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November 11, 2008

Let. Them. Go.

big3.jpg
Source.

President Bush - this is your "air traffic controllers" moment. Do not waver.

Someday, a nation will thank you for it.


Posted by Kate at November 11, 2008 12:23 AM
Comments

I have a question for you Kate, what do you and your husband do for a living and what was your gross income in 2007 - 2008?

Posted by: ok4ua at November 11, 2008 12:47 AM

That graph shows who's really responsible for the downfall of the beloved automotive industry on this continent. I wish I could make that kind of money putting a nut and a bolt together. Unfortunately, there is no reason to believe Bush will choose the wise path. He bailed out a rotten system once and he will only prolong the slow, choking death of the Big Three.

Posted by: SaskHab at November 11, 2008 12:53 AM

Kate

Two words..union spoilt. Productivity decreases with each collective agreement and the legacy of men who busted their balls is diminished by their spoilt offspring. The functionaries within the "movement" pad their nests and the whole concept of quality is rejected in lieu of fake solidarity.

Disgraceful.

Syncro

Posted by: syncrodox at November 11, 2008 1:06 AM

Though I happily voted for Harper, I do have some fears that the Cdn gov't will be bailing out the Big 3 autoworkers in Ontario & Quebec too.

It would be fascinating to show poll respondents the graph and then ask them whether they think the autoworkers should be bailed out with our tax dollars.

Posted by: Robert W. at November 11, 2008 1:16 AM

It all started 40 years ago.

Union; Give us big money and pensions (from R&D kitty if ya have to) or we strike.

Management; Ok, we will just bolt on a new tailfin for next years model.

Meanwhile, Honda and Toyota perfected their crankshafts and made every button and lever work to perfection and encouraged the workforce to innovate, with reward.

In my day - first 11 vehicles were Fords and GMs. The last 3, Honda and Toyota. The kids ? All Honda and Toyota.

Not gloating. I really do think it is sad Sad SAD

Posted by: ron in kelowna at November 11, 2008 1:43 AM

Bailing out the NA auto makers now will only delay the inevitable at the expence of taxpayers.

Either the Unions go or the Manufacturers go.

(Syncro, I think the term roont is more apt than spoilt) :)

Posted by: Oz at November 11, 2008 1:48 AM

Related:
Look at slide #4 (on page 2]
http://www.boomertirement.org/documents/Moshe-Milevsky-Boomertirement-Presentation-Slides.pdf
Big 3 US automakers have an unsustainable business model. Defined Benefit Pensions, retirees living longer.
Chart of Retirees per 100 workers: Toyota, 2; Honda, 5; Nissan, 11; Ford, 125; Chrysler, 153; GM, 310. ref: NYT May 19, 2006 (C5). The hidden liability of DB Pensions will eventually sink the ship; it's inevitable. Let.Them.Go. A little more of interest in the other slides.

Posted by: David at November 11, 2008 2:15 AM

In my day - first 11 vehicles were Fords and GMs. The last 3, Honda and Toyota. The kids ? All Honda and Toyota.

Not gloating. I really do think it is sad Sad SAD
Posted by: ron in kelowna at November 11, 2008 1:43 AM

Back in my early driving days, I had an extremely unhappy experience with a Ford vehicle. It was easily the most unreliable vehicle I have every driven.

After that, I moved onto a Suzuki model vehicle. I ended up not really liking the vehicle, but reliability was not one of the problems -- mainly poor fuel economy bothered me.

My last three vehicles, all Honda. I won't even look at another model. Bought my first Honda back in 1997, and it was easily the best vehicle I'd ever driven, from fuel economy to reliability, top marks.

I have a feeling I'm but one person telling such a story. All due to a poorly engineered and designed Ford product, I have avoided North American vehicles since. Like Ron, not gloating here ... just stating my own personal experience. I would personally prefer to see the "Big 3" auto companies in strong financial shape.

Posted by: CJ at November 11, 2008 2:23 AM

My 1987 Chrysler LeBaron had a great engine and drive train but the damn alternator kept crapping out and the plastic fittings around the window frames never fit. The dealer's attitude: it's your problem, you bought it! My 1997 Saturn SL1 was good but the crankshaft bent at 136,000 km. The dealer's attitude? The warranty has expired.
Shopping for my current vehicle, the local Ford dealer was too busy holding a party for Mustang buyers to deal with us. After that brush off we only considered Honda and Toyota. We bought a 2005 loaded Honda van. Best decision I ever made. Now I am shopping for a second commuter car and GM, Ford and Chrysler do not receive a moment's consideration.

Let. Them. Go. They are authors of their own misfortune.

Posted by: Norm Matthew at November 11, 2008 3:10 AM

Saskboy, let's do a little math, shall we? Let's take Kate's quoted figure as gospel (remember this figure is what the manufacturer says they pay), $73.20. Let's multiply that by the industry's quoted number of hours to build a vehicle, in fact, let's round it up to 24 hours. The product of those numbers is less than $1800. It's been quite a while since you could buy a Big 3 vehicle for 18 grand, so the labour cost is less than 10% of the price of a vehicle. If I worked for free, the price would still be over 90% of what it is now, even if they did reduce it by the labour cost. So, if I did work for free, who would you blame then?

Posted by: finnbar at November 11, 2008 6:53 AM

Saskhab, let's do the math. Taking Kate's figure of $73.20 (a figure given by the manufacturer, let's remember) and multiply by the 24 hours it takes to build a car. The result is less than $1800. It has been quite a while since you could buy a Big 3 vehicle for 18 grand, so the labour cost per vehicle is less than 10%. If I worked for free, and they actually reduced the price by the labour cost, the vehicle would still cost over 90% of what it does now. Who would you blame then?

Posted by: finnbar at November 11, 2008 6:58 AM

finnbar,

Does it only take 24 man hours to assemble a car? What about all of the parts that go into it? It would be good to know just how many man hours are required to build an automobile.

Posted by: Trent at November 11, 2008 7:17 AM

While its easy to trash the NA car biz, reality is, since WWI, it has been the single most important economic engine building the NA economy. Be careful what you wish for. The high wages of the industry have provided the cash flow for much of the consumer portion of all western economies, and the seed capital for many post war recoveries, Japan being a prime example. Oil wasn't a big player until relatively recently. The collapse of the North American auto industry could be the tipping point into a full scale depression.

Posted by: Skip at November 11, 2008 7:26 AM

"I have a question for you Kate, what do you and your husband do for a living and what was your gross income in 2007 - 2008?"

A post that prompted the right Lefty question. What world might the auto union workers live in after their bubble bursts you mean? When they have to earn their own living?

There was a time when unions were important. That time has long past. Now unions are one of the most destructive things the North American economy has ever known.

And given their political sister - socialism - unions are one of the most destructive things our political system has ever known.

Cleanse the system. Let them die.

Posted by: irwin daisy at November 11, 2008 7:46 AM

Some of the comments seem to imply that Americans and Canadians would not be making automobiles if GM, Ford, and Chrysler went under. Is it not true that most of the well managed anuto manufacturers have plants in North America?

Posted by: Roseberry at November 11, 2008 7:47 AM

I spent my life listening to these potbellied, unskilled bozos bragging about how much money they made - not mention laughing about how little work they did.
This bailout will simply prolong the agony. People paid little attention, but the big 2.5 automakers were going broke long before the so-called meltdown. The timing works for them, now they can call for a handout without exposing their inherent weakness. A few years from now they'll be back for more.
It seems autoworkers are the protected class, we are all supposed to make sacrifices for these people. Ontario has lots of unspoiled wilderness left, I say it's time to build a nature preserve and museum for this endangered species; they can demonstrate their lost art of bolting little parts to big parts.

