and makes $7/hr.

[texaspackerbacker]

Thank you, Kiwon. I guess that became a misnomer as soon as they decided not to use the money to buy up bad mortgages.

As I said earlier, the primary benificiary of bailing out the big 3 automakers would be the small time stockholders of those companies--a large cross section of America. The jobs would survive without--most of them; The union might even survive--a dubious benefit; But if GM, Ford, and Chrysler fail, their assets will be bought at fire sale prices by either foregn auto companies or vultures in this country--hedge funds, Warren Buffett-types, those with funds readily available.

It's easy to say, "let capitalism take its course", but I'd much rather see the government, which, face it, has been in the business of rigging outcomes for a long time, intervene to keep those mostly good normal American stockholders from getting screwed, while foreigners and Wall Street vultures and sharks are allowed to make a killing.

Besides, the money would be a bridge loan, very likely paid back, just as the bridge loan to Chrysler in the 70s was paid back.

[Iron Mike]

It's easy to say, "let capitalism take its course", but I'd much rather see the government, which, face it, has been in the business of rigging outcomes for a long time, intervene to keep those mostly good normal American stockholders from getting screwed, while foreigners and Wall Street vultures and sharks are allowed to make a killing.


I agree.....let's subsidize a system where someone gets paid 65 bones an hour to mow the lawn: :roll:

According to the Indianapolis Star:

September 26, 2007 UNITED AUTO WORKERS OFF THE JOB, Striking back at globalization. By Ted Evanoff

Massive job cuts at General Motors, America's largest carmaker — coupled with the bankruptcy of Delphi, America's biggest autoparts maker — have provoked predictable handwringing from liberal pundits who worry that America is "losing its manufacturing base." But the wrenching change now buffeting the auto industry defies the usual press formulas. Just listen to Steve Miller a turnaround specialist who is steering Delphi's restructuring process. He exploded the myth of America's "endangered" union manufacturing jobs at his October press conference announcing Delphi's move into Chapter 11: "We cannot continue to pay $65 an hour for someone to cut the grass and remain competitive."
Take grass cutting. As defined by the current United Auto Worker contract negotiated with the "Big Five" (GM, Ford, Chrysler, and top parts makers Delphi and Visteon), an auto "production worker" is a job description that covers anything from mowing grass to cleaning the toilets. In the real world, these jobs would be outsourced to $8 an hour, no-benefit wage earners, but on Planet Big Five, these jobs get the same wages as any auto line-worker: an average $26 an hour ($60,000 a year) plus benefits that bring the company's total cost per worker to a staggering $65 an hour.
But at least the grass cutters are working for their pay. The UAW contract also guarantees that 12,000 autoworkers get full wage for doing nothing. On the heels of Miller's straight-talk, the Detroit News reported that "12,000 American autoworkers, instead of bending sheet metal, spend their days counting the hours in a jobs bank." These aren't jobs. And they certainly aren't being "lost" to China.
"We just go in (to Ford's Michigan Truck Plant) and play crossword puzzles, watch videos that someone brings in or read the newspaper," The News quoted one UAW worker as saying. "Otherwise, I've just sat."
The coming months will be painful for many American autoworkers. Accustomed to a certain lifestyle, they will see their wages cut in half, jeopardizing second homes, college tuitions, and car payments. One blue-collar Delphi worker interviewed by the Detroit News makes $103,000 a year operating a forklift and fears the consequences if his pay is drastically reduced. But many Americans will ask how a forklift operator felt entitled to a six-figure income in the first place (according to Bureau of Labor Statistics, the average forklift operator wage in the U.S. is $26,000).
It is an opportune time for political leadership to step to the plate and speak with candor, but the signs are not encouraging.

[swede]

Hey Iron Mike,

I also believe that the truth will help set people free.

Good post.

$105,000 to drive a forklift? Man...

But I will also argue that shareholders should not allow executives to bring in MILLION dollar salaries when the companies they run are going under.

[Oscar]

That's an interesting post Mike. I feel that alot of the workers at these plants are extremely over paid. Back in the mid 90's I had a chance to go into the industrial equipment field. Quit working on cars for about 5 years. Worked for a forklift company in Kansas City Ks. Once I had to go into the GM plant to work on a rental lift and was shocked at what I saw. The plant had there own lift truck mechanic's who took care of all the plant equipment. There were at least 10 of them that I saw. They were setting at a table playing cards. Seems none of there stuff needed repair so they just sat around till something broke. I fixed the rental and left amazed by what I saw. Back then the average pay for a lift truck tech. at Gm was approx. 22.00 an hour... There's no doubt changes need to be made. I also realize the amount paid to these people compared to those in the medical field along with many others is way over the top. I hope something can be done in a way that everyone benefits..

