Does the Auto Industry Deserve To Be Bailed Out?

I got into a lively debate yesterday with a fellow student about the bailout of the auto-industry. He said the social ramifications of letting them fail were too high. The impact on the local communities would be too high and so they should be bailed out by the tax-payers.

I said they were not cost-effective and there wasn’t enough demand for their cars to keep them in business. Even if the government gave them $25 billion, they’d plow through it and be back at the door asking for another handout. The government, too ashamed to admit it had wasted the first $25 billion would probably hand them another $25 billion. (This is called the Concorde effect, after the failed Concorde partnership between England and France which was a financial disaster).

I read some articles with also drew similar conclusions, but with different viewpoints.

In 2006, the average hourly wage of a person with a high school diploma was $13.46 per hour. For those fortunate enough to receive insurance and other forms of compensation, the average was $17.50 per hour in total compensation. These averages encompass all age groups.

However, if you are a Detroit auto worker with a high school diploma, your total compensation comes to: $67.78 (Ford), $70.43 (GM) or $72.59 (Chrysler) per hour.

That’s right, it cost Detroit 4-5 times more to hire unskilled labor! I think it’s the auto unions who are driving the US car manufacturers out of business.

I think its said that someone who spent 4 years in college and graduates with a student loan has to work for about $20-$25/hr while an unskilled worker makes more than that. Even grocery baggers in California supermarkets used to make $27/hr after working there for 7 years because of their union deal! That’s a pretty sweet deal if you can find it.

But moving on…

All of this brouhaha about bailing out the auto industry and how destructive it will be to the country - sounds a lot like the moans and groans of the steel industry (and steel unions) a few decades ago when the Japanese and Koreans were killing the U.S. companies with low prices for bulk steel. The biggies, like U.S. Steel and Bethlehem, went under.

And you know what? Small, progressive and aggressive steel companies arose in the U.S. - not for the cheapo junk steel, but for the better grades, for alloys and for hi-tech steels. And in a few decades, the industry bounced back better than ever. The U.S. was THE place to buy the good stuff. The Far East was where you bought the cheap bulk stuff. Did it ‘hurt’? Yeah, for a while, but you know, we got over it and came through it all the better. We just forgot what we learned.

How many innovative car companies do you think will start popping up in the U.S. when the dinosaur Big 3, and their fat-assed dinosaur management, are finally gone? I don’t think that innovation is completely dead in the U.S.; it’s just been shut down in favor of huge management bonuses paid for killing industries through blind stodginess. Let’s see, how many U.S. car companies were still trying to crank out SUV guzzlers when gas prices were scaling Everest? Let the dead die so that the living can grow.

Sorry, unions and union members, but the day is over that a dumb back can command a sizeable (read uncompetitive) wage and benefit package just for showing up to do a job that, in many cases, a monkey could be trained to do. Better get some education. The new companies will be high-tech - there will be plenty of jobs for those with a reasonable education and training. Dumb backs will get to clean toilets at a commensurate wage.

Hear that Fed and Treasury and Congress? Don’t waste money trying to resurrect dinosaur corpses. Put the money into opening up investment in new technologies, good products and well-run companies. Put the money toward training a labor force that can be part of competitive industries. And start the ‘do it or fail’ philosophy in the schools. First-grade would be good.

This reminds of an excellent book I read a few years ago called God Wants You to Be Rich: How and Why Everyone Can Enjoy Material and Spiritual Wealth in Our Abundant World. The author states the example of automated farming techniques introduced in the early 1900s, reducing the workforce required for producing food from 30% of the population to the 3% we have today. Did those people starve to death? No, they went on to find other jobs. I think society, (and by society I mean the US taxpayer) is better served by having an overpaid segment of society go find some other work to do.

And lastly, if the economics isn’t enough, lets look at how poorly managed these companies are.

The execs for the Big Three automakers each took private jets to their testimony before Congress yesterday. Average cost for the flight from Detroit to Washington? $20,000… Northwest had flights available that day for $288 coach, $837 first-class.

