I'm hearing the truly bizarre argument that the UAW didn't scuttle the negotiations; it was the Republicans unreasonable insistence that they cut their wages to levels comparable to that of their competition. After all, the UAW was perfectly willing to negotiate their compensation package--in 2011, when their current contract expires.
And I think that's perfectly reasonable. We'll just wait until 2011 to give them the money, then.
If you know why that's stupid, then you know why the other argument is stupid, too. GM is losing money now. It needs to cut its labor costs (and its other costs) now, not in 2011.
This seems so elementary to me that I cannot even believe we are arguing about it: the reason Gettlefinger needs to take a haircut along with everyone else, is that if he doesn't take a haircut, GM will be back in 6 months asking for more money. There is absolutely no way whatsoever that GM has any hope of profitably making a car with labor costs higher than their competitors. Their labor costs should be lower than their competitors, because they have to sell their cars at a steep discount. Even if we somehow magically revolutionize the management tomorrow and get them steep discounts on their debt, it is going to take them years to rebuild their brand to the point where they can charge comparable prices to Japanese cars. GM cannot afford to pay its workers more than the competition in that situation.
This is not a question of what would be nice, or what would make the workers happy, or indeed what, in a platonically ideal universe the workers should be paid. It is an empirical fact: if GM does not get substantial labor concessions right now, then it will either come back for more money, or end up in bankruptcy anyway.
In the second case, the $15 billion is a stupid temporary giveaway, substantially to his members, while producing cars less valuable than their component parts. In the first case, the US is essentially offering an ongoing wage subsidy to the UAW, in which case, it's totally reasonable to cap that subsidy at a generous, but not lavish level. I don't see why poorer workers, or for that matter even richer workers, should be taxed in order to ensure that Ron Gettlefinger's members get more than $40 an hour in total compensation. That's a very solid living, particularly in the Rust Belt.
I don't think there's anything wrong with Ron Gettlefinger asking, but I'm pretty firmly opposed to acceding to this request. And if Gettlefinger wants to hold out for more, I will feel little sympthy for him, or any members who supported him, when they face the bankruptcy judge and see what's left.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
I'm with you 100% -- but you must know, it's "just deserts," not desserts. Think of "deserve."
Why didn't you call for paycuts at AIG and the banks? They're receiving more money than the auto industry, and their workers certainly make a lot more. Why is it that blue collar workers are the only people who should sacrifice?
I agree - why not cut pay far into the future for all of the bank employees? How about we restrict through a contract the bonus pool at goldman and JP to only 15% instead of 50% of profits in the good years?
Ooooohhhh, that's right, we can't do that.
Geez, guys, pay attention. The US automakers' problems are their own. The idea with bailing out banks (as much as I disagree with it) was that they were fundamentally sound businesses caught in a temporary panic. The car companies are fundamentally unsound.
"GM is losing money now. It needs to cut its labor costs (and its other costs) now, not in 2011."
How much money is The Atlantic losing right now, and how much of a voluntary pay cut are you taking? What's good for the goose, no?
Boy, the banking mess must have been a lot simpler than I thought. They were just paying their execs all that money. That housing bubble stuff was all a smoke screen.
In addition to the points you raise, there is one other huge point.
The problem the Detroit manufacturers face from the union are not just the pay scales. It's the work rules. Work rules couple directly with product quality because they require a culture of non-accountability on the part of the rank-and-file.
-dk
The UAW is bluffing, counting on the new administration to have taxpayers pay their wages and benefits. Unfortunately, that may happen. Our taxes, paying UAW workers.
The only way to avoid this is to let the big three go into chapter 11 and re-negotiate the labor contracts with the goal of becoming competitive.
SK
@Luke: Banks leveraging themselves by 30x to 40x is fundamentally sound?
Its not your fault, Luke. We have a nation full of morons who think just like you - most of whom work for financial institutions.
My one year old daughter thanks all of you for the bucket of shit labeled 'future' that you have left for her.
(btw I don't think banks, car companies, newspapers or airlines should be bailed out)
The UAW is bluffing, counting on the new administration to have taxpayers pay their wages and benefits.
I think what the UAW is counting on is getting both subsidies to bridge them to the Obama administration and getting 'card check' to enable them to organize all those transplant factories. Then the equalizing of labor costs won't be done by cutting rates for the Big 3 but jacking them for the transplants. And if the Big 3 go belly up anyway, well, the UAW will have made the hop over to Toyota, Honda, et al. Simplest thing in the world, then, to negotiate contracts that give precedence to ex-big 3 workers.
No, I don't think it'll work, but I think that's the plan.
Not to mention, I have a hard time imagining that when 2011 comes around and the contract is up, that the UAW would just cheerfully accept those cuts rather than making them the focus of the contract negotiations. Actually, I flatly disbelieve it. 2011 would have been the date that pay negotiations began, not the date they went into effect.
I have some sympathy that it might take more than a week or two to work out the payroll logistics of implementing massive, sweeping paycuts. But three years is daft.
It's not obvious that the UAW is bluffing. As a historical parallel, the typesetters' union preferred to kill the New York Herald Tribune rather than make concessions.
It is an empirical fact: if GM does not get substantial labor concessions right now, then it will either come back for more money, or end up in bankruptcy anyway.
Well, yes, it certainly is a fact that GM will be back for more money soon without labor concessions right now. Nobody thinks $15 billion is going to get the job done. But since the UAW is not willing to take a massive hit "right now" the choice is: provide a loan to tide them over until the new administration comes in, or let them collapse precipitously. I just can't fathom how anybody in their right mind thinks it's a good idea for a country flirting with a veritable depression to let them collapse. Again, were economic conditions different, I'd say let 'em file for chapter 11, and let the chips fall where they may. Unfortunately we're stuck in the present reality
...or end up in bankruptcy anyway.
Well, there's a reorganization coming no matter what. The question is: do we want a Darwinian, anarchic process that rapidly translates into three million pink slips, or do we want an government supervised, humane process that provides a degree of buffer between Detroit's woes and the general economy -- at least until the latter is stronger. Again, why anybody would choose the former is beyond me. It's not like there's not enough money to do the job. We're certainly going to shell out several trillion bucks over the next couple of years anyways, and odd are Washington will get paid back. I reckon lending money to Detroit won't cost more than one or two percentage points of the total we're likely to spend in various stimulus/bailout efforts -- probably less if you take into consideration repayment. I guess ya'll must be sitting on heaps of gold bullion, bullets, and canned goods.
The US automakers' problems are their own.
Not true. Unfortunately, their problems are everybody's -- everybody who depends on the US economy, that is. I think this really is what it boils down to. It's about blame, and righteousness. It understandably rankles people (myself included) to reward years of mismanagement. And as other have pointed out, US financial institutions (as opposed to automakers) have mostly been successful, highly profitable world leaders. I'd urge everybody to jettison emotion, however, and focus on utilitarian concerns. Biting off our nose to spite our face (or to gain some ephemeral moral satisfaction) ain't what a rational, self-interested nation would do right now.
Well, there's a reorganization coming no matter what. The question is: do we want a Darwinian, anarchic process that rapidly translates into three million pink slips, or do we want an government supervised, humane process that provides a degree of buffer between Detroit's woes and the general economy -- at least until the latter is stronger. Again, why anybody would choose the former is beyond me.
What the negotiations have been over have been something like 'bankruptcy lite' -- with the 'car czar' playing the role of the bankruptcy judge. In either case, the government was going to end up lending money to automakers (either outside bankruptcy or as 'debtor in possession' in chapter 11).
Why favor chapter 11? Because a bankruptcy judge would (but a car czar would not) be able to cancel dealer franchise agreements and re-open union contracts. Without the ability to do those things, I think the chances of an eventual recovery are significantly lower than if chapter 11 was used as intended.
Am I saying that the UAW and Detroit management are actually working against their long-term interests in doing everything possible to avoid chapter 11? Yes I am -- but does anybody think that the Big 3 management and the UAW working against their own best long-term interests isn't standard operating procedure?
I'm hearing the truly bizarre argument that the UAW didn't scuttle the negotiations"
it's not bizarre, and it's true. You are misrepresenting what happened. The democrats capitulated on nearly every point of the George Bush-crafted bailout bill. It was the Senate Republicans who, whether their demands were "reasonable" or not--I think they were not--still were not willing to make comparable concessions or even meet the democrats/Bush 25% of the way. Rob me of my money at gunpoint, okay, but if you then want to take my wedding ring, I might just stop cooperating. The Republicans are clearly the culprits, and shame on them.
Slocum: i'm inclined to think you're right that some sort of government-funded Chapter 11 bankruptcy is the best approach. But the reality is that those kinds of complicated deals are simply not within the ability of the current lame-duck congress and administration to pull off. They couldn't even do a fucking direct loan!
let's just keep things real simple until Obama and the next congress come into power. I have much, much more confidence that they can do the right thing for the automakers, and for the country.
I agree with Slocum. Without redoing the labor contracts and the dealership agreements, US auto makers have very little chance of becoming sound businesses.
The union is complaining that the Republicans were trying to hurt them. Cry me a river. What do you expect when you always support the other party? It's not like the UAW is some non-partisan organization who is being victimized here.
the UAW isnt the one who pulled the plug on the electric car. they're not the ones who who didn't want environmental regulations to hamper business.
whether or not people here agree or disagree, you clearly dont want to address that there was in part, a partisan agenda side of what the republicans did. and thanks for ignoring the Internal GOP memo that was circulating before the the bailout that proved this.
we can always count on you to ignore things you don't want to hear.
Your claims about the big 3 being unable to make money with their high labor cost is just plain wrong.
For years the big 3 have been making money with higher labor costs than the Japanese transplants.
But they were making money on a very different mix of products and a much higher level of sales. They were making money on SUVs. trucks and other large cars while having trouble with small vehicles.
Your statement that the big 3 can not make money with higher labor costs depends heavily on the assumed product mix.
Moreover, they were making money when auto and light trucks sales were around 15 million per year.
The main reason they are losing money now is that auto sales are around 10 million. The reason that sales are about 60% of normal is the economic environment, not something that the big 3 control. They know they are a cyclical business and make plans for a reasonable cyclical drop in sales. But a 10 million auto sales year is not reasonable. As a percent of trend auto sales are now the weakest they have been in the post WW II era.