[Iron Mike]

That's an interesting post Mike. I feel that alot of the workers at these plants are extremely over paid. Back in the mid 90's I had a chance to go into the industrial equipment field. Quit working on cars for about 5 years. Worked for a forklift company in Kansas City Ks. Once I had to go into the GM plant to work on a rental lift and was shocked at what I saw. The plant had there own lift truck mechanic's who took care of all the plant equipment. There were at least 10 of them that I saw. They were setting at a table playing cards. Seems none of there stuff needed repair so they just sat around till something broke. I fixed the rental and left amazed by what I saw. Back then the average pay for a lift truck tech. at Gm was approx. 22.00 an hour... There's no doubt changes need to be made. I also realize the amount paid to these people compared to those in the medical field along with many others is way over the top. I hope something can be done in a way that everyone benefits..

It's not only the automotive industry......my ex-BIL worked at a paper mill in Green Bay in the 80s making $18/hr to play cards while the line ran itself. I had two other ex-BILs who paid themselves $22/hr in the 80s to hang sheetrock. How hard is hanging sheetrock??? :roll: Now I'm supposed to feel some kind of empathy for them since construction is down and they have to sell their boat and cottage???

[LL2]

Bad Christmas news!

Chrysler shuts down for a month! 46,000 employees affected...they will get paid, but not normal wages.

http://money.cnn.com/2008/12/17/autos/chrysler_shutdown/index.htm?postversion=2008121719

[Kiwon]

They got their money, but what's really going to change in 3 months?

Nothing, probably.

Chapter 11 will still be looming for GM and Chrysler.

President Bush is a good man, but enough already with the bailouts that total more than the combined costs of all the wars the US has ever fought.

The big condition he stressed in his announcement is that the loans must be paid back to the government if the companies’ restructuring attempts fail, or their plans are rejected, and they go into Chapter 11.

How do bankrupt companies repay these loans? It's money, approved and designated for banks and the mortgage industry, being redirected toward the auto manufacturers and being pissed (urinate, voided, making water) away.

The U.S. taxpayer will never see those funds again. :roll:

[Harlan Huckleby]

The U.S. taxpayer will never see those funds again. :roll:


The second-hand theory that I posted a week ago is that it is worth the cost to delay the bankruptcy by a year because the economy will be better able to absorb the shock then. I can't analayse the economics, but it sounds plausible.

[Partial]

It really makes me mad that these 60+ year old senators, etc are passing bills that they will never have to pay a dime for. They're quite content sacrificing my children's futures to improve their present.

That is shitty.

[bobblehead]

It really makes me mad that these 60+ year old senators, etc are passing bills that they will never have to pay a dime for. They're quite content sacrificing my children's futures to improve their present.

That is shitty.

YOu have children?? Ok, I'll leave all the other things I thought of saying out of it.

[Kiwon]

The U.S. taxpayer will never see those funds again. :roll:

The second-hand theory that I posted a week ago is that it is worth the cost to delay the bankruptcy by a year because the economy will be better able to absorb the shock then. I can't analayse the economics, but it sounds plausible.

What your brother said makes sense in a lot of ways. However, human beings typically don't make the hard decisions/changes until they are literally forced to.

I don't think a consensus of politicians, auto execs, and labor unions can be built and maintained that would actually stick with an ordered bankruptcy plan for one year, especially with Democrats controlling the White House and Congress. Less painful alternatives by special interests, dissenters, not to mention legal challenges would swamp the process.

On another level, "bankruptcy" to many people means extinction. That's inaccurate but that's what many people believe and that thought is tough to swallow when it comes to cars.

Americans have a deep, emotional, almost romantic attachment to cars and the freedom of driving. We grew up in a car culture, proud of our auto companies. And, practically speaking, our nation is huge and you have to have a car to travel.

The longer people have to ponder the doom and gloom of bankruptcy, the more the opposition will grow towards it.

Bush really punted on this one. I think all the criticism of the past years finally caught up with him. He regrets aspects of the Iraq war and, on the domestic side, he also did not want to go down as the President on whose watch the American automobile industry failed.

Detroit has seen the headlights of this train coming for decades. The government too. But the Big 3 couldn't get their act together between themselves and the labor unions and produce vehicles that turned a profit for them in competition with foreign manufacturers.

And the government couldn't stop meddling with mileage standards, pollution regulations, etc.

Fine. You see what happens.

Everyone knew for decades that a cat 4 or cat 5 hurricane would overwhelm the levee system in New Orleans with a direct hit, but did they really prepare for it? No.

That's human nature. The hard changes take place after disaster strikes.

