Why Bailout US Auto Manufacturers?

[Kulindahr]

"Death grip?" You are referring, of course, to labor agreements negotiated and signed by both labor and management, correct? Did I miss something? Did the president of the UAW put a gun to the heads of the CEOs of the Big Three, threatening to kill them if they didn't sign a contract that, you know, the companies themselves agreed to?

Effectively, the unions do hold a gun to the heads of the auto companies: no one else can take their jobs, the auto companies need those jobs done, so the unions are in charge.
If Michigan was smart, they'd allow non-union auto factories to be built.
If they were smarter, they'd slash taxes on manufacturers headquartered in the state, down to, say, 5%.


And these items are pertinent to a serious discussion of the bailout, Alfie: before one makes a decision such as this, one needs to examine causes. The biggest problem for the U.S. auto industry is the sticker price of the vehicles. In the sticker price, labor and taxes are two big items.

 

[Kulindahr]

^ The US auto industry has been a death spiral for years. To accept your notion that the poor old CEOs were powerless to change the dynamics over the course of automotive history suggests that, you know, they thought the unionized work force's wages were fair and reasonable, OR, the CEOs didn't do their j-o-b-s over the past, Oh, 100 years?

Boeing, which is also heavily unionized, which has also faced many strikes, is growing globally -- it's eating Airbus's lunch in the world marketplace. Huh.

Now. You figure that out -- you're the one playing the union Blame Game.

Since I have two relatives who work at Boeing, I will.

Boeing has a totally different company climate than Detroit. Workers on all levels, from the floor to the number-crunchers, want Boeing to succeed. It's part of a team, even family outlook fostered from the start, and amazingly it still works. The workers there, union or not, understand that Boeing isn't something to be milked for their enrichment, but an outfit that needs them as part of it to succeed.
When I've been on the grounds at one of the Boeing plants, on a tour or eating in a lunchroom, people actually talk that way. When Airbus started to be a threat, workers actually asked the company "What can we do to help?"

From what I read of in the papers, and from the few people I've known in the auto industry, union workers there have to almost be beaten with a club to back off and let the companies even have breathing room.

When unions are part of the team, there can be success. When unions see corporations as places to get as much as they can, there's trouble. A relative in the railroad industry has recounted much the same thing with unions there: no one saves, they buy whatever they want, and figure if they get in trouble they can always go on strike and milk the railroad for another raise.



BTW, my sister-in-law in Everret says that since Boeing moved its headquarters to Chicago, there are signs of resentment growing out of feelings of being betrayed. I've wondered if that may start sending Being's union workers on the same path as those in the UAW.

 

[JayHawk]

The uneducated need to start figuring out it doesnt pay. Not be catered to by society. I owe no man equal pay because he had the misfortune to be born. Why do we spend the most money yet have one the lowest rated school systems and students?

"I aint gonna go to no school, the factory will gimme enough for healthcare and a good paycheck. Why bother learning?"

Tariffs are completely out of touch. It is not the reason American auto sales suck here. It is opinion and Opinion is hard earned.

So Kenny how much do we charge them thar foreigners for building cars in America with American workers?

 

[JayHawk]

Who would have ever lived to see Alfie carrying the republican lines????

Richard Shelby, the Senate Banking Committee's top Republican, opposes the measure.

``The financial situation facing the Big Three is not a national problem, but their problem,'' Shelby said in a statement. ``I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers in such a way that allows them to continue and compound their ongoing mistakes.''

Pelosi's Auto-Rescue Plan Sets Up Clash With Bush

 

[Kulindahr]

Why do right wing types hate organized labor? I never understood that..
.....

It's probably too late for that though, seeing as right wingers and libertarians have convinced half of American workers that's it's good for them to compete for wages with third world workers.

Most "right wing types" hate organized labor because the face of organized labor is the guy with a 3600-square-foot home with a two car garage, a 2400-square-foot "cabin" at the beach or lake, two cars, a truck or two, a boat, an RV, who thinks he isn't making enough money. Most people recognize that for the greed it is.
Others hate organized labor because they believe in freedom -- the freedom to go in and say, "Those guys walked off their jobs; I'll do it for you at two-thirds the cost while they're gone"... and not infrequently, the freedom to shop somewhere when there's a union picket line, without having your car keyed, windshield smashed, and tires slashed... or one a family member dodged, when going into a store being picketed: dodging paper bags thrown as missiles, loaded with mud, rotten vegetables, or human shit.
Yet other hate organized labor because for all their lofty ideals, what they're about once a union is established isn't a fair wage, it's as much as they can get for themselves, and to hell with everyone else.