You are making statements that have little basis in fact and that are higly misleading.
Spencer,
The profit margins aren't large enough on small cars for them to make money. Even with US cars sales at 15 million, but those 15 million being small cars, the Big Three woud still be looking at Chapter 11.
UAW weren't the ones who stated that producing "evironmentally conscious cars" i.e. hybrids was a "lifestyle choice" and one that GM wasn't interested in pursuing, that was Rick Wagoner at GM.
If you're willing to hold ANYBODY responsible besides the lower middle class workers on the line then maybe somebody would take what you have to say seriously. But you don't. All you have are repeated "let them eat cake" posts which seem downright bizarre in light of the fact that we're on the precipice of disaster.
Are you sure you have an MBA? My program required me to take an ethics course. Ditto economic courses which kind of laid out that you need a healthy middle class to, you know BUY stuff. Where did you go to B-school? I want to make sure to steer everybody I know away from a program that would encourage the kind of thinking you're advocating in print here.
Mike,
On what planet are UAW workers lower middle class?
Mike M,
Until recently the starting wage for a line worker was $28.12 an hour. That's 56k a year - that's more than a chemical enginering grad. The starting wage for a MIT/Cal Tech educated software engineer isn't that high.
Again - how are these people lower middle class?
$56K a year is now considered a good working wage? Maybe in Arkansas, but not in Detroit or the northeast. I suggest you try raising a family of four in the Detroit suburbs on even $60K a year. I lived outside Detroit for three years when I was much younger when my Dad was in the military.
Its not a plush existence by any stretch of the imagination and your attempt to portray auto workers as a pampered class of individual is way off the mark. Hell I just hired a kid out of school with zero experience for an entry level accounting position in the northeast for $50K. And you think grown men who've been with the same company for 20-30 years who make slightly more are overpaid somehow?
Your anger is misplaced.
Mike,
That's the STARTING wage. The starting wage at the big three is higher than a MIT educated software engineer. They are obviously wildy and grossly overpaid.
Mike M, you are full of BS. The average yearly salary in Ohio is around $27k/year. $56k/year is incredible in the rust belt for a single person, along with the gold plated benefits (health and pension), total compensation is actually something along the lines of $80k+/year starting out. That is incredible for Ohio or Michigan, or really anywhere in the midwest.
And yes, it is obvious that if you are going to have a large family then you're going to need two incomes - cry me a river, that's what everyone does.
Since the U.S. has become a Bailout Nation, why don’t we just give them the $100 billion now, check it off Obama’s to-do list and stop wasting time and taxpayer’s money on a Congress that seems to be operating without a compass. This has already dragged on too long.
In my opinion, any so-called Car Czar that can rescue these two companies with $14 billion, also wears a cape and can leap off tall buildings. This whole deal strikes me as a way to buy time. The auto industry has a long row to hoe before they reap any results, what with restructuring, slashing their work force, closing plants, dealing with UAW, etc not to mention actually producing cars that consumers want.
So what exactly is on the Car Czar’s to-do list? So far it sounds like he’ll come up with some guidelines for restructuring GM and Chrysler by the first of next year. But if the auto execs can’t prove that they have a plan to reinvent themselves by Feb 15, they have to give the money back. Give me a break!
If the $14 billion is an emergency loan, it’s just a survival kit, so what money will be left to give back? One forecasting firm is saying that with or without the bailout, Chrysler is already a lost cause. And what restructuring plan? Didn’t they already submit a plan? Furthermore, under whose leadership will these terms be set? A lame duck’s or will they be enacted after Obama takes the oath?
Apparently the bill will restrict executive compensation, but why are these two CEO's still there? I personally would have resigned a long time ago. But these poor excuses for leaders either weren’t paying attention to the mess they were creating, or they just didn’t care. Who are they going to blame now? The reluctant consumer? Oil prices? Japanese and Korean cars? The economy? Who?
I’ll tell you who’s to blame. It’s you, the auto industry CEOs who bear the full responsibility. You were the ones who were either too complacent or else didn’t have the vision to foresee the geopolitical and economic forces that shaped competition as you continued to crank out gas-guzzling SUVs. It is you who have not mastered the core principles of leadership or even the most basic skills required to manage. I’m referring to the bottom-line business basics of planning, organizing, motivating, performance management, risk management, forecasting, and so on. It’s all there in Management 101!
And I also fault the boards of directors for failing in their oversight. Boards are charged with the responsibilities of setting broad policies and objectives, selecting, appointing, supporting and reviewing the performance of the chief executive, ensuring the availability of adequate financial resources, approving annual budgets, being accountable to the stakeholders for the organization's performance.
These are standard duties for members of any corporate board, but they should be even more rigorously adhered to by high-profile publicly-traded corporations. I give these CEOs and their boards a failing grade on all points –they not only failed, they failed miserably!
And what’s worse, millions of people are being affected, not only throughout the Rustbelt, but millions more across America and around the globe in places like Argentina and other countries where there are manufacturing plants. You have let down all your stakeholders!
Perhaps the savior in the cape, the one they will call the Car Czar, will do a better job than the two CEOs have done. And while the czar will only be a puppet position until Obama takes the reins, I’d like to suggest this as the first order of the day—fire everybody at the top of the auto industry chart who was responsible for creating so much grief.
This comment was posted by Jose Roncal, co-author of "The Big Gamble: Are you investing or speculating?" - For more information, visit www.financialspeculation.com
The over payment of autoworkers pales in comparison to the over payments received by our elites for 3 decades in the form of inflated assets. That one way or another union auto workers incomes will drop, those that are left since their numbers have been sliding for years, is not in question.
What is in question is if the deflation of those formerly inflated assets is going to continue. Megan's possibly inflated wages might depend upon it. So too her investments and savings. So too everyone's.
The bailouts so far have been an attempt to stop that deflation. In every possible way they are just as unconscionable from a libertarian or any ideological perspective as any proposed auto company bailout. Try as some might to slice and dice it.
Ideological certainties about the efficacy of markets as the final arbiter of how societies and cultures are shaped is really just a conceit. A product of the age. Especially embraced by those who have benefited from them for the last two generations. Seeing themselves standing on the foundation of some universal truth. Unaware that the ground under the foundation will someday just shift.
Hi -
Spenser and jmo are right.
1) Any manufacturer, shucks, any business has two major cost areas: inputs and labor. Labor is largely a fixed cost - you gotta pay your people regardless of volume of business - and inputs are variable costs, i.e. if you build 100 widgets in any given month, your purchasing people buy the parts for 100 widgets in any given month, not 300 (unless there is a very, very good reason to do so).
2) When businesses are going well, it's usually only the really good managers who continue to pay attention to purchasing efficiency. Usually you've got your suppliers and you use them because they give you a price you can live with. Same is true with labor: as long as you're in the path of the business plan, you don't worry too much about productivity. You may even be willing to pay a premium to ensure that there are no strikes or other disruptions to the business plan in order to keep your upper management happy.
3) When business tanks - for whatever reason - then people hope first that it's just a blip, then they tend to panic. That's when purchasing managers get woken up and they find better ways of buying inputs, and that's when management goes out on the shop floor and finds ways of getting more output from their workers (this is, of course, not limited to industry...).
4) Making changes to purchasing is fairly easy, especially nowadays: you can find someone somewhere who will save you 10% on purchasing, and then you're a hero with management. But labor is notoriously inflexible, because you either have to fire people (always a bad idea unless you are employing totally unskilled labor: skilled labor is harder to replace, increasingly so as you go up the skill level) to get your costs down, or you have to get people to work harder, i.e. longer shifts for the same money or other similar results.
5) The Big 3 have already cut purchasing to the bone and there is little that can be done there. Hence: the only thing that can tide the Big 3 over until the upturn comes is ... labor.
6) The automobile industry is highly cyclical with very long lead times and very, very high investment costs. Getting a new car out within 4 years is about industry average, and that's not including designing a completely new platform: that takes about 6-8 years from concept to first sales. Life cycle of a car is around 7 years from first production to last sale, so that brand new car you just bought is based on expectations and technology from 5 years ago, and that car will be made for another 7 years (including facelifts and the like) in order to amortize the costs.
7) Capital costs: a new factory costs around $1.5bn for a modest factory (say 40 000 units/year), most of which is structure, infrastructure (rail and road connections usually are paid for by the local community as incentive to locate there) and machinery costs (assembly lines for automobiles are dedicated and can't be reused meaningfully), training costs are moderate. This means that once the decision to manufacture a car is made, serious bucks have to be invested (and earned back!).
So, what should the Big 3 do?
If they trash their current car line up and move to "green" cars, it means writing off billions and investing additional billions, but for a kind of car that has traditionally sold very poorly.
The Big 3 made the decision way back when to pay off the unions and have relative labor peace. This worked as long as the economy didn't tank, and generally speaking it hasn't: the last serious recession was at the beginning of the 1980s, and even then there wasn't any sort of mass layoffs.
We're looking now at probably a -6% movement in GDP, annualized, in the 4th quarter 2008, with a -4% annualized in 1Q2009: that's a big movement downwards. No one expected that and the Big 3 have to cut costs in order not to close down.
These are the facts: everything else is politics. If the Big 3 get their handout, they can bridge the problem, but the way I see it, the problem won't end until the beginning of 2010, meaning that the Big 3 are looking for handouts until then.
Why are they doing this? Because not doing it means confronting the problems that they themselves created by accepting severe limits to dealing with labor costs flexibly. The Big 3 management, almost to a man and woman, have a culture of avoiding dealing with such problems.
Chapter 11 would solve these problems. That is why they are also opposed to it, since it would require them to behave responsibly to their shareholders and get a grip on their inability to utilize labor flexibly. The UAW is also opposed, since their sheer existence is based on making labor inflexible.
Them's the facts. Anything else is politics. The Big 3 and the UAW have their set of bought-and-paid-for politicians and will use them ruthlessly to avoiding ruining what has been for the UAW a sweetheart deal and what has been for the Big 3 an enormous convenience.
The loser: the US taxpayer...