Posted by: clancy six at November 11, 2008 7:48 AM

Union wages are why the big three are opening new facilities outside of US and Canada, not why they're doing so poorly in terms of sales. They couldn't effectively compete with Toyota and Honda in the car market based on design and quality, so they put all of their efforts into the pickup and suv market. Now those markets are drying up, and suddenly they're hurting.

Posted by: pete at November 11, 2008 8:08 AM

There was an excellent book called the Death of Detroit written some 5 years ago. The author pointed out that Toyota and others were headed by engineers and their focus was on the customer and the quality of the car whereas Detroit was headed by accountants focused on how much profit they could make from each vehicle hence the larger the more profit. As all unions do UAW and CAW demanded always more for less. They are no different here in Canada where they are demanding the same taxpayer help. The non-union car companies are still doing well here.

Toyota and the others moved to the bible belt away from the Detroit area and built flexible lines with highly trained and well paid non-union workers.

When I was in Kansas city airport in July I was astounded at the thousands of new Ford SUVs sitting on paved lots never to be sold. Look around you and count the percentage of the Big 3 to the other car manufacturers like Honda. People are buying value and have been for a long time.

Let the market decide and if these companies fail they fail. Remember all the companies that provide the parts supply the other non-union companies too and these successful car companies will expand into the larger market.

The truly sad thing is that whereas the union and non-union employees of the Big 3 will suffer our huge public employee unions grow larger each day as private union and non-union companies shrink and are affecting our whole society. A primary school teacher now makes $94,000 in Ontario plus rich benefits.

Posted by: Dave at November 11, 2008 8:49 AM

I live in Windsor,ON. the automotive capital of Canada ruled by CAW thuggery, dare speak up against them you will suffer reprisals.
Ingrate CAW thugs and money grubbing executives will be all looking for a golden parachute at the expense of the taxpayers.
Ken Lewenza will scream bloody murder and bite the hand that saves his CAW.
So I say NO minister Flaherty to any bailout.The sooner the automotive industry dies the faster the CAW will disappear.
To all you CAW members - who needs your business when you come in looking for CAW discounts. Get a job.

Posted by: Simeon at November 11, 2008 8:52 AM

odd how it is only the unionized auto companies that have all the problems. Bad management, greedy unions, crappy products.

Ya . . just prime for a bailout.

Wonder if they'll bail out Honda & Toyota ?

. . as for me - never owned a "big 3" car. Started with a 72 Datsun 510 that died at 300k miles - then Hondas since. Recently "upgraded" to an Acura TL.

I am a very happy car driver.

Posted by: Fred at November 11, 2008 8:54 AM

I am perfectly happy to pay high taxes so that people whose only skills are political can make more money than me. Why shouldn't I be? We are in Obamopia, after all.

Posted by: Tim in Vermont at November 11, 2008 9:11 AM

I wish they broke out the costs better. They indicate total compensation...so how much of that is direct labour and how much of that is pension and health care liabilities or payments.

GM has moved to address some of this but GM was effectively a Health Care and Retirment Management company based on the programs that they agreed to in contract negotiations.

The answer may need to be Chapter 11 so that the companies are restructured. You need to be careful how it is done so it isnt done for the favour of managemnt, single investors or the unions alone. The old saw is only the government can decide whose ox gets gored when there isnt enough food to feed the village.

These long temrm costs are the problem, they cost money and most importantly they take management time. Honestly, is there any reason mgt should spend one minute discussing the huge bureaucracy that manages health benefits at GM and not spend time discussing new cars, better cars and all the details that flow from it?

The overcapacity in the industry has been known for 25 years. It just isnt possible to float keep it all going now, or engage in slow orderly shutdowns, because they delayed the decision.

Canadianas and Americans will continue to produce cars, its at what wage and who for. Spend too much time discussing it and you'll lose the whole industry.

There will be major pension and health care reform that comes out of this. In the US, I wouldnt be surprised to see this as the excuse to bring in universal health care, they'll do it to save the car companies because then GM can shred the contracts and hand off significant costs to a government plan. Estimates are that helath and bennie costs for retirees are on the order of $5,000 per car!! Thats the costs that kills.

I agree that contrcats need to be respected...but when a contract is no longer tenable, despite best efforts then it needs to be recast. The companies will take a bankruptcy bath, trough Chpter 11 and emerge less encumbered, but shreholders and retirees and current workers are about to take it in the neck.

This has been a long time coming, the ONLY thing the government can do is mitigate some of the pain, it can t stop it or delay it any longer.

How this relates to the crisis, in the past, as in good times, the companies could raise capital, which would then be raided by unions and execs. This credit criss means there is no money available, and the companies are in an incredibly weakened stake.

For Toronto's sake, thank goodness the banks are in decent shape, in pain but not distress. There are two industries that fuel the GTA, Financial services and Automotive. If both went at the same time there would be tumbleweed rolling down king and Bay.

Ugly ugly times. Governments role at this time is to grease the wheels of transition and protect only what is startegic. Flaherty struck the right tone, help only those plants or situations which are in normal course sustainable operations...the rest we will have to deal with otherwise.

I will say again a big F N mess. And in due course metaphorical heads should be put on metaphorical spikes, a little early for that yet but the time will come. And the blame is in some surprising areas.....getting ahead of that curve politically will be important.

Posted by: Stephen at November 11, 2008 9:27 AM

On one of the other threads somebody mentioned the reason the Big Three started the whole SUV thing: taxes.

CAFE standards dictate that cars be a certain size and get a certain mileage...but not "trucks". Nobody wants those cars. They want the truck because its bigger and it can get out of its own way. So Detroit builds trucks. Duh.

V8 rear wheel drive, that's what people want.

Nobody makes that anymore. So the Japanese and Korean cars have a huge advantage, because they are tooled up and trained up to make front-drive four bangers. Any possibility that British or Italian cars might compete got killed by their respective governments in the 1960's.

Fast forward a while, we have ever tightening CAFE standards, ever more obscene union demands, ever more intrusive regulation of workplace and etc. etc. et bloody cetera.

So cars cost $30-$50k. So you have to get a LOAN, because nobody these days can -safe up- $30k in the lifetime of the average car. That being five years. So, pretty soon your frickin' dog can qualify for a car loan.

Suddenly, you can't get a loan. Because SOMEBODY, the same geniuses who were responsible for the CAFE standards and the regulations and the unions and the health care costs and the lawsuit insurance blah blah blah, decided they were going to do for house loans what had already been done for car loans. Now your dog can get a house loan to go with his car loan.

Lasted what, nine years?

Who was responsible for all that? Who did that? The US government, that's who. Sometimes the Dems, sometimes the Repugnicans, but always socialists trying to central plan their way to The Workers Paradise.

So yeah, I think maybe they should bail them out seeing as how they put them under in the first place. And when the bailout fails, as it will, the socialists can raise taxes and nationalize the companies. Which will go broke. Again.

At some point in this process it will become obvious to the general public that Big Government isn't working. Then we will have smaller government. Eventually.

Posted by: The Phantom at November 11, 2008 9:35 AM

Mazda guy myself. I guess Ford owns a piece of the action but so far they haven't screwed it up.

The Big 3 are a money pit. No amount of money thrown their way can save them. Bankruptcy will be painful but is necessary.

Posted by: Mississauga Matt at November 11, 2008 9:37 AM

I'm a dedicated half-ton guy. I drive a GMC or a Chevy. Pretty much the same thing. That could be a problem right there. Why would GM have both? They are the same truck. Doesn't make much sense to me.

The way things are going I may have to consider a Toyota Tundra. The "trade-in value" of my GMC is probably going down fast.

But, I agree - no bailout. Let them go.

