Thread: Bailing Out the US Auto Industry....

Ford had a chance for long term survival when they had Jaq Nasser (Jaq the knife) at the helm, he dealt properly with the Firestone issue, he made some tough calls on product direction, down sizing and quality improvement, but he pissed off the Ford family because they didn't agree, erroneously in this case so he was ditched.

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Originally Posted by Jet Gorgon

The UAW finally agreed to lower starting wages last year. But check this out: auto union workers were making more than $78 an hour PLUS benefits. C'mon. That is ludicrous. $78 an hour just for a newbie to assemble a fekin car nobody wants to buy? ``I've got a saw-mill worker in my district who's making $15 an hour,'' Representative Spencer Bachus, an Alabama Republican, said during a House committee hearing today, according to a transcript. ``And we're taking his money, and we're paying it to a company that's paying $75 an hour.'' The criticism comes a year after the union agreed to lower pay and end pensions for new hires at GM, Ford and Chrysler. (What about the other guys?) Under the contracts, hourly pay and benefits for new hires were cut to about $26 from about $78. The 2007 accords also call for creating a union-managed trust that will take over responsibility for retiree health care obligations starting in 2010. ...The union's lobbyist in Washington, said the labor costs ``aren't out of line'' with those in U.S. factories owned by Asian and European automakers. ``We're not the problem,'' Reuther said. (BS) `Gold-Plated Benefits'

These greedy fcuks are getting $78 an hour..... nothing more than greedy scum. Offer those jobs to the public at $25 and you got a line up. If they are worth $78 then they should have no problem finding another job for $78. Also, since they are suppose to be worth $78 an hour they should easily be able to find many many $50 - $60 an hour jobs. You show me something worth $78 that sells for $50 - $60 and I'll show you a supply problem. Can you imagine a computer factory staffed with these shitballs??? Out of business first day. Fact is, these slobs can't even find a $15 job. The $78 is the result of many years of union extortion. Their main skill is being in a union and complaining about management.... not valuable. Non-union shops want nothing to do with them.

I don't support any of them, I buy cheap used my cars.

Sorry if I offended any union members, truth hurts.

^ Now, now, Jim, the $78 an hour deal was only for NEW hires.
Hey, why better yourself? Drop out of high school, grease the union, and hey, $78 an hour PLUS healthcare and pension plan! Gotta love the UAW.

^ Even worse than I thought. Free markets require supply and demand work hand in hand. I know many tax paying welders and machinists making $20 - 30 an hour, equally or more skilled than UAW workers, with mush less benefits and no job security in a downturn. Management main fault is not bankrupting the auto companies sooner.

Originally Posted by sabang

Originally Posted by Sir Burr

The US car industry is hobbled by an expensive unionised labourforce and huge financial commitments to retirees pensions and health care.

The likes of Toyota, Honda & Benz also have a unionised workforce, and massive pension schemes. Toyota and Honda manufacture quite succesfully in the US too. The buck stops with poor management, I reckon.

This is from last year, but maybe you have the latest news, Sabang.

LOS ANGELES: The United Auto Workers, which has yet to organize a U.S. plant built by an Asian carmaker, was to have held over the weekend its second event this year aimed at convincing Toyota employees in Kentucky that they need union representation.
UAW Stepping Up Drive to Organize Toyota's U.S. Plant Workers - International Herald Tribune

GEORGETOWN, Ky. -- Dissident workers at the Toyota plant here gather at the Best Western Georgetown on Wednesdays between shifts to shape a battle plan. The workers are angry at conditions at this flagship Toyota site, where the best-selling Camry is built.
The United Auto Workers has launched a big new push to organize the plant, trying to capitalize on fears of lower pay, outsourcing of jobs and on Toyota's treatment of injured workers. The stakes for the UAW intensified this month as a private-equity firm agreed to buy Chrysler, raising fears that the union will be unable to block cuts in jobs and benefits at a privately owned automaker.





The UAW has never succeeded in organizing a foreign auto assembly plant in the US, but Toyota's emergence as the world's largest automaker has added urgency to this effort.
In Kentucky, Toyota Faces Union Rumblings - washingtonpost.com

The advantage Toyota has is the UAW cannot shut them down with a strike. Toyota can switch to importing cars during a strike which makes an even playing field .... workers get unemployment, Toyota imports ... and the strike goes on ... and the strike goes on... Eventually they both say F this and go back to work making cars.

I'll never understand the massive trade imbalance the US puts up with decade after decade. It was $820B in 2006, $770B in '05 ...

We've stopped making almost everything. We're labeled as a glutenous consumer society. When the shit hits the fan and we stop snapping up everything that Japan and Germany and China makes, they fall flat on their faces faster than we do, and then they whine that we're not supporting their manufacturing ...

The service society America has become will bite us in the ass. It's unhealthy to be so one-dimensional.

The sharp decline of the dollar vis-a-vis many currencies simultaneously this time last year meant those imported goods got real expensive in a hurry. The gluttons stopped buying and the world started creaking to a standstill.

