No bailout for Detroit!?

[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:

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??? 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.