Listening to the rhetoric from Republican Senators like Mitch McConnell (Kentucky), Bob Corker (Tennessee) and Richard Shelby (Alabama), one would think that the domestic auto companies were all a bunch of incompetent idiots and greedy union workers, unworthy of a bailout.
There is no doubt that the Big Three have screwed up. Their product mix is designed for days of sub-two-buck gasoline, and even though gas is back under two dollars in many places, nobody is buying cars these days. Still, the import companies are not screaming for bailouts. So, what’s wrong in Detroit?
Before we address that, consider the incongruity of Republican Senators balking at a $14B loan to the auto companies, after handing out $500B or so to various banks and insurance companies. Those Wall Street bailouts were lauded as essential to prevent vast economic damage and loss of jobs. But letting three of the largest corporations in the country who employ…directly or indirectly…several million workers go down seems to be perfectly acceptable to them. Is there another agenda working here?
The answer is yes. The three Senators listed above all have auto plants in their respective states. Those plants are all non-union, but to prevent the unions from organizing there, they are forced to pay comparable wages. In fact Toyota’s average wage is above UAW pay scales, around $30/hr. Toyota is not happy about this, and wants to reduce the average wage in their Kentucky plant, for instance, to $12.64/hr. But to do this, they need to get rid of the “competition.” In other words, they need to break the UAW.
And that, gentle reader, is why Republican Senators are fighting to prevent any auto company bailout. It’s all part of the continuing war that the Republican Party has waged against unions for as long as I can remember.
There is a great deal of hypocrisy on the part of those Republican Senators. They all lobbied energetically for hundreds of millions in government handouts to lure import plants into their states. Now they say the government should stand back and allow their competitors to fail.
They criticize the UAW for its unwillingness to make further concessions, but the union has already given up a lot in the last few years. In the 2007 contract, they introduced “two tier” wages, reducing new hires to $15/hr with no pension plan and drastic cuts in their health care benefits. They even agreed to transfer health care costs for retirees to a separate trust. This will offload a lot of the “legacy costs” that burden the domestic manufacturers.
But that wasn’t enough for Shelby and his gang. They want the union obliterated.
But back to the original question: Why are the Big Three in so much trouble, but the import plants are not? In addition to the aforementioned product mix problems, the domestics are saddled with an additional $2000 (on average) costs per vehicle due to the “legacy costs” of pensions and healthcare benefits for retirees. Those legacy costs will equal out over time as the import plants accumulate retirees, and if Obama is successful in establishing a universal healthcare program, that burden will also be lifted.
But in the interim, the Big Three are operating at a disadvantage…partly self-inflicted, partly beyond their control. They seem deserving of a helping hand, and the union-bashing of southern Republicans should not be tolerated.
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Comments: 65
I saw an excellent interview with the author of a new book, "Obscene in the Extreme", which deals with the labor-bashing and union-busting that went on during the 30's and the extreme attacks on Steinbeck's 1939 novel, "Grapes of Wrath". History is repeating itself. When will we ever learn? The parallels are uncanny...and frightening.
And putzes like Lex liked to be virtually raped by CEO's making about 1,000 times the wages of their employees, with private jets and company vacation homes and such. This is exactly what I'm talking about.......the incredible self-hatred. I guess it's like some kind of celebrity worship thing - if they see somebody else making obscene amounts of unjustified money, they think someday they may, too. It would be hysterically funny if it wasn't so incredibly sad.
I take it that Lex means the kind where you make it up.
I, as millions of Americans work for a company that if we do not turn a profit, we need to look at ways to trim expenses, is it unreasonable for people to suggest that wages be trimmed to offset losses? Or is this nore self-hatred?
1) Thanks very much, but I'm not un-happy....but I so appreciate your concern. Sweet of you;
2) There are many, many correlations between what happened during the Depression era in the 30's and what is happening now. And if you think that "regulations have been made to accomodate 21st Century Economics", well, then I will respectfully say that YOU, sir, are the one who is deluded.
3) It is interesting that you bring up wage/loss offsets. Where were you Republicans when the oil companies reported record profits over the past two years? You were crying for them, demanding that we give them more free land and leases, and not once did I ever see one of you demand that they reduce the price of gas, or up the wages that they pay their workers.
You guys really amuse me. You do.