I agree with Milton Friedman that trading pieces of green paper for cars and ships and computers and jetskis is a great idea if those dead presidents never make it back to America -- but we're losing leverage that would be maintained if we'd make more shit at home.

In that sense I think it's a bad thing if US auto makers die. But I'm not excited about bailing anyone out.

Originally Posted by Jet Gorgon

LOS ANGELES: The United Auto Workers, which has yet to organize a U.S. plant built by an Asian carmaker, was to have held over the weekend its second event this year aimed at convincing Toyota employees in Kentucky that they need union representation.

As far as I know the UAW has yet to penetrate Toyota with the exception of the NUMMI plant which I believe was Toyota’s first venture into the US, and is a joint operation with GM.

Needless to say with the problems at GM things don’t look real good out in NUMMI right now:
NUMMI employees in Fremont may face layoffs - 11/07/08 - San Francisco News - abc7news.com

Originally Posted by Jet Gorgon

The UAW has never succeeded in organizing a foreign auto assembly plant in the US, but Toyota's emergence as the world's largest automaker has added urgency to this effort.

With things going as poorly as they are for the big three, I don't think the UAW has much going for it to promote how good they are for the long term good of the employees in their attempts to convince current non-union shops to join them on their way down.

Originally Posted by Texpat

I'll never understand the massive trade imbalance the US puts up with decade after decade. It was $820B in 2006, $770B in '05 ...

We've stopped making almost everything. We're labeled as a glutenous consumer society. When the shit hits the fan and we stop snapping up everything that Japan and Germany and China makes, they fall flat on their faces faster than we do, and then they whine that we're not supporting their manufacturing ...

The service society America has become will bite us in the ass. It's unhealthy to be so one-dimensional.

The sharp decline of the dollar vis-a-vis many currencies simultaneously this time last year meant those imported goods got real expensive in a hurry. The gluttons stopped buying and the world started creaking to a standstill.

I agree with Milton Friedman that trading pieces of green paper for cars and ships and computers and jetskis is a great idea if those dead presidents never make it back to America -- but we're losing leverage that would be maintained if we'd make more shit at home.

In that sense I think it's a bad thing if US auto makers die. But I'm not excited about bailing anyone out.

Hey Tex, this is a great moment!

You are coming round to my point of view on the US (and UK) economy...

Yes, I'll admit, I never expected things to get like this.

What goes well with crow?

Originally Posted by Texpat

Yes, I'll admit, I never expected things to get like this.

What goes well with crow?

Would you like the pie hot or cold?

Anyway, on a serious note, my 'big one' that I predicted in June is now on the horizon of the mainstream media:

https://teakdoor.com/us-domestic-issu...tml#post833794

^ But Robski, you didn't tell us how much you make! (I know you are a skilled tradesman, so that differs IMO). Anyone who has a journeyman's ticket or the equivalent (sorry, don't know all the terms) is worthy of high pay, IMO.
True, I think it's welfare if folks just hang about waiting for the govt to save them, but I do support retraining programs.

Thanks, Bugs, for the updates on wages, etc. I wonder where the $75-$78 numbers came from in that article? Maybe adding benefits, but that's a far stretch from about $30. I do question union data tho.

How do Asian mfg in the US shut out the unions? In employee signing contracts?

Originally Posted by Jet Gorgon

Thanks, Bugs, for the updates on wages, etc. I wonder where the $75-$78 numbers came from in that article? Maybe adding benefits, but that's a far stretch from about $30. I do question union data tho.

How do Asian mfg in the US shut out the unions? In employee signing contracts?

The $70+ per hour is based not only on total cost of the current employees but the legacy costs related to ALL of the retired employees as well.

Originally Posted by Jet Gorgon

How do Asian mfg in the US shut out the unions? In employee signing contracts?

The Asians have been able to keep the unions out by opening plants mostly in non-union areas (the South). They have a few in the North but not in strong union areas. In addition they typically offer wages that are 50% hirer or more than the average local manufacturing wage. For example in say Mississippi, the average wage is say around $12-$13, they go in and open a plant with a wage of around $20 per hour. Now that is still 30% or so less than the big three pay, but it’s around 50% more than any other non-skilled manufacturing job within hundreds of miles. Throw in the benefits and the locals don’t see the need to pay a union to get more – they are already rolling in dough compared to everyone else within a hundred plus miles.

I am not sure if they require them to sign a contract or not, but even if they do I think it is illegal to lock the unions out with any type of employment contract. The employees could still unionize and not void any existing contract.

But again when folks are making 50% more than anyone else doing similar work in the area, with benifits, they don't see the need to form a union and pay dues.


Additionally the biggest problem IMHO for the big three right now are the legacy costs. There is simply no way for them to get out from under them, and no way for them to compete if they have to pay them. And sure these costs are not just the fault of the unions or the employees - the management agrees at one point to pay them. But they were based upon the hayday of operations, back when they had tons more workers and were making lots more money. In a way it is kind of like the problem the US is running into with social security, less and less people paying into the system to cover the costs. The big three end up with less and less workers every year, but they have to cover and increasing legacy costs.

