The UAW Ad for the Auto Industry Bailout

[cannon_fodder]

Please... this is not a loan.  A loan is a sum of money given out with the expectation that it will be repaid.  When a company says they need $4,000,000,000.00 NOW NOW NOW or they will go under I have my doubts that any reasonable person would surmise there is a high likelihood of that being repaid.  

And the UAW could have done something if it so wished.  I am of the opinion that they knew or should have known their wages were a detriment to the well being of the company and continued to press their advantage.  They had as much if not more influence over the Big 3 than any other group.  If they thought the company was operating on a faulty strategy they could have done something.  It would have been unusual for sure, but not out of the realm of possibility.

And that fact is irrelevant.  If/when they fail I will feel sorry for wage and salary jobs alike.  The communities affected.  Everyone involved.  Just like I feel bad for Semgroup employees, WilTel employees, or anyone else that loses their job.  But that doesn't mean tax money should pay their salaries as their company continues to fail.  In the long run, that is not a viable options.

And in the long run, GM has proven that it should fail.  Chrysler is held my a private equity firm that bought the company and replaced the mgmt for profit, they lost the bet.  Ford had the fortitude to stand up and say it MIGHT be OK and probably doesn't need a handout, I hope they are right.

Bankruptcy certainly is an option.  If it needs to be a special case, I understand. They ARE large enough to garner special treatment, but no one is too large to fail.  Allow them to fail in a more orderly fashion if need be, but sustaining a failed company is worse for the economy in the long run.

[RecycleMichael]

Just buy out their inventory and then give every soldier returning from overseas duty a free car.

Problem solved.

[nathanm]

quote:Originally posted by cannon_fodder

Please... this is not a loan.  A loan is a sum of money given out with the expectation that it will be repaid.  When a company says they need $4,000,000,000.00 NOW NOW NOW or they will go under I have my doubts that any reasonable person would surmise there is a high likelihood of that being repaid.  

...

Bankruptcy certainly is an option.  If it needs to be a special case, I understand. They ARE large enough to garner special treatment, but no one is too large to fail.  Allow them to fail in a more orderly fashion if need be, but sustaining a failed company is worse for the economy in the long run.

I have no doubt that with enough cash (and I don't know whether the numbers being bandied about at the moment are enough), GM and Ford can save themselves. Besides, subprime loans are still loans.

If they didn't have healthcare costs on the books, they wouldn't be having any trouble. Yet another reason why I support single payer healthcare.

And BK isn't an option without financing. Financing they can't get, and a lot of it..do you have any idea how much stuff they buy on credit from suppliers? You think their suppliers would continue offering product on terms with the buyer in bankruptcy?

Otherwise don't you think they'd have declared already? There's not a lot of downside.

[Red Arrow]

quote:Originally posted by RecycleMichael

Just buy out their inventory and then give every soldier returning from overseas duty a free car.

Problem solved.

Could they afford to keep and operate them?

[Gaspar]

A MODERN PARABLE...



A Japanese company (Toyota) and an American company (Ford) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the Japanese won by a mile. The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat.



A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing. Feeling a deeper study was in order.  American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing. Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower.  There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses. The next year the Japanese won by two miles.



Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.



Sadly, The End.



Here's something else to think about: Ford has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages. TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results: TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses. Ford folks are still scratching their heads.



IF THIS WEREN'T TRUE, IT MIGHT BE FUNNY.

[nathanm]

quote:Originally posted by Gaspar


Here's something else to think about: Ford has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages. TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results: TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses. Ford folks are still scratching their heads.

Ford has quite a different cost structure. Toyota doesn't have the pension and retiree health benefits to pay, for example.

For that reason, it is much cheaper for Ford to employ workers in Canada. (to name one nearby example) Toyota, not so much, since they don't have years of built up retirement expenses dragging them down.

Such a terrible thing, taking care of your workers.

[cannon_fodder]

quote:Originally posted by nathanm


Such a terrible thing, taking care of your workers.