And may I add, "is it unreasonable to expect upper management in most large corporations today to go back to receiving reasonable compensation packages and to also be rewarded for doing the RIGHT thing, not running their companies into the proverbial ground?" Do you guys think it's the average workers on the assembly lines that made the bad decisions that got these guys into trouble in the first place? Then, why would you be asking them to continue to pay for executive management's mistakes? Why not go after the people who REALLY caused the problems? Again, self-hatred.
That was profound, don't you all think? Lex has moved on to more philosophical comments rather than his one syllable insults of the past. I'm impressed...
C'mon Lex and Robert. Explain to me why that is right.
That works out to about 25 grand, which is VERY CLOSE to the current poverty line.
So much for the middle class.
Our tax money is buying used to pay bonuses for bank execs and dividends to their stockholders. I guess the philosophers on this thread know some 'modern' economics to explain this.
Nevertheless, unions have fought for and achieved decent wages and benefits for their employees. I would not want to see the working conditions prior to unions restored in this country. How would you like to work seven 12-hour days, with no vacation or time off and no benefits? That's what they did back in the nineteenth and early twentieth century.
Individuals have NO bargaining power without an organization to represent them, and Capitalism is not known for its benevelence.
Here's another thought: If unions are driven out of existence, there is only one place workers can go to address grievances and exploitation by their employers: the government. So be careful what you wish for.
I know a lot of unemployed folks in my area who would be thankful to work for 12 bucks an hour rather than 7 bucks per hour part time at Wal-Mart.
I'm not for busting unions or lowering wages either, but most of you are missing the point. They aren't selling cars...and they aren't selling cars because people still can't get loans even though the Government has already pumped billions into the financial sector to free up the credit market.
Senate Republicans’ refusal to support the bipartisan legislation passed by the House and negotiated in good faith with the White House, the Senate and the automakers is irresponsible, especially at a time of economic hardship. The consequences of the Senate Republicans’ failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry
The problem with Pelosi's statement is that 10 Republican Senators voted with the Democrats last night, which means the Democrats could have reached 60 votes if the entire Democratic caucus voted for the bill.
But eight Democrats bailed on the bailout (Reid, it should be noted, voted against it for procedural reasons, in order to bring it up for a vote again).
Four Democrats voted 'nay': Baucus, Tester, Lincoln, and Reid.
Four Democrats did not vote: Biden, Kennedy, Kerry, and Wyden.
(And, of course, the Democrats would have another member right now if Blagojevich had sold that Senate seat before he was busted.)
Does Pelosi think that these Democrats, who had the ability to pass the bailout, are "irresponsible," too? And, for that matter, why didn't she simply call them "unpatriotic"? Isn't bailing out the auto industry a better indicator of your love of country than bailing out Wall Street? "
http://www.weeklystandard.com/weblogs/TWSFP/2008/12/senate_democrats_had_enough_re_1.asp
The only thing that will be lost is spending power for the consumers which will keep the economy weak and allow Congress to give more of the taxpayer's money to AIG and companies like them in the disguise of saving us.
UAW workers arent rich,average is $58,000 a year. If you take that income out of the economy in the states the automotive is prevelant in,you will take down stores,malls, restaurants and other services that depend on these people spending money.
To those of you who think line workers should make twelve bucks an hour, I ask: Have you ever done a job like that? Working around machinery that is noisy, doing a repetitive job for eight solid hours every day, with constant pressure to "keep up" with the line?
I haven't, and I sure wouldn't want to, especially for slightly above minimum wage. It's easy to say "let them eat cake," as a famous French lady did (she lost her head over it, though) but when you put yourself in their shoes, they aren't so comfortable.
Bruce...actually Toyota pays slightly MORE than GM union scale in some of their plants...but grudgingly, just to keep the union out. That's why they would love to see the unon busted. I wonder how the workers in the Toyota plants feel. If I were in their shoes, I would want that union to survive!
To George and Bill...both of you seem to think the inferior quality of Detroit products is all the fault of the unions. I guess design and product planning have nothing to do with it, eh? It's those greedy union folks that told GM to build Hummers and Ford to build Excursions.
"Put the money back in the hands of the trained and extremely skilled professionals, and yes...I'm sorry...put the guys on the line back to $12 an hour"
I don't know where you get your average wage information, but when I left Houston 8 years ago, engineers were getting $80 an hour. I don't know what rocket scientists make, but I'm sure it's more, certainly by now.
Your point about priorities is more relevant. When did top executives become worth 400 times the average worker?
Nobody is arguing that executives should make the same as union workers, but as Gary says, it's a matter of degree. Are they really worth hundreds of millions in salary and stock options when THEY are the ones responsible for the "crap" that the plants build, not the unions. I have NEVER heard that union workers are less competent than non-union workers. Is that what you are claiming?
