CONGRESS is not happy about the bail-out demand from U.S. automakers. Lawmakers are gagging at the thought of spending $25 billion to keep General Motors, Ford and Chrysler afloat, when none of those companies seems capable of making a serious effort to compete in either products or efficiency with foreign carmakers.
But the Big Three, battered as they are, can still deal from a position of strength. The company bosses may not be able to convincingly defend their management of the Detroit dinosaurs, but they don’t have to. They have hostages.
Rick Wagoner, chief executive officer of General Motors, trotted the hostages out Tuesday when he was in Washington, D.C., to testify before a Senate committee. He warned that allowing the companies to fail and fall into bankruptcy could lead to the loss of 3 million American jobs.
“This is all about a lot more than just Detroit,” he said. “It’s about saving the U.S. economy from a catastrophic collapse.”
There are already 10 million Americans out of work, and nobody in Congress wants to add 3 million more — from automakers, parts suppliers and other companies — to the unemployment rolls.
The Congress has more more choices available to it than handing $25 billion to the Big Three or preparing to pay unemployment benefits and retraining costs for 3 million workers. Those are just the choices offered by the failed company managements — choices that the automakers’ executives hope will lead to a bail-out and their own job security.
Mismanagement is not the only reason the Big Three are facing bankruptcy, but years of mismanagement did leave the companies vulnerable when the credit crisis hit the American economy.
The $25 billion the companies are asking for would not solve the automakers’ problems. It would just buy time for continued mismanagement until the economy improved enough to increase sales.
Congress needs to do more than listen to the pleadings and threats of the CEOs. It needs to talk to the workers, the unions, the dealers, the suppliers and the credit companies — every group involved in the auto business. The lawmakers need to understand exactly what the industry’s problems are before they can begin to spend money to fix them.
As it stands, $25 billion would be just a bail-out, an investment in business as usual. What the Big Three need is not a bail-out, but an intervention.
And if Wagoner is to be believed, the welfare of 3 million Americans is riding on the outcome.
goodoleboy (anonymous) says...
If they keep the same management they have now for Christs sake let them go down. A bail out will only prop them up for awhile, these companies have not been profitable for years, some free market we have...........
November 20, 2008 at 3:01 p.m. ( permalink | suggest removal )
truelovecharlie (anonymous) says...
If they would have been building a quality product at a reasonable and fair price all these years; they might not be in this shape. As I've said in many posts; greed has brought this on and greed will keep this economy going south. Make the big 3 go to their workers and give them the choice of taking some cuts in benefits and pay. A reduction in pay and benefits is better than closing the doors and going on unemployment. How often has the auto workers union threatened strike for better wages and better benefits? They make far more than an average wage. Their quality keeps going down while their prices keep going up. How about the government just give every LEGAL US citizen over the age of 18 $50,000 each. How many would run out and buy a new car with that money? How many would pay down their motgages? How many would go on a great shopping spree? That would stimulate the economy far more than the bail out and much cheaper.
November 20, 2008 at 3:11 p.m. ( permalink | suggest removal )
wookdog13 (anonymous) says...
As I see it, it would make more sense to bail out the auto industry than the banks. There a fewer people involved in the banks than what would be involved with the auto industry.
Also, I do believe that all golden parachutes,and bonuses of all the banks and auto people should be done away with, before any monies are handed out.
I think they could actually drop the price of the vehicles more than half the price and still come out ahead. They could all do away with their corporate jets and pay for their bank problems.
Why should we be responsible for a free ride for all these companies? Why are we picking and choosing who gets help and who doesn't?
Do not blame the unions, because if it were not for them the average worker in any industry would only be making minimum wage. Yes there is a cost with the unions, but not to the extent of what the corporates make in salarey etc.
Besides, the union are paid for by the people they represent.
November 20, 2008 at 3:25 p.m. ( permalink | suggest removal )
create (anonymous) says...
Unions had their place at a time when industry was taking advantage of working people; however, they could still be a viable aid to the working man IF they weren't so greedy and aggressive. But in this case, the UAW has been the noose around the necks of all those involved including the workers and consumers too. Yes, they collect big union dues; I wonder what those union bigwigs make. I'll bet they have personal planes too. Not to say I am letting those ceo's off the hook for having the temerity to go to Washington, hat in hand, while traveling there in their private jets.