But the reality is that those kinds of complicated deals are simply not within the ability of the current lame-duck congress and administration to pull off. They couldn't even do a fucking direct loan!
So fine -- provide them with just enough operating cash to give them a few weeks to put together a pre-packaged chapter 11. I have no problem with that.
Here's an interesting article:
http://www.nytimes.com/2008/12/10/business/economy/10leonhardt.html?_r=1&hp=&adxnnl=1&pagewanted=all&adxnnlx=1229263541-ZLL4MCkV6CbkBVs6qrw2YA
He says
"labor costs, for all the attention they have been receiving, make up only about 10 percent of the cost of making a vehicle. An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies"
So why is it, exactly, that the Republicans need to make the critical issue labor wages?
I don't begrudge the workers their pay or the CEO's theirs. However, their business model is NOT WORKING. They have to fix it. Now, we can all sit here and declare that's it's CEO incompetence, UAW greed, completely moronic work rules (N.B. If I had to work in a place with the work rules that they have, ie., one can't address a problem if it isn't exactly in one's area of responsibility, I'd have to shoot myself), pension benefits that are completely out of line with reality (and this is a HUGE problem coming at all of us like a freight train) or dealers keeping costs elevated. We can also take collective blame for idiot CAFE standards that result in little, underpowered pieces of death-trap crap that I wouldn't buy in a million years or our uber-brilliant
Congress prohibiting significant oil exploration or refinery construction for decades now. (If any of you out there think that there's going to be an economically viable replacement for oil for the next few decades, you need to check into rehab.) We can note all of this. But it's their problem to solve and we can't keep bailing out people from their stupid behavior.
"How much money is The Atlantic losing right now, and how much of a voluntary pay cut are you taking? What's good for the goose, no?"
No one is taxing me to give money to the Atlantic. Second, I can access the Atlantic for free, online. Third, its quality is better than Detroit. Fourth, I guess that Megan makes less than legacy UAW workers. All told, this argument is a massive fail.
Sigh. You do know this is a non sequitur, don't you?
The Big 3 can pay whatever compensation they want so long as they do so without my money.
As for the recurring Banks vs. Auto Manufacturers meme, every last man and woman in this country (and many elsewhere) rely upon the liquidity provided by U.S. banks. I cannot think of a single consumer who will be left without several viable alternatives if the the Big 3 never produce another vehicle. Also, in case you haven't been paying attention, tens of thousands of jobs in the banking industry have been eliminated and the average compensation pales in comparison to auto workers. If you'd like to reduce auto worker comp to be in line with bank employee comp, be my guest.
No, ScentofViolets, the non sequitur here is "My industry is on its death bed because, among other reasons, it has bloated labor costs. You give me your (you being the taxpayer) money now and I might fix the labor costs in two years."
You have no idea what 'non sequitur' means, do you?
Just because we gave money to the banks/financial industry, it does not follow that we should give money to Detroit.
1. To put it very simply, banks get a raw material (money) and convert it into loans (money). If the supply of raw materials stops, then they cannot supply their product.
The best analogy for Detroit would be a sudden supply shock in steel, with the government having a large reserve of it on hand. In that case, I would support the government supplying Detroit with steel until the supply shock is resolved.
2. The financial industry is a viable ongoing business, and is likely to pay back any money. Detroit has been losing money for years, even with government support. Would you give it money?
3. The collapse of the financial industry affects the entire economy. Even shipping apples from a farmer to a grocery store requires money to be moved around. If GM went bankrupt yes, it would be mess and lots of people would face hardship, but (a) the big 3 only account for about half of domestic production (b) a short term loss of production would not affect most people, as most people dont buy cars on a weekly basis (c) even if the ENTIRE auto industry disappeared, the USA would survive. Most countries of the world do fine without much (or any) domestic auto production. None survive without a functioning banking industry.
You could look at the UK, for example, which let its large auto industry die. What was left were small specialist manufacturers who are doing very well. More importantly, the UK stopped wasting money on money-losing industries, and allowed capital to flow more freely. The UK economy is much healthier than it was in the 70s.
4. Salaries of bankers vs auto workers.
Yes, top executives at banks make a ton. But, the banks are full of people all the way down, who make less than UAW line workers.
Most importantly, bankers got their $ in a highly competitive free-market system. If they don't produce, they are fired. Like the 100s of thousands who are losing jobs now: those people will now be looking at medicaid etc.
By contrast, the UAW has used its power to force the big three to accept above-market salaries and work conditions, and almost full salaries for those laid off.
5. Regional effects: the banking industry is important across the country, the problems are not confined to one area,and the govt $ are being applied nationally.
By contrast, the serious problems in the auto industry are focused on the Detroit area, among workers who earn a lot more than their competitors (and have done for a long time).
What Detroit is asking is that the Federal government tax the lower-earning auto worker in Alabama, and funnel this money to Detroit to subsidize the wages of the higher-earning worker in Detroit. This is why GOP representatives from Alabama, KY etc are not supporting $ going to Michigan etc.
Scent of Violets: I know what are non-sequiturs. Are you saying that the original comment directed at Megan was a non-seq., or my response was a non-seq.?
The italicized comment is a non sequitur, for the obvious reason that it does not address the question. And here's another comment that, in this case, simply isn't true:
If banks were actually using the bailout money to keep lending, this might have some force as an argument. But in fact, the money they are receiving is not being used for lending. It's being used primarily to give people 'retention bonuses' - $70 billion worth! - to acquire other institutions, and to unwind and unload their toxic assets onto the taxpayer.
If you have information that suggests otherwise, I'd certainly like to see it.
What nobody has mentioned is that bailout, no bailout, wage concessions, whatever ... it's over.
Nearly 75% of the public is against this bailout in *any* form. If just 10% of them decide against buying a car made by the UAW as a form of protest, you can flush the Big 3 right where they belong.
These brands sucked to begin with, now they have ENORMOUS political badwill working against them, too. How long will it take for that to go away? Twenty or thirty years?
It's over.
President Clinton told a pizza shop owner years ago to raise the price of his pizza when the owner complained in a town hall meeting that Clinton's wage policies caused his costs to go up.
The Democrat answer to higher wage costs is to raise the price of the item sold.
GM simply has to add $5,000 to the price of every car they make.
Instant profitability. End of problem.
Now let's move on to really important stuff like stopping cows from farting.
Notice how the pro-union posters relentlessly avoid the topic of work rules? The hourly salary isn't the problem, it's the petty restrictions that kill productivity. GM could pay workers less than Toyota and they still wouldn't be competitive, because of the rules built into the UAW contract.
someone here wrote, regarding the banks:
Nothing could be further from the truth. AIG, in particular, owned a subsidiary (AIG Financial, I believe) that was a truly unsound business with lots of so-called "investments" in credit derivatives. AIG Financial is what took AIG down.
The investment houses made repeated, shockingly bad investments, encouraged by, fundamentally, the Federal Reserve and, indirectly, by the Fannie Mae-created market in sub-prime mortgages. Nonetheless, the banks did not have to purchase these Structured Investment Vehicles (what a laugh).
The banks deserve to fail, but our brainless Congress and equally brainless Pres. Bush have stolen taxpayers funds and given it to the thief-in-chief, Henry Paulson.
At least the auto companies actually produce something. The financial industry is mostly parasitic.
If I were a southern senator out to protect foreign car plants in my state, I'd insist that the UAW maintain their unrealistic contracts. That would mean the plants in my state would maintain their cost advantage, thus encouraging more companies to locate there. Plus since the contracts are clearly unrealistic, they would hobble the Big 3 permanently, or at least until the government tires of throwing money at them and they go bankrupt.
I'm generally against bailouts, and I'd certainly like to see a lot of bank executives reduced to penury (oh heavens, where's my driver!) but I'm not entirely opposed to a GM bailout...
...if the UAW gets what they've had coming to them since 1972. Otherwise, Chapter 11, sooner not later.
Chrysler, on the other hand, is dead no matter what. It was never Cerberus' intent to build anything, they've invested nothing in new product development since DB packed up back to Stuttgart.
And the real UK analogy for what's in danger of happening now is the government's creation of British Leyland out of a couple potentially-successful companies and a whole lot of dead wood, in order to keep their workers employed.
Save GM because they are a going concern with capable product, kill Chrysler because they're dead anyway.
Scent of Violets:
My answer is a non-sequitur of the question addressed to Megan, as it must be, because I cannot address the question addressed to Megan.
My answer is not, however, a non-sequitur to the assumption behind the question addressed to Megan (which was, itself, a non-sequitur of the issue Megan was discussing).
Hiding behind formal logic is disingenous given that the foregoing discussions fail to meet the conditions requisite for the proper application of formal logic.
The mistake that all of the Washington and Detroit 'managers' are making is in assuming that the rest of the world's OEM automotive industry wants access to the (formerly?) rich US car market. Even if you raise the costs of labor for Toyota and the other 'transplants' and thus raise the selling prices of their cars the transplants can still make better cars that hold their values. If you raise the labor costs outrageously, so that, for example, a rural Alabama worker at a Hyundai plant is making more than the Mayor of his town or the owner of a small business in his town then Hyundai will import cars to the US from a lower labor cost country or withdraw from the US market and go after the BRIC markets more actively (already occurring, by the way). The losers both of good jobs and of reasonable price cars-who else-will be the taxpayers. The Washington hereditary class of rulers is way out of its depth and leading us to second-rate-ness in the community of nations. Perhaps we need a completely new Congress the only qualification for which is that you must have worked for a living that supported yourself and or your family before running for Congress.
What Detroit is asking is that the Federal government tax the lower-earning auto worker in Alabama, and funnel this money to Detroit to subsidize the wages of the higher-earning worker in Detroit. This is why GOP representatives from Alabama, KY etc are not supporting $ going to Michigan etc.
What Detroit is asking is that the Federal government stop forcing taxpayers in the industrial Midwest to subsidize the factories and wages for Mercedes, Honda, Hyundai and Toyota throughout the South. Michigan has averaged 81 cents federal spending per tax dollar while Alabama averaged $1.40 over the past three decades. That's hundreds of billions of dollars of wealth transferred to big Dick, Shelby's pet projects.