Posted by: a different Bob at November 11, 2008 9:38 AM

When I was a kid the most popular and affordable cars out west came from England. Austin, Morris, etc Very poor management,a greed y Union along with foolish Government killed the British owned industry. They nationalized Austin, Morris into British Leyland and that didn't help.
Today, no British owned car company exists.
Strangly (or not) cars are produced in great Britian by many other car mfg's.
The bottom line is that the big three and thier Unions have been beaten in the market plaace by thier compettitors.
When the public decides that they want cars made by a new batch of car makers instead of the big 3
no government should interfear with that choice.
For the workers at Ford, CHrysler and GM here in Canada..,. they should thank thier home grown "RED BARON" Buzz, for joining with poor management in destroying a great Industry.
Our Governments should accept that the consumer has chosen to avoid buying from the BIG3
Save our Tax dollars for something worthwhile.
p.s. yes I own a Dodge 1 ton and my wife drives a Vibe.. (choices)

Posted by: melwilde at November 11, 2008 9:50 AM


Sadly, there will be a bailout any way you look at it.

It would be good to let them go into chapter 11 before helping so that they can be re-organized.

But any way you slice it, the ERISA laws will kick in if they go under. Thanks to the Dems union pandering decades ago, the union shops were allowed to promise unsustainable retirement benefits which they didn't have to fully fund. The US taxpayer is going to get to do that. All defined-benefit pensions (which only union and government hacks get any more,) are insured in the US.

That means that bailout before or bailout after, bailout there will be. Hopefully, it's after chapter 11. They need to shed the unions and force the bond holders to take a haircut. The equity holders will get zero (which, some analysts are already calling.)

Posted by: Warwick at November 11, 2008 9:55 AM

Warwick,

Thank you for mentioning the pension piece, defined benefit.

While the Canadian government is reconsidering pension rules, they should outlaw defined benefit plans, only to take them off the table for union demands. Save companies and unions form themselves. Leave it at defined contribution and then there are no lingering liabilities down the road for comapnies to poach or unions to negotiate higher bennies on.

Its for each sides own good. Outlaw these creatures now and force conversion of existing ones, provide assistance to do so. They are corrosive promises, either false hopes for workers or an unecessary drain on companies.

Posted by: Stephen at November 11, 2008 10:06 AM

While there have been bailouts in the past that have worked (Lee Iaccoca Chrysler), the reality is that most bailouts just wind up encouraging the recipients to continue exactly the same as what they have been doing.
In the false hope the good old days will return and then we'll pay it all back.

Hands down winner so far in this thread is Dave with the Toyota engineers designing good, quality cars versus Detroit accountants designing Detroit dollar signs, ooops, I mean cars. That is as true as it gets.

And to think of all the years that Buzz Hargove pleaded poverty!

Posted by: rockyt at November 11, 2008 10:12 AM

Autoworkers making almost $75/hr. Hah, they wish. The average wage is about $25/hr for autoworkers at the Big 3 in Canada. Benefits are at most about $15/hr. Outside of the Big 3, average wages are only a few dollars less per hour mainly due to their slightly younger workforce (experienced workers earn more) but that gap continues to shrink.

Posted by: Robert McClelland at November 11, 2008 10:14 AM

Ontario teachers make $94,000?!? Dave, check your numbers: a teacher in the top pay category of the current contract, with the maximum years of experience, makes $10,000 less than that -- and teachers who are in lower pay categories or are "working their way up the grid" make considerably smaller sums. Remember, too, that many of these people have a couple of university degrees, and the potential to make considerably more in the private sector if they so chose.

Posted by: Chesswiz at November 11, 2008 10:24 AM

McClelland,

You're an economic illiterate/leftard - which is the same thing.

The labour costs include days off (sick as well as vacation,) health, pension, wages, benefits, and includes the cost of retired employees as well as working employees.

They include those not working as they still have to pay for them. In fact, GM's retired workers cost them more than the people currently building what they refer to as their product.

The figure is the COST of labour and is an accurate figure.

Posted by: Warwick at November 11, 2008 10:25 AM

BTW, I am wondering when Lawrence Solomon is going to weigh in on this subject?

He is the Toronto-based writer that wrote many, many columns that ridiculed the federal govt for spending tax dollars on western agriculture.
He said it was a complete waste of money to 'subsidize' agriculture in the Palliser Triangle and most of Western Canada.

Has anybody seen anything Lawrence's position on the auto industry bailout?

Posted by: rockyt at November 11, 2008 10:27 AM

Robert,

This is why I wish the source broke out what is in the calc. It is likely the unsustainable pensions and health bennies. SO each car isnt carrying just the "burden" of mgt overhead, direct labour and other inputs but the past legacy of all ex employees.

As somone pointed out here or otherwise, GM has moved to change this with the union but the effects wont really be felt till till either 2010 or 2012.

You could make the car everybody wants and it would still be a problem until the new structure kicks in.

In normal times GM, in partiucular, would have muddled through till that time, raising either some debt or additional equity to tide it over till their new cost structure started to yield benefits.

One option on the table, if it was about a single company, was providing the funding to accelerate that chnage to yield the new costs structure. Then you could walk away saying its all down to business finally and not some legacy that the government played direct and indirect roles in creating. And that is the question all sides have to face.

This isnt just GM mgt fault, not just the workers. If the last 50 years had been a true negotiation, without the government thumb on the scale in a number of areas, requirements to builf certain types of cars, tax incentives to build others, favours to unions in certifications etc then a more rational result might have been the result. But there is lots of time to deal with that later.

There is continued overcapacity on the car industry, massive new investments are required in the normal course of business and there are new things coming down the pipe that will require additional new investment. Investment is hard to come by right now, these arent normal times, so government has to be prudent about what it does, who it helps and who it chooses to let slide beneath the waves, because some have to but not all.

This is when I really wish we had a majority government. But Harper looks to be playing it smart and trying to ensure that as many groups as possible are in the boat with him making the decision. A proper process makes the inevitable cuts easier to implement.

Big F N mess.

Posted by: Stephen at November 11, 2008 10:29 AM

Robert,

This is why I wish the source broke out what is in the calc. It is likely the unsustainable pensions and health bennies. SO each car isnt carrying just the "burden" of mgt overhead, direct labour and other inputs but the past legacy of all ex employees.

As somone pointed out here or otherwise, GM has moved to change this with the union but the effects wont really be felt till till either 2010 or 2012.

You could make the car everybody wants and it would still be a problem until the new structure kicks in.

In normal times GM, in partiucular, would have muddled through till that time, raising either some debt or additional equity to tide it over till their new cost structure started to yield benefits.

One option on the table, if it was about a single company, was providing the funding to accelerate that chnage to yield the new costs structure. Then you could walk away saying its all down to business finally and not some legacy that the government played direct and indirect roles in creating. And that is the question all sides have to face.

This isnt just GM mgt fault, not just the workers. If the last 50 years had been a true negotiation, without the government thumb on the scale in a number of areas, requirements to builf certain types of cars, tax incentives to build others, favours to unions in certifications etc then a more rational result might have been the result. But there is lots of time to deal with that later.

There is continued overcapacity on the car industry, massive new investments are required in the normal course of business and there are new things coming down the pipe that will require additional new investment. Investment is hard to come by right now, these arent normal times, so government has to be prudent about what it does, who it helps and who it chooses to let slide beneath the waves, because some have to but not all.

This is when I really wish we had a majority government. But Harper looks to be playing it smart and trying to ensure that as many groups as possible are in the boat with him making the decision. A proper process makes the inevitable cuts easier to implement.

Big F N mess.

Posted by: Stephen at November 11, 2008 10:29 AM

Chesswiz is correct. My wife is a primary school teacher and she's one year off the top of the scale and doesn't make close to 94k.

