Pedal To The Metal

UAW-AARP in an Edsel. That man does have a way with words. Great article. Thanks Kate.

Bailoutistan. Love it!

As one of those million GM retirees, I take no consolation in the fact that my next pension check may be my last.

It really sucks to be a 100 year old company, and have a responsibility for the legacy of former employees. Why, it would be much simpler and a lot cheaper to collapse the organization every 20 years and walk away. That would be real civic minded.

Very few of us autoworkers have full control of our destiny. We are at the mercy of production decisions made in the face of an ever changing marketplace. For 38 years, I was fortunate enough to be part of an organization building Chevrolet Silverados and GMC Sierras in Oshawa, Ontario. For 37 1/2 years, we simply could not build enough to satisfy the demand. Build, not sell. Every year the Chevy market guys would show up and exhort us to "Beat Ford". Rah rah rah! The irony was that we could never beat them: Ford could always build more F150s than GM could Silverados.

Then, suddenly, within 6 months, we went from 3 shifts to 1 shift to plant closure. You can mock the overpaid autoworker (trust me, there is lots to laugh at) but at any given point in time, that plant alone contributed upwards of 10% of the entire Canadian balance of trade.

Last time you checked, Kate, the F150 was still the best selling vehicle in America. Check out No. 2 on the list.

Toyota opened their full size truck plant in Texas a year or so ago. No union, no pensioners for 30-40 years. GM and Ford really do not stand a chance.

Me, I guess Timmy is hiring.

It really sucks to be a 100 year old company, and have a responsibility for the legacy of former employees. Why, it would be much simpler and a lot cheaper to collapse the organization every 20 years and walk away. That would be real civic minded.

Or, they could pay their employees a fair wage for the years worked and people could be responsible for themselves once they no longer work there. You know, the vast majority of us don't have anything resembling the post-employment benefits UAW/CAW or public sector employees have. We set aside money while we're working to pay for our own retirement.

I've had employers go bankrupt before - it meant I had to find another job and that's it.

The most telling factor was Steyns assertion that Toyota had a profit of $1600 per vehicle, while GM showed a loss of between $500 to $1500 per vehicle.
Need a new business plan? You betcha!

John, when I first moved to the Saskatoon area, it was to work for a neon sign company. I worked on contract basis there for about 4 years, (meaning no benefits), went on holiday and returned to be told they'd hired someone new (cheaper), and my services were no longer needed. To add insult to injury, someone had stolen one of my oils hanging in the art department there.

No notice, no severance, and no second income.

They went broke about a year later.

Kevin Jaeger:

Do you think auto workers are underpaid? Every frickin' newspaper article I read about Detroit says they make $70-80 an hour in wages and benefits. GM says the average wage in the US is close to $40/hour, with another $33 in pension, health care, and other benefits. Now, my math skills are rusty, but I can still do basic arithmetic. $40/hour works out to just over $70 grand. Not too many tag days for them!

John:

I feel for you, but Detroit's biggest failure was marketing. Too concerned with this year's bonus in the executive suite. I remember my dad telling me about a component his company was building for Ford in the 60's; it was a window winder (remember those?). Ford's specs were that it wouldn't fail for so many revolutions AND that it would fail after so many revolutions. That's the type of thinking that gave North American cars a reputation for shoddy construction.

And whatever happened to innovation? I can't think of single new car feature to come out of Detroit since the intermittent wiper (and that came from an outsider as well). Well, maybe the Volt. Airbags, ABS, crumple zones, even 3-point seatbelts were all developed elsewhere. I know there are smart engineers at the car companies, but they don't seem to get much rein.

Ironically, for companies that supposedly make crummy cars, the quality is now so good, they've actually eliminated a good chunk of their market as people now hold on to their cars for for almost 9 years, instead of the 6 that was the average in the 60's. That's a third of the total market gone. And that's in a boom; now that recession is hitting home, they're going to hang on to them even longer. Lean years for all the auto makers ahead.

Do you think auto workers are underpaid?

No - where did I say that?

As with public sector workers it's very hard to figure out exactly how much they're paid, since so much of the compensation is a promise to provide future benefits after they no longer work there.

Isn't red the colour of debt? Can you say irony?

KJ:

You wrote "Or, [the auto firms] could pay their employees a fair wage".

While my math skills are rusty, I'm pretty confident in my reading comprehension. By using the comparative "or", you imply that another state of affairs exists, which is to say the auto firms pay an unfair wage. An unfair wage is usually taken to mean "underpaid", with the notable exceptions of professional athletes, movie stars, and Wall Street bankers. I don't think you were contending that auto workers are overpaid. As I pointed out in an earlier post, GM's average wage is $40 in the US (don't know about Canada). 70,000 US a year won't let you live in luxury, but it's a start.

$40/hr is a very good wage, wish I had earned that much in my trade, but, we had competition.

The UAW appears to NOT have any intention of taking more than a token pay cut, and I wonder what sacrifices the executive branch intends to make, none?

Governments had better keep an auditor on the companies backs, full time, or these billions will be wasted on maintaining the status quo, and they'll be back for more.