Whether it's good or not for American workers to compete with those in the third world, it's reality. We either face it now, and learn to adjust to economic realities by settling for competitive wages, or let our kids face it later. Economic realities catch up to a country, as we're learning right now, and trying to run a business as though you can charge what you want when other people can make a competitive product at half the cost is a path that will end in a failed business.

 

[Kulindahr]

Another would be that lazy, incompetent CEO's take a pay cut so that they make no more than 10 times what they pay a top scale union worker.

Use union power to do that -- there's a good chance that not only would more jobs be driven overseas, but the whole company might leave. Companies value the freedom to pick their own [STRIKE]corrupt[/STRIKE] [STRIKE]lying[/STRIKE] [STRIKE]cheating[/STRIKE] quality CEOs

While we're at it,how about a tarriff on all imported cars that would be equal to the amount of money Detroit loses each time a foreign made car is sold in the U.S?

What, so other nations will put equal tariffs on U.S. cars?
Tariff wars are a great way to destroy a global economy.

I think it's time we started looking after our own industrial base.It's good for our economy,and it's a national security issue too.

That's most certainly true. There are some steps we could all take:

1. Unions stop asking for percentage wage increases, and ask for the same amount for everyone; if the guy at the bottom making $12/hr gets a $1.20/hr raise, that's what the guy making $145/hr should get.

2. Government should slash corporate taxes for companies' income derived from business within the U.S.

3. INFRASTRUCTURE!

oh --

4. Energy!

 

[JayHawk]

Kenny,
How can you believe that there is instant poverty or a 26 dollar an hour pay difference for the same work? Remember the first example? 16 vs 40 an hour for the same job? After living in Memphis for the last four years I can tell you there are plenty of high school educated workers who are extremely satisfied with how FEDEX treats them IRT pay and benefits. You probably get the point of view of the driver since that is your world. I understand FEDEX does not hire company drivers. They hire contractors and then contractors are responsible for their own benefits. The US govt does that with most mundane and also many technical task because it is so expensive to take a Sailor from cradle to grave.

What i dont understand is why you think no one can do something simply because we dont have a robust educational system? I earned my degree while working for pennies on the hour. I may have to be away from home months at a time but I dont complain about it. I am happy to do what I have chosen. I could walk out the door and make twice what I get now easily however I choose the work I do because it holds some other meaning than simply a means to pay bills.

You also talk so eloquently at the medical care yet you have no idea what it is to be fucking test rat for baby doctors. Try researching the number of failures Military doctors cant be sued for because the are the Federal Govt. Maybe someone who has experienced chop a block health care for his entire life might know some pretty damn good reasons why govt run socialized health care is crap. Why not ask norway, canada or the french how great it is, you might be appalled if you stop drinking the koolaid and actually look up some information.

So no i in no way what so ever think that because we have cultivated a culture of too lazy to challenge yourself to do better that we should reward it by institutionalizing that behavior. I think we should pick people up and expand the KNOWLEDGE of the amount of free education available in most states for the not so well off. I have taken men into the Navy from the streets of LA who knew they had to do something or go back to that pit of hell. They start with a GED and then move on the degrees and sometimes multiple degrees. So no it is not to hard to learn even if you come from a shitty background. It is too hard to learn if you choose that it is too hard.

 

[Kulindahr]

Kinda like I don't know where your meeting these guys that are bitching about only making $40.00 an hour.

Easy -- Detroit area (auto workers) and Nebraska (railroad workers).

I'm not sure you guys belive your own b.s...Why is it that we are told America is the land of opportunity,and that anyone can make it here if they ''just work hard enough?''I guess that doesn't apply to poor and middle class people who want to improve their lives.It seems the right wing and their republican cousins the libertarians really belive in an American caste system where people ''know their place''..

It's the powerful unions who believe in a caste system, with themselves at the top. Business owners and stockholders are tolerated only as means for the unions to get more money.

It seems workers though, don't fare so well under right wing/libertarian scrutiny.
They are singled out and labled as greedy,ungrateful,dumb and my favorite,lazy.

Your repeated assertions about a libertarian society just show your ignorance -- you should try learning what liberty/libertarianism is before making any more claims.

Personally,I couldn't imagine crossing a picket line.Not to work or do any kind of business whatsoever at an operation that is involved in a labor dispute. I have very strong feelings about someone that would.To me ,short of sodomizing a child,it's one of the worst things I think a person could do.I was raised to belive that anybody that would cross a picket line is nothing less than a scumbag that is never to be trusted or socialized with.