I'm tired of southern leeches perpetuating the lie that they being asked to subsidize northern autoworkers or California public safety workers. Look at the actual figures of how federal revenues are spent and you'll see that it's the South that continues to be subsidized.
http://www.taxfoundation.org/research/show/22685.html
The South has never had a successful industrial tradition. It was an agrarian society and that culture persists. They couldn't manage their textile mills competitively, their furniture industries have imploded in the face of foreign competition, and the only successful manufacturing businesses in the South are transplants from either offshore concerns or from other states (many defense plants have been moved from California to the deep South).
What's happened is that the Japanese and Germans have made an alliance with the Confederacy to destroy Northern industrial power, something that helped defeat all three of those enemies of the United States.
GM couldn't make money in 2005 when the economy was booming.
What is it about the taxpayer funded patch job that will make it profitable when the economy recovers in 2015?
"If banks were actually using the bailout money to keep lending, this might have some force as an argument. But in fact, the money they are receiving is not being used for lending. It's being used primarily to give people 'retention bonuses' - $70 billion worth! - to acquire other institutions, and to unwind and unload their toxic assets onto the taxpayer. If you have information that suggests otherwise, I'd certainly like to see it."
The first issue, that the banks are misusing money (as you would have it), is not an argument for giving money to Detroit. It is, rather, an argument against it, as it demonstrates the propensity to misuse taxpayer money.
Moreover, to support actions to alleviate a credit crunch does not mean that one supports other actions to prop up failing banks.
Second, as to evidence that the bailout has been successful, my criteria is credit availability. So far, the relevant indices suggest that the credit crunch has been averted.
Ronnie Scheiber on the Southern leaches:
I completely agree. I would be much less sceptical of the Big 3 arguments if Detroit was asking for the Federal Government to stop subsidizing the South through myriad transfers.
The problem is that we have so many competing subsidies in different forms. Now Detroit is asking for another subsidy, on top of the regulatory subsidy it receives by lobbying for protection against overseas competition, below market gasoline, loopholes in CAFE standards etc.
Oh, you mean the subsidies that offset state money funneled to Honda, Daimler-Benz, etc. for building nonunion areas, the massive market distortion that is CAFE that's resulted in us getting poorer product at higher prices, etc?
The fact is, Detroit's leadership has been dilatory in dealing with the cost and product-development problems that have been eating them for decades, but no one's hands are clean in this.
Honda and Toyota had sales declines of more than 30% last month.
How long before they go asking the Japanese to help with a bridge loan?
I say before September of 2009.
Auto sales are not going to pick up in the near future. This has more to do with the economic climate than anything else.
I just bought a great car, A 2009 Mazda 6 that, if my web searches can be believed,was made in Michigan. The online information did not reveal whether the plant was unionized of not. Obviously, even Michigan workers can build excellent cars when supported by good engineers and good management.
My humble suggestion is this. The government should send the little two (GM and Chrysler) into a prepackaged bankuptcy. We should then pay a consortium of Toyota, Honda, Hyundai etc. the $14 billion (they might demand more) to take the mess off of our hands. The UAW goes away as do Waggoner, Nardelli, et. al. If Ford thinks it can survive, God bless it. Otherwise put it in the hopper too.
SOV, I don't have any trouble following the sequence that leads to the argument "No one is taxing me to give money to The Atlantic."
Unless it really is that I'm just a lot smarter than you, I'd suggest you look up the concept of "narrative ellipsis" and give it another try.
Right, Charlie. Since I'm so slow, why don't you spell out the salience of the argument, in detail? If someone argues that employees have to accept wage concessions because their firms are in the red, and that this is part of the medicine to get them into the black, and if it is pointed out that if that's the case, since that someone is also working for a firm that's in the red, why aren't they suggesting that they themselves take a wage cut, how is it remotely relevant to the argument to drag in 'taxpayer money'?
Go ahead, explain it to me.
The Mazda6, like the 626 before it, is built in Flat Rock, Michigan by AutoAlliance International, a joint venture of Ford and Mazda. (Ford, of course, owns a smidgen of Mazda; they used to have controlling interest.) Ford's Mustang is also built at Flat Rock.
Workers at AAI are indeed represented by the UAW.
My second 626 (a 2000) was extremely reliable: unscheduled maintenance in the six years I owned it totaled less than $300, and half of that was to replace a windshield cracked by a stone.
Mike M.
"$56K a year is now considered a good working wage? Maybe in Arkansas, but not in Detroit or the northeast. I suggest you try raising a family of four in the Detroit suburbs on even $60K a year. I lived outside Detroit for three years when I was much younger when my Dad was in the military."
LOL. I live in Michigan. One worker making $56,000/year with fat union benefits at age 25ish is doing just fine. Add a wife working part time, and life gets good real fast, unless they spend too much ... which most people in Southeast Michigan do!
Are you people paying any attention? Even Megan McArdle, if she were a real, honest to God reporter who did the job right would know better.
Since the signing of the 2007 agreement between GM and the UAW, the company has shed something along the lines of 30,000 UAW workers, bought out with their own pension fund, not new money. That made room for the replacement of those 30,000 people with new hires that will get paid 50% of what the people they replace made. Corker is asking the UAW to take a 30% wage cut on top of this. That is not parity with the transplants he seeks because that would put UAW pay significantly less than the transplants. That is the reason Gettelfinger said NO to Corker.
Not only the above, but one also needs to learn that many of those 30,000 who got a buyout will not need to be replaced due to work rule efficiencies also put in place due to the 2007 contract.
The UAW agreed to take retiree health care off the hands of the company, then agreed to forestall that agreement when GM couldn't meet its obligations under that provision. What do you want? WE've met every company demand with some degree of give back. GM hasn't had anything to say publicly about any sort about union recalcitrance.
You people, including you Ms. McArdle, are ignorant of all the facts. Just like the lame-brained claim that UAW workers are compensated to the tune of $78/hr when that is a burden rate not a compensation rate.
For cripes sake, my own burden rate is $105/hr in a high tech, very high capital intensive department. How in the world could my compensation rate be $78/hr and all the rest of the indirect expenses of my department only equal $27/hr? Preposterous.
Luke said at 9:17 on the 13th:
"that they were fundamentally sound businesses caught in a temporary panic. The car companies are fundamentally unsound."
You got that--------backwards. The banks were fundamentally sound???? Where is the rolleyes emoticon?
---But in fact, the money they are receiving is not being used for lending. It's being used primarily to give people 'retention bonuses' - $70 billion worth! -
I hate reading this kind of non-sensical, self-righteous, whacko-liberal statement. Do some damn research and tell us what amount is actually involved - it can't be 70 billion.
BTW - plaudits to the Republicans for actually thinking of the taxpayers. I believe that over 50 percent of my fellow citizens (most of whom do not earn as much as the Union workers and do not have golden pensions and health care) do not favor the bailout of the UAW.
http://www.gallup.com/poll/112993/Americans-Still-Buying-Auto-Bailout.aspx
As for the evilness of the once-Big 3 management for building the SUVs that actually met the demand of the market place, look closely at their cost structure and observe that they COULD NOT build the small cars with their cost structure and make a profit. And this could have been addressed by allowing them to import their european manufactured cars - which are selling well -- with which they do make money (different cost structure). So why didn't the government allow this? Because it would take UAW jobs.
The government sets the environment so the UAW succeeds and the automanufacturers fail.
Tabris @ 7:57 says :"...total compensation is actually something along the lines of $80k+/year starting out."
Whoa! Some honesty! That's.... $40/hr comp. rate?!
Yep.
That is low though. In reality it is $48/hr comp rate.
jmp @ 5:20 says: "The starting wage at the big three is higher than a MIT educated software engineer. They are obviously wildy and grossly overpaid."
Who says what a MIT educated software engineer is worth? And... who says what a factory rat is worth? Ah ha!! For the uneducated the answer is... the market. Sooooo.... if and until the government induced collapse of the general economy and government induced crimp on energy supplies came along to knock us all around... the MARKET has said A-OK to the pay scales at GM factories. NOBODY made them pay. Besides... if the market wasn't willing to pay then why were ALL the competitve brands fairly closely priced. You never saw a TUNDRA priced 1/3 of a SILVERADO, did you? How about a CAMRY at 1/3 of an IMPALA? A BMW and CADILLAC?
Of course not. The competition also charged what the market would bear and that is the story.
The majority opinions on this forum amount to very little more than a fine, healthy display of Schadenfruede.
"Why didn't you call for paycuts at AIG and the banks? They're receiving more money than the auto industry, and their workers certainly make a lot more. Why is it that blue collar workers are the only people who should sacrifice?" - Stan
Actually, they already have. Most of the bank employees have significant parts of their pay at risk which is now gone. Second, they weren't overpaid relative to their competitors to begin with. Third, the loans to the banks WILL be paid back -- GM, Chrysler -- never (AIG, not so much). Fourth, more bankers have already lost their jobs than the auto industry would experience in a Chapter 7 bankruptcy.
Oh, the poor blue collar workers.
There is a lot of blame to go around, but a large part of it is that the UAW has arranged to be have a monopoly on the supply of labor to the Detroit automakers.
One union was able to corodinate all the workers and serialize strikes against the automakers. If the automakers coordinated, they would go to jail.
No right-to-work (so the worker must belong to the union to be hired), so no competitive free market in labor.
Work rules designed to maximize the number of union members, rather than productivity.
None of this comes as a surprise. Its been obvious what 20-30 years what needed to be done, and the AUW has fought it every step of the way. I have ZERO sympathy.
One example - my company (a Fortune 500), stopped paying 100% of health costs in the early 80's. The company and the worker share the costs. The UAW would not accept this.
You UAW gents sure are making friends down here in Dixie! Another reason to buy a UAW-made car, yes indeed.
You keep forgetting to mention that Tennessee has a GM factory, the so-called GM Saturn factory, which isn't currently making any cars -- got some guys on paid layoff till after Xmas, though - and never has hired any local people for jobs requiring UAW membership.
SJE @ 10:21 says :"No one is taxing me to give money to the Atlantic. Second, I can access the Atlantic for free, online. Third, its quality is better than Detroit. Fourth, I guess that Megan makes less than legacy UAW workers. All told, this argument is a massive fail."