A free market solution is the tough medicine that Detroit needs, not a government bailout that will probably serve as a bridge loan to yet another government-backed, long-term restructuring plan. Government, government, government. There’s always the government to come to the rescue.

Just when will the hard, really hard, decisions to lower costs, including cutting wages and benefits for current and retired workers thereby creating economic hardship for them, be made internally by the auto industry? Not in the foreseeable future given the current climate in Washington.

[texaspackerbacker]

It really makes me mad that these 60+ year old senators, etc are passing bills that they will never have to pay a dime for. They're quite content sacrificing my children's futures to improve their present.

That is shitty.

Partial, you and I are on the same side more often than not. I opposed the TARP bailout and was lukewarm about the automakers bailout.

However, your premise in this post is flawed. Injecting money into the economy--even in the massive amounts seen lately--is absolutely NOT something that has to be "paid for" by future generations or whoever. The money accelerates and multiplies and stimulates, resulting in economic growth and ultimately, more tax revenue to the government even with lower rates.

The potential problem for the future is if enough wrongheaded politicians actually do try to "pay for" deficit spending with tax increases--thus killing the golden goose. With the combined forces of damn tax and spend liberals and misguided "fiscally responsible" conservatives, there is a distinct possibility of some bad Carter-esque consequences in the future, as you seem to be worried about. It would NOT be the massive spending that would do the harm, though, but the bogus need perceived by some to "pay for" that spending with higher taxes.

[MJZiggy]

I've decided I'm all for bailing out Detroit, I mean the Lions are bringing down the whole division. It's just embarrassing...:mrgreen:

[swede]

I believe that giving money to a company that has proven itself to be uncompetitive in the open market is counter intuitive to anyone with a lick of common sense.

I would rather they give toyota and honda $14B and those companies buy up the assets of the failing businesses since they have proven more able to compete. As a matter of fact I OWN Honda stock and if you give the big 3 an unfair competitive advantage you are effectively STEALING from me and everyone who relies on any auto business NOT involved with the big 3.

:bclap:

That's funny. And it has me half wondering if it's possible to force the Big Three Automakers to sell themselves off to profitable companies who haven't strapped themselves to untenable union contracts and stupid executives; it is a heck of a lot more like free enterprise than simply throwing taxpayer money at three failing businesses.

In the old Lee Iacoca days he came out and humbly asked for a chance to set things right. He needed government loans to change Chrysler's business model and do things differently. If I recall, he got union concessions to help him out. I was about 17 at the time and didn't read the WSJ much.

B3AM CEO's jetted themselves in and said, "Here's our argument: We're too integrated into the national economy to be allowed to fail even though, as businesses, we can't do a f*cking thing right. Where do we pick up our checks?"

Bush just kicked the can down the road with his plan.

I've got a feeling the Obama administration will try to save the union contracts--which would simply set a race in motion. Who will go bankrupt first? America or the US auto manufacturers?

[Harlan Huckleby]

see below and above

[Harlan Huckleby]

lot more like free enterprise than simply throwing taxpayer money at three failing businesses.

Free enterprise is ultimately going to rule the day. The money to buttress the car companies will not keep them afloat for long. There isn't NEARLY enough money or political will to subsidize the car companies beyond the next 6 months to a year.

This is not the time to be debating economic philosophy, that's just irrelevant. The government is not going to manage the auto industry, that "Car Czar" talk will not materialize into anything important. The loans to the auto industry are merely a turnaqet to help the overall economy from sliding into a depression NOW, at a time of danger.

If anybody is still reading this post, I have a technical quesiton: what the hell is the problem with GM declaring bankruptcy? They still stay in business, and it provides a mechanism to dump unreasonable obligations, like payment of dividends to preferred stock holders. I fail to see any downside whatsoever for going through with a bankruptcy. What am I missing?

[Bossman641]

lot more like free enterprise than simply throwing taxpayer money at three failing businesses.
If anybody is still reading this post, I have a technical quesiton: what the hell is the problem with GM declaring bankruptcy? They still stay in business, and it provides a mechanism to dump unreasonable obligations, like payment of dividends to preferred stock holders. I fail to see any downside whatsoever for going through with a bankruptcy. What am I missing?

My take: but for many people bankruptcy means death. I think it is more of the stigma attached with bankruptcy then anything else.

[Harlan Huckleby]

I think it is more of the stigma attached with bankruptcy then anything else.

You might be right, a bankruptcy would be bad pub. But Chrysler already successfully navigated a bankruptcy once before. And begging the gov for money ain't exactly a proud moment.

I think there may be some more tangible reason why GM wants to avoid bankruptcy, perhaps it is the loss of control. Or maybe they WANT to pay their stockholders dividends.

[Bossman641]

I think it is more of the stigma attached with bankruptcy then anything else.