When you go interfering with a labor dispute,and start fucking with peoples jobs,I think you deserve whatever abuse you have coming.As a matter of fact,if I witnessed a person getting beaten for crossing a picket line,I would hold the picket signs of the strikers so they effectively administer a proper beating.Then I would swear in court that the person who crossed the line started it all.

I find out about the union, first. I they're making more than $25/hr., I'll cross the line if there's something I need. If they're making $40/hr or more, I'll cross the line if there's something I want. If they're making $50/hr or more, I'll go out of my way to cross the line.
But if they're down near minimum wage, I'll hand out cold pop and sandwiches.

And if that's how you would really handle someone crossing a picket line, you belong back in Soviet Russia, not in America, because you don't know what freedom is, or respect, or human dignity.

I don't belive this country should have to compete for jobs with former sworn enemies. We don't need their inferior quality crap flooding this country,and we shouldn't have to ''settle'' for ''competitive'' wages against people who make $5,000 a year.

I don't know when this ''global economy'' b.s. started,but to me it's code for slave wages, poor qualty merchandise that is often dangerous to the user/consumer..

Your choice is for the U.S. to become a third world country.
No, wait -- we could nuke the rest of the world back to the 18th century.

Those two paragraphs there show that you have no grasp of economic reality: when someone sells a product equally attractive to the consumer as yours, you either cede market share or beat his price. Since labor is part of the cost, it may have to go down for you to beat that price. If you don't, your competitor will take market share, and you will lose income, and have to lay off workers -- and, eventually, go out of business.

You may call your competitor's product "crap", but your opinion is irrelevant: the only opinion that counts is that of the customer. If customers want what your competitor makes, you either beat his price, or improve your product enough to get back your market share.

These are laws of human behavior, and are as impersonal as the law decreeing that water run downhill. You can try to ban your competitor's product, but if it's really wanted, all that will do is generate a black market, which in turn will invite merchandise even shoddier than what you think your competitor's is.

And remember that those people making $5,000/yr. have taken a great economic step upward by doing so. A thousand dollars may not amount to much in the U.S., but in many other countries it is still wealth. When Nike and other companies built plants overseas where they were paying a handful of dollars per hour, many ignorant people screamed "slave wages", while the truth was that Nike was making these people wealthy by local standards, paying as an hourly wage what was commonly accepted as a daily wage.

When the global economy business started is easy: America began it, by turning out cheap merchandise that shipped all over the world; America boosted it, after World War II, when American goods flooded the world and became the standard everyone aspired to; and America fueled it, as American consumers began buying things from former allies and enemies both, from all over the world.

All that the "global economy" really means is that the privileged near-monopoly the United States has enjoyed is ending. We no longer get to tell others what we'll pay for their raw materials so we can sell them back as products whose prices we set; we are no longer the world's great source of goods. Instead, we are facing competition from other countries as they undergo the transformation we did, from minimally self-sustaining to abundant production as their people learn that work means earning, and earning gets them more things.

You should be cheering all this: it means that workers around the world are earning more, are achieving better lives for themselves and their families, are fashioning better futures for their families. And isn't that what unions are supposed to be about -- improving the lives of the workers?

 

[Kulindahr]

A senior Democratic senator raised doubts on Thursday that an attempt to bail out U.S. automakers had enough support to clear Congress this year.

http://www.reuters.com/article/marketsNews/idINN1339368420081114?rpc=44

Yeah, that was on ABC.

But since the Treasury has decided not to use the money voted for dealing with the crisis to actually help people, it doesn't surprise me that there aren't the votes to hand over any other big amounts of money.

My opinion on bailouts: companies be required to sock away 10% of earnings into a fund so they don't have to rely on credit to operate.

 

[Centexfarmer]

Why sustain an industry that seems intent on suicide? How else can one explain forty years of progressive decline? US car makers aren't just out of luck and out of time, they are out of ideas -- they cannot succeed because they cannot provide a product people want. We aren't talking about a couple of bad business quarters -- we are talking decades.

Obama talked about making the economy grow through government investment in green technology, and by reinventing the automotive industry so that it will make great, efficient cars that everyone world-wide will want. Great! Let's do it, if it's really important. But why should we think the existing business model of our automotive industry -- the same industry that inflicted injuries to itself for forty years -- is the way to achieve that goal? Giving failed corporations and failed executives more resources and expecting different results is a poor business plan.

That's the conundrum isn't it?

During the 1950's, under Eisenhower, we got the Interstate Highways, and GM was buying up all of the privately operated public transportation, and sold everyone on the idea that "What's good for General Motors, is good for America!"

Now they're trying to sell us on the idea that 1 in 5 American Jobs rely upon the U.S. Auto Industry, and therefore a bailout is necessary to keep out economy running.

