Last week’s deal was supposed to hold both the managers’ and unions’ feet to the fire. In handing out the taxpayer money, the White House insisted the auto union cut worker pay roughly to the levels of their successful competitors, Toyota, Honda and Nissan.
For $17 billion in emergency bailout cash and possibly much more later, it was a reasonable request. As President Bush said, “The time to make the hard decisions to become viable is now — or the only option will be bankruptcy.” He added that a deadline of March 31 for the industry to prove its “viability” and other limits “send a clear signal to everyone involved.”
Well, if so, the United Auto Workers didn’t get it.
Just days before Christmas, the UAW let it be known it’ll fight any concessions on wages and benefits. “An undue tax on the workers” is how union boss Ron Gettelfinger described it as the UAW reneged on the deal almost before the ink was dry.
This will go down as one of the most cynical acts of political manipulation ever. The UAW agreed to one thing with President Bush, knowing full well President-elect Barack Obama and congressional Democrats were big recipients of union largesse and would let them slide. They read the situation correctly.
Sgt Lejaune at December 26, 2008 12:11 PM
The union establishment isn’t fighting to build cars, they want early retirement and medical plans on the taxpayer’s dime. What they really don’t want is bankruptcy, new management, new young workers, and a fresh start with them and their old management buddies out on their asses.
But they are going exactly about it to achieve the unwanted.
You’re the one who brought up the banks Ulianov, not me. I am totally opposed to the way banks were bailed out. Now name something else I didn’t mention. If you want to argue about things that were not said you must be running out of ammunition. But I suspect you have .45 calibre shoes to throw, and a low calibre brain, so the ammunition you’re running out of is of no concern to me.
Ulianov. Sorry, the shoe missed.
RW: “Why is Ford doing so well in comparison to GM and Chrysler?”
What do GM and Chrysler have in common?
http://tinyurl.com/6ca3co
It’s spelled Cerberus.
Top Wall Street stories of the week?
http://tinyurl.com/8nmu49
“What sort of concessions did the banks make? ”
Ownership, and control of the company.
I’d say that’s pretty large.
Folks, don’t get the circumstances of the US and Canadian banks mixed up. Some pretty big US banks in the US have folded. The ones that remain standing have received significant bailout money from the US government to stay afloat.
I believe ulinov made reference to the Canadian bank “bailout.” Allow me to please set the record straight for ulinov, and others.
The Canadian Banks were not “bailed out.” The Canadian banks sold CMHC-insured mortgages to the federal government. This was done to provide cash to the banks, since some of their main sources of capital was drying up (i.e. the US banks going bust). The Canadian government is now the beneficiary of the cash flow being generated by those mortgages.
The Banks would have preferred to keep those mortgages, because they are high quality assets providing a regular, high margin, income stream. CMHC mortgages are high quality mortgage, NOT sub-prime. But, without access to capital to continue lending, something needed to happen.
You are either part of the solution, or part of the problem. The CAW is choosing the path of being the problem.
There has been so many job losses in the states, that this attitude won’t go over well with Joe the Plumber types. The trouble is that THE ONE is having to deal with the CAW cashing in it’s chits. That and that career turd Barney Frank defending this larceny.
If this is the CAW’s position, then, PMSH, LET THEM FAIL!
Dan
I did not assume any reference to Canadian bank bailouts. You did that.
ulianov
“”””””always blame the union” theme. Unions don’t manage the car companies, they don’t design the cars, they don’t control the price of fuel, they don’t approve bank loans, and they don’t ask for free trade agreements with countries that refuse to buy products manufactured in North America. “””””
and the unions ARE deserving
no, they don’t manage, design, and all the rest, but their demands certainly effect all these areas, and more. as GM in oshawa was at one time a ciustomer of mine, I got a rather up close and dirty look at their operation. when they paid $500+ for a service call that actually took 15 minutes of my time….. well you git the point, and all this because of UNION rules
and probably 1/3 of all my customers were union shops and the same song and dance routine applied in all of them, so don’t talk union and union effects throught your hat to me
there is a place in the work world for unions, just not the unions we have now
Ed. It was my post, not Dan’s.
And, I assumed nothing. I was responding to ulianov’s 2:26 p.m. post which made specific reference to the Canadian government’s recent purchase of CMHC-insured mortgages. I was trying to educate him as to the nature of the recent arrangement between the federal government and the Canadian chartered banks, that it was not a bailout.
I didn’t “call out” anybody else.
This old forest of decay & decrepitating reduction of production. Should have burned by now to make way for new vigorous new growth that will be fresh . One with innovation & new eye’s to see opportunities. Keeping these old scarp heaps in tax money is only prolonging the inevitable. There utter collapse. If a farmer does not accommodate new techniques they go under. Its the same here.
The fact the Union is willing to kill their own members jobs just about says it all. The of course will just move to another Union. As the government with management they too are entrapped by entitlement dementia.
I suspect the management is just as bad, if not worse with their bonus’s & such.
Its a guild gone corrupt.