You might be right, a bankruptcy would be bad pub. But Chrysler already successfully navigated a bankruptcy once before. And begging the gov for money ain't exactly a proud moment.

I think there may be some more tangible reason why GM wants to avoid bankruptcy, perhaps it is the loss of control. Or maybe they WANT to pay their stockholders dividends.

Honestly, I really don't know. I looked around a little bit and all I saw was reference after reference to the lost jobs, warranties, and the fact that bankruptcy would be difficult for such a large operation. Doesn't really cut it for me.


What would follow bankruptcy?
Even if one or more of the Big Three were to file for bankruptcy, it would likely to be under Chapter 11, which allows companies to continue operations as it tries to shed costs, rather than Chapter 7 liquidation.

"They may not be running the business well. But they're still selling a lot of cars," said Lombard. "It's not buggy whips, it's a real business. I don't think any of them are going away."

Instead, most industry experts say that a bankrupt Big Three automaker might shed some of their weaker brands. To that end, GM is already looking to sell its Hummer brand, for example.

However, filing for bankruptcy protection would be a mixed blessing for the Big Three. On the one hand, a bankrupt automaker would have an advantage over its U.S. rivals since it would be able to shed some burdensome costs

However, most auto experts believe a significant percentage of buyers would shy away from an automaker in bankruptcy due to concerns about getting warranty work done on their vehicle.



White House 'very close' to plan for restructuring automakers
By Jim Puzzanghera and Martin Zimmerman | Tribune Washington Bureau
December 19, 2008
WASHINGTON - The White House said yesterday that, instead of a financial bailout, it is considering a so-called prepackaged bankruptcy plan for General Motors and Chrysler, a move that many congressional Republicans favor but the automakers and some analysts say could lead to the companies' collapse.

Bush administration officials, while still weighing their final set of options, were "very close" to a decision, White House spokeswoman Dana Perino said.

The White House, hoping to shield the U.S. economy from more damage, pledged this month to help Detroit stay afloat after Congress deadlocked on a bailout.

But it was clear that time was growing short. Already, GM, Chrysler and Ford have announced drastic steps to cut costs, including idling plants and slowing production - steps that add to the country's immediate economic woes even though they might be necessary to the companies' ultimate survival. Chrysler said Wednesday that it was closing its 30 factories in the U.S. and Canada for at least a month.



In an ordinary prepackaged Chapter 11 bankruptcy, companies meet with creditors and other stakeholders and work out how to restructure debt and make other changes to enable the company to survive. Only then do they go to bankruptcy court, where a judge oversees the execution of the agreed plan.

How that would work on the enormous scale of the domestic auto industry - or whether it would work at all - is not clear. And the arguments have been tinged with politics, ideology and opportunities to advance agendas not directly related to the auto industry, such as weakening or preserving unions.

Each of the big automakers has billions in liabilities, hundreds of creditors and thousands of retirees. Getting all of these parties to agree on a restructuring plan for GM might be impossible without the oversight of a bankruptcy judge, according to Craig Litherland, a bankruptcy specialist with the law firm Gilbert Oshinsky in Austin, Texas.

"I don't see how you can do that in a prepackaged bankruptcy," Litherland said. "With their legacy costs, you have tens of thousands of people who would be affected. Outside of bankruptcy court, how do you negotiate with all of those people? Who speaks for them?"

He also noted that "prepacks" tend to be a better option when the company's prospects are beginning to improve and creditors have a higher degree of confidence that restructuring will succeed.

That's not the case with GM and Chrysler. The U.S. economy is in deep recession, auto sales in November hit their lowest monthly level since 1982, and many analysts expect sales to continue to fall next year.

Supporters said a prepackaged bankruptcy would force restructuring of union contracts and other debt because the judge can void existing agreements.

"Absent such restructuring, we do not believe any amount of money will succeed in saving these companies," seven Republican senators wrote to President George W. Bush this week.

But a prepackaged bankruptcy has risks, as well as costs, for taxpayers.

If the federal government steps in with money to keep the companies operating through the bankruptcy proceedings - and GM and Chrysler say they are nearly out of operating cash now - taxpayers could be spending more than the $14 billion in short-term emergency loans GM and Chrysler are seeking.

Bush said yesterday that he had not decided how to help the automakers, although he has vowed not to let them fail. Many Republicans have been pressuring Bush not to extend loans from the $700 billion financial rescue fund for fear it would set a precedent for helping other troubled industries.

[texaspackerbacker]

The most obvious effect of an automaker bankruptcy would be to terminate union agreements in force that are killing the companies. Having been raised in a UAW/GM household, and living very well that way, I will withhold judgment on whether that's a good thing or bad.