The UAW Ad for the Auto Industry Bailout

[waterboy]

quote:Originally posted by Red Arrow

quote:Originally posted by waterboy

Red Arrow, you went to college to get a better job. Hopefully it doesn't include logic.

Anyone who says the cost of an employee isn't such & such a price unless benfits are included could use some lessons in economics. The cost of benefits are always part of the cost of any employee. I got the $69/hr from your post. You can pick any number you want, benefits still cost the employer and are part of the cost of labor.

Notice: No where in here did I say that management is worth their salary either.  The purpose of management is to lead the company.  If they lead the company down a hole they should be fired.. no benefits, no parachute (unless it is lead).

My logic is just fine thank you. I often question the logic of Union lackeys and 5 year plan Harvard MBAs.

Then we agree. They don't have to pay for the cost of benefits because their government foots the bill. Our employees cost us more because of that shortsighted policy. It makes us uncompetitive across the board. So, saying that Toyota can produce cars cheaper because their labor is cheaper and deducing that we have to cut the cost of labor is a specious argument. We will never cut the cost of labor enough to balance out their advantages.

Three  things are routinely ignored in these conversations:
    1. If UAW workers were really making $69-74 hour of pay, there would be a rush of employees to Detroit to fill those jobs. Just like there was when Alaska was attracting labor to the north slope. Even adjusted for cost of living, thats good pay. There is no rush. And, wages are regional. A sanitation worker in Berkeley, CA makes more than a college educated policeman in Tulsa. Comparing their respective pay isn't meaningful benefits or not.

    2. Who benefits should the big three have their labor neutered and possibly forced into bankruptcy? Simple enough. Southern states whose senators have manufacturing plants owned by foreign manufacturers like Toyota. States who tout their labor as cheap and willing. Solid red state senators who coincidentally have the most to gain by killing off big labor and the big three. Suddenly they will prosper even more and attract trained workers from the north into their states. They will finally win the civil war...economically.

    3. UAB will not negotiate for a unilateral reduction in benefits. That is not negotiation, that is dictation. Reductions are already scheduled from past negotiations.

The system sucks for us to compete economically within our own confines. Our cars sell well overseas and make good money but here at home the rigid insistence that management and health insurers should be protected, while labor and the general public are punished means other industries are to meet the same crossroads that the automakers are at.

[Ed W]

So while we're arguing about a 12 billion dollar loan to the auto industry, we're not supposed to pay attention to that man behind the curtain, or this:

Feds refuse to disclose recepients of Two Trillion Dollar loan

It seems to me we're being very effectively distracted while the Treasury is being looted.  Two trillion is a whole boatload of money, and we don't need to know who's getting it?

[nathanm]

quote:Originally posted by Red Arrow


Anyone who says the cost of an employee isn't such & such a price unless benfits are included could use some lessons in economics. The cost of benefits are always part of the cost of any employee.

That would be stupid. Just as it's stupid to include the cost of benefits to retirees as part of the pay of active workers, as everyone seems to be doing.

[Red Arrow]

Waterboy:

Don't put too many words into my mouth. I find it difficult to believe that the Japanese government in paying directly for US plant workers health care, social security (the part the company pays), life insurance, unemployment compensation contributions, and maybe a few more that I don't remember.  The scuttlebut is that the US plants are profitable.  I don't have access to financial papers and probably wouldn't understand them if I did.  I am just an engineer, not a clever accountant.

[Red Arrow]

quote:Originally posted by nathanm
Just as it's stupid to include the cost of benefits to retirees as part of the pay of active workers, as everyone seems to be doing.

Two thoughts here.

Social Security taxes today pay for today's retired folks.  People who are not self employed have 1/2 of their SS tax paid by the employer (a forced benefit that costs the employer).  That sounds like the cost of today's retirees being part of the cost of today's active workers.  (I didn't say pay, I said cost.)

The old time retirement account was supposed to be funded independently of the active workers. I know there were some "discrepancies".  How the Big 3 got to where that is not the case is probably a failing on both management and the Unions.  

Question:

I thought being part of a Union was supposed to include unemployment (strike or otherwise) and  retirement benefits.  Wasn't that part of the dues?  At one time, the Union had more to offer than the order to strike. Is that no longer true? (My grandfather, a tool and die maker, always claimed that the income he lost during a strike was never made up by increased wages over the next contract.)