When, pray tell did the Atlantic ever have half much less 20% of the magazine market? And getting the Atlantic online for free is the right price. You can't even wipe yourself with it when you're done.
Quality is subjective. 99% of what the Atlantic prints winds up in the trash within a month and is forgotten about, save for archives. Most of what GM makes is still on the road providing some kind of transportation value decades after it's built.
I disagree strongly with your evaluations based on these truths.
armchairpunter @ 10/19 says: "As for the recurring Banks vs. Auto Manufacturers meme, every last man and woman in this country (and many elsewhere) rely upon the liquidity provided by U.S. banks."
True. Yet is was bank holding companies, hedge funds and derivative markets that imploded, not the banks per se.
We didn't need the so called services of those companies. They served a market that was set up basically on a three legged pedestal that was rotten at the foundation: reserve banking, arbitage, the lemming response to inflated asset values.
Lots and lots of banks were/are ok. And we have those to provide liquidity provided the FED sticks to its true mission.
1) downturn paycuts are the norm in the semiconductor industry
2) downturn "at-will" workforce reductions are the norm in the semiconductor industry
3) not hiring back those laid-off is also the norm in the semiconductor industry
4) firing underperforming execs is also the norm in the semiconductor industry
5) "right-to-work" (non-union) workplaces are also the norm in the semiconductor industry
6) monster capital expenditures are also the norm
~~~~~
just wondering why silicon valley can do so well in a brutal international marketplace and the Detroit "Big 4" (incl UAW) whiners need a bailout
Rob @ 11:58 says: "Notice how the pro-union posters relentlessly avoid the topic of work rules? The hourly salary isn't the problem, it's the petty restrictions that kill productivity. GM could pay workers less than Toyota and they still wouldn't be competitive, because of the rules built into the UAW contract."
Pretty much true but changing. How's that for an answer? Can't say its been avoided anymore, now.
There were a number of tasks/jobs that the UAW agreed to let outside contractors bid on and do because they realized the pay scale didn't justify the old way. I don't have the list of how many or what jobs but it is pretty extensive. Then there is another category where several tasks previously assigned to several job classifications are now assigned to one or maybe two. Lots of piddly type stuff, like who changes a light bulb is now under a rule called right to access which basically means "Can do.. must do." No more "it's not my job."
Admittedly we still have a looooong way to go in this area IMHO.
I have suggested to a friend connected higher up on the UAW food chain that there be NO unskilled workers in the factory. That way the production would be run by skilled trades and when the line needed skilled attention the same people would attend to those issues. NO more excuses for downtime. My friend suggested I wait on this idea until he leaves the UAW.
That's part of our problem. Leadership is timid.
Ernest @ 12:02 says: "If I were a southern senator out to protect foreign car plants in my state, I'd insist that the UAW maintain their unrealistic contracts. "
Not a bad rationale. But let me offer a different one. If the UAW plants are at parity with the transplants what reason would a transplant factory have for voting in a union? As long as the union maintains a better set of conditions and pay over the transplants they have an inducement for the transplant workers to join.
So, if the Senate forces pay and benefit parity on the UAW then the lure of unionization coming to their "Right to Work" state is significantly diminished.
See what I mean?
I was looking for two new vehicles when all this hit. Except for a few bad experiences with Euro nameplates, I've always owned American cars and trucks. I recently sold an aging Corvette and my work truck is getting long in the tooth.
I'm a cash buyer, which is good, because as a self-employed person I apparently can't get credit now (that's one thing killing the dealers, and the manufacturers, including the transplants; Mercedes is furloughing workers in its SUV plant in the US, for example. This problem was created by individuals who lied, and lenders who didn't verify, partly because of the agency problem with third-party, commissioned, loan generation).
I'm waiting to see what happens with this bailout. If the clowns in Washington decide that I need to pay for the comfort of the clowns in Detroit, from the executive suite vitamin-clue-deficiency cases to Ron Gettlefinger's UAWelfare job-bank bums, I'm done; I'll join the legion of happy Toyota buyers.
At least until card check lets the UAW scorpion hop on that particular frog for a (free) ride.
As far as the argument that MI, OH and IL get ripped off on Federal taxes: you are the guys who elected the pols who have done that for you. Look, they're all crooks, all 535 of them, all Blagos. You guys elected inefficient crooks. Somebody thinks Debbie Stabenow is Senatorial material? Lord love a duck.
The better argument against the foolish comparison of UAW wages and AIG/Citi/Wall Street wages is this: High wages are one of the top two or three reasons why GM and Chrysler are in such trouble. That's been evident for years. This day of reckoning has been coming for years. Labor costs are reflected directly in the cost and quality of the product. The market is saying no to GM's cost and quality package, thus the market is saying no to the UAW wage/benefit structure. They've been saying it louder and louder each year.
High wages on Wall Street have nothing to do with why Wall Street melted down. The amount being paid out in salaries to the Wall Street traders might be obscenely high, but it is trivial compared to the amount of money that they manage. The issues there were overleveraging and poor risk judgment. The "haircut" being taken on Wall Street is that regulators are rolling back leverage margins, which will dramatically reduce commissions, bonuses and other compensation -- again, incidentally.
You could cut everyone's salary at AIG in half, and it would hardly make a difference in the underlying problem with their business. You could cut everyone's salary at GM in half and that, combined with streamlining work rules, would make GM a successful company again.
RE: Stan, and those who agree with Stan: "Why didn't you call for paycuts at AIG and the banks?" (December 13, 2008 8:50AM)
Stan, the answer is simple: The banking catastrophe has nothing to do with its employees' wages, benefits, or pensions. Therefore, an act of symbolically flailing at those features would be pointless. If banks were failing because they paid their people considerably more than their competition, making their product non-competitive and unprofitable in their markets... well, that would be different, no?
UAW wages, benefits, and pensions are, in fact, the proximate cause of the Big 3 automakers' problems and their imminent and perhaps inevitable demise. Not adjusting these items now will not only prove disastrous to the industry, but - ironically - most disastrous to the very UAW workers who presumably would like to save their jobs.
Observer2 @ 2:49 says: "One example - my company (a Fortune 500), stopped paying 100% of health costs in the early 80's. The company and the worker share the costs. The UAW would not accept this."
Sorry Charlie. You are wrong about that. The company still pays 100% of the premiums but the coverage has changed a lot. Not to mention we agreed to unload ALL of the cost of retiree health care off of the company.
--As far as the argument that MI, OH and IL get ripped off on Federal taxes: you are the guys who elected the pols who have done that for you.--
Well said, Granholm raises taxes in a recession with Michigan clearly an economic basket case - and she's an economic advisor to Obama. I laugh when I hear the commercials inviting business to to move to Michigan.
http://biz.yahoo.com/ap/081202/ri_unemployment_ri.html?.v=1%22
This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan's biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state's tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be "invested" in social spending ...
http://online.wsj.com/article/SB121192942396124327.html
Right, Charlie. Since I'm so slow, why don't you spell out the salience of the argument, in detail?
Poor pedagogy.
---The company still pays 100% of the premiums but the coverage has changed a lot.
Yes, my company paid 100 percent of the premiums too -- IN THE 1980s! Welcome to 2008.
You didn't mention copays.
rm3 frisker ftn says: "1) downturn paycuts are the norm in the semiconductor industry
2) downturn "at-will" workforce reductions are the norm in the semiconductor industry
3) not hiring back those laid-off is also the norm in the semiconductor industry
4) firing underperforming execs is also the norm in the semiconductor industry
5) "right-to-work" (non-union) workplaces are also the norm in the semiconductor industry
6) monster capital expenditures are also the norm
~~~~~
just wondering why silicon valley can do so well in a brutal international marketplace and the Detroit "Big 4" (incl UAW) whiners need a bailout"
At one time GM employed 840,000 in the United States. Today I think the number is 108,000 including salaried workforce. I'd say that's a downturn, wouldn't you?
They're all gone. GM is not paying them a dime to be laid off.
The difference between silicon valley and GM.
The price of gas directly affects the best market mix. Huge swings in the price of gas in a very short time create disturbances in the market that take awhile to adjust to. One does not design and build an automobile real quick.
The car market lives and dies on consumer credit. When the credit market dried up the car market hit the wall.
Wild swings in currency values create pricing challenges that are not part of a normal car market.
Those swings played havoc with assumptions made on contracts with suppliers, some due to swelling commodity prices, some due to transportation costs.
A general downturn in the economy hurts everyone but big ticket items are usually first to feel the crunch.
It is not all that sensible to compare silicon valley to Detroit. There is more that is dissimilar than similar.
red. co-pays are part and parcel of what I meant by saying that coverage has changed a lot. I didn't want to and really couldn't do proper justice to the scope and detail of the changes in our insurance coverage. Excuse me for that.
It's not what it was. My wife takes care of that part and she says so every time we get a medical bill.
Mike at 254pm:
yes, quality is subjective, and my personal views on cars or magazines are only one small datapoint in the market. The difference is that the Atlantic is not (presently) forcing me to pay for them. If Detroit gets another subsidy from the taxpayer, it is forcing me to pay.
I also agree that the big 3 can make good (even great cars): they do it all the time overseas and make a profit. I've driven many nice Ford and GM products overseas.
US workers can also make good cars at profit: the non-big 3 plants do. I even agree that big 3 plants with UAW workers can make good cars. Unfortunately, most cannot do so at a profit (at least not consistently, and not in the long term): if they could, they wouldnt need to beg for $, because they could raise it on the capital markets.
Kevin R.C. O'Brien: If I were a gambling man I would say that when the time comes to buy you will do the rational thing and shop the best product for your money no matter how this turns out.
I hope you won't turn a blind eye based upon your broader economic convictions. You might not be happy in the long run.
Dave Davenport @ 2:50.... I hear you. Oh, By the way, how much did the value of your lands skyrocket when GM located in TN?
How much economic activity has been associated with that new plant?
Is Murfreesboro still the quiet little burg it always was?