Toyota has never laid off workers.  Not in Japan, not in the US.  Not ever.  Pretending Toyota doesn't take care of their work force is just a false idea.  They make very good livings, have good benefits, and a sense of perfect job security.  Toyota has had a net increase in jobs over the last decade.  The BIG 3 have been laying off for a generation.  

In the long run, who does it seem is taking care of the workers?  The company that paid more and promised early retirement and then couldn't afford to pay and fired all the workers, or the company that pays a reasonable wage and retains its workforce?

If you can "take care of your employees" better, I'm always in favor.  But compensating (among other problems of course) to such an extent that you can no longer afford to keep them working is doing no one any favors.

quote: a region where the average manufacturing wage still runs around $12 an hour, Nissan's jobs are coveted. Even though the plant isn't unionized, Nissan starts workers at $14.19 an hour, including what Nissan calls a "guaranteed bonus" of $1.25 an hour. They top out after five years at $23, just a few bucks less than United Auto Workers earn in Detroit.

Benefits are close to union scale, too. UAW members have the gold standard of health-care plans, paying nothing but drug and office visit co-payments. Toyota's plan is similar, while Nissan workers pay 10% to 13% of health insurance premiums and have higher co-pays. The only area where they lag behind is retirement: While UAW members have traditional pensions that kick in after 30 years of service, Nissan provides a 401(k) plan that matches 68 cents for every dollar a worker contributes, up to a relatively skimpy 5% of salary.

One myth about foreign carmakers is that they don't do creative, intellectual work in the U.S. Just in the past year, Toyota, Nissan, and Hyundai all have expanded their U.S. design and research-and-development facilities. Hyundai just opened one in Ann Arbor and staffed it with 150 tech-savvy people, with plans to expand that headcount to 1,000 by 2010.

And Detroit carmakers? They're downsizing at home. GM has been cutting its white-collar payroll by 10% a year since 2000. Its engineering staff has been reduced from 19,000 then to 12,000 now. Fortunately, top researchers and designers have other places to go. Just ask Joel Piaskowski, chief designer at the Hyundai Motors Design & Technical Center in Irvine, Calif. Sitting at Hyundai's booth at the Detroit auto show, Piaskowski says he left his job at GM after designing the new Buick Lucerne sedan to join Hyundai -- with a nice promotion. He left Detroit, he adds, to be part of a company that is thriving. Piaskowski's new job gives him the freedom to design more types of vehicles. "Other companies are burdened by cost and overhead. We can do things they can't do," he says. While the upheaval in the car industry has shaken up the majority of Piaskowski's former co-workers at GM, it has left him in a better position than ever.

http://www.businessweek.com/magazine/content/06_07/b3971057.htm

Ironically, as they cut the dead weight and "steering" the Japanese automakers are happy to pick up the engineers, designers, and managers.

Gaspar:

While I appreciate your analogy, but of course it is overblown and simplified.  And the comment that plants have been leaving the US is not accurate either:

http://media.ford.com/plants.cfm

[Gaspar]

Many of the Ford engines and parts are no longer made in the US.  Large components and assembly is still done here, as is elemental components such as glass and rubber, however complex construction such as engines, electronics, and mechanical assemblies has been shifted to Mexico and other countries.  

In many cases US carmakers have actually outsourced these materials completely.  Mitsubishi builds many of the engines in our "American" vehicles.  Delco is bankrupt and the German company Bosch is now supplying many if not most of the electrical components, lights and LEDs.  Seals, rings and small simple components are made in China.

The more intricate and delicate the work, the less affordable it is to pay someone $30 an hour to build it here, especially when the unions are mandating maximum production speeds, and blocking incentive based production.

[nathanm]

quote:Originally posted by Gaspar

Many of the Ford engines and parts are no longer made in the US.  Large components and assembly is still done here, as is elemental components such as glass and rubber, however complex construction such as engines, electronics, and mechanical assemblies has been shifted to Mexico and other countries.  