How many people in this country make $65 an hour? I'm a teacher with two degrees and never once hoped to make that kind of money. And I didn't have robots to do my work either. I have a tough time feeling sorry for those auto workers at those wages.
Between the unions, greedy management on a roll, overpriced cars and parts, they priced themselves right into a big fat mess. I agree with chapter 11 and entire restructuring including a huge cut in wages and bonuses from the top down. If any manager doesn't want to participate, see ya, and no parachute. Let them eat brownie batter, or dead worms.
November 20, 2008 at 3:54 p.m. ( permalink | suggest removal )
madpoet (anonymous) says...
I saw an editorial on the news last weekend about this. It's not just the jobs but if we have to scale up to go to war in a big way, those auto factories would be converted to military use. I agree they need to slow down and examine every angle before deciding what to do. I know Bush is in a rush to get it done before 1-20 and he leaves but too darn bad. We don't need to dig a deeper hole than we're already in by throwing good money after bad. It makes me sick to see my tax dollars used to rescue greedy jerks who should have known better. But what can we do? Life sucks sometimes.
November 20, 2008 at 3:59 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
I did some research on the UAW, I found that they are not nearly as bad as the actual management. In the early 90's GM laid off more than 100,000 employees while posting profits of more than 4 billion a year. The unions have made a great deal of concessions over the last few years including that new hires will not see the kinda of wage people are throwing around. They get paid a great deal because their workforce has been downsized and they take on added responsibilities and more technical training. I fault the management here more than any union, imagine where GM workers would be without a union? Management has pushed a failed business model to the brink all the while losing ground in quality and brand loyalty, there was a time when American cars were great products, what happened? Plain and simple folks the management has cut and cut to increase profits and it has finally come back to haunt them. Banks are one thing, this is whole different animal, the government is and always has been intertwined with the financial institutions, whereas if they bailout the big three, what is next? And more importantly what does this say to responsible auto makers who had the foresight and ingenuity to not get themselves into this mess?
November 20, 2008 at 4:15 p.m. ( permalink | suggest removal )
USNretired (anonymous) says...
Tie the money to infrastructure improvement and retooling. Not one cent of THIS money to management or Union.
November 20, 2008 at 5:45 p.m. ( permalink | suggest removal )
dalelinn (Dale Linn) says...
Bailing anyone out is like patching a worn out tire. If anyone remembers, the air was let out of our tires when our manufacturing was exported. If we had listened to Ross Perot, maybe we would have some of that air left, instead of the sucking sound of air (jobs) moving across our border. The bigger question isn't whether to keep things going with our grandchildrens money, but how to get manufacturing (jobs) back into our bankrupt country. But, let's listen to Mr. Kelly talk about whether or not to bail out our auto industry. Gotta love NAFTA and "Free Trade", compliments of our central banks. Let's send them some more taxpayer money.
November 20, 2008 at 6:32 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
I agree with create - why in the world did I waste my time and money getting a degree, when all I needed to do was drop out of high school and join the union and run a drill. I'm not belittling labor - spent many years there myself - but the UAW has gotten things out of hand. Unions have their place, but they all need to work together - when the union says screw the company, nobody wins. When the company says screw the union and the laborers, nobody wins. Concessions need to be made on BOTH sides.
But I'm sure once we open the borders wide they'll be able to hire all the workers they want.
November 20, 2008 at 7:15 p.m. ( permalink | suggest removal )
Pingeon (anonymous) says...
It just kills me to see people still supporting the unions. They had their place and they made great things happen for working conditions. However, we no longer have to worry about that. OSHA has dictated minimum standards and the market sets wages.
Ask yourself if you would go run a drill for minimum wage. My guess is no. Therefore, the market sets the wages for this at more than minimum. Unfortunately the unions have set it higher than it should be and now we are in the mess you see around you.
Go ask the employees at Toyota if they would like to be unionized. I already know what their answer is as my company has bench marked them and done on site studies of their operations. Also take a look at what their average wage for their first year machinist is. The company AND the workers are BOTH winning at that factory.