Posted by: Warwick at November 11, 2008 10:30 AM

Nah, it's just the beginning. What's next are governemnt employee pension shortfalls, they are all DB type and the legacy costs are beyond what a resonable person would pay for, contract or no contract. The taxpayer is on the hook for them, paid for by us BEFORE we get to pay for our own.

The actual people in government who will decide the results of this looming fiasco, have a conflict of interest - they are also recipients of government DB pensions.

Posted by: jt at November 11, 2008 10:34 AM

Mucho apologies over double post

Posted by: Stephen at November 11, 2008 10:36 AM

Logically, GM will arrange a working line of credit, (either prive hands holding bailout money), or direct bailout funds, file for protection, void all contracts, leases, default on the pension plans, (forced in place by GOVERNMENT, not unions), shut down and sell off obsolete plants and THEN gobble up the remains of Chrysler and strip it down as well. This will save the military divisions, and ensure continued production. Are you aware that Allison Division, (Automatic transmissions), is operated under military command with full military security?

As another mentioned, the CAFE standards mandated everyone drive Ugos, and the demand was there for trucks and SUV's. Unfortunately, manufacturers can't change production as fast as fickle consumers can change their minds. Back in the dark ages, (the seventies) I worked for Hertz Truck division, Ford told us that Hertz was 35% of their market,and US governments were 45%.

When I worked for Chrysler in the late ()'s, 60% of all Chrysler vehicles were purchased by US governments. It was rumoured that the failure of Chrysler in the Carter years was due to the US government cutting back on military spending on vehicles.

IanV

Posted by: Ian Vaughan at November 11, 2008 10:37 AM

Elementary school teachers in Ontario earn an average $80,392 in salary and benefits, according to the ministry of education. Secondary school teachers earn slightly more, an average of $83,543.

With the wage increases on offer, the average elementary school teacher's salary will rise to $90,481 in four years.

Posted by: pete at November 11, 2008 10:49 AM

I'm a pretty young guy and I bought a 2006 Ford Fusion over a similar Honda Accord/Toyota Camry because it was $7,500 less and had 0% financing rather than the 7.25% financing that Honda and Toyota were offering at the time; the Honda and Toyota were nicer cars, but there was a $10,000 premium for owning them. If it wasn't for unpaid liabilities to retired union workers the total price difference would have been much more dramatic.

The American automobile manufacturers can compete in the marketw, but certain liabilities need to be eliminated and they have to survive long enough to move into a new market segment ... Back in the day people bought Japaneese cars because they were dramatically cheaper than American cars, if the big three survive we may see the reversal of this trend.

Posted by: NoOne at November 11, 2008 10:59 AM

pete,

That figure includes benefits. The figure from Dave above claimed 94k NOW ++ benefits.

The problem with teachers isn't their pay but their lack of accountability. The unions only protect the teachers who should have been fired long ago. My wife complains about the bad teachers all the time. She's a good Scot with a proper work ethic. She doesn't look kindly to the lack of effort and professionalism shown by some of her peers.

Given the average age of teachers, the unions have also sold out younger teachers. Boomer's greed again. May they die young.

Posted by: Warwick at November 11, 2008 11:01 AM


Un-fortunately Kate, I firmly Believe Bush is gona bail the Big-3 out.

We Conservatives had it made when Bush came on board, but how quickly it all came apart. Bush and Roves Amnesty Plan pretty much killed the GOP and now if they appoint Steele to head the RNC it will finish us off. There is no accountability or transparency left in our Gov't.

Get what you can, stash what you can, take out what you can, and cash it in if you can and hang on, it's gona be a rough 4 year ride.

ps.. the Pontiac Vibe is a Toyota Matrix, and isn't the Ford Fusion a Mazda something or other ?

Posted by: Ratt at November 11, 2008 11:12 AM

Bottom line on bailouts, USA, Obama. Canada, electoral numbers, we still need a majority of Ontario votes for a conservative majority. As far as I’m concerned bailouts are a given, hardly worth discussion.

Posted by: Western Canadian at November 11, 2008 11:22 AM

Kate you are right.

Unfortunately the auto industry has in essence become a form of welfare.

Quality isn't that great, never has been. Ergonomics of most US auto designs is terrible. No such thing as a refined, well-engineered small engine from any of the US auto companies. Big is better has always been their engineering and business motto.

And workers are way overpaid.

It's a rotten situation all around.

The gov't would be better off taking their money and using it to seed some NEW auto companies that are able to bring fresh ideas to design, and that don't have union shops.

The big US auto companies are dinosaurs that need to be left to become extinct. The US will be better off in the long term.

The notion that companies are used as a form of welfare is very European.

Posted by: TJ at November 11, 2008 11:36 AM

RockyT, you know, I can't really agree with you on the design thing. I have a Dodge 1/2 ton truck which I love, a Honda Pilot which bores me but is a really fine vehicle in all other respects, and a Chrysler Intrepid which is like 13 years old and still working just fine. Boring, but fine.

My all time favorite cars I've ever owned were a 1976 Pontiac Lemans and a 1978 Oldsmobile Delta 88. I bought them both for under $1000, and drove the hell out of them. The all time worst POS I ever had was a 1978 Honda Accord. Where the Yankee iron kept on chugging, the Honda lost a wheel bearing on the 401, lost a pair of front brake pucks on the Gardiner Expressway (exciting!), and burned oil like a smudge pot. Impossible to work on, everything teeny weeny.

My Pilot works 100%, my sister's Element toasted its brakes once and blew the front and rear diffs and transmission already at three years old. All depends, doesn't it?

All things considered, I like the older American cars and newer trucks because I can FIX the damn things. The rice and the front drive American cars a hell to work on. Bad design forced into service by asinine government interference and weak kneed managers.

Posted by: The Phantom at November 11, 2008 11:37 AM

Trent, the 24 man-hour figure is what the company tells us it takes. This is when they are telling us that we must reduce that time to be more competitive. Obviously, a reduced time would mean the labour cost is an even smaller part of the vehicle's cost. As for sub-components, they are beyond the control of the Big Three's employees, aren't they? So if the companies choose to outsource and are taken to the cleaners by other manufacturers, how is that the fault of those overpaid slobs who only screw nuts onto bolts? How is outsourcing considered to be a labour cost?

Posted by: finnbar at November 11, 2008 11:43 AM

Finnbar,

How about doing a bit of analysis instead of just conjecture. Let's compare GM to Toyota shall we? EBITDA margins at Toyota are 15% (approx). They are 2,5% at GM. That's a 12.5% difference! If you assume GM could somehow make the same margins at Toyota, it would (assuming it managed its working capital properly) be able to invest an extra 23B per year in capex to improve its products. So obviously, the inferiority of GM's product line has to do with the fact that it makes less money on the cars it sells.

So let's delve into this further. What are GM's costs? A huge portion is raw materials (steel, aluminum, plastic). It is doubtful Toyota could gain such an advantage on that front. The other big cost are fixed costs related to running plants. That is mostly energy and operational costs. Again, improbable that Toyota could gain such an advantage from this. The last major component is labour. Look it up, estimates of Toyota's advantage in terms of labour costs range between $1500 and $3000 per car. So if your average car costs $18 000, it is perfectly logical to conclude that the Toyota advantage comes from it's labour efficiency. How is this not the union's fault???

Please do your homework and think before spouting your economically and financially illiterate opinions.

Posted by: Charles at November 11, 2008 12:01 PM

Ted Turner appeared Tuesday on CNN, the network he founded....

CNN: [Obama] seems to be talking about a lot more government involvement in the business community going forward, more government money for an auto industry bailout, another economic stimulus package. As a person who pulled [himself] up in the business community from his bootstraps, is that the way to do it, with more government involvement?