To expect the public in effect to buy a car they will never see to keep necrotic inefficient plants open with wages that exceed product selling, is irresponsible. How are we going to feel when we get the bill for their incompetence with Ingratitude. Sick of bailing out billionaires & greedy people of all stripes.
I belong to a Union because I was forced to be. CUPE is just as bad . There anti-Semitic, Islamist infiltrated Marxists. By vote & actions. Who steals workers money to support the NDP. Which 9 out of 10 workers detest.
Lets heal the woodland. Let it crash & burn, than grow anew in strength. After all its the green thing to do eh?
The reason for the ”bailout’ is because of the importance to the overall economy of this particular industry. Think of what would happen to the Saudi economy if oil production stopped. The auto industry isn’t as supreme as oil, but GM’s payroll is almost 9 billion a year, and a 1998 strike knocked a full percentage point off the US economic growth that quarter.
ulianov – you wrote:
“Unions don’t manage the car companies, they don’t design the cars, they don’t control the price of fuel, they don’t approve bank loans, and they don’t ask for free trade agreements with countries that refuse to buy products manufactured in North America.”
I disagree with your view. The CEO of the car companies, in their management, MUST include the union presence and its effect. This includes costs of production (i.e., contracting out, out-of-country contracts, costs of car production or less man-hours of work etc).Research and design has to be considered with the union in mind as to costs of production. The CEO must also consider the demands of the union in attempting to obtain bank loans, for a bank may very well say that the union costs are so high that the profit margin is too low to provide for future investment by that car company. As for countries that refuse to buy products manufactured in N. America – that’s also a result of the union costs which have driven the price of production beyond the carrying capacity of the local consumers.
The union costs are not just 8% of production, but include, for example, an approximate $1,600 per car ‘legacy costs’ for retiree’s health and benefits for their pension. The legacy costs are an enormous drain.
Then, normally in hard times, an industry would reduce production. But GM’s union agreements mean that it can’t legally close plants or lay off workers without enormous penalties! That’s what the union has done!!! Get it, Ulianov? The union has transformed a production industry into a service centre for workers.
The industry can’t get enough money to research and develop new cars; it can’t reduce the costs of production because it can’t reduce even the NUMBER of workers! It can’t close plants. Its only reason for existence…is to serve those workers. To hell with car production.
Even if GM halts its production, it STILL has to pay the workers, and their pensions and health care and other benefits. That is, what the union has done is to set up a situation where the car industry can’t reduce its production because its production has NOTHING to do with cars but with workers. It can’t lay them off, can’t reduce its numbers of workers..and when they retire, the benefits are an enormous cost. Those union legacy costs are an enormous drain and this union-caused legacy is the basis of much of what ails the auto industry.
Toyota, Honda, Nissan didn’t get trapped by the unions, didn’t transform from car manufacturers into worker service centres. They are able to turn their profits into profitable new designs, which the Big 3, with their different focus on Benefits To The Workers – were unable to fund. For example, GM put only 7 billion on research and development vs Toyota’s 15.3 billion.
As for ‘bailing out the banks’, please remember that the banks are not unionized, and the purchase of insured mortgages has nothing to do with production costs of anything.
This will go down as one of the most cynical acts of political manipulation ever. The UAW agreed to one thing with President Bush, knowing full well President-elect Barack Obama and congressional Democrats were big recipients of union largesse and would let them slide. They read the situation correctly.
– From Kate’s excerpt at the top of the thread.
It might also be fair to criticize Bush for cynicism. I think Bush desperately wanted to NOT have the failures happen on his watch now that he’s only a few weeks away from vacating the WH. I think Cheney himself said that they didn’t want to be Hoover to Obama’s FDR. But that was already the case before the auto bailouts.
“The time to make the hard decisions to become viable is now — or the only option will be bankruptcy.”
– Bush
Well, Mr. Bush, the really hard decision was to let the free market do what it does, not to to suspend the rules of the free market in order to “save the free market”
Bush has broken the law with this bailout. At the very least he should have used maximum leverage and structured this deal so that the loan was not made UNTIL the agreement was inked and delivered to the WH. Someone above mentioned that the loan might have to be called. But how do you call a loan on a bankrupt?
That he didn’t do this proves (to me, anyway) that he was more concerned about his legacy than being the defender of the looted taxpayer. I am bitterly disappointed with Bush’s second term. I think he’s the Repub’s Jimmy Carter.
Well said, ET, well said! But just remember that “Ulianov” is simply the codename for Jack Layton. I’ve never seen any divergence in views between our favourite Radical Leftie on here and the Video Professor.
This should be a vivid reminder to ALL Canadians of where the NDP stands when it comes to our tax dollars.
Colin from Mission B.C. at December 26, 2008 5:43 PM
Some pretty big US banks in the US have folded. The ones that remain standing have received significant bailout money from the US government to stay afloat./i
Well, not true. Wells Fargo, American Express (now a bank) and, I think, Bank of America (?) to name but three. Many banks didn’t touch the ABS scams with a barge pole and are now profit(eer)ing. Good luck to them.
Me No Dhimmi at December 26, 2008 7:15 PM
continuers BDS; what will he, and many iotgher similarly deranged, do when the Messiah is “in power”?
