Posted by
davecatbone on Friday, November 14, 2008 7:08:37 AM
US automakers really are in trouble. They could fail and put millions out of work, this fact no one disputes. Having been born and raised in the Detroit area myself, I grew up witnessing the impact the car makers have on the region's economy, culture and political atmosphere.
Reuters reports:
...Goldman Sachs suspended its rating on GM and said the
automaker needs at least $22 billion in aid. Goldman also said
it would be difficult for Chrysler to survive without help.
The debate continues over whether or not companies should be allowed to fail. A tough call when you're talking about millions of people out of work. But bankruptcy doesn't mean the company shuts down, it means the courts reorganize it. And make it more efficient and better set to make a profit and pay off it's debts. And there's the rub.
Newsbuster's commented on an AP report:
Wednesday evening's dour Associated Press report by Tom Krisher and
Ken Thomas on the proposed bailouts of General Motors, Ford, and
Chrysler acted as if their fates will determine the viability of the
entire US auto industry, and waited until the 15th paragraph to name
the primary reason why the companies are where they are financially.
Beyond that, the AP report did not mention that United Auto Workers has
flatly ruled out union contract concessions.
The Unions. There's no doubt in my mind, the Automaker Unions have ruined Detroit's, Michigan's, the entire region's economies because of their greed and corruption.
And the Unions were major contributors to the success of Barack Obama.
..... Opponents of the idea say government money will just delay the
inevitable demise of companies that are on death's doorstep because of years of mismanagement and labor costs that are far higher than their global competitors.
Total Compensation Per Hour, 2007-2008 (includes wages and all benefits):
Big Three automakers — $73.08
Toyota — $48.00
All workers — $28.48
In 30-plus paragraphs, the AP reporters "somehow" failed to tell readers about UAW President Ron Gettelfinger's refusal last week to give an inch on labor costs, as reported by Dow Jones at CNNMoney.com
Translation: Taxpayers are just supposed to accept the UAW-imposed cost
structure as it exists, even though those being bailed out earn $44.60
an hour more in wages and benefits than other working families.
The Wall Street Journal reports:
Republicans have pointed out that Congress has already set aside $25
billion in loans to help auto makers modernize plants to make
fuel-efficient cars, but that program has been tied up in red tape.
Republicans have suggested that Congress pass legislation to free up
those loans more quickly, an option that Democrats might consider.
Democrats have said the legislation would include stiff conditions such
as limits on executive compensation and standards for the development
of fuel-efficient vehicles. But stronger conditions such as an overhaul
of management at the U.S. auto makers and major company cost
restructurings don't appear to be part of early discussions.
Democrats don't want to have to play their card. Until the inauguration, they'll continue to blame Bush and the Republicans for not saving the Big Three.
Senate Majority Leader Harry Reid, a Nevada Democrat, also
cautioned that success of a bailout rests with Senate
Republicans and the White House. With their slim majority,
Democrats cannot force a measure through the Senate or trump a
White House veto.
Bush has threatened no veto, Harry. And the GOP is trying to find a way to help Detroit. But this is politics of course.
And it seems entirely possible that if the GOP doesn't cave to the Democrat's demands like they did on the Financial Bailout, that the incoming Obama administration will most likely give political paybacks for the support it received in the election, and hand over our money to the Unions, while business goes on as usual.
UPDATE 11.15.08 THE UNION SPEAKS OUT!
United Auto Workers President Ron Gettelfinger said Saturday that
workers will not make any more concessions and that getting the
automakers back on their feet means figuring out a way to turn around
the slumping economy.
No way are they voluntarily giving up the goods they worked so hard to extort...
Gettelfinger also called on Congress to act quickly on a bailout
plan for the auto industry, saying action is necessary before
President-elect Barack Obama takes office in January.
We must get this done so we can blame anything going wrong on Bush!
He said if
one automaker were to file for bankruptcy, the others may follow. He
said the automakers would find it difficult to restructure under
bankruptcy laws and instead could end up out of business. "Would you
buy a car from a bankrupt automaker?" he asked.
It'll be difficult to restructure? How? They're all fired, and new guys come in to clean up the mess. Unions? You're outta there?
This is as hardball as it gets. Expect it to get as ugly as it possibly can, billions of dollars are up for grabs.