auto bailout

[riverrunt]

Now that the auto bailout is toast, do you think the auto union workers should have given in? Seems to me 70 percent of something is better than 100 percent of nothing. I,m no Commie but do you think all this greed is causing the collapse of Capitalism? Do you think Marx knew what he was talking about?
back to the union,you gotta know when to hold 'm & when to fold 'em.

[Old Scout]

Why do you think so many companies moved to Mexico, or overseas? ? ? The cost of labor was killing them and was driving prices up to where they couldn't compete. There is a fair wage and then there is greed. Most of these jobs are not high skill jobs but they are being paid like they were.

[Catfish]

You know how we can compete with Mexico and over seas companies? Just send the MOB bosses down there and unionize those poor stiffs. In no time they'll be commanding wages like we enjoy. Walla,boom....even playing field!

[Floyd Alvin]

I'm not in favor of one red cent of tax payers money going to the auto bailout unless the unions are out, not just compromised, but out all together. And a huge, huge pay cut to the top 25% of management and all future pay based on performance and no golden parachutes.... You quit or get fired you don't even get to take the pencils out of desk draw.

But the big thing I don't understand is where everyone thinks all this auto and bank bailout money is coming from? The US Government is broke... dead broke.... who is going to bail them out?

So far all I see is a constant erosion of the tax base, soon to be excaberated with the coming socialization of the health care and oil industries and who know what else?

Of course there is no way the oil and pharmaceuticals will tolerate the new policies. They too will simply move off shore to avoid the "windfall taxes". And there goes those jobs too.

[Nimble]

Most plumbers, refrigeration repair peolple, etc. command a bigger wage than auto workers. What people get paid goes to buy other consumer goods. Yes the CEOs were paid obscene amounts and made incompetent decisions on CAFE standards, insisting on producing Valdez class guzzlers, etc., but this crimninal stupidity should not result in punishment for an honest hard-working work force. Having said that I too would refrain from government involvement. In this case it will not happen due to the Republican hatred for union workers. In fact we do not have a market to support three big mega auto producers. Ford will likely survive anyway, they have products closer to what the consumers what in mileage and they are not in as bad shape financially. GM will come out with the Volt soon but at $40,000, who will buy it. Soon plug in Prius's will be on the market as well.

Another option is to say, draw straws and whoever get the long one gets the 15 Billion.

[Floyd Alvin]

The point is the government don't have $15 billion to give. In fact the do not have 15 cents.

They just keeping printing money and those union workers and the rest of us will need one of those one ton pick-ups to haul enough dollars to the corner store to buy a loaf of bread.

The definition of stupidity is said to be doing the same thing over and over again and expecting different results.

We seem to keep doing that no matter who's in office. Trying to be all things to all people and thinking we can give everyone cradle to grave protection form anything bad is our own brand of stupidity.

[Catfish]

Until this morning I had mixed feelings about the bailout. This morning I spoke with an old friend who lives in Michigan, while we were talking somehow the bailout issue came up. He belonged to the Auto Workers Union. I didn't know this about the unionized plants, that provide a continued check each month for layed off and retired workers. That check is, (get this) 95 percent of their wage for ever. He said these guys were making between $60-$75 per hour. How can any company afford to pay it's current workers and all past employees that kind of payroll. Wow, and then you wonder how they acquired such an economic demise. I'm guessing that if the companies went bankrupt and folded, that would cut out those 'pension' checks. What do the rest of you feel about that scenario?

[Deb Richardson]

It's wonderful that the auto unions wanted to look out for their retirees (sounds like mob line of thinking to me), however now at what price. My Dad worked for Frito-Lay for over 30 years, part of his retirement package was full paid insurance benefits for both he and my Mom, even if he would pass. Frito-Lay found they could not continue to do that and operate profitably. My Mom still carries the insurance but now pays a premium, luckily for her the premium is minimal. Many companies that offered nice retirement benefits, as well as employee benefits have found the need to cut back. Maybe the auto industry should have done some of the same years ago.

[Jeff Boettcher]

Catfish, What you are referring to are "Job Banks". Below is a copy of a newpaper article posted in November:

"Thousands of laid-off auto workers get paid $31 an hour to sit around and do nothing all year under a controversial program that could continue even if American taxpayers bail out the American auto industry.

The program, called "Jobs Banks," has been around for 24 years. Some of the employees at jobs banks choose to do community service, but others do crossword puzzles and watch TV all day -- or just stare at a wall. If you're a laid-off auto worker, it's what comes with your pink slip, thanks to a deal struck in 1984 between the United Auto Workers and the Big Three carmakers.

The program is likely to continue if Congress approves a $25 billion bailout of the industry. But if the automakers go bankrupt, some analysts say, they may be able to eliminate the program, which would abruptly eliminate benefits to the workers in it.

"Subject to some limits, management could find itself in a position to terminate the program," said Edward R. Morrison, a professor at Columbia Law School and a bankruptcy law expert. "The [laid off] employees may become 'creditors' with claims against the company -- they would be in the same position as bond holders and other creditors."

A second bankruptcy law expert, George Mason University Professor Todd Zywicki, said, "This is exactly the sort of thing bankruptcy is useful for ... to get rid of programs that don't do the company any good."

$31/hour for "laborers" doing nothing? Add that to executives getting bonuses for the same & we have an explanation for why the U.S. auto industry is sucking wind.