Blame Bush, I expect. At some time, though, the narrative will cease to be cr3edible to even the most politicval driven and obsessed people.
Shamrock…re equity holders….they are toast anyway, dilution doesnt matter.
Why Ford is better off. they didnt get as bad as GM and they started the turnaround a little earlier, and they have been turning around faster, smaller more focussed company, and they have a brilliant CEO who turned around Boeing.
GM needs new mgt and real cold shower to shock the culture into change, that and getting rid of half the brands, but this is old news. That is the shocking thing, none of the perscriptions are new.
3 rd point, I dont think the report was blaming Bush, the report was balming the unions for making a deal and now reneging. Obama would be wise to enforce the deal, if only to reinforce the authority of the Presidency.
RW: I don’t suffer from BDS, which is an irrational hatred for the man for no reason.
I like the man. I was a very strong Bush supporter in his first term but I consider his second term a disaster, for a variety of reasons not related to this post.
Nor am I a blind, deaf and dumb robotic partisan. I call ’em as I see ’em. His handling of the financial meltdown has been a disaster. I think he panicked and was probably the victim of a elaborate hoax.
Lots of strong conservative thinkers, including Michelle Malkin, are disllusioned with Bush which is not to say that I will not miss him when the execrable marxist thug takes over.
My point was simply this: giving the auto companies the money BEFORE they signed and delivered the agreement was DUMB. I can only come up with a single theory as to why he did this: he wanted to forestall the failure til he was out of office.
BTW, federal debt DOUBLED under Bush. That is to say he added as much debt as was added from the founding of the country in 1776 up to his inauguration. He also failed to use his veto pen.
Look, folks.
The CAW supports the NDP. What further proof do you need that they are evil?
[quote]Then, if congress would get rid of idiotic CAFE standards and other business-hampering laws, the automakers could perhaps concentrate on making cars that people want to buy, rather than moronic little putt-putt golf carts that lie optimistically in lots, waiting for a sale.[/quote]
Mhb23re,
You have identified the BIG chip that is in Play… The Union are bluffing for the Dem’s and holding out for Boxer’s “waiver” RE: California NEW Co2 Regs
The Big 3 need to stop playing the Stupid game & declare bankruptcy. If they sign the waiver they don’t have a chance in hell.
The thing that is not obvious is the amount of Money that the Gov’t has already spent on Alt Energy R&D. Its in the Trillions over ~>40 years
R.W. @ 12:36 p.m.
Point taken, and thanks for the correction. I didn’t mean to imply ALL U.S. banks received bailout proceeds, but indeed, that’s what I posted.
However, the main thrust of my post stands: interbank lending largely ground to a standstill — banks that remain healthy going concerns have had traditional sources of capital dry up.
Previous post was responding to RW @ 7:36 p.m. (not 12:36 p.m.).
Ulianov said: “Unions don’t manage the car companies, they don’t design the cars, they don’t control the price of fuel, …..”
Unions are purely and simply about control, by whatever means possible. Despite their constant mantra as ‘protecting the working man’ they really don’t give a rats’ potoot about anyone other than their own worker and more importantly, their own union management.
Whomever else might get hurt is irrelevant.
Witness the transit workers in Ottawa – one of the worst early winters ever and everyone else from retailers to volunteer workers for shelters and the Sally Ann are hurt by their strike. Not to mention the 25,000 people in town for the World Juniors (Canada leading Czech 8-1).
Yet the transit workers, some of the best paid and benefited amongst us, are striking during the most severe recession in a lifetime, for even more wages and benefits. It’s obscene.
Hundreds of thousands work daily in the ‘retail trades’ for $10 – $12/hr with no benefits, yet they still do their best to serve us well and with a smile. Union workers by contrast, are invariably unhappy, often dislike their employer and believe they are used and abused.
A quick example. Every fall I go fishing with cousins who work for a major, unionized employer and their father – my uncle – who has retired from B.C. Ferries. The boys show up in their nice new shiny F-150’s – company vehicles and using company gas.
They pay no ferry fees to the Island, because their dad, as a retirement perk, has a LIFETIME pass that includes vehicles. And because the union is a tight little club they come across together – three pickup trucks, one pulling a 25′ 5th wheel. He just shows the ferry loaders his lifetime pass. tells his fellow club member that the boys are with him and they all get waved aboard.
Some of my cousins have wives who work within the medical system and they too know how to work the system to a fare-thee-well, taking every advantage possible.
Yet around the campfire, they can’t seem to stop bitching and complaining about their employers, both past and present. Oh,and discussing the many little ways they find to ‘screw’ their companies in order to get what they so justly deserve as ‘good, hardworking employees’.
The rest of us, who were self-employed and had to rely on satisfying our customers, who have no pensions or medical plans and who have had to save for our own retirement,have just given up discussing such matters with them.
There is just no point. It’s like ‘union derangement syndrome’ – they just can’t grasp any other view other than ‘class struggle’ of the ‘working man’ against the capitalist oppressor.
It would be funny if it didn’t tick me off so much.