November 20, 2008 at 8:39 p.m. ( permalink | suggest removal )
MelissaE (anonymous) says...
"Bailing anyone out is like patching a worn out tire."
EXACTLY. I don't care if you make cars or lend money.
In fact, I'm more pissed about the lending--the banks KNEW DAMN GOOD AND WELL the loans they were giving were bogus. It does not take a rocket scientist to see that a household making $50k/year canNOT afford a house worth $400k/year...the payments (not to mention insurance & taxes) are at least $1200/month. Throw in the extras and HELLO $1500/month. And $1500 x 12 mos. = $18k per year. $50k - $18k = $32k...figure in utilities, grocieries and *must haves* and then figure in daily expenses. And then remember that the family probably wasn't asked to put any money down. So not only can they not pay it, they have no equity.
I see the car industry's issue: If the gov't can bail out the bankers, then why the hell not bail them out, too?
I think, and I may be really ignorant here, but a free market HAS to crash before it can be fixed, no matter where or for whom you work.
Why did the US bail out anyone?
Melissa
November 20, 2008 at 9:27 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
Now, now, MelissaE. Those are all good, solid practices put into place during the Clinton administration. And there's no problem with making loans like that for Fannie & Freddie - after all, it wasn't that long ago that Barney Frank assured us so. And after all, he's a Democrat and anti-Bush, therefor he MUST be correct. Not to mention the fact that he just easily won re-election, and we all know the people are way too smart to be hornswoggled like that. Just watch the Zogby poll results sometime. If we can just find a few more "misplaced" trunkfuls of ballots 100% for Al Franken in Minnesota, we'll prove how smart people there are, too.
Observation, I don't make anywhere NEAR what the UAW workers make. I'm beginning to like this spread the wealth idea. If we could average out what educated degreed professionals like create & I make, (the poor folk), with what a line worker for the UAW makes, (the rich folk) we'd both be in pretty darn good shape - LOL
I'm looking forward to when "The economy will be corrected early next year as promised by the new President and his followers".
And don't forget, also, around the same time, the lion shall lay down with the lamb, everyone around the world will beat their swords into plowshares, and we shall all enter a new age of enlightenment and understanding once the enlightened one - the Messiah - is crowned early next year, and his followers spread peace, harmony, and rose petals upon the earth.
Sometimes this board is better than watching the Comedy Channel - LOL
November 20, 2008 at 11:30 p.m. ( permalink | suggest removal )
trainrech (anonymous) says...
Both the UAW and management are at fault here. The words I heard in their congressional hearings was that "it wasn't our fault" that the economy tanked. Using that logic the federal government should be considering bailing out every company affected by our local economic conditions.
I think a Chapter 11 reorganization would be the best way for them to go, although I've heard the union friends in Washington would consider this a union-busting move so I'd be surprised if it received any support.
November 21, 2008 at 7:08 a.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
I agree, they're both at fault. But the UAW strongly supported Obama & the Dems, and with a majority in both houses, they're not gonna lose....
Average wage + benefits for UAW workers in 2006: $81/hour.
Average wage + benefits for Toyota non-union emp: $35/hour.
Maybe Toyota could buy the Tyson plant and retool it to move some of their poorly-paid work to Emporia???? :)
November 21, 2008 at 8:57 a.m. ( permalink | suggest removal )
USNretired (anonymous) says...
UAW should be prosecuted under RICO, as should most unions. Mortgages need to be treated like standard loans with collateral. Both are majorly played in politics, to the enrichment of a few and to the detriment of our free market. Lobbyist bribe legislators for votes and they pass laws regulating what should be left alone, and ignoring things that should be brought to light. These and more have contributed to the current mess.
November 21, 2008 at 9:40 a.m. ( permalink | suggest removal )
create (anonymous) says...
Observation, I don't know where you get the idea that I make so much money. If you have been reading blogs for long then you know I have said many times that I am a teacher, now retired. Two degrees, yes, but still a teacher on teacher wages, certainly not what the auto workers make. Yeah, yeah, it was my choice to become a teacher and not an auto worker. I knew I was destined to be the Catcher in the Rye, its own reward just not financial. And I did belong to the NEA, but the most they ever did for me was a 2% raise when the district offered less.