In many cases US carmakers have actually outsourced these materials completely.  Mitsubishi builds many of the engines in our "American" vehicles.  Delco is bankrupt and the German company Bosch is now supplying many if not most of the electrical components, lights and LEDs.  Seals, rings and small simple components are made in China.

The more intricate and delicate the work, the less affordable it is to pay someone $30 an hour to build it here, especially when the unions are mandating maximum production speeds, and blocking incentive based production.

Foreign carmakers use a lot of Detroit engines, just as US carmakers use some foreign engines, just FWIW.

As far as taking care of workers, many of the agreements the big 3 are laboring under were made back when they had a much larger market share than they do today.

Toyota and Honda (in the US) don't have defined benefit pension plans, and back home in Japan, they don't pay for their employee's healthcare. They also have the advantage of Japanese monetary policy.

Ford, at least, tries to sell better cars here, but nobody buys them. They tried to bring the Mondeo over here (as the Contour). It was a colossal market failure, since everybody here wanted SUVs, so you can't exactly blame them.

[Gaspar]

quote:Originally posted by nathanm

quote:Originally posted by Gaspar

Many of the Ford engines and parts are no longer made in the US.  Large components and assembly is still done here, as is elemental components such as glass and rubber, however complex construction such as engines, electronics, and mechanical assemblies has been shifted to Mexico and other countries.  

In many cases US carmakers have actually outsourced these materials completely.  Mitsubishi builds many of the engines in our "American" vehicles.  Delco is bankrupt and the German company Bosch is now supplying many if not most of the electrical components, lights and LEDs.  Seals, rings and small simple components are made in China.

The more intricate and delicate the work, the less affordable it is to pay someone $30 an hour to build it here, especially when the unions are mandating maximum production speeds, and blocking incentive based production.

Foreign carmakers use a lot of Detroit engines, just as US carmakers use some foreign engines, just FWIW.

As far as taking care of workers, many of the agreements the big 3 are laboring under were made back when they had a much larger market share than they do today.

Toyota and Honda (in the US) don't have defined benefit pension plans, and back home in Japan, they don't pay for their employee's healthcare. They also have the advantage of Japanese monetary policy.

Ford, at least, tries to sell better cars here, but nobody buys them. They tried to bring the Mondeo over here (as the Contour). It was a colossal market failure, since everybody here wanted SUVs, so you can't exactly blame them.

Not exactly.  The Toyota, scion, Honda, Hyundai (and several more) equivalents to the Mondeo sell quite well here.  

Don't blame the American Public for exercising their freedom of choice.  We buy American SUV's because they offer a good product for the price when compared with their foreign counterparts.  

Conversely, when we buy small economical vehicles we buy foreign because they offer a better vehicle for the price.  If american car makers could match the quality and price point on small cars than they would sell more.  

In the last 10 years, the Asian market has started to offer large SUVs with comparable interior spaces to their US counterparts, eating away at our SUV market.

The problem is simple, but people are straining themselves to make it complex in an effort to protect a very flawed system that cannot survive in a free market.

Make what we want, for the quality we expect, at a competitive price.

To do this concessions will have to come from BOTH Management and from Unions.  If one will not budge, both shall perish.

Or. . . the Government could just punish the public for purchasing a non-domestic product, and a little bit more liberty dies.  I think this is what will happen.  It will not correct anything, but it will buy votes, and prop up US car makers at least until the current management gets to retire.  Ah yes. . . a prolonged slow death on life support.  The new American way.

The natural progress of things is for liberty to yield and government to gain ground. Timid men prefer the calm of despotism to the tempestuous sea of Liberty. – Thomas Jefferson

Tariffs, quotas and other import restrictions protect the business of the rich at the expense of high cost of living for the poor. Their intent is to deprive you of the right to choose, and to force you to buy the high-priced inferior products of politically favored companies. – Alan Burris

[nathanm]

quote:Originally posted by Gaspar

quote:Originally posted by nathanm

quote:Originally posted by Gaspar

Many of the Ford engines and parts are no longer made in the US.  Large components and assembly is still done here, as is elemental components such as glass and rubber, however complex construction such as engines, electronics, and mechanical assemblies has been shifted to Mexico and other countries.  