Make them go bankrupt and reorganize if they can. If they come up with products the public wants they will do OK. Other automobile companies have failed and the world is still going around the sun. How many besides me remember Nash, Studebaker and America Motors (Rambler)? They had pretty good vehicles but the companys failed. I started off with a Dodge, tried Ford’s, Chevy., Plymouth, Pontiac, Dodge again.etc. both cars and pickups. Now own Honda and Toyota and will never go back to the “Big Three” no matter what the hype. I don’t owe them any favours considering some of the crap they sold me over the years.
Why Ford is better off?
Ford builds better heavy duty trucks.
When the wash is done and the rest of the “Big 3” has gone under, the Ford Truck division will go on for a while afterward because Ford heavy duty Trucks are a good product that the Japanese cannot yet replace.
“Then, normally in hard times, an industry would reduce production. But GM’s union agreements mean that it can’t legally close plants or lay off workers without enormous penalties! That’s what the union has done!!!”
This assertion perfectly exemplifies your patently naive, disjointed analysis of this matter. It is not the unions, but rather the corporate/government compacts that compel specific artificial employment levels. Government subsidies and loan guarantees obligate these practices, not the unions. As an example, GM is closing 20 plants during January. This was done without prior consultation or union approval, obviously.
I can assure you that during contract negotiations, companies surpass your level of sophistication in these affairs. The various manufacturers will, as a matter of course, employ cost accountants who can well anticipate the labour component of production costs (primarily a fixed cost). This manner of forecasting analysis can, on occasion, obliviate certain significant variables, in this instance credit scarcity and burgeoning healthcare costs.
The corporation freely and purposedly contracted these commitments, and they do not affect relative share value, cash flow or access to credit to the extent the diminution of revenue has.
You should also remember that the employees of non-union manufacturers personally benefit by union presence in their industry just as surely as UAW/CAW members.
joebaloni,
Maybe 2nd year will shed some light for you. Cost accountants? … are you talking about the same ones that managed to catch the fast sinking boat?
BTW: Can you tell me how all the single moms (and their offspring) benefit by throwing their tax dollars into the begging cups of UAW/CAW members?
Sooo, the UAW has chosen the bankruptcy route. Interesting & stupid move for sure.
Once GM & Chrysler go broke the union contracts will be dead & so will the UAW.
GM had an opportunity 15 years ago to be miles ahead of their competition but instead elected to be incompetent!
“According to GM Chairman and CEO Rick Wagoner, his worst decision of his tenure at GM was “axing the EV1 electric-car program and not putting the right resources into hybrids”.
So all of us suffered with outrageous fuel prices, which has been a MASSIVE contributor to the economic crisis. When I saw the movie “Who Killed The Electric Car”, I was hoping this day would come! They robed ALL OF US of a fantastic opportunity. LET EM SINK they deserve it!
Google EV1 and see how far ahead they would have been.
http://en.wikipedia.org/wiki/General_Motors_EV1
Few Americans support the bailout and none support the unions getting a free ride on their dime. The old adage that whoever pays the piper calls the tune is still true. That being said Barack Obama will have to be a tough negotiator. What is at play here is a second term as President. If he does not show the resolve to deal firmly with the unions he can kiss a second term good bye.
no guff – nice outline; yes, that’s very much the attitude of the Protected Workers, who operate within an adversarial mindset, and yet are the elite among us all, with their protected status, their many benefits, their security from being held accountable for their ‘work’.
joebaloni – nope, your comments are, to be blunt, full of baloney.
Rubbish- what ‘corporate/government compacts’? How about moving your mindset into reality rather than the fictional narratives of the 19th century? Hmm? There’s no such thing as a corporate-government compact.
Unions are no longer guilds working for the safety and well-being of the ‘workers’. They are now, themselves, enormously wealthy corporations and their agenda is – to increase their profits. Unlike a genuine manufacturing corporation that produces goods and services for people, a union gets its money from being a parasitic leech on its members. It wants to increase its members to increase its source of money. And it wants to increase the income/benefits of those members so that it can increase its dues/income. That is, now, the ONLY reason for unions – their own huge profits as being, themselves, a corporation.
And no, when the unions insisted on these high cost clauses, this wasn’t any result of government subsidies or loan guarantees. Heh – how do you arrive at this nonsense?
The cause was the Union Corporate Agenda of increasing the Union Parasitic Income – by raising their dues, and they could raise their dues because their new contract included a clause on no plant closings, no worker layoffs and so on. How do they get these results? Well, as parasties, and latched onto the bodies of the workers, they can bleed the worker so that no work can be done in the plant. ‘Bleeding the worker’ so that he can’t work is a metaphor for ‘going on strike’. If you read my post, you’ll see that a strike cost the US economy billions.
So, you are quite wrong; the GM Production Corporation did NOT ‘freely’ choose the Union Corporation’s contract. Unlike the Union Corporation, which has that ‘Strike Card’ in its hand, the GM Production Corporation has no such powers to affect the outcome of contract ‘negotiations’. Try again, joe baloni.