Turner: Well, I don't think so. It was a struggle financing CNN, but I did it without ever asking the government for a nickel. In fact, I gave the government $32 million when they were a little short and couldn't pay the dues to the U.N.

http://www.cnn.com/2008/SHOWBIZ/books/11/11/turner.qanda/

Posted by: JM at November 11, 2008 12:10 PM

If Chevy went back to making a basic pickup truck?

I'd buy another in a heartbeat.

Never any major issues and held up when I got hit by a drunk driver in a Dodge Ram.

I hate the "luxury liners" anyone cranks out anymore.

The Titanics of Deeeetroit they are.

Posted by: Hard Right at November 11, 2008 12:18 PM

Bought my first Honda in 1982. Haven't looked back since. Currently an '07 Civic that runs a treat. And it's made in North America. Having lived in an auto town for several years, I can tell you these guys aren't starving by any means. Laid-off workers get a top-up to 90%
of their salary and benefits include legal plan as well as medical, dental etc. CAW effectively runs the company. My prediction is the domestic auto industry is going to go the way of the Brits.

Posted by: Gerry Atric at November 11, 2008 12:20 PM

Phantom, I was raised a Ford man, but the only new car I bought was a 71 Camaro z28 (4 spd 4.10 rear heh). And I drove Volvos with fuel injection long before most people had even read about it.

Before that I also had a Porsche 1600 Super and a TR3, so I am a free thinker on autos.
But the fact remains that Detroit fell behind after Nader put the kibosh on Detroit innovation by going after GM over their first Corvair (I also had a 65 Corvair Corsa with the good suspension heh).

I also like cars I can fix but we are dinosaurs in the world today. Luckily most cars in general today are so superior to our older stuff it is unreal. Both Detroit and the furreignners deserve kudos for that.

Posted by: rockyt at November 11, 2008 12:22 PM

Do all of you pick-up drivers live on farms or do you just enjoy spending more on gas than food each month?

What the hell use is a pick-up truck on a day-to-day basis if you aren't rural (or a tradesman, etc.)?

Posted by: Warwick at November 11, 2008 12:22 PM

Do all of you pick-up drivers live on farms or do you just enjoy spending more on gas than food each month?

What the hell use is a pick-up truck on a day-to-day basis if you aren't rural (or a tradesman, etc.)?

Posted by: Warwick at November 11, 2008 12:42 PM

Chuck, it is hardly my fault if you don't like the results obtained by using the Big Three's numbers. THEY say their costs are $73.20 per hour, and THEY say it takes almost 24 hours to build a car. If you think the result is incorrect, do the math yourself. IF you STILL don't like the answer, your problem is with the data and that, amigo, is not supplied by the union. Those are facts, no matter how much you whine about it or pretend to be a financial wizard. As I said before, if you eliminate the labour cost completely, the cost of a vehicle is reduced by less than $1800 dollars. I'll tell you what: you tell me how much YOU think the labour cost is for an average Big Three vehicle, if you really believe that Toyota has a $3000 cost advantage per vehicle.

Posted by: finnbar at November 11, 2008 12:54 PM

Here's an article regarding labour costs of GM and Toyota:

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20071008/REG/71004020/1001/TOC

Posted by: pete at November 11, 2008 1:13 PM

Reality is that the US bailout, now up to $75 Billion, will mostly go to selling the existing inventory of cars at firesale prices. After that's done, the Big 3 will declare bankruptcy because their products will not sell in the current situation.

It's over .. nobody is going to invest in a big, overpriced yank tank because it has no resale value, and you can't expect to keep running it after the manufacturers finally go bankrupt. Would you 'invest' in a Cadillac knowing it's going the way of the dinosaur?

WTF did you think was going to happen with the Billion$$$ of bailout money ... the rebirth of the Detroit Big 3 ...???!!!

Posted by: Observant at November 11, 2008 1:16 PM

This could be very significant going forward;

[Now that it has negotiated a new labor contract with the United Auto Workers, General Motors has shrunk its labor cost gap with Toyota down to $800 per vehicle.

Just two years ago, that gap ran as high as $4,000 per vehicle, said Dave Cole, head of the Center for Automotive Research in Ann Arbor[Financial Week

Who knows, but at $4 bucks a share, we may look back some day and say; Boy was I stupid. The Engine and tranny lines alone were worth $40 bucks a share.

8 years ago, $81 bucks

A year ago, $25 bucks

Today, a share can be got for less than $3 bucks.

Even if GM clawed back to within only a quarter of it's peak value ($20), that would represent a gain of 700% from today !!

Moves like that is what make the rich, really rich. Think Buffet.

Posted by: ron in kelowna at November 11, 2008 1:51 PM

Finnbar,

You haven't even begun to address my argument. If you do not believe that the 12.5% disadvantage comes from labour, please make a rational case for another factor that could explain the discrepency. I already outlined the 3 major cost components. Please explain how Toyota could have a 12.5% advantage from raw materials or energy.

Meanwhile, GM has improved its gross margins from -0.6% (yes it actually lost money on each car it sold in the US before factoring in SG&A, depreciation, interest and taxes) in 2005 to 2.8% in 2007. How did it do this? Well, part of it is $9B in advantages from cutting costs from labour. That's 5% of revenues. GM also estimates that its labour costs represent 30% of sales in 2007. It hopes to cut this to 25% by 2010. GM's recent health care settlement with the union cut 1.1B in costs alone. Where did I get this info? How about simply reading the annual report? Apart from the auditors, thousands of analysts pour over these numbers to make sure they are correct. Lying on a 10-K amounts to fraud, and eventually these types of lies come to the surface ... think Enron.

BTW, I don't know what you do for a living, but you obviously have no clue how to analyse a company's financials.

Posted by: Charles at November 11, 2008 2:07 PM

one word for the mess


UNION!!!!!!!!!!!!!!!!!!!!!

Posted by: GYM at November 11, 2008 2:10 PM

Ummmm ... Ron ... Buffet only buys stable businesses with great managements and great track records. GM is trading at $3 because it is about to run out of cash. It only has two ways out, finance itself with debt or equity. Since banks are not going to lend, it is safe to say equity would be the only option. If equity is used, current shareholders will face massive dilution and hence lose almost everything. If the company goes into receivorship, then the bondholders will have first dibs at the assets and you can bet there will be a fire sale. Either way, there are tons of great firms trading at outrageously low valuations ... stay clear of GM.

Posted by: Charles at November 11, 2008 2:14 PM

Warwick, I buy big American trucks because I can, Chevy Avalanche, Silverado, Lincoln pick up, and Cadillac SRX V8 AWD. Why the hell not. While I live in an agricultural area, the only time my vehicles go off road is when I lose momentary control. Mind your own business and enjoy yourself in the rice grinders.

The Japanese manufacturers have gotten a free ride in the U.S. building facilicities with huge state benefits and no legacy overhead. In Japan, U. S. manufacturers can barely get through the red tape to establish mere showrooms. Similar to our beef and rice producers they have mammoth protectionist restrictions on foreign products. Some ally.

In the meantime, I buy my vehicles based on what I know, not what Catie Couric said on the news. My Dad was always a Ford man until I turned him to the "dark side" with GM. He owns two GMC Yukons and a GMC "Jimmy." The Jimmy is the ranch truck and so only has around 220,000 miles. The two other Yukons do "road duty" and so have well over 300,000 miles. Neither has ever had any work to the 4WD or the motors. Actually, the 2001 turned over 300K this past Spring. Don't tell me about Japanese quality. There is some fact in the reputation mixed with a lot of gullibility. I've been driving Fords or GM products, one Jeep Wrangler Sahara, since the '70s. I don't need either hand to count problems because there haven't been any. AND, I thrash my vehicles. The Big 3 provided jobs, housing and college to millions of Americans over the decades. I for one would rather bail out those jokers than hand money over to smart ass venture capitalists who weren't as smart as they thought they were and in any case should have known better.

