Michigan's Unemployment Insurance agency is bankrupt.
Bailout the Automobile Industry ?
- Thread starter TheMasterOfOrion
- Start date
Amen to this.
I hated the bailout of the financial sector, but at least there was an underlying reason (financial cascade failure would have certainly caused a major global depression and very serious geopolitical instability). Automakers going out of business, no matter how big or how many people are affected, is something that can be contained and eventually solved within existing market models.
The UAW can't do anything about it any more. Look at how Delphi screwed people over, and the UAW was powerless. GM is doing the same thing now. Everyone's moving what production there's left to Canada and Mexico, because of the cheap labour or the low health care costs.
It actually looks like Ford might survive this whole thing. GM and Chrysler, not so much. Doesn't help that they're giving their execs 'retention bonuses' while laying off everyone else. 'Oh please, you've run the company to the ground but here's money to keep you here!'
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Elmo Dukat
Guest
So Michigan can't manage its money --- doesn't mean that ~$25 billion from the Feds to legitimize the UAW's strong-arming is justified. Causality - the failure of one doesn't justify bailing out the other.
Chapter 11 is the best option, regardless. In terms of long-term sustainability of the industry, and future growth --- which means more jobs and *naturally* higher wages (no strong-arming needed!) --- the Big 3 must restructure.
The bailout culture is all about fear and instant gratification. It's the fault of Michigan that they let the UAW have such a stranglehold on the auto companies. Now they've got to take it in the arm so they can be stronger in the future. It sucks, and people might have to move away to get jobs at healthier plants or industries, but it's much worse for the economy in the long-term if you throw money at toxic assets.
Well, not likely. But they also have a very high unemployment (getting closer to 8%), and have had so for a while.
So if the rest of the autoworkers go on it? OUCHIE
As for UAW, the pay autoworkers got before made sense, and things were fine when autos were selling. Then execs made bad decisions and listened to no one, and now the companies are in the crapper. SO the execs sit with their bonuses and try to dump the workers.......
It's not the pay that's been killing them, either. It's the healthcare costs. Now it's the economy as well......
That is one of the key reasons...
There are some that believe that GM might not be able to survive a Ch 11 restructure (I posted a link to the story in the other thread)
That said, if GM goes under, so does Ford.
Given how many jobs depend on the "Detroit 3," we do need to bail them out... However, the bailout should come with emergency powers to give them virtually all bankruptcy protection from their workers and former workers while allowing the company to move forward on all other fronts
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Elmo Dukat
Guest
The idea that this is about exec compensation and the global market is fallacious. If that is true, how are the foreign plants able to survive - and do well - in the states? I know that the foreign plants have a measure of encouragement from their government, but when it comes down to it, it's all about the numbers.
The average compensation, including benefits, for a GM worked is ~$75/hr. For workers in the foreign-owned plants in TN and Alabama, it's ~$40/hr. All other costs are comparable. That, quite plainly, is why GM isn't competitive. And the labor costs are largely determined by UAW demands, which they've promised not to bargain on. Therefore Chapter 11 must be declared so GM can break its union contracts and have any hope of surviving.
What's better in the end: $40/hr or $0/hr? Restructuring is the only option here. Rewarding the UAW for hoisting themselves and their workers on their own petard is pointless and harmful.
Which foreign plants? And right now they're all doing bad.....
I know Toyota takes steps to make sure no one tries to start a union. They also tend to hold short contracts. They also pay their workers similar pay (when I applied there a few years back it was 20-30 an hour plus benefits) They also were making product that people were buying, i.e. not gas guzzlers. GM stuck all their eggs into the SUV/Truck market even while that market was shrinking due to the gas prices, because those were more profitable to sell than a normal family car. Now they're sitting on a ton of them that no one's touching.
And in Canada, the health costs were low enough that the auto plants there were making money.
I know Toyota takes steps to make sure no one tries to start a union. They also tend to hold short contracts. They also pay their workers similar pay (when I applied there a few years back it was 20-30 an hour plus benefits) They also were making product that people were buying, i.e. not gas guzzlers. GM stuck all their eggs into the SUV/Truck market even while that market was shrinking due to the gas prices, because those were more profitable to sell than a normal family car. Now they're sitting on a ton of them that no one's touching.
And in Canada, the health costs were low enough that the auto plants there were making money.
BS, BS, BS. They've always been overpaid. The problem with the Unions is that everyone is paid the same rather than being paid what according to an annual evaluation like most other position. The UAW believed its own BS that it was better than sliced bread and nothing compared to Union labor. Unions were initially created to protect tradesmen/craftsmen to protect buyers from shoddy product. They became a joke by requiring employers to allow the union and contracts. They strong-armed the Big 3 and now it's time to pay the piper. To top it off, the Unions have always been filled with corruption, hence the reason their numbers have been dwindling and they've been trying to fill the coffers by going after Wal Mart employees
Quit blaming the CEOs and such for their large pay. No one ever forced anyone to pick the job they have. If you piss and moan that you're never going to get anywhere in life, then that's what will happen.
You mean to tell me that NO ONE was buying trucks or SUVs? THE PEOPLE BOUGHT WHAT THEY WANTED!!!!