November 21, 2008 at 11:44 a.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
In a town where the marijuana shops outnumber the Starbucks, "Sister" Pelosi ain't no relative of mine.....
I wish I made "only" just under $170K. Wow. To be that poor. My retirement has pretty much disappeared in the last couple of months. Thanks, Barney, you knew it would all be ok. That's how you got re-elected so easily. Just consider me to be one of those "ye of little faith" when we usher in the Dawning of the Utopian Era next year.....
November 21, 2008 at 1:05 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
Still harping on the unions when the management certainly shares more of the blame.
Business 101
poor business model=failed business
don't believe me, take it from the most successful business man in the world
http://news.yahoo.com/s/ap/buffett_ec...
November 21, 2008 at 1:30 p.m. ( permalink | suggest removal )
create (anonymous) says...
I don't have anything to lose with the auto industry bailout, Observation, I guess I'm just another American voice in the wilderness screaming about the entire economic mess. We're all so frustrated. Remember the cartoon showing a mouse with a giant screw going through his chest?
November 21, 2008 at 5:46 p.m. ( permalink | suggest removal )
USNretired (anonymous) says...
Greedy crooked union = auto prices as high as small house prices
November 21, 2008 at 8:06 p.m. ( permalink | suggest removal )
admireed (anonymous) says...
Ob...who is we?
November 21, 2008 at 9:50 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
USnretired::
"Greedy crooked union = auto prices as high as small house prices"
Up until a few years ago they never had ANY competition in the full size pickup marketyet they are losing ground every year to higher priced Tundras and Titans.. Hell the Toyota Camry and the Honda Accord have always been priced higher than the GM/Ford equivalent yet people continue to buy them because of QUALITY. This is where the Big three has failed so badly, the union has nothing to do with the business model. I will concede that the union has been greedy in past but look at their concessions in the last 3 years and look at how imports such as Toyota,Honda, and Nissan have modeled their business, ask yourself why the Big three need a bailout because of the "economic climate" and the the foreign 3 do not. Its bad management folks plain and simple and I am glad as hell that Congress is addressing the fact that these companies have not been profitable for a long time and want to see a change in business strategy.
November 21, 2008 at 11:28 p.m. ( permalink | suggest removal )
create (anonymous) says...
goodoleboy says, "...ask yourself why the Big three need a bailout because of the "economic climate" and the the foreign 3 do not. Its bad management folks plain and simple..."
So far this is the most intelligent statement I've seen come out of this entire argument. Spot on!!!
November 22, 2008 at 7:56 a.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
And PART (not all, but PART) of that bad management is..... look at the union and the diff in wages paid between the Big Three and the foreign three.....
November 22, 2008 at 8:44 a.m. ( permalink | suggest removal )
USNretired (anonymous) says...
The unions skew the outcome, the consumer pays. The model is in place before the skewing. New infrastructure with more automation and less workers will result in a new model. Since the automakers are part of the defense framework, controls are appropriate while the union no longer is.
November 22, 2008 at 9:59 a.m. ( permalink | suggest removal )
USNretired (anonymous) says...
The Japanese government is a partner in their auto industry, same with ROK. Our government is one of the least interfering on the planet, when it comes to industry. I drove a Mitsubishi when I lived in Sasebo, Japan. I know firsthand about JCI and some of the consumer rules that their society considers normal that seem weird to us. WE NEED railroad and auto/aircraft infrastructures that will fully support our National Defense. Right now we lack both. Our government needs to have more say and less union in these vital areas. If you can't see that, I probably don't have the patience to break it down so you can.
November 22, 2008 at 10:11 a.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
I see fine, I see mismanaged companies that have been continuously falling for DECADES. You want to blame the union, I am here to tell you that anyone worth their salt as a business person can look at the big three and see where the problem is. I don't need you to break down anything for me, I hold an MBA and work in Accounting and Info systems so believe me I have a good grasp of what is going on here. You realize that the big three have many plants outside the US that manufacture cars right? You realize the wages paid to those workers offset the unions right? You realize GM just built a new 300 million dollar plant right next to St. Petersburg in Russia right? Lemme sum this up for you.