I repeat, GM can’t lay off workers or close plants. Closing plants doesn’t mean for the month of January; it means the end, ‘finito’. Get it?
Dear god, do you think that a cost accountant predicts the future? What about the future when the parasitic corporation, which feeds off the workers, has increased the costs of production beyond the capacity of the Real Corporation (eg, GM) from getting any profit from the sale of the cars? This profit is needed, to be put into R&D, and to renovate plants, buy new equipment etc. Of course, your cost accountants predicted this current recession, eh? Hmm.
And how the heck do non-union employees benefit from the existence of Union Corporations? After all, these unions drive the costs of goods up, up, up. That’s why non-unionists purchase goods that are built by companies that are NOT unionized. The union shops goods are too expensive. The Union Corporations have driven the costs of production out of the capacity of people to purchase them….Get it?
Cheers. I suggest you read a bit on the effects of unions in our modern world.
“You should also remember that the employees of non-union manufacturers personally benefit by union presence in their industry just as surely as UAW/CAW members.”
How can I forget something that never was?
There’s a bigger picture here too, that none of us should forget. And that is the real cost of a new auto/truck to the so-called average Canadian. with fairness to the Big3 and their challenges, we also see that the Japanese auto makers have experienced a similar slowdown, their worst drop in 40 years. This is not just a Big3 problem. Now here’s the rub.
There certainly is a sector in our society that can buy whatever they want, whenever they want, but this is not what drives the economy, it’s the so-called middle and upper-middle class where most people fall into. And we are the ones that spend and borrow, and support, the economy, by and large.
Has anybody really considered the real cost of an auto or truck up until now? I have only once bought a brand new vehicle, and it wasn’t exactly brand new. It was a 97 Aerostar, that was used by the dealer for a year as a runabout, so it has 10k on it, and it cost $16k. Payments were affordable, around 350 a month. And that’s it for new.
My current vehicles were both 3 years old when they were purchased, and, again, payments are 300 and 400 a month….affordable. An Explorer and a Jetta, both with lots of options, but, affordable.
There were lots of nicer, newer, plusher, more expensive makes and models at the time of purchase of these, but, payments were much more, despite how cool they would have looked in the driveway.
Consider how many people do buy brand new. Loan or lease, these people are doing it to themselves. A $40000 loan over 5 years, if you paid taxes up front, is $750/mo. A lease is similar, plus taxes. Lots of new 4x4s running around cost more than that each month. These people are not making 100k per year, it’s all credit, and we’ve hit the wall.
And now the economy hits the skids……who is going to run out and buy anything in this price range, whose job/company has slowed down business? My wife is in real estate, it is slow, and I’m in telecom, and while the company appears solid, you still wonder if they might consider cuts to boost share prices. Dumber things have happened.
Needless to say, we are not considering -any- major purchases in the near future, and I don’t think the attitude is much different anywhere else in my neck of the woods.
The price of vehicles has gotten completely out of hand, and only cheap credit, up to this point has saved the industry. We are now past the point of cheap credit to be able to revive it, at least in the short term. The cost of vehicles has to be ‘reset’ to make them more attractive to buyers……
Ever noticed the 25%-33% premium on new Canadian vehicles vs American vehicles? And we pay GST on top of that, no wonder the industry is in trouble, and will continue to be. This isn’t just a Big3 problem, it’s an INDUSTRY problem!
Maybe we’ll see a return of a bare bones runabout, much like the K-car idea, where options are once again options, and not standard equipment, keeping prices down, and stimulating buying. Otherwise, like myself, I expect to keep my vehicles, and do repairs as needed, rather than tie myself up in extended payments over many years. This is NOT what the industry wants, but the cost of vehicles drives this mindset
Back to basics, people!
The bankruptcy question keeps coming up. In more normal times I would agree, this is what should be done. bankruptcy is a process not an endpoint. Insolvency is an endpoint.
In Ch 11 Bankruptcy, companies get protection from creditors while they reorganize. What is important is that they have financing in place to tide them through the bankruptcy process. This is called Debtor in Possession financing, or DIP.
With this credit crisis DIP financing has disappeared. Implication is that going into CH11 without DIP quickly puts you into insolvency, where the company isnt reorganized it is shut down. The difference in value between on going companies and ones that are no longer going concerns are enormous.
Ch 11 with DIP means that a judge makes the decisions. It takes time and do not underestimate the complexity of a reorg of a company the size of GM. The question is will, assuming you could line up DIP, that customers would continue to buy or would it be a slow bleed off?
The above question is subject to much debate. Some point to Delta and United as peoples willingness to fly on a bankrupt airline, surely a more dangerous proposition than buying a car from a bankrupt company. Others point to some surveys…it is a known unknown.
But the key is DIP. No DIP means Ch 11 is a worthless proposition. One of th options is for the government to provide DIP, or guarantee it. This would be in keeping with its actions. Problem is the solution for the moment is almost CH 11 but no enforcement from a judge. In Ch 11 a judge could just tell the union their new wage rates and they can pound sand, there is no recourse.