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Elmo Dukat
Guest
While it's true that GM would have done better to go in the direction of more fuel-efficient vehicles, technology progressing is a natural risk in any industry. You bet on technology going on way or the other, and sometimes you lose. However, if you're paying your workers twice as much as other comparable plants, you can't price risk into your wages. The reason why it doesn't make sense to be so much higher than the industry average is because of the very reason of the necessary risks taken when betting on future trends.
Blaming this on the execs is just not the whole truth. The execs don't have full control over their business model, so they can't make risky decisions that could potentially profit the company (like trending away from their big moneymaker, SUVs). They have no wiggle room to price in risks, because they've got to make payroll because if they don't, they can't do what every other company does --- temporary layoffs and restructuring/retooling, then re-hiring.
GM hasn't been a market-dependent company for a very long time. It's run as a jobs/healthcare company. But it isn't a jobs/healthcare company, it's a car company. So it was only a matter of time before this significant weakness would cause them serious problems. As it is doing now.
When companies fail, everyone loses. It's in the best interest of regular workers to support their companies as profit-earning entities trying to do a specific thing, like sell cars. When their companies succeed, they succeed. If you overprice labor, it's only going to hurt the company, and then no one will have a job any more, or many fewer people will have jobs as the company shrinks. Labor has a market value. And that's a good thing, because that market value goes up naturally when companies are successful.
However one tries to spin this as a failure of the market, it's very much the opposite. It's by not listening to the market that this happened. It's not called the "invisible hand" for nothing. It very much will work for you if you work with it, but if you work against it, you'll fail. That's been shown time and time again throughout history. I've never read of a long-term case where ignoring the market made anyone more successful than if they'd listened to it.
So the automakers have never been profitable?
They made good money for years with the Unions.
Their numbers are dwindling because there are less autoworkers, not because people are leaving because they're scared of the Mob.To top it off, the Unions have always been filled with corruption, hence the reason their numbers have been dwindling and they've been trying to fill the coffers by going after Wal Mart employees
That seems to be a good tack to take when it comes to complaining about autoworker's pay, eh? And when did this start affecting my personal viewpoint on social advancement?
I complain because they're the ones who kept pushing to make more trucks and SUVs while the market collapsed around them, and now they get the retention bonuses while laying off those who were just doing the job they were given. Gas was higher than it is now and they were announcing more SUV lines.,....
So the automakers have never been profitable?
They made good money for years with the Unions.
Their numbers are dwindling because there are less autoworkers, not because people are leaving because they're scared of the Mob.To top it off, the Unions have always been filled with corruption, hence the reason their numbers have been dwindling and they've been trying to fill the coffers by going after Wal Mart employees
That seems to be a good tack to take when it comes to complaining about autoworker's pay, eh? And when did this start affecting my personal viewpoint on social advancement?
I complain because they're the ones who kept pushing to make more trucks and SUVs while the market collapsed around them, and now they get the retention bonuses while laying off those who were just doing the job they were given. Gas was higher than it is now and they were announcing more SUV lines.,....
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Elmo Dukat
Guest
I hated the bailout of the financial sector, as well. I know some pretty smart people, quite versed in economics, and all agreed that it was a necessary evil. I wasn't sure about that. I was afraid it was going to lead to the bailout culture we're currently beginning to get a glimpse of --- this protection of failure, which has never once worked at any time in the history of the industrialized world.
There was a point in our shared industrial histories when people were much more knowledgeable about the importance of competitiveness in the market, of businesses competing with one another. It drives down prices, improves quality/price, creates jobs, and drives up wages. It's a very simple set of calculations, and there are many examples in history to show that it works fairly well.
However, protecting failing businesses drives away competition. You reward those who are pricing themselves out of the market, who have bad business models, and the companies with good business models have to operate without a huge chunk of cash from the government. It puts them at a disadvantage, distorts market forces. It's not a good thing. There are many examples of industry/business failures based on this kind of pseudo-monopolizing by government.
I would dare say that they have made good money for years DESPITE the unions. Unions had their need back in the day... but I dare say that for the most part the only thing they have done is help price US workers in general out of the market and lead to a massive out sourcing of all US jobs... or at the very least they have led various companies into financial problems as they try to compete with companies that don't have such massive employee overhead
I know, I know. It all stinks. But going back on the financial bailout for a moment, and the "necessary evil" bit. I think it really was. For a while, with no hyperbole, it was really close to "end of the world as we know it" stuff. If the whole financial sector stopped lending, then the depth of the depression that would result would have been worse than the Great Depression because our modern world is far more dependent of liquid capital flow. I'd probably still have voted against the bailout first time round, out of principle/pride though!
Anyway, I do agree that the exceptional circumstances of the financial bailout shouldn't lead to a knock-on "me too, me too" series of bailouts for ordinary companies.
The auto manufacturer who comes up with a car that runs on air, sunlight or some other cheap and renewable fuel should get the bailout bucks.
On the provision that they are American cars.
I can handle that.
And when the next UAW worker retires with his lifetime benefit we rasie the credit another $5K. Its a blackhole which Detriot can't crawl out of. Either take over the retirement benefit of everybody entirely or stay home don't waste the effort. Its doomed to fail.