[guido911]

Interesting article here regarding the constitutionality of bailouts:

http://www.cato.org/pub_display.php?pub_id=9729

Also, here is Fox News legal analyst discussing this issue as well (yes, I know, Faux News sux):

http://www.foxnews.com/video/index.html?playerId=videolandingpage&streamingFormat=FLASH&referralObject=3292709&referralPlaylistId=playlist

[waterboy]

quote:Originally posted by Red Arrow

Waterboy:

Don't put too many words into my mouth. I find it difficult to believe that the Japanese government in paying directly for US plant workers health care, social security (the part the company pays), life insurance, unemployment compensation contributions, and maybe a few more that I don't remember.  The scuttlebut is that the US plants are profitable.  I don't have access to financial papers and probably wouldn't understand them if I did.  I am just an engineer, not a clever accountant.

Nor put any into my mouth.[] We covered this some time earlier. They do not provide those benefits for their low paid American workers. However, the American employment is only a part of their costs of production. Their advantage is that their own employees are granted those benefits which are subsidized by their home governments. Just as their R&D is also underwritten by their governments.

Yes, I read that the Smyrna, Georgia and other American operations are profitable. Its because they pay low wages there (lower cost of living) and as noted, have built in advantages from the head offices overseas. It also helps that they are fine companies to work for, utilizing strong management techniques that result in low turnover, high morale, state of the art equipment and healthier employees. They also don't stubbornly build cars that nobody wants.

No one notes the obvious. Move Detroit to a southern state and contract with the Japanese to run them. Bankruptcy avoided, southern republicans happy, ineffective managers cut loose, labor costs reduced and probably no need for unions at all.  

[nathanm]

quote:Originally posted by waterboy


Yes, I read that the Smyrna, Georgia and other American operations are profitable. Its because they pay low wages there (lower cost of living) and as noted, have built in advantages from the head offices overseas.

The average wages are only slightly lower for non-union foreign plants than the big 3 pay, when you don't count benefits for retirees as part of the wages of current employees, as the $70 an hour figure does.

A new big 3 employee actually makes less than a foreign maker's employee under the renegotiation last year. Old employees get to keep their current pay scale.

You also have to keep in mind that at least as of 2006, Toyota had something around one thousand US retirees.

And the falloff in sales over the last year of the foreign makes is much greater than that of Ford, and slightly over GM's drop.

There's a bunch of BS going around regarding the automakers.

[Red Arrow]

quote:Originally posted by waterboy
[No one notes the obvious. Move Detroit to a southern state and contract with the Japanese to run them. Bankruptcy avoided, southern republicans happy, ineffective managers cut loose, labor costs reduced and probably no need for unions at all.  

I did think of that but thought it might give you a heart attack.  Merry Christmas, or whatever you may celebrate.

[waterboy]

quote:Originally posted by Red Arrow

quote:Originally posted by waterboy
[No one notes the obvious. Move Detroit to a southern state and contract with the Japanese to run them. Bankruptcy avoided, southern republicans happy, ineffective managers cut loose, labor costs reduced and probably no need for unions at all.  

I did think of that but thought it might give you a heart attack.  Merry Christmas, or whatever you may celebrate.

Nah. Wouldn't bother me. Maybe we could get a Toyota/GM plant in Oklahoma and alleve some of our suffering. I think that many are under the illusion that this is a simple fix- reduce the cost of labor- but I see it as more systemic. It is costly to not face up to our shortcomings, one of which is to ignore that the rest of the world has national health care of some kind which allows them competitive advantage. They can focus on productivity.

The other is that we have refused to address the havoc created in our workforce from drug abuse. There is no large scale, low cost or free health program to rehabilitate our workforce. Our fix is to use costly, private insurance that only treats those families who have good jobs or wealth or invest in private prisons. We'll pay dearly for that one.

Merry Christmas!

[Gaspar]

Wow.  There's a bunch of people here that don't understand, business, math, or economics.

Person works for company.  Company pays person MONEY.  Company pays MONEY for person's health care.  Company pays person more MONEY in tax deferred account for retirement.  Company pays more MONEY for huge benefit packages.  Company pays more money for various bonuses not based on performance.


MONEY + MONEY + MONEY + MONEY + MONEY= TOTAL EMPLOYEE COST

Rationalize it however you want.  Nearly 500,000 full time UAW workers.  Reducing their pay across the board by $5 hr,  would save 2.5 million dollars every HOUR!  100 million a week.  Over 5 billion a year.

Lets look at some pay scales for Daimler UAW workers.  