Ch 11 bankruptcy IS the right answer, as GM without its obligations at current levels, debt, wages and pension, is definitely a going concern or could be. Chrysler is somewhat of a different pony, its medium term viability is in serious question.
So the lack of DIP, due o the credit crisis, means the government is a legitimate option as lender of last resort. But the government really should be sticking as close to the normal process as it could. The apparent games from the UAW should be severely punished, if they are happening, as they threaten to bring the whole house down. Playing for time is a legit option, till a GM insolvency wouldnt threaten the whole edifice, I would say in a year.
If you follow the play for time option then the UAW is going to get a broomrape like no other. All, rpeat all parties need to contribute. The UAW has to recoginize that if those jobs disappear they are gone forever, the wage rates are gone anyway.
What should be kept in mind about the lowly 10% labour cost on vehicles of the big 3 is that they are for assembling parts procured from other entities. These costs are not for “manufacturing” these vehicles but for putting them together, think IKEA.
Most people do support the loan guarantee’s to the big three but also feel it is neccesary for the unions to make concessions.
Fact is unions took advantage of weak management but also (false) free trade tied their hands, and now the industry fails.
We need to support this industry for national security as well as economic stability… We should however tie some strings to manage the industry better, bring the wages on to par with other manufacturing, and make the switch to clean transportation.
All this is possible, try this for a read…
http://www.freewebs.com/elmwood_transcona/beyondkyoto.htm
In my petty little ideal world the management and union would be shown the door so that real managers and workers can start designing and building cars and trucks that real people want, can afford to buy and run.
Can’t help but ask ,but what exactly did the bankers etc give up for their billions in bailouts?How many captains of finance and industry are lowering their 4 figure an hour salarys?Same dicks that got us into this mess are to be trusted to get us out?
I have a lot of question about this auto bailout.
It has been bandied about how the Big 3 have “labour” costs of 70 odd bucks an hour vs 40 odd dollars for the imports. And that these “labour” costs is about 7% of a vehicle price.
Now these labour costs, does that include the wages and benefits of the non-production line staff such as clerks, managers, stock keepers etc?
Does the Big 3 include these costs in the”hourly” $70?
Do the imports, do they include the same thing, or are they excluding something?
Legacy costs….well I understand if a company has a defined benefit pension plan, and the stock market does really good, they can have a “contribution holiday”. They don’t have to contribute if the pension fund performance matches or exceeds the company contribution amount. But if it performs poorly….
Now with companies with a defined contribution plan, where they match a workers contribution for dollar for dollar, can they take a holiday or do they have to contribute regardless?
Which plan is really cost effective?
Also, this financial meltdown, crisis, recession/borderline depression, what ever the name is, to me it is a market correction. People got too greedy. Too shady. Too arrogant. And they got spanked.
But unfortunately, the culprits will basically go free, maybe with some taxpayer money.
But you know what? This meltdown/market correction is probably the best thing to happen to businesses. Another excuse to get some concessions from the workers, whether they be union or not. What will the spin be this time? Shareholder value? Maybe, it is wearing thin. Corporate survival? Perhaps, only if the CEO’s lead by example, thin chance tho. Saving your jobs? That’s a good one. Will the product come down in price while one takes a wage cut/freeze? Unlikely.
But managing by fear, always brings out the best in workers.
AS for the Big 3 losing money on each car they sell, ever notice with the Japanese imports, it is our price, our finance rate and if you don’t like it, too bad. Tried to deal on a Rav4. Price went up from one week to another because of the “gas” prices, interest rates were not competitive/lousy terms and the dealership’s attitude was if you don’t buy from us, you’re buying crap. But alas a ’08 Ford Fusion V6 AWD loaded is now in the drive way and at 38 miles to the gallon (imperial), far better deal than the Rav. 6 grand off MSRP at 0% hey…..and yes it is a great car.
Maybe the Big 3 should be a bit firmer on their pricing. Who knows?
But the way I see it, we are in the midst of a market correction, businesses and corporations will use it to their advantage to squeeze something more out of the workers, and the taxpayers are getting hoodwinked.
ET, one of your best comments that is so true and worth repeating.
Remember, the unionization of Canada prevents a market economy because unionization changes the focus of that business from consumer satisfaction to employee satisfaction.
my $0.02
in 1978 i bought a 1976 GMC 1/2 ton for $4500.
in 2006 i bought a 1999 FORD 1/2 ton for $6500.
the GMC lasted a decade. the Ford may too.
a “new” 1/2 ton is at least $20,000. too much
Ulianov
I’ve worked with many union parasites over the years…..endless illnesses, endless time off, barely adequate when at work, anything but productive. Oh, and they get the promotions too, because they have the most seniority, bless their useless hearts! Parasites is an apt term for these useless pieces of sh!te.
There is no democracy in unions, only a shell of one, every now and then, when it suits the union boss’ needs. Otherwise, it’s pure dictatorship. Democracy is just a useful tool for unionists when it suits their needs.