RealToast @ 3:34 says: "UAW wages, benefits, and pensions are, in fact, the proximate cause of the Big 3 automakers' problems and their imminent and perhaps inevitable demise. Not adjusting these items now will not only prove disastrous to the industry, but - ironically - most disastrous to the very UAW workers who presumably would like to save their jobs."
Let's do math, shall we? GM has 64,000 UAW members still working. Let's say they gross $70k/year. Now let's have them all work for free, just to see where that takes us. My calculator says $4.48B is what we all make.
GM lost what last year? $79B? Oh, I don't really remember and I'm not going to look it up. They lost a whole lot more than $4.48B. So we could work for free and GM would still have posted an incredible loss.
Now let's make it tougher on the UAW. Let's take the fictional total compensation rate of $78/hr and apply it to GM's balance sheet and see what we get. I got $9.98B/yr. We could work for free, give up all our benefits and GM would still have shown a loss the last couple of years.
It is not wages/compensation. WE will and ARE doing our part but that is not the solution. GM has other things they have to do to become profitable.
Hello Mike,
All you mention is equally applicable to the semiconductor industry PLUS:
1) the cost of a chip halves every 18-months unlike a car
2) the semiconductor industry lives and dies on consumer demand (credit?) ... iPod/iPhone, flat-panel TV, frig, auto ECM module, you name it the semiconductor industry is involved
3) exchange rates? topic is mentioned during every semiconductor companies quarterly conference call
4) foreign competition? absolutely BRUTAL but this works both ways
Cliff-notes summary for industrial success:
1) "at-will" employment (i.e. no contracts)
2) rarely rehire anyone you let go during a down-turn - they end up working for your competition in the valley anxious to prove you wrong for letting them go
3) "right-to-work" employment
4) paycuts during downturns
5) fire non-performer executives
6) sorry i forgot to mention "zero work rules" (tomorrow I could be told to help unload the FedEx truck or clean toilets or perform a failure analysis on a defective return or design a replacement widget)
7) no whining
SJE says @ 3:55: "If Detroit gets another subsidy from the taxpayer, it is forcing me to pay."
As to this gripe, I sincerely understand. I was balls out against the bank bailouts. Who is going to pay if the little 3 go out of business and on unemployment and all that? Point is, you're going to pay. Now one can make a sturdy argument that if that is so then let's pay to allocate resources where the market wants them. That is a hard one for me to tackle. So I'll try with this. The market still wants GM products. We still make as many or slightly more for domestic sale as Toyota, our biggest and most capable competitor. See more just below....
YOU ALSO SAID: "they wouldnt need to beg for $, because they could raise it on the capital markets."
THAT'S why we need government help. The capital markets, if you haven't heard, are kinda messed up right now.
I really think we can turn it around. And I'll be the first to tell you that watching GM fritter away its market position has been frustrating to the point of asking for an 8 second suspension of the work place violence, zero tolerance policy. No dice so far on that though. I'd imagine myself as being a cross between the Tasmanian Devil and Calvin of "Calvin and Hobbes". I would be a window cling after that.
rm3 frisker ftn said @ 4:23: "All you mention is equally applicable to the semiconductor industry PLUS:..... and lots more"
In all honesty your list of working conditions FOR INDUSTRIAL SUCCESS conjure up a heap of "WOULDA, COULDA, SHOULDA".
I could nit pick a little. If I didn't I guarantee you people would get killed in a factory. But I know you'd understand what I was getting at, there.
I've been preaching a politically correct version of your rules in the factory for 20 years. I also know the pay back for being politically incorrect in the factory. Mmm hmm.
Read the bottom half of my post @ 3:15.
We have to work with the ossified critter we got. And I think these shocks are just the medicine to see it though to a day when your work rules and "our" work rules don't look much different.
Need one more chance, though.
Mike:
I give you that the credit markets are difficult right now, but they ARE still making loans, financing equity etc. But, only to those with a good risk profile.
What the markets are saying right now is that GM is ALREADY bankrupt: its share price represents not much more than the value of its assets. Putting more money in it only delays the inevitable.
Its a mess. The sort of mess chapter 11 is designed to solve. The company doesnt disappear, but everyone has to take a very serious haircut.
I want to state that I am not anti worker, or anti union, per se. I really feel for people who are worried about their jobs, as I am mine. I support something being done to help. However, throwing money at GM is not going to help, unless there is a plan. The problems in Detroit have been predicted for 30 years, just as certain as we knew that New Orleans would flood one day, and that San Francisco will be hit by an Earthquake.
Lots of back and forth over who is to blame for the Big 3's demise.
Bottom line, it doesn't really matter because there is enough blame to go around.
If you want to save the companies, however, then the only way to do so is to cut costs as quickly and deeply as possible.
This means labor takes massive cuts, productivity-reducing work rules are eliminated immediately, management takes massive cuts, dealers get eliminated, functions that can be get outsourced, etc., etc., etc.
The UAW's unwillingness to reopen contract negotiations until 2011 is disgraceful. The Big 3 might not exist then, but they won't care because they will have "won" the fight by not accepting lower wages today.
As for dealers, most of them have to go. Toyota has about 1,600 dealers nationwide while GM has nearly 6,500. The only way the Big 3 can eliminate dealers fast enough is Chapter 11. Only a bankruptcy judge can void dealer contracts and override state laws protecting dealers so the necessary cuts can be made quickly enough.
At the end of October, the Big 3 only had 46 percent of the domestic car market and there is no indication their share will be growing any time soon.
In short, the only way to survive is to get small, nimble and efficient very, very quickly, and that will require a great deal of pain, but the entire bailout process seems to be a delusional exercise in pain avoidance.
Personally, I believe the Big 3 are already dead and that we are simply negotiating the cost of the funeral.
I hope I'm wrong, but I don't believe I am.
Mike says,
Dave Davenport @ 2:50.... I hear you. Oh, By the way, how much did the value of your lands skyrocket when GM located in TN?
How much economic activity has been associated with that new plant?
Is Murfreesboro still the quiet little burg it always was?
Mike, I'm sure a few families made big money when GM bought the farmland on which to build the Saturn plant, but so what? One can say the same about WalMart stores, or about Nissan's North American HQ, which they have moved from the Los Angeles 'burbs to suburban Nashville.
Many pre-Saturn local people in Spring Hill have always resented GM because the only local hires GM makes are for janitors and cafeteria workers at the Saturn plant. All other Saturn workers, both hourly and salaried, have been moved in from outside Tennessee.
In contrast, almost all Nissan's hourly people are local hires.
Mike & others supporting the "Big 4" bailout,
Here's a photo (http://laborpains.org/2008/12/12/22-pounds-uaw-rules-and-regulations/) showing the absurdity of manufacturing autos in the US.
Want a "Big 4" bailout then align yourselves with the semiconductor industry and get rid of such an absurd stack of paper btwn the employer and the employee.
NOTHING like this stack of paper exists in the semiconductor industry.
Again the Cliff-notes summary for industrial success:
1) "at-will" employment (i.e. no contracts)
2) rarely rehire anyone you let go during a down-turn - they end up working for your competition in the valley anxious to prove you wrong for letting them go
3) "right-to-work" employment
4) paycuts during downturns
5) fire non-performer executives
6) sorry i forgot to mention "zero work rules" (tomorrow I could be told to help unload the FedEx truck or clean toilets or perform a failure analysis on a defective return or design a replacement widget)
7) no whining
Instead of "SHOULDA-COULDA-WOULDA" how about "Just Do It".
Instead of "SHOULDA-COULDA-WOULDA" how about "Yes We Can" change the way the "Big 4" build cars.
Instead of "SHOULDA-COULDA-WOULDA" how about we are "AmeriCANS" instead of "Whining Americants"
We are all in this together and I look forward to being your "change agent"
I won't buy a car what a greasy fat-assed UAW worker pawed over. Used to, never had a foreign one yet. Not no mores though. I'm over it.
Dave D. ..."Many pre-Saturn local people in Spring Hill have always resented GM because the only local hires GM makes are for janitors and cafeteria workers at the Saturn plant. All other Saturn workers, both hourly and salaried, have been moved in from outside Tennessee."
Two reasons for that. One was to drain the swamp called the Jobs Bank that everyone is making points over. The other one is that the transplanted people were a ready trained work force.
and you fisker.... my shoulda, woulda stuff was a reflection on what I wished it had been and doesn't mean I've given up on that is how it should be.
and SJE... I can only parrot what our CEO has said about Chapter 11. Take a product with a five year warranty, a potential 20 year service life and try to sell that product when you might not make it through the bankruptcy means many custmers will walk away. If things get that bad Chapter 7 is the preferred route since they believe an 11 will wind up being a 7 for sure, anyway. The other mentionable is that during an 11 proceedings many small suppliers/creditors couldn't weather the storm. Without them and the parts they provide no cars get made anyway. And the last thing I heard was that during an 11 proceeding a company gets what is called Depositor in Possession loan to bridge the time between the start and finish of the proceeding. GM says the credit markets will not make that kind of loan to GM either. So they ask rhetorically, what's the point? Now some in the Congress have said that the U.S. would provide DIP loans, but then GM reverts to it's other reasons that an 11 proceeding wouldn't work.
The management and board met Thursday do discuss an 11 with retained counsel that specializes in 11's and they came up with a "no-go" decision for that avenue.
So it's either some kind of government loan/bailout or Chapter 7.
BTW, you guys have been great, dealing with me on this as civilly as you have. Most people have been civil to a fault towards my carrying on. I appreciate it.
I don't mind an energetic exchange one bit.
You act like the situation is static. The industry - management and UAW thugs both - with lots of help from Congress - have begun an aggressive marketing campaign to reposition their branding from selling a driving experience to positioning their product line as socialist make-work program surplus. Be as wonky as you want but each wonky day that passes this message is the only thing that's being driven home.
Re: UAW wages, benefits, and pensions are, in fact, the proximate cause of the Big 3 automakers' problems and their imminent and perhaps inevitable demise.
Um, no. The cause of the auto industry's problems is that people are buying fewer cars right now. The fact that union contracts limit the flexibility of the auto makers in responding to this fact is indeed a problem, but it is a secondary problem.
Re: Her tax plan raised the state income tax rate to 4.35% from 3.9%
???
when I lived in Michigan last (ten year ago), the income tax rate was 4.6% (and that was under a popular GOP governor), so %4.35 hardly looks like extortion.