“It’s almost like seeing a guy show up at the soup kitchen in a high hat and tuxedo,” Rep. Gary Ackerman, a Democrat from New York, said of the dynamic trio. “Couldn’t you have downgraded to first class or something, or jet-pooled or something to get here?”

Maybe they should have driven?

The southern states make cars like Honda (HMC), Acura, and Nissan (NSANY). They don’t have the high labor rates and are actually profitable car companies. Obviously they’re opposed to the bailout because it use’s their tax money to help the competition.

So what do you think of the car industry bailout?

Comments

[Bababooie:]

With a psudeo of Investor Nirav, It's highly unlikely that the author is a North American Born Citizen. Protectionest legislation in other countries are not allowing natural growth of an industry globally. The car companies are taking actions by exporting some of their labor overseas. The Author cited details on wages at the Auto Companies, but failed to mention the actual education that the workers have, and are striving to obtain. The current model of wage is abnormally high, but so are the wages of Financial managers of companies that are fialing and have failed. I am talking about MBA's, & Professors from the likes of Harvard, and Yale. The good ol' boys network got them in a position that their fathers might have been able to handle with LESS education.

The author had indicated that the conversation was with a "fellow student". The Author is obviously in the process of getting an education. Every education comes with a cold shower of reality once in the marketplace.

The Autoworker are getting paid exactly what the marketplace demanded. There are varying degrees of education by these workers. The SMART ones can get a comfortable income, while not having to deal with a lot of stress.

My advise to the Author.....Try and get a job (and Keep it!!)

2008 Nov 21 04:42 PM

[UH2L:]

It's not a matter of whether the companies deserve the loans, (notice I didn't use the term bail-out). God knows, the banks didn't deserve them due to their greed and stupidity. But, giving them the money was the best thing to do for the good of the world economy. I would argue that the same holds true for these Detroit 3 bridge loans.

Auto workers are not unskilled!!! Do you even know what the workers do besides screwing in bolts? Have you ever been to an assembly line, design studio, stamping plant, test track? They do modelmaking, tool maintenance, durability driving, data acquisition, computerized machining. What you call a "worker" is not just a person on the assembly line. And to say a monkey can do their job is insulting. Even with simpler jobs, what the lineworkers do is admirable considering the monotony, physical exertion, and risk of injury in certain cases. Desk jobs don't kill people but plant jobs can and do occasionally.

Perhaps they do make too much, but it's a legacy from prior UAW contracts that aren't the fault of current management. They are doing the right thing by fulfilling obligations and if they go bankrupt, (which will mean disaster for sales and our economy), then they will get out of the obligations but the healthcare and pension burden will be shifted onto the government. And nobody will buy a car at a reasonable price from a bankrupt company for fear of not getting parts and service.

By the way, I'm a white collar former GM employee, but these arguments by supposed "experts" have to stop. Learn what really goes on in the industry before you write such articles. You are doing a disservice to our workers, our auto industry, and our economy.

UH2L
www.thingsivenoticed.c...

2008 Nov 21 04:46 PM

[UH2L:]

Bababooie,

For you to bring up the fact that the writer is not an American born citizen has no place in our comment. I am not one either. I was born in India, (presumably where Nirav is from based on his name), but I grew up in the Midwest from when I was a baby. I'm also a liberal and I have an MBA from the University of Michigan.

Don't go stereotyping people based on ethnicity and education.

2008 Nov 21 04:49 PM

[jarco:]

To the author Nirav, your statement "The execs for the Big Three automakers each took private jets to their testimony before Congress yesterday. Average cost for the flight from Detroit to Washington? $20,000… Northwest had flights available that day for $288 coach, $837 first-class." deminishes ones interest in the remainder of your comments.

If I'm likely paying an executive $2500 plus an hour, his/her 12-15 hour day is worth more than the cost of the trip. How many conference call minutes could occur between the exec and his staff in Detroit on a Northwest flight. Zero. Aside from whatever he/she could accomplish while testifying, the whole day is shot and right at time critical in the business.

Since you haven't been there, you're excused.

2008 Nov 21 05:02 PM

[jarco:]

Interesting comments. Makes a big difference when someone's "been there, done that". However, I would like to take issue with " Perhaps they do make too much, but it's a legacy from prior UAW contracts that aren't the fault of current management. They are doing the right thing by fulfilling obligations . . ."