Ulinov; thanks for the rant. Lenin would be proud how you tow the party line and do not allow anything, not even common sense, to stand in the way of propaganda. “I challenge you to prove the net worth of any large union” etc is a ludicrois point as these “large unions” have no hard investment in anything to accumulate their wealth other than fact that they ARE parasitical and suck wealth out of both employee and employer. If you can not see this one point then there is no hope for rational thought from you. P.S. – Goebbels like Taliban Jack Layton was a socialist first and foremost, your rantings might work at the Thurday town hall meetings of the NDP,as proposed by Laydown but is not palatable to taxpayers.
ahh ulinaov/lberia, there you go again, introducing red herrings:
First, you begin by insulting me and everyone here. Is that the definitive behaviour of a leftist?
Second, you introduce a fallacious comparison by trying to claim that unions are not ‘enormously wealthy’ until and unless their assets are comparable to that of large corporations or to the wealth of the top 100 wealth individuals in Canada/US. That’s an irrelevant comparison.
However, most certainly, unions are ‘enormously wealthy’; their assets are worth in the billions; (Trade Union Investment Policies; Nathan Belfer); unions put their money into purchasing land, buildings, mortgages, investing those pension funds in numerous ‘capitalist ventures’..such as the Toronto Maple Leafs. Unions like the Teacher’s Union, CUPE, CAW, United Steelworkers and so on, have ENORMOUS funds to invest in various, capitalist…and I’ll repeat that word…capitalist schemes.
Trade unions do NOT post their asset value, ulinaov/lberia, so it isn’t that easy to find out ALL their assets (Belfer). But, if the Ontario Teacher’s Union Pension Plan could buy BCE for 51.7 Billion, then, I guess they are doing OK in the top 100 wealthy individuals.
Then, there’s yet another fallacious analogy, with your ambiguous ‘Japanese and European cars are often more expensive’. What’s that supposed to mean? Are you saying that a Lamborghini is more expensive than a Pontiac G3..which is more expensive than a Honda Fit..
Oh, right, sure…GM can get the government to change labour laws, like..for example..outlawing unions? Heh. Try again, ulinaov/lberia. And you didn’t read what I wrote – the GM labour contract doesn’t permit the company to close its plants. Got that? Or reduce its worker numbers. OK?
Poor workers..when they go on strike they don’t get pay. Yes they do; it’s called strike pay, from the union’s investments, investments, investments.
I repeat, modern labour unions are parasites. This isn’t demonizing them; this is an accurate description of HOW they get their money. From the WAGES of the workers, which they then INVEST in capitalist ventures. Does this money get returned to the worker? Absolutely not. Part, and only part, gets doled out for pensions, medical benefits. That’s it but this is nothing that the individual couldn’t invest for on his own.
No, poor besotted ulianov/lberia, I’m not lying about unions. They are parasitic corporations, out to get money via the dues of workers, and more and more workers. They invest this money; they are, themselves, capitalist corporations and do zilch for the worker except to hinder his freedom, and importantly, drive up the costs of goods, and drive industries to other countries.
They do NOTHING that the worker, if had that money taken by them for his dues, could not do for himself. A bunch of people could pool their money and invest it, and get the same pension and more benefits as the union provices. And it would be their choice, their agenda, their freedom. And would keep consumer prices LOW. And would keep industries here in N. America rather than driving them out of the country.
Now, ulianov/lberia – provide some facts of your own. Without the insults. I know you are a leftist but that doesn’t mean that you should do the ‘leftist thing’..which is to insult people. Be different. Just stick to the issues rather than the insults.
look, ulianov/lberia, unions do indeed drive up the wages of some workers – the elites – but THINK what this does.
The wages go up, and the union ‘take’ (dues) goes up! Hurrah for the Union Corporation! It has increased its own income!
Oh, and the cost of producing the goods goes up. Hmm. So, it costs that same worker MORE to purchase goods, because the Unions, in their greed for more and more and more and more money, have driven up wages and benefits and pensions..and so, these costs are all passed on to the consumers. And the cost of living for all workers..goes up. And up. And up. Due to those Union Corporations.
Unions were useful in the 19th c. They have now become not merely useless but harmful to workers. All workers. That’s because safety, pensions, health care, etc have been taken over by the government OR by private insurance and pension companies which the individual worker can invest in on his own.
So, if there weren’t any unions, then, the worker would be left with MORE money – not merely his dues, but the COST OF LIVING wouldn’t have zoomed skyhigh. Therefore, the individual would be able to invest his money into private health insurance and pensions…and..and..the cost of consumer goods wouldn’t be so high. And factories wouldn’t have to move out of the country. Or go broke. Or seek govt assistance.
So, lberia/ulianov, your devotion to unions is naive at best and ignorant of history and economics as well.
Unions are parasites. Parasites. Parasites.
Unions do create parasitic workers. The socialist dream that any loser or unproductive worker can rise in rank above better qualified workers with more pay and promotion through time.
Works very well for both moral and productivity, no? Then as they perpetually pressure their respective employers for higher wages and benefits through their union they guarantee to get their demands met or they hold the company & customers hostage through strikes.
As with the big three the wages go up to a disproportionate amount of their competitors and the company compensates their losses with cheaper materials and technology to lose their marketplace as innovators and leaders.