My favourite Chevy jingle was, "Chevrolet, building a better way to see the USA".

[quote]It really sucks to be a 100 year old company, and have a responsibility for the legacy of former employees. Why, it would be much simpler and a lot cheaper to collapse the organization every 20 years and walk away. That would be real civic minded.[/quote]

John,
You do know that all Company employee benefits are a pretax write off. That means that the Company pays less taxes and that results in other taxpayers paying MORE. The GM retires are been supported by taxpayers (USA)

In the real world of corporate economics it’s a double whammy! The pre-tax advantage write-off for employee benefits can be set at a predetermined amount (pick a number) that is not the actual cost (USA). This gapping Tax loophole encourages large Corporations to Self Insure & Self Fund their benefit packages. They actually make Money in their benefit packages. Corp HR policies generate revenue streams reaping huge amounts when they close a plant or fire the employee just before they reach vesting or retirement age. Re-organization plans are a moneymaker and that money comes indirectly from other Taxpayers. It the classic SKIM off the top.

I believe the CEO of GM was honest when he said the UAW was not a problem for the Corporation, and now you may know why!

BTW: "Rivet Head" a book by an Auto assembly worker is a Classic example of the Management in Detroit, although he didn't intend that slant . I loved it.

John, my heart goes out to you and your family. Sincerely, it does. I have a very good friend in Windsor named Hansi who is in a similar situation. He & his wife, Lori, are in their retirement years now and have vast plans to continue their traveling around the world.

Both you and Hansi did nothing wrong. You simply agreed to the terms of the contracts and went forward, just like any of us would do. But unfortunately the Management at the Big 3 were making promises which were simply unsustainable. And now they are expecting the citizens of America & Canada to cover their mistakes.

If it were just the money recently allotted for the Big 3 then I could it handle it. But we all know that they'll be back again & again & again over the next 2+ years. This is where I must say 'No'.

I've worked for myself for the past 14 years. I have no company financed pension plan. I actually sustained a fairly significant personal debt when a past company of mine failed. My employees were paid but I got stuck with the debt. Not once have I asked for or expected taxpayers in Canada to bail me out. How present and past UAW members can expect differently is beyond my comprehension.

Personally I'm on the work-until-death pension plan. I have no illusions that these socialist wonder programs will still be solvent when I hit 75.

That will be the new retirement age, they'll have moved it to escape the demographic bulge. Boomers -never- die, they just hang on, and on, and on...

But on the bright side, kids keep getting fewer and poorer educated every year, so there should be plenty of work.

dmorris:

The UAW signed an agreement with GM a few weeks ago that drops the starting wage from $28/hour to $14/hour. It only applies to new workers, though. And I don't see GM hiring lots of people in the future.

And the big problem with the pensions, as I see it, is more people are living longer. US men in 1960 had a life expectancy of 67 years; now it's 75 years. Women live even longer. The percentage of people over 65 has increased by almost 50% since 1950. I'm sure when the Big Three inked those deals, their accountants/actuaries looked at life expectancy, and calculated reasonable and sustainable pensions. But now we have more and more people living to be 90 or 100, so the stats are out of whack. And I'm pretty sure the UAW wouldn't allow a roll back of pensions!

Phillip Shaw:

Why shouldn't firms be able to write off the cost of benefits? They expense salaries, don't they? It's just as much a cost to the firms as steel.

And your fantasy that the Big 3 "self insure" would come as disturbing news at Blue Cross Blue Shield of Michigan, where I worked. Their single largest customer was the UAW. BCBSM did close to $10 billion in premiums last year, and a big chunk of that came GM, Ford, and Chrysler.

Love your creative use of capitalization, though.

I also had a chuckle over the Christmas image in Steyn's article:

"We three kings of ol' Detroit are;
Seeking checks we traverse afar"

If no one ever said "Thank You" John for helping to build those Sierra trucks I will. They're a hellava ride!
I've puked out the door manys a time in my younger days.
Just about everybody I know has gotten laid in one.....that's males and females.
If you loaded down the box with some weight the buggar could push through snowdrifts to the top of the hood.
That being said....I also have the work til ya drop pension plan....don't expect the taxpayers to also fund your retirement and their own. Sorry dude.

Swash 700 Elongated Biscuit Toilet Seat Bidet.

talk about a Steynian way to flush a Chevy

[quote]Their single largest customer was the UAW. BCBSM did close to $10 billion in premiums last year,

[quote]Love your creative use of capitalization, though.[/quote]

KevinB,
Lets do a little more creative capitalism with your assumptions.

In Canada some retailers have thier own credit Cards. The Home Depot would be a good example; if you look on the back of that card you will see the Corporate meatball of GE Capital (or I am a Monkey's Uncle). The obvious question is who has money at risk? Is GE a storefront of services using Home Depot’s money, or are they (GE) fronting the whole enchilada. The answer could be found in the Contract between the parties.

You claim BCBSM made 10B on "Premiums". How would you know? Self Insured does not mean that they don’t use outside Servicing companies, and thier fees, but it "does mean" they do not pay profit generating premiums.

BTW: UAW pays thier own executive & employee benefit packages.

Of course I somethimes jest!