In many cases US carmakers have actually outsourced these materials completely.  Mitsubishi builds many of the engines in our "American" vehicles.  Delco is bankrupt and the German company Bosch is now supplying many if not most of the electrical components, lights and LEDs.  Seals, rings and small simple components are made in China.

The more intricate and delicate the work, the less affordable it is to pay someone $30 an hour to build it here, especially when the unions are mandating maximum production speeds, and blocking incentive based production.

Foreign carmakers use a lot of Detroit engines, just as US carmakers use some foreign engines, just FWIW.

As far as taking care of workers, many of the agreements the big 3 are laboring under were made back when they had a much larger market share than they do today.

Toyota and Honda (in the US) don't have defined benefit pension plans, and back home in Japan, they don't pay for their employee's healthcare. They also have the advantage of Japanese monetary policy.

Ford, at least, tries to sell better cars here, but nobody buys them. They tried to bring the Mondeo over here (as the Contour). It was a colossal market failure, since everybody here wanted SUVs, so you can't exactly blame them.

Not exactly.  The Toyota, scion, Honda, Hyundai (and several more) equivalents to the Mondeo sell quite well here.  

Don't blame the American Public for exercising their freedom of choice.  We buy American SUV's because they offer a good product for the price when compared with their foreign counterparts.  

Conversely, when we buy small economical vehicles we buy foreign because they offer a better vehicle for the price.  If american car makers could match the quality and price point on small cars than they would sell more.  

In the last 10 years, the Asian market has started to offer large SUVs with comparable interior spaces to their US counterparts, eating away at our SUV market.

The problem is simple, but people are straining themselves to make it complex in an effort to protect a very flawed system that cannot survive in a free market.

Make what we want, for the quality we expect, at a competitive price.

To do this concessions will have to come from BOTH Management and from Unions.  If one will not budge, both shall perish.

Or. . . the Government could just punish the public for purchasing a non-domestic product, and a little bit more liberty dies.  I think this is what will happen.  It will not correct anything, but it will buy votes, and prop up US car makers at least until the current management gets to retire.  Ah yes. . . a prolonged slow death on life support.  The new American way.

A large part of the issue with American cars is perception (at least related to Fords, having never owned a GM vehicle, I can't say about them)

Their small cars today are pretty similar to those of foreign makes, and have been for the last ten years.

Again, I don't know specifically about GM, but Ford's main problem is being caught in an environment where credit is unavailable with a dire need to retool into making fewer SUVs and more small and midsize cars due to a sudden oil price shock. (A price shock that would have passed quickly were it not for market manipulation but instead stretched out far longer than anybody expected)

They are also, as I said before, handicapped by obligations to retired workers that the foreign automakers simply don't have. Ignoring that and what happens to those retirees if the only alternative turns out to be reneging on the deal is just dense.

[Gaspar]

quote:They are also, as I said before, handicapped by obligations to retired workers that the foreign automakers simply don't have. Ignoring that and what happens to those retirees if the only alternative turns out to be reneging on the deal is just dense.

Agree 100%.  Any corporate entity that backs employee's retirements through investment in their own stock or internal pension programs is headed for tragedy.  

It puts the worker at the mercy of the Company and the Unions, both of which are focused on self preservation above all else.

I believe we are seeing the end of an archaic system that squashes the liberty of it's members in exchange for perceived security.

[TeeDub]

For some reason I kept thinking this ad belonged here.



Edit, it won't let me post it due to possibly profanity in the filename...  nevermind.

[RecycleMichael]

My company has a fleet of six vehicles...

How many does it take for Congress to consider bailing us out?

[we vs us]

quote:Originally posted by RecycleMichael

My company has a fleet of six vehicles...

How many does it take for Congress to consider bailing us out?

We call those "small business loans."