Management IS in CHARGE of destiny of the company, skew it anyway you like but guess what, we the TAXPAYER not the consumer will pay for their failure in one way or another. You can spin it however you want but imports cost more and yet they STILL outsell the big three, and that is the unions fault? Hmm, do the unions design the cars? Do the unions make decisions on quality standards? They have no say in WHAT gets built, they just build it, and herein lies the problem. You want to blame the workers, when in fact you should blaming the management for running an American institution into the ground. Never mind the fact that all new employees make the same wage as those listed above for the Toyota plant, the wages you are up in arms about are grandfathered in, much like the railroads and many other industries.
One final thought:
Unlike government the management of these firms have all the say in the direction and operations of the company, therefore they shoulder the burden of blame more than any other entity, because they are in fact the masters of their destiny, explain to me how the unions made all those bad business decisions, I'd really like to hear it.
November 22, 2008 at 11:33 a.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
From the UAW website:
http://www.uaw.org/barg/07fact/fact02...
"In 2006 a typical UAW-represented assembler at GM earned $27.81 per hour of straight-time labor. A typical UAW-represented skilled-trades worker at GM earned $32.32 per hour of straight-time labor"
Sounds like most workers do in fact make around what the non union workers do, the $65/hour mark must be the extreme high end, hmmm
"The total labor cost of a new vehicle produced in the United States is about $2,400,2 which includes direct, indirect and salaried labor for engines, stamping and assembly at the automakers’ plants.
This represents 8.4 percent of the typical $28,4513 price of a new vehicle in 2006. The vast majority of the costs of producing a vehicle and transporting it to a dealership and preparing it for sale – including design, engineering, marketing, raw materials, executive compensation and other costs – are not related to direct or indirect manufacturing labor."
I just want to reiterate here:
design, engineering, marketing, raw materials, executive compensation and other costs
ARE NOT under union control of any kind and they make up %90 of the costs, who makes those decisions? I'll take MANAGEMENT for $25 billion Alex.
Feel free to references the sources of the website, they are solid.
November 22, 2008 at 12:01 p.m. ( permalink | suggest removal )
USNretired (anonymous) says...
The UAW as a source? HA HA HA
November 22, 2008 at 1:04 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
Are you that dense? So the US Census Bureau is not good enough for you? They referenced them. NADA? Seriously man, read a little into, follow the link to their sources, google up your own and see if they correlate like I did. I challenge you to explain to me how the union controls or dictates:
design, engineering, marketing, raw materials, and executive compensation.
Instead of laughing present your argument, show me YOUR logic and reason instead of making pointless claims with no substance behind them. Very juvenile sir.
November 22, 2008 at 1:30 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
More facts:
http://seekingalpha.com/article/17845...
Foreign autos cost 12% MORE still than American cars yet people still buy them and yet foreign autos turn more profit per car still. Why is this? Efficient Management and ingenuity and wait for it.. QUALITY.
November 22, 2008 at 1:40 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
goololeboy, what you missed, is that the high wage figures quoted INCLUDE benefits - not just straight wage. Pension, insurance, etc... - they add up to quite a bit. Actually, you didn't miss it, it was in your own article - here's part that you "somehow" omitted:
"Why is the figure cited as hourly labor costs by the companies so much higher than the wage rates?
In addition to regular hourly pay, the labor cost figures cited by the companies include other expenses associated with having a person on payroll. This includes overtime, shift premiums and the costs of negotiated benefits such as holidays, vacations, health care, pensions and education and training. It also includes statutory costs, which employers are required to pay by law, such as federal contributions for Social Security and Medicare, and state payments to workers’ compensation and unemployment insurance funds. The highest figures sometimes cited also include the benefit costs of retirees who are no longer on the payroll. "
Here's from another article with different numbers, but the same idea:
"In 2005, for example, GM produced three times the cars as Toyota in North America — but had five times the number of production workers. GM had 77 plants (all unionized) to Toyota’s 12 — only three of which were unionized. And unionization makes a huge cost difference. Once benefits, pensions and such are factored in, GM’s average hourly labor cost is an eye-popping $73 versus Toyota’s $48"
I forget - when the Big 3 first started asking for money, how much did they say they needed just to stay current on pensions & benefits, let alone retool?