Correct me if I'm wrong but its my understanding legacy medical benefits include coverage up to age 65 and then reduce to a supplemental to Medicare. And the coverage is termed by some as "very generous". Should these benefits cease, then the employee would have to pay for similar coverage privately. While deemed to be difficult, all other non-union (and that's most of us) are in the same boat.

Auto employees will earn/have social security plus a pension. That's all. The rest disappears or the business that supports the continual pension funding disappears. In addition, layed off workers will collect state unemployment insurance just like the rest of us. No more 95% pay without punching the clock . . . just like the rest of us

On Nov 21 04:46 PM UH2L wrote:

> It's not a matter of whether the companies deserve the loans, (notice
> I didn't use the term bail-out). God knows, the banks didn't deserve
> them due to their greed and stupidity. But, giving them the money
> was the best thing to do for the good of the world economy. I would
> argue that the same holds true for these Detroit 3 bridge loans.
>
>
> Auto workers are not unskilled!!! Do you even know what the workers
> do besides screwing in bolts? Have you ever been to an assembly line,
> design studio, stamping plant, test track? They do modelmaking, tool
> maintenance, durability driving, data acquisition, computerized machining.
> What you call a "worker" is not just a person on the assembly line.
> And to say a monkey can do their job is insulting. Even with simpler
> jobs, what the lineworkers do is admirable considering the monotony,
> physical exertion, and risk of injury in certain cases. Desk jobs
> don't kill people but plant jobs can and do occasionally.
>
> Perhaps they do make too much, but it's a legacy from prior UAW contracts
> that aren't the fault of current management. They are doing the right
> thing by fulfilling obligations and if they go bankrupt, (which will
> mean disaster for sales and our economy), then they will get out
> of the obligations but the healthcare and pension burden will be
> shifted onto the government. And nobody will buy a car at a reasonable
> price from a bankrupt company for fear of not getting parts and service.
>
>
> By the way, I'm a white collar former GM employee, but these arguments
> by supposed "experts" have to stop. Learn what really goes on in
> the industry before you write such articles. You are doing a disservice
> to our workers, our auto industry, and our economy.
>
> UH2L
> www.thingsivenoticed.c.../

2008 Nov 21 05:20 PM

[Robert Nabloid:]

If you are in such bad shape, go to Chapter 11 - which is the only way to force dramatic re-organizing of the company and its debts owed to others. Then the government can issue some government loan guarantees that must be repaid.

Either way, we haven't addressed the economic issues... If we bail them out with cash (no strings attached), they will be back for more. Loan them money. Don't give it. This will force restructuring because they will still have to address their issues.

2008 Nov 21 05:56 PM

[knot2hazy:]

I think of "Who killed the electric car" when GM caved to big oil. They had it all and crushed and shredded the world lead in energy efficient automobiles, pissing away their own future. They sneered and wrote off the love that people developed for the EV1. They deserve now to be written off by the people they crawl to on their undeserving knees.

2008 Nov 22 08:14 AM

[knot2hazy:]

Oh yes, one more thing. My website will wake you all up forever.

2008 Nov 22 08:18 AM

[xsuddensam:]

I'm sick and tired of all the cry babies. Management's poor business model and labor's unreasonable demands are primarily responsible for the big three meltdown. If they now can't work it out, too bad. We don't need to subsidize UAW pensions and health plans and we certainly don't want to reward the big three for failure.

Yesterday, the UAW pleaded for a bailout, warning about the far reaching unemployment implications if it is denied. If the UAW is so concerned about keeping these jobs, the union officers should take a pay cut, downsize the union, lower member fees and convince members into making more concessions.

It's about time people standup and take responsibility rather than bitch and moan about their self created problems.

2008 Nov 22 09:03 AM

[msoori:]

Does that figure of $67-$73 average pay per auto worker with a high school diploma include the multi million $ salaries of upper management that seems to operate with the intelligence of one with a High school diploma as well? If so, it all makes sense now.