Re: Yes, my company paid 100 percent of the premiums too -- IN THE 1980s!
I last had 100% employer paid insurance in 2005 (that applied only to the employee's premium; dependent premiums had to be funded by the worker). So it's not like that system is all that outmoded.
Re: rarely rehire anyone you let go during a down-turn
What's the reason for this by the way? Once upon a time it was normal to hire back laid-off personnel in just about all industries-- our unemployment system in fact assumes that is the norm. Seems to me it would make a lot of sense to call your own people back after a downturn, (assuming the layoffs were due to economic circumstances not worker malfeasance) since you'd be getting totally experienced people, cutting out the costs of recruiting and training, which are substantial. This seems so incredibly bone-headed that if I were Lord High Dictator of this country I would make a regulation that companies could not deduct new hire-related costs from their taxes as long as they had unemployed former workers available (again, assuming the former workers had done nothing to merit their dismisals.) This would make for shorter recessions, fewer "jobless recoveries" and more profitability sooner for recovering businesses.
Mike:
1. The warranty issue can be dealt with separately from the company, just like I can get a loan for a GM car from GMAC or from a bank. It will be more expensive, because GM has been subsidizing sales.
2. The debtor in possession issue is a problem for GM. However, the govt could provide a bridge loan for that, as part of a planned restructuring. That is, its part of a PLAN to make GM work again instead of throwing money at a big hole in the ground.
As for civility, its a two way street. You have been civil and well reasoned, and deserve no less in return.
Happyfeet said: "greasy fat-assed UAW worker."
I got just one thing to say to you...
peeping Tom. What are your friends and family going to say about you now?
The cause of the auto industry's problems is that people are buying fewer cars right now.
What's fun is to reflect that marketing data has historically shown that liberals have a far higher propensity to purchase foreign cars than non-liberals. The actual Big 3 customer base is going to be flocking to the socialist make-work program surplus showrooms in no time at all I bet.
look happyfeet, if the vehicles on a GM lot don't fit the customers' needs, driving experience or sense of social justice, whatever trips their trigger, then they just won't buy. So what that this is a marketing push is as you say? I don't see it bu t that's just another, so what. Usually, most people won't fall for that. Remember all that Made in America hype? Didn't last, did it? People bought what was good for them, ignoring the slogan's plea. I think you are off a bit, here.
SJE: how is anyone going to honor warranty work without parts? You can get a loan anywhere but often newly designed parts are not after-marketed yet, until after the warranty runs out. And we didn't even cover repair work. Where're you going to get parts for those?
A gov't DIP bridge has debatable merit. The experts will have to hash that out. I'm behind that curve. GM still thinks the the haggles of it will cause suppliers to fail causing a chain reaction.
It has been fun and informative.
Atlantic mag and Ms. McArdle, thanks for the forum.
Mike - GM-UAW
No, Mike. People bought what was good for them is not exactly what happened in recent history. What for real happened is liberals bought foreign cars and conservatives bought cars that they were told were evil carbon spewing babykillers. Now they're told they will soon be able to buy new Approved People's Cars in solidarity with Teh Workers! Don't blame me I'm not the messenger other than to say screw that action I'm getting a scion I think.
Let's see how entrenched the UAW is in six months, when one-half or so of their dues-paying members have been laid off.
I just bought a great car, A 2009 Mazda 6 that, if my web searches can be believed,was made in Michigan. The online information did not reveal whether the plant was unionized of not. Obviously, even Michigan workers can build excellent cars when supported by good engineers and good management.
If it was built in Michigan, that's probably from Ford's Flat Rock plant, which produces Mazda products as well. Technically it's a joint venture between Ford & Mazda but for practical purposes it's a Ford facility that also produces the Mustang.
You UAW gents sure are making friends down here in Dixie! Another reason to buy a UAW-made car, yes indeed.
I've never been a union member and I'm still tired of you leaches in Dixie being subsidized by the taxes of the industrial Midwest.
oh. For what it's worth from sunny Los Angeles I'm happy to subsidize the good people of Dixie. The industrial Midwest? That's precious.
Many pre-Saturn local people in Spring Hill have always resented GM because the only local hires GM makes are for janitors and cafeteria workers at the Saturn plant. All other Saturn workers, both hourly and salaried, have been moved in from outside Tennessee.
I suppose that's the difference between Tennessee and Michigan. As the automobile and related industries grew in the North, many of the most ambitious, industrious and hard working Southerners, black and white, came north to work in the factories. So many Southerners moved to the Detroit area that their children and grandchildren joke about living in Hazeltucky (Hazel Park), Ypsitucky (Ypsilanti - home of GM's Hydramatic plant), and Taylortucky (Taylor). Many of your former neighbors and their families are the autoworkers of Detroit. Those families now are an integral part of this region and state. They are our teachers and doctors and engineers, our small business owners and entrepreneurs.
The difference between Tennessee and Michigan, is that you resent people who moved to Tennessee for economic opportunity and choose to ignore the larger business opportunities that the Spring Hill plant created. The word we Detroiters and Michiganders have for the people who moved here from the South a generation or two ago is "neighbors". Perhaps that's because just about all Detroiters know from their families' experiences about moving someplace to make a better living for your family.
Perhaps those Southerners who didn't go north to work in the factories are more traditionally agrarian per the culture in the South than those who came north. They are more emotionally tied to the land and maybe they don't understand what it is like to move to find employment. The attachment to the land might also explain some of the resentment you express to the workers at the UAW plant. They're outsiders, interlopers, carpetbaggers interloping on sacred Southern soil.
It looks like that famous Southern hospitality is a sham.
Ronnie Schreiber
Motorobilia
At the end of October, the Big 3 only had 46 percent of the domestic car market and there is no indication their share will be growing any time soon.
That's a lie. The Detroit automakers had 55% market share in October and just about the same in November. GM sold about 20,000 more cars in each month than Toyota. Ford and Chrysler each sold more cars than Honda and Nissan.
Like Senator Moynahan said, everyone's entitled to their opinion but not there own set of facts.
There's so much misinformation and outright lies about the auto industry that I have to believe some of it is deliberate. A simple fact of business is that when a business screws up and pisses off customers, a significant number of those dissatisfied customers will use that as an excuse to exaggerate or even lie about about the company.
There's also a lot of astroturfing going on about the automakers' crisis.
Goin' to Detroit Michigan,
Girl I can't take you.
Hey I'm goin' to Detroit Michigan,
Girl, you got to stay here behind.
Goin' to get me a job,
On the Cadillac assembly line.
I'm tired of whoopin' and hollerin'
Up and down the Mississippi road.
Oh I'm tired of whoopin' and hollerin'
Pickin' that nasty cotton.
Gonna catch me a bus up North,
I won't have to keep sayin' yessir boss.
Goin' to Detroit Michigan,
Girl I can't take you.
Hey I'm goin' to Detroit Michigan,
Girl, you got to stay here behind.
Goin' to get me a job,
On the Cadillac assembly line.
Well, girl if you'll be alright,
And keep your blue jeans zipped up tight
When I make my first check,
I'll put you on the Delta jet. Hey hey.
I'm gonna send for you darlin'
Won't you come on home
How about a reality check here? If all autoworkers worked for free, the cost of a big 3 auto would decline only 5%. That's right, five percent. The cost of Detroit vehicles has already been discounted far more than that and they're still not selling.
This is a pointless debate of political talking points by both sides. What the UAW does or doesn't do will not make a significant difference here. The prices offered on US autos are already discounted more than the total labor cost of making those autos.
Now I know everyone wants to believe their own side, but do the math. Busting the union won't save the automakers. Better look somewhere else...
Ronnie, thanks for the background info on the Southerners who move to Michigan to find economic opportunity. I have lived in Michigan and I have lived in Tennessee. Your portrayal of the residents of the latter is wide of the mark. Imaginative, though.
There was no legal way to cut that pay. Period. The pay is set by a contract and it cannot be over ridden or abrogated by some quasi legal 'bailout' legislation.
UAW reps were at the table but had no legal authority to do anything to alter the contract, even if they had been willing to pretend they could.
So this whole argument is about make believe. A huge cut in wages tomorrow would not fix the immediate problem which goes far beyond profits this quarter or next.
When I want to read true stories about make belive I browse Soap Opera Digest at the checkout lines.
"Perhaps those Southerners who didn't go north to work in the factories are more traditionally agrarian per the culture in the South than those who came north. They are more emotionally tied to the land and maybe they don't understand what it is like to move to find employment. The attachment to the land might also explain some of the resentment you express to the workers at the UAW plant. They're outsiders, interlopers, carpetbaggers interloping on sacred Southern soil."
Honey, I live south of Nashville and north of Spring Hill and west of the Nissan plant and have for more than 40 years. You are either misinformed or delusional. And yes, if you came down here with that hokey preconceived notion about us then I'm sure you might have had a hospitality problem, bless your heart.
Rapier wrote @ December 14, 2008 11:08 PM "There was no legal way to cut that pay. Period. The pay is set by a contract and it cannot be over ridden or abrogated by some quasi legal 'bailout' legislation.
You might be correct; however, if the Big 4 Bailout Legislation has words to the effect of "UAW take it or leave it - money transfer by retired bankruptcy judge car Klingon ('czar' is too conventional) is contingent on UAW membership approving:
a) elimination of all work rules
b) at-will employment
c) 'competitive' wages
d) elimination of all seniority
e) other lean & mean, we mean to compete gung-ho measures
Then I'm sure an attitude of:
a) AmeriCAN (vs AmeriCAN'T)
b) get the job done
c) just do it
d) yes we can
e) enthusiasm
... will overcome all obstacles.
Take a product with a five year warranty, a potential 20 year service life and try to sell that product when you might not make it through the bankruptcy means many customers will walk away.