Teachers are one of the most underpaid groups in the country...at all levels, from elementary school to graduate school. When you consider the responsibility THEY have for the future of the nation, they should be paid MORE than CEO's of corporations. The fact that they are underpaid does not justify taking money away from other people. It means that, as a nation, we have our priorities screwed up. Oh, and throw in professional athletes and entertainers who make hundreds of millions. If we are doing comparisons, then auto workers salaries should be doubled or tripled if we want to compare actual contributions to society.
By the way, "The need to go back to the bottom" is a really stupid thing to say. Lots of people are buying American cars, and they are priced economically and they do not break down. It is much better to get everyone unionized than it is to play the game of the overpaid bosses and have workers attack each other each insisting that they should all be paid a minimum.
It is the bosses that decide what the workers will do, what products they will make, and how they will make them. The workers have done a great job for the most part and do not deserve to have a pay cut. The bosses on the other hand are the ones who set up the company to be too vulnerable to credit changes, and did not put some extra flexibility into the systems.
Not to mention the pay increases for the managers while the company is losing money.
It is better the unionize both north and south jobs and break the backs of the southern union busters who brough this whole collapse on us through their greed and interference in the economy.
J.D. Powers Sales Satisfaction Ratings
That suggests to me that they aren't breaking down any more than the others.
Where are you getting your data on Chevy heating and cooling problems, Melinda?
And Ford injector problems. Have you driven a Focus? My son has one, and it's a very well made, nice handling little car, hardly what I would call "big and clunky."
The problem is product mix...they DO make some big and clunky cars, but punishing the workers by asking them to take EVEN MORE pay cuts is silly, and won't even solve the problem. Only 10% of the cost of a car is labor. The manufacturing process is already highly automated. The cost differential is largely in the aforementioned "legacy costs," and that is a problem the government needs to address. The unions have already made major concessions, as I described in the article.
Mostly, they just need to replace all their top management. I recommend that they go to Toyota, Honda, Nissan, etc. and hire their junior-level management and put them in charge. They will straighten things out and get a proper product mix in a hurry.
The whole argument for all of these issues is so entangled in BS that is useless for the country in figuring out what to do. In fact American automobile companies have the greatest number of hybrid cars being offered for sale. They are not all about big gas-guzzlers. They are reliable, cheap, and competitive. What is going on here is a marketing political event, in my opinion.
We need to get rid of the top three layers of management in the auto companies, and we should bolster unionization by offering it to the auto workers in the South, provided all workers take an appropriate but temporary pay cut. In fact, the thing to do would be to offer American workers stock in their companies for the pay cuts they are taking.
And yes, we may have to pump more money into the automakers in a few months.
I still think it's a good investment, and it will save a lot of suffering.
The trick is to put the right strings on the money, so that the idiots in charge are not allowed to continue their idiocy.
If the hard times we are having persist, then how many industries are we ready to toss in the trash can and beat ourselves up over? Are we going to see the whole country be given away ... to the very countries that follow the supposedly "socialist" agenda that we say does not work ... how fr*king ludicrous!
According to the article that I posted earlier, some left-wingers didn't agree either.
Go to any right wing economics website and look at all the justifications that have been used to bring this sad state of affairs about. They rest of misinterpretations of Capitalism and economic theory.
Adam Smith believed the tax burden ought to be progressive,that is it should impose a greater burden on the affluent than everyone else, because under capitalism the affluent will always receive a disproportionately greater share of economic growth.
What we have today is a class of people who continually lobby, coerce, bribe the people and the government to reverse that rule so that for 30 years we have the most wealthy. most corrupt in the top levels of all society.
That propaganda machine pushes forward still trying to convince us even against what our own eyes see that waste, fraud and incompetence are all caused by government, and that a small government or no government with no taxes would somehow be better for everyone.
Since most people have to work so long and hard and risk their lives and their family's futures just to express any contrary opinion they do not say how full of it those statements are, and they do not have much time to even think about it.
In my opinion this country is already too far gone to correct itself from inside the system. Those who have carefully worked to place themselves above the law will not relinquish power voluntarily, and and they have immense resources at their disposal to bride, coerce, threaten, hurt or kill anyone who stands up to them, and make the law powerless to do anything about it, and the press will support anything that is done. Anyone who disagrees just goes to the back of the line and to the top of the enemies list.