November 22, 2008 at 1:46 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
Funny, how in my line of work, full-time employess are being replaced left and right by contractors. And the contractors make MORE per hour than we do. But..... no overhead, no benefits. The company can pay them more per hour but still save a huge amount of money.
I'm not saying saying the unions need to be gutted, and that everyone needs to take a huge cut. I'm saying that there need to be concessions made on BOTH sides. Management is inept - and many of their costs, including labor, have gotten disproportionatly high (did I spell that right? :). If the Big 3 get a bailout, there needs to be concessions from BOTH mgmt & labor. If either of the 2 balk, then I say let 'em file for bankruptcy.
November 22, 2008 at 2:06 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
And I'll say it again, their labor costs are but a fraction of the real problem. Lack of efficiency and ingenuity in engineering, design, marketing, and the cost of raw materials are the real costs here. I am not trying to vindicate the unions, I conceded earlier that they had their blame in this too. What I am trying to convey is that the blame should be falling smack dab on the management for not making good business decisions and evolving. The UAW is small piece equation yet a lot of people are out to crucify them unfairly when its the management that should be taking the brunt of the blame. Their products are FLAWED and have been for a long time now, blaming the schmo that builds the car is pointless, hell I'll tell you what, if they built something worth a damn we would not be having this conversation at all and I would be driving home in a Chevy-LOL
November 22, 2008 at 2:17 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
I drive a GMC - and it's a damn good vehicle. 170,000 and counting, still solid, no major rework needed.
Alot of the problem is/was their direction - spitting out big gas-guzzlers when gas was "relatively" cheaper. As far a mgmt - hey, the market was there, they were selling well - maybe we need to put a little bit of blame on ourselves, the consumer? Had we demanded more fuel-efficient cars in the past (demanding with our wallets) - they would have long since - retooled. Can't always blame the management for giving people what they want.
http://www.nypost.com/seven/11162008/...
GM .... is locked in asphyxiating labor deals, has dealership franchise agreements that it can't break and faces huge pension bills its rivals don't. The company's retiree medical benefits bill was $3.3billion in 2007 - the company is trimming that back next year but still faces mounting costs its foreign foes don't pay.....
...Blame decades of collective bargaining with unions, the whims of crude oil and, most of all, trucks. The truck is Detroit's salvation and its downfall. Pickups and sport utilities threw off so much profit in the days of cheap oil that the Big Three could lose money on dull, less-reliable cars and simply shrug.
Lacking any incentive to improve fuel efficiency and battle imports on style notes thanks to the cushy truck business, the Big Three doubled down on gas-guzzlers just before crude oil prices soared.
In the era of $4 unleaded, the Big 3 spit out fleets of guzzlers that required $100 fill-ups and tepid sedans that, while better than '90s era Detroit metal, still choke on Accord and Camrydust. As the economy slowed and consumers put off new car purchases, the trucks are still too expensive to drive and even deep discounts won't move the inventory. GM's sales were down by nearly half in October.
continued...
November 22, 2008 at 2:41 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
"The market is telling them that we don't want what they're selling," Covel says. Yes, gas prices are back to 2007 levels and truck sales are picking up, but Honda and Toyota's trucks are now good enough to stab at the Big Three's coronary profit artery. In 2005, foreign trucks accounted for one-third of all US purchases; as recently as 1995, American trucks accounted for almost 90% of the domestic market.
The United Auto Workers can blame management all they want for the predicament, but the compensation numbers are sobering. Detroit's workers earn more than $70 an hour compared with $45-$48 for the non-union shops of Toyota and Honda in the US. You can argue until you're Ford Oval Blue in the face about why the wage gap exists, but Detroit's carmakers start the sales contest already down two scores to the imports. Years of strikes and threatened strikes forced the Big Three to buy labor peace at a price they can no longer afford. The scenario gets even worse when you look at the Big Three's pension woes.
GM claims its pension plans are fully funded; the government agency charged with picking up the pieces for failed pension plans says the deficit is $31 billion. The Pension Benefit Guaranty Board predicts that if GM defaults on its pensions, the claim against the PBGC will be bigger than all previous claims combined. Who funds the PBGC? U.S. companies that have pensions pay dues, but pension-offering firms are dwindling fast. If the Federal agency can't pay, taxpayers open their wallets again.