With GM scheduled to run out of cash within the next couple of weeks, that uncertainty is already a fact of life. You may have noticed that this story has been widely reported and discussed -- every potential GM customer already knows about it. A pre-packaged chapter 11 with the government providing or guaranteeing the financing would make the situation more stable and predictable than it is now, not less. On the other hand, if the Bush admin now provides just enough cash to kick the can down the road (as seems likely), the uncertainty continues for another month or two at least. Furthermore, one of the biggest uncertainties for customers is not -- "Will GM be here?", but "Will my local dealer be here?". Who wants to buy a car if you have to drive 25 miles for service? Getting the dealer network pruned up front is important for removing that uncertainty. Lastly, even after Obama is in office, Democrats still won't have 60 votes in the Senate (and you may have noticed that a few Dems voted either against the bailout or abstained on the last vote).
So, if the Senate forces pay and benefit parity on the UAW then the lure of unionization coming to their "Right to Work" state is significantly diminished.
I think you'd have to conclude that given what has happened (and is happening) to Detroit's UAW workers (hundreds of thousands of jobs vanished, employers driven to the brink of death), the lure of unionization to Toyota workers is probably close to zero right now. 'Join the UAW and enjoy the same benefits that workers in Detroit have!' -- now there's a slogan for you. That's why I think the UAW looking for 'card check' to save them is a complete fantasy.
If it helps remove uncertainty I won't buy a car a greasy UAW welfare queen layabout pawed all over. Ever.
So let's just arguments sake say that the UAW decided to work for FREE, no pay, no benefits, no retiree costs to The Big Three, no cost at all.
Anyone want to guess how much money The Big Three would save?........
THE ANSWER: ONLY ABOUT $800 PER CAR, less than 10% of the production cost, and less than 5% of the sticker price! Since that's hardly enough to get people to switch to buying GM instead of Toyota, could we stop with all the BS about how the UAW is the problem?
THE ANSWER: ONLY ABOUT $800 PER CAR, less than 10% of the production cost...
Uh, no -- the $800 per car that's floating around was an estimate of what the big 3 would save if the UAW matched the transplant costs immediately, not the total labor cost of a car. Do the math in your statement above -- surely you must know that the cost of production of a vehicle is not $8,000.
It's silly to think UAW workers deserve as much money as hardworking transplant workers what are making cars people actually want to drive. It's apples and oranges.
I'm baaack.
GM-UAW workers will be earning less and less as a group, more and more each month. It matters not a whit the path of the bailout/loan request.
It's a deal that's already been inked between GM and the UAW.
Corker is asking for something he's already got. If he doesn't know it he should ask Gettelfinger.
happyfeet, usually losing a potential customer isn't something I aim at. I will make an exception in your case. And if you do go and do something rash like buy a Chevy I hope you get one of those mythically made ones assembled after lunch on Fridays. We may as well live up to your expectorations. :)
I don't understand. If the UAW's suffocation of our poor little auto companies and their support of card check thuggery isn't disgusting then what is? Which is why I am disgusted. Legitimately disgusted. I will be the first person in my family ever on either side to buy a foreign car. Not a year ago I was still trying to figure out how to get one of those Fords from Europe that their fatass layabout workers won't let us have here. No it's not the UAW's fault that the idiot Ford people named it the Fiesta not realizing that the name has as much cachet as discount carpet remnants. But at some point you just have to say no. Go beg somewhere else you losers I'm not your welfare daddy.
typical disgusting UAW puerility and who is not having any part of it? That would be me for one.
happyfeet said: "typical disgusting UAW puerility and who is not having any part of it? That would be me for one."
Well, I'm not defending that. No siree, not with a 10' pole. Faux Pax and all that.
check card thuggery? Look, happyfeet, I get it that people out there who are anti-union think the check card system might be favoring the unions too much. But using the word thuggery when all a person has to do it have the guts to say NO? So it takes a little guts. Like life doesn't.
I don't know how to ask really because no right to ask exists but that schoolyard name calling is sooo 50's ish and over the top. I wish it would stop. All it really does is stoke emotions where they don't accomplish very much in a positive way. Got a burr in your saddle over check card? Fine, legit and all that. Just saying so does the trick. All the name calling puts you in a poor light. We don't need that amongst adults, here.
Want to buy foreign brands? Fine. Sorry to lose your busness but go on ahead. All your name calling doesn't much make for a good customer relation anyway.
The UAW didn't design the Azteck, Fiero, Vega, Cimarron, Rheatta to name the few that pop into my head right off. The UAW didn't pay dividends during repeated quarterly loses and squander company cash. The UAW didn't buy then sell Fiat; the fiasco deal. The UAW didn't pay Ross Perot hush money for giving sound advice. The UAW didn't award Roger Smith a pension of $1M/yr after he about ruined the company. The UAW didn't hang on to Richard Waggoner as CEO way past the time the ship was taking on water until it is almost sunk. The UAW didn't create a bloated, top heavy bureaucratic monstrosity of a company, the UAW didn't make the marketing calls that missed out on the various turns in the market, and the UAW never signed the company side of any contract.
We have a saying in the shop.
Your design, your price, your manufacturing processes, your marketing strategy.... OUR fault?
Oh, and BTW, Volunteer State folks are top notch.
WAR STORIES OF THE UAW!
Long post coming. Trying to blow away some of the fog about what it is like an a UAW shop.
In 1999 the company asked my local for a work rule pilot program covering a part of the shop. The union countered that they would like to implement the company's idea plant wide. The company refused. The reason was that the company got scared that the union saw something in the proposal that would allow the union more power on the shop floor. We put into effect the original scaled down proposal of the company. TIMIDITY!
In 2003 the company propsed expanding the pilot program plant wide and the union agreed. There wre no problems or additional power passed to the union because of it.
From 1998-2004 one of my best friends was elected twice to the shop chairman's position; top dog. Daily he would walk the shop floor with the plant manager and discuss what they saw. A recurring theme was employees without tasks to perform. The shop chairman would point out that several tasks in the contract that could be done were usually not assigned by the supervisory level. The company wanted changes and the union insisted that all that was needed was to simply assign employees tasks they were obligated to do. However, the gist of the matter was that these tasks were not the primary task of the employee and were, in fact jobs that had previously been done by task specific classifications that the union had agreed to put an end to. The supervisors were reluctant to assign those tasks because people had gotten used to sitting around and would squawk when assigned them. Bottom line: management TIMIDITY. They had both the contractual authority and the unions blessing to put those people to work and they wouldn't.
2007- The union knows it has its back to the wall. The company proposes a modified work rule situation on the shop floor which the union accepted. However, all that changed was ... well it amounts to not much. The company was expected to ask for the moon and most of the membership was prepared to go there. One provision that the union did refuse involved the company being able to task more than one classification of persons to a particular job. After the signing of the contract the shop chairman told the head of the company's labor relations that the provision they sought, noted above, had been their prerogative for at least ten years. They had just never either read the contract or had the inclination to implement it. Bottom line: TIMIDITY
My area has an employee whose routine is to spend the first 2 and a half hours each day reading the paper and doing crossword puzzles. I swear to you he's the only one in my area like that. Management watches him every day and never says a word to him. When they tried he was insubordinate and got away with it. Bottom line: TIMIDIY
How is the union supposed to DO managements job? If they won't step up, keeping their own people in line about doing their job, how is it that I"m supposed to take a 30% pay cut to save the company's bacon.
I'm glad Gettelfinger is resisiting at this time.
Sorry. I am harsh. I guess from your point of view there's dignity to be found in your situation. Not seeing it. But for real, people what are not begging to become serfs of Baracky's peoples collective are going to call you names. It kinda goes with the territory you've staked out. I'm just really good at it is all.
http://emptywheel.firedoglake.com/2008/11/15/what-the-ap-left-out-about-the-uaw/
From the link:
In its contract last year, the UAW made painful concessions, adopting a two-tier wage structure, such that new employees make just $12 to $15 an hour. The move is projected to bring the American manufacturers in line with their Japanese rivals’ non-union labor costs in the near future.
In addition, the union has taken responsibility for providing retiree healthcare, thereby eliminating one of the last remaining competitive disadvantages for the American manufacturers’ unionized workforce as compared to their Japanese rivals.
With these agreements, the UAW has managed to save jobs, while still providing the superior labor force that leads most segments in terms of the most efficient plants measured in hours per vehicle.
The UAW’s workers have made deep concessions to ensure American-owned auto industry remains competitive with its foreign competitors. Now that the American-owned manufacturers have eliminated some of the structural disadvantages that gave foreign competitors a market advantage, it would be a terrible waste for its country not to do what’s necessary to sustain American manufacturing though this tough financial period.
———
All information sourced in the link.
Mike wrote "We have a saying in the shop.
Your design, your price, your manufacturing processes, your marketing strategy.... OUR fault?"
Yes it is ... in part.
The price the vehicle is sold at is a function of many things (e.g. wages paid, benefits provided, factory throughput, ability to quickly recover from a line down, etc)
The manufacturing process is also a function of many things (e.g. how quickly people can be moved around the factory)
Can't say that I understand why the Big 4 have such weird work rules as illustrated by this photo of a 22-pound, 9-inches tall Big 4 contract
Photo here ... http://server1.laborpains.org/wp-content/uploads/2008/12/photo.jpg
Just amazing. Nothing like this anywhere in the semiconductor industry (e.g. AMAT, Intel, Micron, Spansion, Hynix, etc). My individual contributor employee agreement is two-pages, including the phrase "will perform other tasks as the need arises". Toss in a one-page non-disclosure agreement. Toss in a patent invention disclosure agreement. QED.
Management TIMIDITY can perhaps be blamed on the culture y'all Big-4 types allowed to be developed. I learned about that culture in two places:
(1) David Halberstam's book "The Reckoning", comparing & contrasting Ford and Nissan
(2) Caltech ME student intern who spent a summer at Big 4 auto engine plant --- he had a union grievance filed against him for trying to fix a line down.
Granted the above two occurred twenty-years ago in my life; however it sounds like it still existed in your neck of the woods.
Time for a good ole house cleaning. Bankruptcy. Flush out the TIMID management you mention. Flush out the LAZY workers. Spin-off the surviving assets as pre-IPO startups. Hire people under "at-will". Give them stock options. Not much place for a complicated work rules in a start-up. Plenty of room to innovate. Need a can-do, get the job done, hustle attitude. Anyone with an attitude like that still left in the rust belt. Doesn't sound like it.