Last I heard, 1 in 150 Americans now work for Walmart; selling Chinese made goods, and most of those employees can't even afford to buy what Walmart sales.

So my question, the conundrum, how can Obama expect "Green" to compete, when we're giving badly managed corporations a leg up?

 

[Centexfarmer]

Since labor is part of the cost, it may have to go down for you to beat that price.

But when the CEO of said corporation makes more than 350% over those on the front lines that are actually doing the work, there's an imbalance there.

Henry Ford, back in the early days, calculated what it would cost for his employees to be able to purchase a Model-T, and then adjusted their salaries to make that possible.

"Corporate America" scoffed at the idea of paying their employees five dollars a day, but it worked, and made Henry Ford a very wealthy man.

Anyone who complains about Unions, are those who've forgotten what unions have done for the American workers.

The problem is, Corporations decided to make the rest of us pay by charging us more, and then the unions started charging the workers, and hourly wage no longer reflected what the rest of America was making to buy the products that they themselves were producing.

Why bail out a failed paradigm?

It's time to start new, and it's time to change the paradigm.

 

[Kulindahr]

But when the CEO of said corporation makes more than 350% over those on the front lines that are actually doing the work, there's an imbalance there.

The question is whether he's doing a job worth that %350. And that's hard to calculate -- if you pin it on short-term results, you get the sort of short-sightedness that crippled U.S. industry a generation back (I'm not sure it's recovered yet). But how do you pin it on long-term?
There's a point at which a new paradigm would help: find some way to pin CEO benefits to long-term performance.

Anyone who complains about Unions, are those who've forgotten what unions have done for the American workers.

That's kind of like saying "Anyone who complains about Republicans, are those who've forgotten what Republicans have done for America".
That's why the difference in my behavior WRT picket lines: those unions still actually working for the worker get my support; those focused on greed... my opposition.

The problem is, Corporations decided to make the rest of us pay by charging us more, and then the unions started charging the workers, and hourly wage no longer reflected what the rest of America was making to buy the products that they themselves were producing.

Greed begat greed. At this point, greedy unions are as much to blame as greedy corporations.

 

[Kulindahr]

I'll start to believe that unions are interested in a fair wage for their members when they give up percentage increases. As I've said before, when the guy at the bottom making $12/hr gets a 10% raise, the guy at the top making $120/hr should not get a 10% raise, but rather the same amount the guy on the bottom did: $1.20/hour. Anyone who thinks he deserves an hourly raise that's as much as the guy down below gets for an hourly wage is nothing but a plunderer.

 

[Kulindahr]

Kenny, you say libertarians don't want to pay the help:

with one exception, the libertarians I know are the help!

 

[Kulindahr]

A comment on tariffs:

we ended up with international bodies to regulate/monitor such things because they can result in tariff wars. Especially now, the U.S. can't afford to engage in any tariff wars: most of our raw materials these days are imported, and if supplying countries decided to retaliate by imposing tariffs on anything exported to the U.S., we'd be in a world of hurt -- everything made with those raw materials would suddenly have a higher price, not just some specific product.

 

[voyager6]

It's obvious that there is plenty of blame to go around on this subject.

Until the economy began it's major downward spiral, I had worked for an auto parts manufacturer [non-union--not sure which tier] for 17 years. I wonder what things will be like if the BIG 3 are allowed to collapse or just merge [GM/Chrysler]??? The umemployment rate here in Michigan is already the highest in the country. The ripple effect from manufacturing job losses to date are bordering on disasterous.

Can anyone really live on a minimum wage job [or 2], if you can find one??

The government already subsidizes Big Oil, 'factory' farms, etc....couldn't that money be redirected to help save 'Main Street' instead of just the weathiest .01% of the population?? I remember something I recently heard on C-span... the last time so much wealth was concentrated at the top was 1929. Anyone recall what happened that hear in history?

Sorry if I'm rambling

 

[Kulindahr]

I read Saul Alinsky's "Rules for Radicals" a few years back. He recalled a head of the UAW saying, "Building cars using robots is fine, except robots don't buy cars." Meaning, of course, that workers need a certain level of compensation to live a life of middle-class dignity. This race to the bottom, the outsourcing of manufacturing to countries like China immolated the US manufacturing base and was a contributor to the decline in the living standard of America.
....