November 22, 2008 at 2:42 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
In business you NEVER concede a market as they did to the Accords and Camry's, when times were good instead of looking at their lineup and improving it they let it go and conceded defeat. They kept losing market share. 9/11 should have been their wake up call that oil could sky rocket at any time, this and a working knowledge of global markets with the economies of China and India growing like weeds it does not take a rocket scientist to see the writing on the wall.
It boils down to this, quality. American cars have lagged behind for years and now Americans are loyal to Toyota, Honda and Nissan. So much so that they pay MORE for them than their American equivalents. Ford has actually made some strides forward in recent years but in comparison to the imports our cars have just flat out been getting it handed to them. Where does quality start? At the design and engineering level, using good material and making smart choices in marketing. Gm failed on all levels plain and simple, who is to blame? Those who made those calls that is who.
Its like an old Hank Williams song I heard awhile back talking about the good times, and I quote:
"I wish a Ford or Chevy would still last 10 years, like they should"
And he wrote it in the early 90's...........
November 22, 2008 at 3:54 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
I agree with your last post completely except for your one line about how GM has failed on all levels.
My GM hasn't failed on ANY levels, except it would be nice if it got a little better mileage. But, when gas was $4/gallon, I'd have said that even if it got 50 miles/gallon - LOL. After 170,000, its still the best vehicle I've ever owned.
But overall, yes, our Big 3 have failed - they failed to recognize the coming market and react, they failed to keep their costs (including labor) competitive. They succeeded in giving a certain segment of Americans what they wanted at a certain time - but they should have recognized that was not going to last. And to be prepared when it didn't.
November 22, 2008 at 5:26 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
I was generalizing about GM management more so failing on all levels, their products are the byproduct so to speak but I am glad your GM has worked out for you, but you realize that since you bragged on it now that it will surely be going to the shop=P
November 22, 2008 at 5:45 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
LOL goodoleboy. Dang, you're right, I probably just jinxed myself. Good one! :)
November 22, 2008 at 6:03 p.m. ( permalink | suggest removal )
USNretired (anonymous) says...
I will repeat WE NEED railroad and auto/aircraft infrastructures that will fully support our National Defense. Right now we lack both. Our government needs to have more say and less union in these vital areas.
November 22, 2008 at 7:18 p.m. ( permalink | suggest removal )
methusla (anonymous) says...
I must disagree with those who believe that the UAW does not bear any responsibility for the mess that the american big 3 auto makers are in. Everyone involved with the so called Big 3 auto makers is responsible, management for wanting outlandish compensation packages for their work or lack of work, the workers for listening to the UAW for demanding higher and higher pay packages and the UAW for convincing the workers to strike for more and more pay and incentives.
What do you as buyers of the auto'sthat the BIG 3 produce thinks makes a BIG 3 auto so expensive !
Here are my thoughts, if you have to pay some 259,000 employees a pay and incentive package amounting to $70.00 per hour because thats what the employee demands according to what the UAW has convinced them to demand and pay top management outlandish pay packages and incentives as well, don't you think that is why the BIG 3 auto's are so expensive and that is why the BIG 3 auto makers cannot compete with the other foreign auto makers.
Also why do you think that the BIG 3 auto makers have moved plants and jobs to Canada and Mexico ? I believe it is because they don't have to pay workers $70.00 per hour in wages and incentive pay and I may be wrong but these plants and workers I believe are out of the reach of the UAW !
I mean really, you will pay as much or more nowadays for a Cadillac or Lincoln as a Mercedes Benz will cost you, now thats rediculous and it seems that the foreign auto makers have been able to make more fuel efficent autos for a while now.
I agree that greed has been the precursor to the BIG 3 and the Financial Intitution's failure for the past couple of decades and now it is going to be the working taxpayer who is going to end up paying for the mess, that is as long is there are working taxpayers who are lucky enough to still have jobs !