Posted by: iowavette at November 11, 2008 2:22 PM

The labour costs in a big 3 vehicle accounts for only 7% of the final price. Canadian autoworkers could work for free and it would change nothing. Working in an assembly plant is very difficult. Yes, I work in one, and I can honestly tell you that I do not feel overpaid. There is no real quality gap betwwen the big 3 and others. Only a percieved gap. The plant I work in uses 17 man hours to build a vehicle - better than all the japanese plants. Our quality is second to none and always getting better. The vitrol in this thread (and others) toward the autoworker is unjustified. The canadian autoworker is the world's best and getting better. This industry is definitely worth saving in my opinion. I am not a bloviating, loudmouth union lardass. Sure there are those, but they are generally ignored. We know what's going on around us and have always been willing to change and compromise and improve to survive. Being a lifelong conservative is difficult in a union shop sometimes, but the union hard ons are increasingly being marginalized and ignored. Please stop dumping on the canadian autoworkers. We are smarter and harder working than most think. It is a vibrant industry that finds itself in the crosshairs of a serious situation. We will recover and continue to make vehicles second to none for a very good wage. What's wrong with that? The claim that productivity suffers with every new collective agreement is simply not true. Productivity in the canadian auto indrustry is the best ever and getting better.

Posted by: Chazz at November 11, 2008 2:59 PM

While there have been bailouts in the past that have worked (Lee Iaccoca Chrysler)
Posted by: rockyt at November 11, 2008 10:12 AM

Well, rockty, not to go all ideologically pure on you, but "worked" is questionable. Read some Frédéric Bastiat, esp. about the "what is seen vs. what is not seen". To wit, you can't know this 'cos you don't know what productive use this money could have been put to had it not been expropriated by the government.

That Crysler continued as a commercial enterprise does not prove that the bailout "worked".

Posted by: Me No Dhimmi at November 11, 2008 3:15 PM

ok4ua I don't get the point of your question. Whatever Kate's gross family income is is hardly relevant here. We are not saying that there are no people who make more than Big 3 auto workers (certainly we all know about teachers, public servants, bus drivers . . . they all take home a pretty good buck.) The point is that in comparison to the average hourly wage, Big 3 auto workers are clearly way beyond the average. This tends to be the case with most union shops. The result is a two-tier universe -- union workers and then others (many small business people). I think in view of this it is necessary to make some judgments about whether or not union concessions re salaries are appropriate if there is to be a bail out -- or even whether or not a bail out is warranted. Funny, I have also noted that some among the most wealthy and priveleged of these well-paid union groups are also staunch NDP supporters (lots of teachers, univer. profs, etc.) -- so much for "social justice".

Posted by: LindaL at November 11, 2008 3:20 PM

Charles, I agree. I used GM as an example how of this deep downturn could, could be a huge buying opportunity - even with a poorly run company as GM, Ford ect. (panic may, may have driven it lower, much lower than fundamentals would suggest.

I also agree, the stable, well run companies are the ones to hold today. They have been collateral damage in all this. (Proctor ? J&J ? Wells F ? Power Corp ? Genentech ?)

Posted by: ron in kelowna at November 11, 2008 3:33 PM

iowavette,

lol. well, if you want to piss away your money on gas, go right ahead. I will always have better things to spend my money on.

You did hit on a huge portion of the big-3-dino's problems though. It's the "legacy overhead" combined with bad engineering and a shoddy product which will sink them.

If you haven't had your GM's in to the shop much you must fix them yourself. My mom drove a Yukon Diesel and it was in the shop so often she was happy to be rid of it. My first car was a ford. It was my last ford. In my family, the GM's and Fords have all sucked and the Hondas and Toyotas have been faultless. You can whine about it being "anecdotal" all you want but you go with experience. My current Honda was built right here in Canada and I my best friend just moved from Dana where he worked in a now defunct unionized truck frame plant (F150 frames) to the new Toyota plant. They provide plenty of jobs here.

As for the "big-3" not being "let into" Japan, I can't see why anyone would want to try. The Japanese buy mostly small cars. In case you didn't notice, there isn't much room in the average Japanese city so if you drove a chevy half-ton you'd have a half-ton worth of paperweight while you sat stuck in traffic you can't get through. There isn't any demand there for the crap GM or Ford makes. They only people who buy big vehicles there are the rich who tend to favour Mercs and BMW's to Lincolns and Suburbans.

Posted by: Warwick at November 11, 2008 3:39 PM

Chuck,
Why do you refuse to address what I've said? Let's continue, shall we? YOU say that GM says labour is 30% of its sales for 2007...fair enough, let's use that figure. With 266,000 employees and 30% of 181 billion dollars, they now claim that each employee "cost" them about roughly $212,000. Since they didn't pay me anywhere near that amount, the rest must have gone into funding my pension fully.........oops, wha'dya mean my pension is underfunded? I do not know what they do with the money they earn but labour is hardly where it goes.

You seem quite willing to take their word for what the figures are, so much so that you convince yourself that auditors get to see the real books. You tell Ron that Warren Buffet wouldn't buy GM because it is poorly run but then you have profess faith in their auditing process? Let's make it real simple: if GM wants to get public money, the government should get unlimited access to their books. And if you think that will ever happen, I've got some very valuable GM stock to sell you.

Posted by: finnbar at November 11, 2008 3:54 PM

finnbar

As an economic illiterate, I would not expect you to understand these things.

But you did hear that labour costs for the companies include RETIRED employees as well as those currently working?

In other words, the pensions, health benefits/drug costs, etc. have to be included.

I also bet you didn't know that the retired employees cost MORE per year than those actually making their product?

If GM shut down today, tomorrow's labour costs would still be huge.

Posted by: Warwick at November 11, 2008 4:07 PM

Warwick asks(somewhat heatedly I must say): "What the hell use is a pick-up truck on a day-to-day basis if you aren't rural (or a tradesman, etc.)?"

1. It will shrug off a direct hit from a minivan, and survive one from a transport truck.

2. You can put a 4x8 sheet of plywood inside where it won't get rained on.

Try that with a Honda Civic.

The money I save on gas by driving a small car is no good to me if I'm dead. Being in the medical rehab biz, I've met a lot of people who've been smashed to crap in car accidents. This has left me with a profound need to have lots of mass on my side of the crash equation. I happily pay for the gas to haul all that mass around.

If I was poor, I'd drive some ancient barge like I used to when I was a kid. 1978 Olds, baby. Big like a mountain, nasssty like barbed wire. Nobody EVER cut me off in that thing. Same with the Pontiac. Same with my truck these days. The morons fear the big iron.

Conversely, every single time I drive my smaller car somebody will cut me off, tailgate me, or pull some other stunt. My driving style doesn't change, just the size of the vehicle.

Big is good. Small, not so good. This is the Phantom Theory of Vehicles.

Posted by: The Phantom at November 11, 2008 4:09 PM

"2. You can put a 4x8 sheet of plywood inside where it won't get rained on."

1-How often you do drive around with plywood?

2-do you drive around with plywood more often because all your friends and family know you have a pick-up?

As for the size vs. survivability, engineering wins over mass and with a smaller car, if you aren't an incompetent driver you can manoeuvre easier so you don't get into an accident.

I'm not saying don't buy what you want. I don't care if you blow your money at the track. I'm just saying it surprises me how many people waste good money on pick-ups they don't need. But to each their own.