Let the BIG 3 go! Someone will pick up the slack, albeit Japanese or European manufactures. Quite possibly there will be new innovators and upstarts within the US to build new and improved vehicles from the ground up. There will be a fire sale in manufacturing parts and machines along with an abundant supply of non union labor who will be more than willing to work at the current rates. Just give them a few months of unemployment to think about it.
Hell it’s not like they are going to find work in the fields, or construction, or road repair – for those jobs are the one’s Americans won’t do and the illegal’s have those industries all sewed up. Remember?
“Unions are not parasitical because they provide a service”
I challenge that assessment. While the term ‘parasitic’ may be emotionally loaded, it isn’t entirely inaccurate. The ‘service’ provided by unions is one workers are compelled to consume.
One can try to dress up a union as simply another service provider (like a bank, clothes retailer, real estate developer, etc.), but the compulsion of union membership quickly dispels this notion.
wait, ulianov/lberia – how do you know that unions are NOT ‘enormously wealthy’ – and you claim that they are not – if they don’t post their assets? Well?
By assets, I don’t mean their offices and computers, I mean all assets, which include those delightful pension funds and various benefit funds controlled by the union – all of these are legally union assets. Again, if the Ontario Teacher’s Pension fund, aka their union, can afford to purchase something for over 50 billion, heck, I guess that means that they are a major corporation.
I repeat my claim – the unions drive up consumer costs – in everything, from cars to health care to government services …Everything.
The Ford Focus and Toyota Corolla sell for the same price – and the Toyota, is far more economical than the Ford, with respect to gas. Resale for the Toyota is superior..and so on. Just google the two names and you’ll find out yourself, lberia/ulianov.
No, don’t blame the industrial corporation for the problems caused by the union corporation. Remember, the union corporation controls the workers – and that’s an enormous clout that it has. For example, a city’s transit union strike, which takes a third party, the riders, hostage, can force the industrial corporation (the city) to agree to disastrous union corporation terms.
Big deal- you say that over 95% of bargaining is concluded without a strike; that’s because the union corporation has the option of a strike.
Unions are NOT highly regulated by government. Provide some of those regulations. What about strikes? Hmmm? They are economically disastrous when they take third parties hostage. As for strike pay – it’s still pay, and the Unions dole it out. Remember, this money all came from the workers, but the unions certainly won’t fund top pay for these strikers.
I’m not against unions investing their money. I’m against unions. Period. The individual worker can invest his money, taken by the parasitic union corporation – himself. He shouldn’t have to give it to that parasitic corporation which then invests it – and DOESN’T RETURN the benefits of that investment to the worker. The individual worker would do FAR BETTER investing that money on his own.
And remember, the union parasites drive up the cost of production. Up and up – and that harms the worker as well.
No, I’m not lying. Your description of unions isnot factual. You haven’t provided one fact. Nothing about how wealthy the unions are – and you claim that they aren’t..yet you also claim that you don’t know what their assets are..so you do you know about their financial state?
You claim that they are regulated by governments but don’t outline what those regulations are.
You claim that strikes and strike threats are irrelevant – but ignore the costs of strikes. For example, a transit strike in Toronto can cost the economy 50 million a day. Neat. The United Steelworker’s strike in the US – cost the economy billions.
The regulations don’t prohibit the relentless search by unions for more blood (remember, they are parasites so they need new members all the time, both in new factories and to replace retireers)…
The regulations don’t prohibit the outrageous demands of unions – which drive up the costs of the goods and services
The regulations don’t prevent a unionized shop from transforming into an employee-centred enclave, ignoring its original focus on the customer and services..
So far, you haven’t provided any proof. Not one word. Nothing. Try again. With facts not just your assertions.
ET/ Goebbels:
Hahaha! YOU are the one claiming that “unions are wealthy corporations” so prove it! Don’t try to twist things around so that you can write anything you want and then others have to prove you wrong.
Unions do not control the workers…decisions, like accepting a contract or going on strike are voted on. All members are entitled to a vote, and it is a secret vote. You want proof that unions, strikes, etc. are highly regulated (BC, for example):
http://www.lrb.bc.ca/codeguide/chapter6.htm
Does your RSP belong to you or your fund manager? Stop lying about pensions because they are separate from any union assets. They belong to the employees/union members and are managed by trustees who are elected or appointed by the union. Pension plans are also highly regulated…look it up for yourself.
“Parasitic” implies that there is no benefit to the host, ie. the worker. This is wrong, because on average unionized workers make 20% more than non-unionized employees. Go to Statistics Canada for proof. (“Parasitic” is what the Nazis called the Jews in order to inflame hatred and Godwin not withstanding, you are doing the same thing.)
I’ve given you proof…stop your lies and do some research…unless, of course, you don’t have a problem selling out your integrity for $$$ to the anti-union Coservative/NCC/Fraser Institute types.
Nice banter.
The real issue with this post is the UAW’s decision to “bluff and go all-in” within a week of the deal. It shows how big their balls are. And they’re big.
It will be interesting to see how Obama responds before March 31.