November 23, 2008 at 2:18 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
No one ever said that they did not have a stake in the blame, but again if the Big Three's management would build vehicles of high quality that last then they would not be in this position would they? The big three blame the "economic climate" when in fact they have not been profitable for a long time. Lets say you have a carpenter, and you tell him to build a house from a poor design, with substandard materials, then said house falls apart on you a year later. Who is to blame? Not the carpenter, he just did what he was told, even if he was overpaid.
The labor costs are excessive, but in the overall picture of things if the big 3 could have just stayed competitive then they would not be begging us for money now would they. The unions have no say in business policy, models, or direction, they are in a sense just the worker bees, over paid worker bees mind you, but drones all the same.
November 23, 2008 at 3:50 p.m. ( permalink | suggest removal )
methusla (anonymous) says...
goodoleboy-Ah! If only what you say about the unions not having any influence on the Big 3 as to business policy were true. But the truth is that the unions that convince the workers to go on strike for higher wages, etc. so the union big wigs can demand more union dues from the workers to fatten their pocket books and bank accounts, in fact do play a role in how any corporation makes business decisions. Also if you think a union does not raise union dues along with a workers pay raise, you are badly mistaken.
If the unions convince the workers to demand higher wages, etc. that in turn causes the business or corporation to decide to cut costs elsewhere in order to pay the higher wage demands of the workers and union management. In order to cut costs the corporation may have to use inferior materials, inferior design, moving plants and jobs to foreign countries, etc in order to remain profitable. So I hope you may see that everyone involved in a corporation, from top management, workers and yes even unions must bear some responsibility in the possible failure of a business or corporation, therefore there is plenty of blame to go around.
But I agree that corporate CEO's, etc. are paid way, way to much for the amount of so called work that they are required or think that they do.
November 23, 2008 at 5:06 p.m. ( permalink | suggest removal )
methusla (anonymous) says...
P>S. Oh by the way, I also agree that the corporate CEO's, are not going to take a cut in salary to save their company and alas the problem is that noone is willing to work for a lower wage in order to save their company or job or as a matter of fact their country.
November 23, 2008 at 5:12 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
Uhhh, their wages are not the problem, they make approx as much as their non union counter parts. Its the benefits that are the problem, so your argument of higher wages for more union dues does not make sense, see my point? Currently the approx percentage cost in a car in the Big three that is allocated to the assemblers(union workers) is about 10%, give or take a few points. A lot of people get mislead on the wage figure, they only make around 30-40 per hour on average, again its the benefits factored in that you get the $70 per hour figure. I believe in their greed for higher profits they simply cut themselves to deep and its come back to bite them. Earning back consumer loyalty is a VERY difficult task once a company has lost that trust. All the signs that their vehicles on the whole were inferior and inefficient were there for a long time, choosing to ignore the problem was managerial decision, not a union vote.
November 23, 2008 at 5:54 p.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
As I said above:
Business 101
poor business model=failed business
don't believe me, take it from the most successful business man in the world
http://news.yahoo.com/s/ap/buffett_econo...
If the unions were the REAL culprit of the problem I guarantee we would be seeing more statements incriminating them from prominent businessmen. I do not absolve them from guilt, I merely say again, why are the other companies that build cars not in this predicament? I promise you the union workers are not the reason.
November 23, 2008 at 6 p.m. ( permalink | suggest removal )
methusla (anonymous) says...
goodoleboy- Do you actually think that if the workers at the proding of the UAW by demanding more and higher benefits and higher wages, the BIG 3 management would have given the workers more pay and more benefits on their own, that is a laugh.
Do you know for sure that the foreign auto makers that have factories in the U.S. that their workers are in fact organized by the UAW and do you know for a fact that the workers who are employed at the foreign auto plants in the U.S. are getting the same amount of pay as those of the BIG 3 ?
Seems that I read or heard somewhere that those workers employed by the foreign auto makers in the U.S. won't even talk to the UAW representatives and that the workers at the foreign auto plants in the U.S. do not in fact make the same amount of wage, including benefits as the BIG 3 auto workers and union demand.
I just don't remember where I read or heard this info. But I will try and find out.
November 23, 2008 at 8:11 p.m. ( permalink | suggest removal )
glarson (anonymous) says...
We're moving to a news forum:
http://www.emporiagazette.com/forums/...
November 24, 2008 at 7:34 a.m. ( permalink | suggest removal )