Posted by: Warwick at November 11, 2008 4:21 PM

Kill the corporate welfare fatted calf. Since when do tax dollars go for incompetence at business? To continue to make a lavish lifestyle for bums. The Unions have become a burr under the saddle of regular workers. Teachers unions I recon to be the worst for political & economic blackmail.
The result of this socialization has been poor productivity, the loss of any real democratic Unions to user abuser mooches, who take from peoples checks with avarice, since they can't work a real job. Presidents for life. Money for nothing & there homes for free , including cars. Frankly I see little difference in both these organizations leaders.
If where to pay these losers at least give us some stocks as compensation.
Spend some money in worker education. Inspection systems. Make the product well, not based on old models, but sound engineering as America was famous for with Canada. A low dollar made us lazy, sloppy & stupid for handing con men our lives out of expediency. We l noticed the price4s for cars did not go down when we equalized our dollar with the US. It took months until even the press figure3d it out. Gouging your customers can make money in the short term. Kills you with a bad rep. When the Canadian dollar went lower it was not 10 hours before they raised prices back to 40 cents on the dollar. Who needs these crooks. The3 same could be said for furniture companies & the rest including oil. I notice as usual between 20 & 10 cents less a liter in the EAST. Nice to know where being buggered that way as per usual by Easteners. Is there not one business, or bank, including the government in this Nation that doers not rip off its own Majority of peoples, by gouging with over taxation, high absurd prices or just plain theft?
JMO

Posted by: Revnant Dream at November 11, 2008 4:23 PM

Let's get something clear. I do not believe GM should get any public money. Governments should never own companies because inevitably decisions become political and not economic If they do, I firmly believe management should get fired and the union canned. Management should have never caved in to the union.

Have you ever heard of the job bank? GM actually has to pay ex-employees 90% of their salaries even after firing them. Furthermore, GM has to pay insanely generous retirement benefits to past employees. So your formula does not work. It is simplistic and ignores reality.

I again will restate my position. How do you explain the EBITDA margin difference between GM and Toyota?

And another thing. GM is a poorly run company. But auditors are independent. Auditors must audit good and bad companies. What's your point?

Posted by: Charles at November 11, 2008 4:43 PM

Chesswiz and Warwick, I meant to say at the end of this contract just signed. According to the Toronto Sun the high wage would be 94K with the median one being $83k. This is an incredible wage for 158 days of work.

Chesswiz, don't be to sure that teachers would do just as well in the private sector. My wife, who was a director at one of Canada's largest accounting firms, worked in Human Resources and interviewed many teachers at a downturn several years ago. They were in such a huff when she said you have few marketable skills for business with a degree in history or fine arts. As noted by many posters here these degrees mean little in private industry and many businesses are loath to hire former teachers as they come from a heavy, heavy union environment with all sorts of entitlements and attitudes. Check Dion out as an example!

Posted by: Dave at November 11, 2008 5:05 PM

Robert W. wrote: "It would be fascinating to show poll respondents the graph and then ask them whether they think the autoworkers should be bailed out with our tax dollars."

The only way that the masses are going to become aware of this massive, potential tax liability is if people like us make them aware.

Copy and past the graph and title and comments provided by Kate (with attribution on course) and paste them into your Outllook or other e-mail program. Then send them to everyone in your address book and ask them to forward it to everyone they know.

Otherwise, with Ontario putting heat on Stephen Harper, it's going to be a done deal and we'll all be back in deficit territory again.

Posted by: No Guff at November 11, 2008 5:10 PM

One other thing to be aware of with the Big 2.5 is the public's perception of long term viability. If the potential buyer of a GM or Ford feels they may not be around in a few years they may be reluctant to purchase the vehicle and the tipping point would have been reached. This happened as mentioned to the English car companies and they all disappeared.

Posted by: Dave at November 11, 2008 5:20 PM

Actually Me N D, you have a good point about opportunity cost.

But the reality is that if Chrysler borrowed the money at the going rate, and paid it all back (ahead of time even) which they all did, then nothing was lost by the govt. In fact, comparing the Chrysler loan to the pathetic record of Cdn govt loans not being paid back ever or token repayments at best, it was a excellent investment for the US gubmint because a local company kept local people employed for another 20 years and they got all their tax dollars back.
And that's all anybody else could have with the money at the time also.

Of course if you can show exactly where this same money was asked for by somebody else at the time and the exact noble purpose they were going to use it for, then maybe we can further discuss Bastiat's/your theoretical side of the question.

Posted by: rockyt at November 11, 2008 5:21 PM

Chazz said: "I can honestly tell you that I do not feel overpaid."

That's a first. A union worker who feels he's not overpaid! Keep that one for the archives.

Posted by: No Guff at November 11, 2008 5:45 PM

Dave, the numbers are fishy again. I assume you meant teachers work 185 days, rather than 158? Still doesn't sound like much, I suppose, if you're not in the profession -- and not aware of how many evenings, weekends, and holidays are spent on the preparation and follow-up required to do the job properly. Then there are the additional qualifications courses taken at your own expense during summer "holidays." For those teachers who DO dog it, well, like Warwick and his wife, I have a lot of sympathy for the idea of getting rid of them, and no patience at all for the unions that defend their incompetence.

Yes, the max. in 4 years time will be about 94K. That will be earned only by those teachers with maximum experience in the top pay category. I don't know how the Star could claim to calculate a median, since that would require knowing how many teachers are employed, and what they each earn -- which I doubt the Star does. I'm guessing they just picked a big number from what looked to be about halfway up the grid. And even if 83K will be the median in 4 years, that means half of all teachers in the province are making less than that -- many of them a lot less.

Re: private sector jobs: point taken. I didn't mean to suggest that any old teacher could simply walk in to any private sector job they wanted; I've known more than a few I wouldn't hire to walk my dog. A more accurate way to put it would have been to say that a comparably educated professional in the private sector has the potential to make vastly more than a teacher ever will -- one of the reasons fewer men have chosen to enter the profession in recent years, especially in the elementary division.

Posted by: Chesswiz at November 11, 2008 6:09 PM

Correction: I meant "the Sun," not "the Star."

Posted by: Chesswiz at November 11, 2008 6:13 PM

rockyt at November 11, 2008 5:21 PM

Well, rockyt, I DO confess that I had forgotten that the Chrysler bailout was a loan at market rates which was paid back before the deadline. Nevertheless, I'm still squeamish about risking taxpayers money on a gamble which may well not have paid off.
If it was such a good investment for the gubmint why not for private lenders? Also, I'm uncomfortable that CEOs even see this as an option, and even in the form of a loan it does create moral hazard.

But you're right, my reference to Bastiat may not have been quite apt in this case.

On the subject of Bastiat's "what is not seen" it is quite amazing how many economists fall for the fallacy. Recent Nobel laureat, the moonbat BDS sufferer Krugman opined that there was a silver lining in the cloud of 9/11 vis-a-vis the economic "stimulus" of rebuilding. The "broken window fallacy" I think Bastiat called it.

Posted by: Me No Dhimmi at November 11, 2008 6:50 PM

Wading into the war of experiences with vehicles, I can tell you after six years of renting vehicles instead of owning one, you get more bang for the buck with a toyota, honda, mazda, etc than a North American model. Even comparing a North American model, say Mazda Protege to a Mazda 3 built overseas, there is a difference, although not as blatant. Early rice burners did have issues with Canadian winters and roads in the early years (had a Hyundai and a Honda back in the 80's) but they adapted and improved the product to the point that I'd rather not get a North American model.