In robotics lies the conundrum of our future: robotics is necessary to keep things affordable for most people, and yet robotics is -- at least so far -- death to employment. The technology isn't just doing away with manufacturing jobs, but is making inroads into service areas as well. The promise of robotics is less drudgery, and greater safety, for human beings, but... with what shall we buy that which the robots make, if those doing the tasks for which we used to get paid are to be robots?
One could propose granting everyone stock in the companies using robots, but that begs the question, for even if we had stock, if there is no one earning wages with which to buy the products of the robots, what will be used to pay dividends? and without dividends, again, who will buy the products?
One could say, "Workers in countries which don't have robots yet", but that only postpones the reckoning: when all jobs are done by robots, where will we all earn wages?
There are robots to assemble cars, robots to stamp out the parts and tools used by those robots, robots to build the robots which stamp out the parts and tools. Robots clean the factory floor, others recycle faulty parts, still others clean and wax the hallways, wash the windows, make the coffee, deliver the paper... and at home it is robots which vacuum the carpet, mow the lawn, even cook the meals.

When all is done by robots -- they're even talking robots doing surgery! -- and robots are cared for and repaired by other robots, the only costs left will be raw materials, energy, and transportation. Nothing will go to "labor" -- because robots don't get paid, so they don't buy cars.
But if they don't, who will?

 

[Kulindahr]

Among the great and enduring legacies of the Democrat's New Deal program was the creation of a vast middle-class. It worked hard and accumulated, in aggregate, trillions of dollars in assets. The middle-class, starting with Reagan, has been under merciless and sustained assault by the Republicans. The GOP has largely won that war against Main Street: the upward migration to the top 1% was largely a transfer of this accumulated middle-class wealth upwards, like a gigantic straw, sucking wealth.

A repositioning of the federal government towards the interests of the great "middle" started with the 2006 election. In this recent election, Obama's and the Democrats' ideological liberalism bulldozed the Republican ideology of extremism and exclusion. America is inclined toward economic fairness, as affirmed by the Obama mandate. But getting back on track will take huge political will.

Ironically, the Republican penchant for helping businessmen get wealthy has gleefully taken advantage of the New Deal wherever possible. Any place there were subsidies created for the purpose of helping the regular guy, corporations have moved in and sucked it up like welfare.
Worst, IMO, is agriculture, where subsidies and payments intended to help families stay on the land are now gobbled by corporations so vast they may as well be non-geographical "company-states".
Yet if Obama moves to change the rules there, making it so those subsidies are limited, say, to farms whose owners live on them, and at least participate in running them, the agribusiness lobby will go into high gear.

My radical solution? Simple, in two steps:
1. Pass legislation specifying that only human citizens may donate to political campaigns -- if it can't vote, it can't donate.
2. Institute a moratorium on corporate lobbying by big businesses until (a) the budget is balanced, (b) the DOW has recovered to its highest point this year, and (3) all Social Security funds are back in the Social Security account -- and rendered unavailable to Congress under any circumstances.

 

[Spiff]

I really hope Obama doesn't actually pursue this. I think it would be a devastating initiative that will cripple his record before he hardly had a chance to get started as president. Bailing out the big 3 is like feeding steak to someone with chronic heart disease who is already on their last breathe.

 

[NickCole]

A repositioning of the federal government towards the interests of the great "middle" started with the 2006 election.

How so?

I haven't seen much since 2006 that's helped the middle class. The middle class is more screwed today than two years ago.

Democrats were the primary push behind the $700 Billion bailout that hasn't helped the middle class and, as I've said from the beginning, won't (though they'll be paying for it for years to come). And bailing out Auto manufacturers who have been making bad business choices for years is just more of the same. October was the 4th straight month of plunging retail sales, October actually breaking the record of all time. That's the middle class not buying because they're broke, or anyway feel broke, and that's not going to be helped by the Fed bailing out badly run Big Business.

Obama's economic advisory team is made up exclusively of people like Robert Rubin, Larry Summers, Time Warner Chairman Richard Parsons, Xerox CEO Anne Mulcahy, Google CEO Eric Schmidt and Warren Buffett (I've left out a lot of names but go through the list, they're all the same). Who, among them, knows squat about start-ups, small struggling businesses and living today in the middle class? Even giving Obama benefit of doubt, caring about the middle class is no substitute for informed decision making. If Corporation CEOs have Obama's ear but real life middle class entrepreneurs aren't at the table, there's vital information missing.

Democrats now have control of the White House and both Houses of Congress, I hope they figure it out. But judging by what Congress has done since 2006 (this economic crisis didn't just happen in a day - Democrats like Barney Frank and Chris Dodd are as much to blame as any Republican) and Obama's inexperience, there's not much there that's encouraging.

Republicans made a big fat mess of things and I would love nothing more than to see Democrats clean up the mess and set us back in a prosperous direction, but we need more than change, we need a well informed cohesive plan that --I agree with you-- focuses largely on the middle class.