First grade starts at $28/hr based on 2006 negotiation, plus $3,000 upfront signing agreement. Plus $600 Christmas bonus (for those working an average of 26 hours or more a week).  Plus $80/wk COLA (cost of living payment). Plus 3% yearly performance bonus.  NONE OF THIS INCLUDES WHAT IS PAYED INTO THE PENSION PROGRAMS.

And they won't budge to save their industry?  OK.

[we vs us]

CF:

I'll cop to being a little exercised about this subject, but mostly because it's pissing me off. There're lots of problems with the conventional wisdom regarding what's happening/happened to the Big 3, and the $70 per hour union wage is one of them.  Turns out it's not even close to true.

quote:  . . . [A]verage wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income--hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.

More important, and contrary to what you may have heard, the wages aren't that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can't be sure precisely how much those workers make, because the companies don't make the information public, the best estimates suggests the corresponding 2007 figure for these "transplants"--as the foreign-owned factories are known--was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker's annual salary at $52,000 a year.

The $70 wage lie is repeated for political reasons, pure and simple.  There's no other reason to assert it, because it is certainly not true economically.  I'm not accusing you of this, but the GOP is flogging that false number to score a political victory, and is doing so at the expense of many many working Americans.

Further, ancillary industries are quaking in their boots about possible Big 3 bankruptcies.  By most estimates, the toll in lost jobs in supplier industries would far outstrip the job losses in the Big 3 themselves. As I've been saying, we're not just playing with a couple companies here; we're toying with a sector of the economy.  Letting an entire industry go down without help is pure negligence, and make no mistake, that's what we're doing.  Regardless of their marginal wage advantages, foreign companies will be hit almost as hard when their suppliers close shop.  Already sales of Toyotas and Hondas are down just as much as Ford and GM.  This is an industry wide downturn, and that's why focusing on relatively small wage concessions is fruitless and dishonest.  This is a much bigger problem than that.

But the real issue is how we conceive of labor and what we think people who do the building of the cars are worth.  As far as I know (and I'm willing to be corrected) no modern union has ever demanded so much as to tank its business.  It's simply not in a union's interest to do so.  Why destroy the thing that provides your livelihood? The fact that you cite the shedding of union jobs in the airlines, in steel, etc actually supports the thesis.  The unions in each of these cases were willing to negotiate jobs away rather than destroy the business.  

In the automakers' cases, the unions have continued to negotiate when market conditions change (cf. the new contract of 2007, as cited in the first link).  

Similarly, that we are willing to believe a number as astounding as $70/hr -- and make policy decisions based on that erroneous info -- proves the gulf of mistrust there is between American conservatives and unionized manufacturers.  While it's obvious with some digging that the relationship between the automakers and their union evolves with the times, it is ideologically convenient for the GOP to rely on outdated assumptions to justify their vote.

[Gaspar]

You are still not getting it.  Current UAW data

Wage Rate of GM/Ford/DaimlerChrysler
UAW Represented Assembly Workers as of March 5, 2007

GM Assembler   Hourly Rate   $26.09
   COLA   1.77
      $27.86

FORD Assembler   Hourly Rate        $26.10
   COLA   1.83
      $27.93

DAIMLERCHRYSLER   Hourly Rate   $26.86
Assembler   COLA   1.89
      $28.75


With Benifit packages:

Competitive Labor Cost Comparison
2006 Average Labor Costs — UAW represented (per hour worked)

DaimlerChrysler      $75.86

Ford              $70.51

General Motors      $73.26

It's not some wild Republican plot.  IT'S PUBLISHED BY THE UAW, BY FORD, BY CHRYSLER, AND BY GM.  

A PDF of the breakdown is available from the 07 Chrysler labor talks.  

Christler Labor Talks 2007

[cannon_fodder]

Wevus:

That article supports my assertion, it retorts the company COST figure by arguing that the employees do not bring home any more than $65,000 a year.  $28 an hour take home pay ($28 per your article), plus full pension, plus complete health care, dental, life insurance, disability insurance, and overtime.    EASILY costing the company $74 an hour.   NOT how much the employee brings home, how much they COST the company.

Think about it, what do you pay per month for health care?  How much is your life insurance?  How much do you save in your 401k?  Do you have dental insurance or disability?  Do you get overtime?  Do you realize how much you really COST your company?  

I would be happy to work for $65,000 a year, a full pension, and all those benefits.  That is probably equivalent to $100,000 in income without those benefits.  A household with 2 average UAW members would be in the top 10% of income households in the nation.  If you count their benefits at a mere $10 an hour (I've managed companies before, $10 is a very low figure) they are in the top 5% of households.