And for the record, I was and always will be a pick up truck guy ('66 GMC) but now drive a Mazda 3 on a daily basis. It is fantastic on gas and parks great but I have trouble taking a plasma tv or sheet of drywall home, not to mention no trailer towing. If I had the luxury of a truck for weekends etc though it would be a Tundra (Toyota). Toyota Tundra Texas Edition is particularly sweet.

Posted by: Texas Canuck at November 11, 2008 8:19 PM

Warwick - good and valid quesion. I am not a farmer/tradesman but I do own a cottage about 30 minutes from where I live. I am always hauling something to or from the cottage so I decided I needed a truck. Now I did not buy a truck as a second vehicle. It is the only vehicle I own (other than my Harley). You know the saying "you should own a truck or a friend who has one." I AM the friend who has one.

Posted by: a different bob at November 11, 2008 8:21 PM

Dammit Me N D, you're not playing fair!

I wanted you to suggest an alternative use for the money and then I was going to point out we could have a vote on the uselfulness of the Chrysler spending.

You may have also forgotten/not known that this famous govt loan allowed Chrysler to give the world the first, taaa daaaa, MINIVAN.

And you would have lost because all the soccer/hockey/baseball/tennis/everything Moms (bless them all) of North America would have voted massively for the van.

But seriously, I fully support and vote for small and frugal govt. The less the govt spends as a total of the national economy the freer the citizens are.
Luckily in Canada we (along with the IMF) were able to beat some sense in the feds about Canada's total govt debt load bomb, that approached $900 billion, and they started slimming down in the mid 90s.
Cut the hell out of healthcare but financed the gun registry and Adscam - what a perverse value system!

Now the Canadian govt is in a very good position to help the economy thru the muddy road ahead with some judicious spending.
Canadian conservatives can stand up and take a bow over that one.

Posted by: rockyt at November 11, 2008 8:39 PM

I wish that people who do not understand the "workings" of a business would take the time to learn BEFORE they spew their nonsense


when factoring labour cost for comparison you use only direct manufactoring costs, over head is a different matter


and when considering these direct labour costs, one must also take into account productivity and quality. Quality could mean a defective rate that brings the cost of production up due to rejects. These rejects at chrysler in brampton are scrapped because it cost to much (because of unions) to repair. These costs are often "hidden" in overhead

and as far as one poster claiming about the HARD work. I'v had one of the 3 bigs as a customer, and have yet to see anyone in there work, PERIOD!!!!!!

Posted by: GYM at November 11, 2008 8:52 PM

If these jokers get there way. Some day we may end up putting wreaths on monuments to the victims of these Wolves. Evil knows no shame. Id she doesn’t show up you know someone high up put the kybosh on this little exercise in propaganda.

Perfect idea Ezra. You just may have scared her away. Will be sending some more money, just takes time is all ,to save.

Posted by: Revnant Dream at November 11, 2008 9:48 PM

Chesswiz, thanks for the feedback. I didn't mean to just focus on teachers but they are a blatant example of how escalating public sector union wages continue to soar in a time of economic crisis. Teachers take courses primarily to make more money though they are in most cases unrelated to their job, just padding the CV.

Whereas there will be a market correction for the unionized auto industry and they will adjust or die the public union's greed seems to know no bounds. York University staff are on strike demanding 11% over 2 years and could care less that tuitions are soaring or students may lose their year, I want mine now.

As noted before, McGuinty has hired 41,000 public employees in the last year alone. An article in today's Sun covered a restaurant owner that I patronize complaining about countless inspectors and myriad paper work to achieve compliance with scads of red tape, taxes of over $400,000, 10 times what he takes home before his own taxes. As Tom Zoras, the owner, states "I am essentially a civil servant with no benefits or pension."

This overregulation will destroy small business. It is a reflection of too many government employees, each with a large salary, benefits and a huge pension feeding on the wealth creating side of business and consuming that wealth through make work jobs.

As a former director of payroll and human resource systems for the Oshawa Group, a former large national food company, responsible for a staff of 42 people and a payroll of $350 million I earned not much more than a teacher made at the time, just a few years ago with nothing like the benefits and pension. We worked the nights, Christmas, T4s, whatever it took to meet our deadlines.

I had a great staff and enjoyed the job but a good friend who worked for the City of Toronto retired at 53 with a 70% pension, fully indexed and took his last year off fully paid for by his accumulated sick days and vacation time. Who pays for this, you and I do in our taxes. The question is for how long can declining private industry squeezed by the reality of the marketplace continue to fund this?

Posted by: Dave at November 12, 2008 12:16 AM

GYM said, "as far as one poster claiming about the HARD work. I'v had one of the 3 bigs as a customer, and have yet to see anyone in there work, PERIOD!!!!!!"

What part of the plant are you in? You do realize how ridiculous that statement sounds? I can only speak for my plant, but everyone has a job. It's the whole thing. The shiftwork (I'm not complaining, but everyone knows shiftwork impedes good health). Repeatitive work is inherently stressful. Strain injuries are very common, especially as the plant community ages. I could go on, but the point is, the public perception of the autoworker as "have yet to see anyone in there work, PERIOD!!!!!!" is largely simplistic. As in any workplace, their are exceptions, but the vast majority of canadian autoworkers are hardworking and loyal. Bailout or no bailout, I will survive. I really don't care. It would be easier for me to finish out my worklife within the auto industry, but I'm prepared to move on, just like any other worker. I just want to clear up some facts. A factory doesn't churn out a quarter million vehicles a year without hard work.

Posted by: Chazz at November 12, 2008 3:04 AM

The problem with the car industry is they have totally over complicated the product based on stupid consumer demands. They are too heavy, to ineffienct, and way too expensive and their value drops like a rock once purchased. What kind of logic says somebody should be spending 30K plus (x 2) to drive kids to soccer and pick up groceries and get to work. People live such crappy lives revolving around paying for car loans, insurance, gas and maintaince.

My solution, ride a bike to work, drive and old car in town, and rent if a go on a long road trip and when I want to go fast, dust off the 82 750 Katana. For the wife, a basic Honda Civic.

Bye, Bye, big 3.


Posted by: Matt at November 12, 2008 10:36 AM

Didn't mean to get the defensive going there, Warwick. GM and Ford produce small cars for the European market which are entirely appropriate for Japan. But that's actually not the point. People in Japan buy Hummers but they have to move heaven and earth to get them because of the restrictive government import laws. Same thing with North American agricultural products. If foreign nationals want to sell over here, my neighbors sure as hell better be able to sell over there. In the meantime, does the phrase "engine sludge" have any meaning to you?"

And TCanuck, better check the gas mileage on your Tundra prior to purchasing. My Avalanche hauling the better half's Victory gets about 5 MPG better. Now there's advanced technology.

Posted by: iowavette at November 12, 2008 2:42 PM

Chazz at 3:04 AM


tho I was not in the main production area, I counted over 60 heads before I stopped counting


and I will say it again, I did NOT see one person working


on other visits I saw some people doing things to look busy ,explained to me by one of the people I was there to see


now as to who I am


I'v completed my Industrial Eng coarse, I travelled all over NM and CM as a sevice tech, and have had my own bus. as well as worked at 50+ jobs, so I'v gain enough insite & experience to be able to observe and asses such things


in my experience I'v seen so much "trouble" caused by employees who are protected by unions, and they, not those who work, set the standards that ruin companies. I for one would not work in a auto plant, nor would I work again in a union enviorment


and chazz, I kno several who work at honda in alliston, whole different ball of wax

Posted by: GYM at November 12, 2008 6:48 PM

I don't get it. You paint a picture of a complete fool's paradise Jim. That's just not accurate at all. Splain to me how a quarter million vehicles a year potentially leave the plant, when not one person works? You just sound angry to me, almost bitter.

Posted by: Chazz at November 13, 2008 12:39 AM
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