I have another example. I bought a 2003 Saturn Ion two years ago.
I did some research, but bought with confidence because of friends who were over 100K miles with their Saturns & lovin' it. It turns out that the 2003 - 2005 Ion & 2006 - older Vues were equipped with a new type of transmission: Continuous variable speed transmission (CVT). When this belt driven transmission started failing, GM didn't issue a recall. (Not a safety issue.) They extended their warranty to 75K miles. Naturally mine failed at 80K. Replacement tranny = $5100!

After doing some internet digging I found that GM has settled a class action suit on these tranmissions that will be finalized Feb. 17, 2009. After a call to GM Saturn I was informed that they would assume 75% of the replacement cost. If I hadn't had the capability to look around on the internet to find out that this transmission design was defective, I would have been liable for a $5100 + labor repair bill.

We should trust them to get solvent after the bail out? They produce defective products, avoid recalls to fix an obvious problem, pay people to not work, give bonuses to executives managing firms that are losing boatloads of money.

[Catfish]

Jeff, Thank you for your homework. I was waiting to hear Your insight on this thing. I guess we are feeling the same way about this, however the figures that were passed on to me were incorrect. I value your knowledge on the subject more than my friend in Michigan, he perhaps was on a rant and tended to exaggerate his figures.

[Old Scout]

In an interview with an auto worker in Kenosha the other night, he commented that he was having a hard time living on 80% of his wage. No dollar figure was mentioned but still 80% is a lot more than what I received some years back from unemployment.

[Catfish]

Jeff, while appreciative of the knowledge you passed along considering the "job bank", I stand to correct your figure of $31 per hour. Just tonight on CBS news they reported that the AVERAGE G.M. employee's salary at $69 per hour, so my original statement of them making $60-$75 per hour holds true.

[Floyd Alvin]

Anyone with an IQ higher then a car bumper knows that the largest cost of running any business is the cost of labor. And it doesn’t take a much higher IQ to know that union labor cost more then non-union.

If a union or a non-union company fails because they can no longer compete in an extremely price completive market, then labor has to take its fair share of the blame of that failure in direct proportion to its willingness to make necessary adjustments either in more productivity or less pay to make the company profitable again. The history of unions is to never give back and constantly demand more. That’s how they got here.

I understand the unions have made a few concisions, but the fact is that any bean counter with the aforementioned bumper IQ can probably project out what little good those concessions will really do.

The fact remains that even with those concessions and the government bail out combined, they are not going to do anything but hasten the further demise of the US as a world economic power.

The writings of Alexander Tyler, 1747-1813, in the Downfall of Democracy, are becoming closer to reality every day. Most people just scoff at his writings and laugh it off as just another scare tactic. But if you stop and read this shot article with an open mind you can see it happening right before you eyes.

Aren’t the bank and now the auto bailouts just that, gifts form the treasury? Not to mention Obama’s new $850 billion bail out he is promoting.

http://docs.google.com/Doc?id=dgxm7rqm_20dpsck7dp

[Old Scout]

I believe that the 60 to 75 dollars per hr. that you are quoting, is the combination of wages and benifits. In other words the cost to the company for each employee. It has always been my understanding that benifits are at least equal to or greater than the wage and thus approximately doubles it. Based on my experience from when I worked at Harley this would hold true.

[Catfish]

Scout, I see what you mean, because CBS News stated the average "salary" of the employees is $69. Then I went on to say or asume $69 per hour. For the sake of this discussion it's more like apples or oranges or wage/salary. None the less, whether it is wage or salary it's still $69 dollars per salary/wage that they are getting 80 or 95 percent of. Again I must wonder how a company can pay all of it's employees 80-95 percent of an average of $69 and everyone that has ever worked there, and stay afloat. Ever worked there, meaning retired or laid off. No apples or oranges for anyone that was fired. No wonder they're in a financial mess.

[Kerry Tobin]

OK, I've done a little research since I was curious about the average pay... From what I've found, what the average union employee from the big three makes per hour is not a lot more than a non-union employee makes at Honda or Toyota. However, the average employee costs US auto makers more than $70 per hour when benefits are added in compared to less than $45 at foreign-owned plants.

Another report put the total cost per hour of a US auto worker at $73.20 per hour. It found other costs such as, Toyota - $48, Avg Management & Professionals $47.57, Goods Production - $31.59, and all workers - $28.48.

I'd say the union needs to make a couple of concessions or their employees better get used to the idea of no pay or no health care while making minimum wage as a Walmart greeter...

[riverrunt]

Why slam the union wages? How about some comment on the multi million dollar salaries of the execs?

[Kerry Tobin]

Wanna guess which one makes up a bigger portion of the company's expenses???

From what I remember the top execs all said if they took a bailout they would take $1 salaries...

[riverrunt]

So how about taking bailout money for exec bonuses? How about banks refusing accounting for where thier bailout funds are going? Some of these bohunks are getting bonuses for bad company performance. Is that what capitalism is supposed to be?

[riverrunt]

If you Google "US exec pay versus foriegn exec pay" you will find some interesting data.

[Jeff Boettcher]

Riverrunt,
If you re-read my post, I was railing on the union AND the execs.
Both the union & the execs made this mess.

Quit trying to deflect the blame to the office dwellers. The whole US automaker structure is to blame. Ask yourself why foreign car companies, producing cars in the U.S., can be more profitable or lose significantly less $$$ than the "Big Three"?