9-5 with $65,000 in cash and full benefits on a high school diploma, where can I sign up?   That is more than the average college graduate makes.  Including benefits, it is more than the average attorney in Tulsa makes.  From an economic perspective, it is not efficient to have Americans costing a company $100,000 a year.  

And if you want to throw in the retirees for fun, then lets discuss that.  So what?  It doesn't change the fact that the company is failing.  They promised more than they can afford to pay.   Very simple.  
- - -

The discussion in this thread is on the labor aspect of the failure of the Big 3.  Labor costs, either current or legacy, have contributed to the fall.  Labor negotiated for those contracts and management gave them the contract.  If it is too high or not, it really does not matter.

The companies are no longer competitive by their own fault.  If you want to blame legacy costs so be it, but EVERYONE saw that coming for decades.  Americans and the rest of the world are choosing to by other products.  No matter what the underlying cause, it does not change that fact.  The companies are failing.

$15, 20, $30,000,000,000.00 will not save them long term unless something drastic is done.  Neither management or labor seems willing to do anything drastic.  GM will go bankrupt eventually and will either die or emerge a leaner and more competitive company.

To be very clear: the failure of the big three is NOT labors fault.  The worker in the plant showed up to work and did what he was told.  I have no spite towards the workers.  I also have no ill feelings for the engineers of Wiltel, the mechanics of AA, or the roughnecks that will soon be laid off.

I have clearly stated by position on labor, but we can remove that if it is the focus of disagreement on the bailout.  Even if labor decided to work for minimum wage and IF the company still proved to be a non-viable entity - I would still oppose the bailout.  I view it as trying to built a dam out of cash to stop a flood... it may slow the ultimate flood but it is not the solution.

Show me a viable solution and illustrate that the bailout is a governmental INVESTMENT and I'm in.  Saving that many good paying jobs would be fantastic for our economy.  But I do not think this bailout plan will ultimately lead to that goal.  And once we have $30b in public funds in we will kick in additional billions and more billions.  Slowing the ultimate demise and hurting the US economy as a whole.

Whenever you take money from Joe to subsidize a job for Bill, the end result is to hurt the economy by encouraging inefficiencies.   Ultimately a way will need to be found to take GM into receivership and facilitate a restructuring and partial liquidation (selling off units).  It is my understanding that pension liabilities can be restructured but not forgiven and that pensioners will (and damn well should) have their contracts fulfilled.  

I want to see them all survive and want to see well paid American labor.  We merely differ on the ultimate effect of the bailout.

[we vs us]

quote:Originally posted by Gaspar

You are still not getting it.  Current UAW data

Wage Rate of GM/Ford/DaimlerChrysler
UAW Represented Assembly Workers as of March 5, 2007

GM Assembler   Hourly Rate   $26.09
   COLA   1.77
      $27.86

FORD Assembler   Hourly Rate        $26.10
   COLA   1.83
      $27.93

DAIMLERCHRYSLER   Hourly Rate   $26.86
Assembler   COLA   1.89
      $28.75


With Benifit packages:

Competitive Labor Cost Comparison
2006 Average Labor Costs — UAW represented (per hour worked)

DaimlerChrysler      $75.86

Ford              $70.51

General Motors      $73.26

It's not some wild Republican plot.  IT'S PUBLISHED BY THE UAW, BY FORD, BY CHRYSLER, AND BY GM.  

A PDF of the breakdown is available from the 07 Chrysler labor talks.  

Christler Labor Talks 2007

Actually, Gassy, YOU'RE not getting it.  The hourly wage is competitive with everybody else, with benefits included.  $70+ does NOT go into every union worker's pocket every hour.  More than half of it represents legacy costs (pensions, healthcare, retirement, etc) for workers who are no longer making the cars.

This is also before the 2007 labor talks, which, among other things began to shift responsibility for most of those legacy costs to a union-administered trust fund, and for which the Big 3 contributed start up funds, but for which the union itself was responsible for from that point on. At the same time, other benefits shrank, and they introduced a two tier system for wages, grandfathering in existing workers but offering new workers a reduced wage.

And I stand by what I've said about the GOP senators who killed this relatively miniscule bailout package.  It was done for political gain, to the detriment of the American economy.

Strangely enough, I'm now waiting for President Bush to loosen up the approximately 2% of the TARP that it would take to offer the Big 3 the $14 billion bridge loan they're asking for. I guess we'll see if Bush will bypass his own party or, as Cheney told them, it really IS "Herbert Hoover time."