One thing I have been kicking around in me head as of late would be something along the lines of kicking the existing legacy costs of the big three over and into the PBGC, but this would have to be as part of some kind of chapeter 11 or the like, and requrie ALL of the top exects and board members to be shown the door with no pay.

Pension Benefit Guaranty Corporation (PBGC)

Pension Benefit Guaranty Corporation - Wikipedia, the free encyclopedia

If I recall not too long ago GM tried to kick the legacy costs over to the union buy offering up X billions of dollars and let the unions take it from there. Did not work, but if GM makes it thru the current mess I look for the X to continue to grow until the union get greedy enough to take it. Then the retirees will end up getting screwed by the union instead of GM.

Once again, the Legacy costs can be put at the foot of management. The Pension fund is not an asset of the Company, it is owned by it's employees. Somehow or other some companies have been able to plunder their workers Pension fund though, like United Airlines- I don't think this should be allowed. GM failed to adequately fund it's pension fund- this has been talked about for several years, and I imagine things are even worse in the current environment. So it is left with several billion dollars of contingent liabilities.

^ I think it fits better in this one, MM. Unless we start a union, benefits, pension thread? Maybe interesting to compare these issues across countries.

Bugs, thanks for the non-union info. Makes sense for those folks and for the companies. I know workers in Japan are unionised, but a very different system. That is also changing as life-time employment is not as prevalent anymore.

American car companies are too old to change their ways. You can't teach an old dog new tricks. For too long they tried to dictate to the American public what type of car they should drive.

stated a threadabout this ages ago.

Pretty sure people said Gm wasn't going to go bust in that thread.
soebody dig it up

Originally Posted by mrsquirrel

stated a threadabout this ages ago.

Pretty sure people said Gm wasn't going to go bust in that thread.
soebody dig it up

Yes, that will be me. I posted this in July:

https://teakdoor.com/us-domestic-issu...tml#post680578

Of course, Butterfly's responding follow-up post stated that he didn't understand. But then again, he never does.

Further back, in February, I posted this:

https://teakdoor.com/issues/24787-bri...tml#post533337

Most people have rejected what I have said on the current economic situation since I joined the board, only to now acknowledge that I was correct.

I draw comfort that some, such as Butterfly, continue to disagree, given his lamentable track record.

Heard on the news again about GM union members making $75 an hour, but it includes pension and benefits.

Here's news on Wagoner, GM's chairman and CEO

Wagoner has run the world's largest automaker for the past eight years, presiding over $73 billion in losses beginning in 2005. He already endured a fight with dissident shareholders and several failed turnarounds and may argue he knows the company better than most who could take his job.
The 55-year-old executive joined GM in 1977, as U.S. automakers were fending off Japanese competitors who recognized the need a decade earlier to build fuel-efficient vehicles. While U.S. auto sales broke records during Wagoner's years as CEO, the three major producers -- Ford, Chrysler LLC and GM -- battled against high labor costs from pension and retiree health care obligations.
...
Senator Grassley, an Iowa Republican, said in a letter yesterday to the three auto leaders that they should follow Iacocca's example and cut their own pay. Iacocca took a $1 yearly salary and his executives as much as 10 percent less after the bailout, according to the letter.
...
Aid to the automakers must come with conditions that reduce their U.S. production costs to match or beat those of Toyota, said Crandall, who managed a unionized workforce as American Airlines CEO from 1985 to 1998.
Toyota generated pretax profit of $922 per vehicle on North American sales in 2007, while GM lost $729, according a June report by a New York-based consulting firm.
Bloomberg.com: Exclusive

How much did Wagoner make?

Rick Wagoner, chief executive of General Motors Corp., announced in June the company had to close four plants that make trucks and SUVs because of lagging demand as fuel prices soar. That followed the posting a $39 billion loss in 2007, a year when its stock price fell by about 19 percent, without adjusting for dividends.

And Wagoner? His pay rose 64 percent, to $15.7 million.
CEOs pay chugged higher in '07 despite economy; GM's Rick Wagoner's pay rose 64 percent -

Well, that is a drop in the bucket compared to the total losses, but if mgmt took pay cuts, it would be easier to negotiate cuts with the unions, too, IMO.

The $25 bil the industry wants won't do anything. A big bladdy band-aid is all it is, and it will just delay the inevitable. Let them file for bankruptcy and then restructure. Design jazzy new hybrids that people want to buy. Remember the beloved Ford Mustang? Sure, gas prices have fallen dramatically, but it can't last and what good are cheaper prices if folks are out of work? Typically, prices for all goods, including groceries, have risen dramatically over the past few months, in line with skyrocketing fuel and commodity prices. Well, all of those prices have fallen, but have retail prices? No. I am still angry that Safeway's Kaiser rolls cost $0.19 apiece a few months ago. The price rose to $0.32. And that's where they stay despite the drop in input costs. I wonder how low-income people can afford to feed their families.
Sorry, I digress...