It all comes down to human nature, and my observation is that large organizations...whether they are businesses, universities or governments...tend to develop social and political structures that are not necessarily consistent with the stated goals of the organization. Instead, their main purpose seems to be to allocate power...and money, of course.
Human nature, indeed.
I posted a url to an article that showed 4 Democrats voted against the bill and 4 other Democrats didn't even vote. I posted that earlier in this thread.
By the way, I'm an anti-Bu$h Republican. I'm looking forward to Obama. I'm curious to see how he will handle all of this. At least the man has a brain and some ambition.
As much as I despise most of what the Republican party has done as of late, I fail to see a Southern Republican union busting conspiracy here.
Jamshed...I think you are right. The bailout seems like a no-brainer to me. So why did those Republican Senators stonewall this thing and force Bush to solve the problem? Are they just playing politics, demonstrating their support for their constituents to garner votes in the next election, without the slightest concern about the nation as a whole?
in, we'll learn that Wall Street bailout was another inside job, with huge
"agency" fees. There is just something of that Bush family scent about the
entire affair.
Fitting that the business built by Henry Ford would be one of the last
in manufacturing to come under the iron fist, or, am I better to say the soft
blanket, of the oppressive state bureaucracy.
Pencil pushers and desk jockeys are lavished with raises and benefits, while
the working people pay the tab. I'm old enough to remember when men were
men and women were women, and workers were valued for what they produced,
not only in America, but around the world. Now, the working class is seen as
just another receivable in the wealth of the nation, another pound of flesh carved
from the breast of the once proud eagle, to be drained, milked, and extracted,
by greedy international financial interests, and the undisciplined domestic stooges
who aid and abet them.
Wake up, America. Your standard of living has slipped to number twenty-six in
the world, from number one, just in my adult lifetime. The nation lives in a
hypnotic trance, drugged, mind-numbed, and, brainwashed, by a self-serving, monopolistic, and, reactionary, super state.
If there is hope, it is reserved for those with the courage to rise up and throw off the
chains of discouragement, doubt, and, fear; and, to stand up for themselves and
their countrymen in the face of increasingly exploitative and deceitful authority.
"Resurrection, not Insurrection"
Tonight, NPR ran a feature on press
access in the new administration, and
posed the fact that the press was not allowed
to swarm the "second swearing-in" as an
indication that the new administration might
be carrying on the Bush tradition of keeping
reporters at arm's length. The story went on
to warn of the dangers of excluding the
"guardians of liberty" from White House
functions. I caught myself nearly laughing
out loud.
Those we used to call reporters have
gradually but surely made the transformation
from performing a valued objective function to
being little more than corporate lackies. Newspaper ownership coalesces to fewer and
fewer entities; ultimately, there will be one.
Kurt Vonnegut, before he died, made a pet
project of this issue. Kurt discovered, and
didn't mind talking about it, in schools of
journalism, even the better ones, to follow
the traditional path of the reporter is the
shortest route to the dunce stool. Students,
now called "journalists," are taught and
encouraged to produce for the circulation
department. What really struck Kurt, what
really stuck in his craw, was how eagerly the
students and professors have embraced the new
ideal, like cats lapping up the milk.
My point is, what goes for newspapers may
be said twenty times over for television
reporting. For all the folderol surrounding
"60 Minutes," can you honestly name one single substantive reform that can be traced to a "60 Minutes" feature? I can't. "60 Minutes" is a
perfect example of mindless pablam masquerading
as investigation. Perfect for the new media,
Compare this with legitimate publishing. I could probably, given time, name 500 substantial reforms, starting with Upton Sinclair's 1906 expose of the meat packing industry, "The Jungle," and moving forward, that have been the result of real
reporting.
Yes, that's the mantra: "Can the Television!"
Our nation is endangered by this, I truly believe.
that, more and more, when I type in search words into
Google and Yahoo, the results returned are, increasingly,
links to commercial sites hoping to sell me info on the
topic.
Can't blame them for that, I suppose. They are in business to make money.
We need a news service like the BBC, that is truly independent of commercial bias.
How do we get it, without Big Brother's guiding hand?
the guiding principles of information management. Still, as there
are exciting new browsers in the works, the future will present
much more flexible search engines. (Truth is, the more a user
knows about Google, the more he or she can get out of it.
But to return to newspapers, I tell people I think circulation
is down because, quite simply, the papers don't have anything
to say.
The death spiral of newspapers is self-inflicted, and self-fulfilling.
my part. I meant to say, "The problem is that
they (papers) aren't saying anything."