2008 Nov 22 09:39 AM

[a. palmer jr.:]

I kinda got a laugh at the Representative who asked the CEO's how they got there. It's kinda like the Senators, Sec of State, Pres. and Vice Pres. flying around in planes paid by taxpayers when our government is trillions of dollars in debt!!

2008 Nov 22 09:42 AM

[axelrod608:]

Wake up, all you anmal rights protectionists, it's time to let the dinosaurs die of natural causes of their own making. They have eaten everything in sight and now want the government to feed them. The Big 3, Goldman, Citi, BoA, J.P., etc are all unsustainable businesses. Just as the dinosaurs thrived in the lush forests and swamps, our megacompanies thrived in an environment of protectionism and unlimited cheap credit. Party's over.

It's time for the agile, quick, innovative and lean to take over.

If Koreans or Japanese were running the Big 3, they'd be profitable. Without the debt load of course.

The ONLY Constitutional solution to solve overindebtedness is bankruptcy. It's time our government stopped trying to subvert the Constitution and put these unsustainable relics where they belong - in bankruptcy.

2008 Nov 22 09:52 AM

[xsuddensam:]

a.palmer jr:

It's like the pot calling the kettle black. However, the crooks in Washington are flying for free in jets belonging to their corporate masters.


On Nov 22 09:42 AM a. palmer jr. wrote:

> I kinda got a laugh at the Representative who asked the CEO's how
> they got there. It's kinda like the Senators, Sec of State, Pres.
> and Vice Pres. flying around in planes paid by taxpayers when our
> government is trillions of dollars in debt!!

2008 Nov 22 10:04 AM

[Miken:]

California is facing a $22.2 billion budget deficit in 2009. Massachusetts is $1.2 billion, Alabama is $784 million. I think Nancy Pilosi, Maxine Waters, Barney Frank and Senator Shelby should be required to do the following:

1. Submit a plan to the tax payers of their respective states, and to the American people that would eliminate the debt in their respective states as well as the U.S. debt.

2. Until such time as these debts are eliminated, they will give up all preferential parking at airports.

3. Receive a salary of $1 per year.

4. Be required to introduce a bill to eliminate the governmental air fleet (including Air Force 1).

5. Plan on having their generous retirement program turned over to the PBGC and be capped at $3500 per month.

I mean, if it's the thing to do for a company that is $50 billion in debt, why wouldn't it be appropriate for a country that is $11 trillion in debt.

2008 Nov 22 10:40 AM

[Drew Horn:]

In all phases of the current economic cycle, subsidies have been justified by the concept that banks, insurance, and car manufacturers are ---"TOO BIG TO ALLOW THEM TO FAIL" ---.

Cash has been given to them with no visible control and the results have been to make things worse. Some banks are using the cash to buy their competitors and become even larger. AIG is into us for $150 billion much of which has been used to pay off their gambling debts (credit default swaps). GM attempted to get us to enable them to buy Chrysler. The result would have been to make them much larger and TOO BIG TO FAIL! Fannie and Freddy have been nationalized and told to subsidize all the idiotic, bad real estate loans they can find and in the process their bad asset portfolios grow TOO BIG TO FAIL!.

Encouraging companies in trouble to grow is exactly the wrong thing to do but our government is so inept they don't know what else to do. Breaking up companies into units to small the be a threat and devising ways to insulate the overall economy from the bad judgements of a few, and making their owners take the risk, needs to be the objective.

Propping up the US auto industry is the wrong thing to do. They should be forced into chapter 11, reorganize into several smaller companies and then allowed to compete. This will have a lot better result for all of us. Continuing to have the oligopoly of hucksters in Detroit sell us cars that are bad for us individually and as a nation, is the wrong thing to do.

2008 Nov 22 12:13 PM

[djsunshine:]

'American citizen' and him being student have nothing to do with topic.
Seems you have a hard time focusing on the issue.


On Nov 21 04:42 PM Bababooie wrote:

> With a psudeo of Investor Nirav, It's highly unlikely that the author
> is a North American Born Citizen. Protectionest legislation in other
> countries are not allowing natural growth of an industry globally.
> The car companies are taking actions by exporting some of their labor
> overseas. The Author cited details on wages at the Auto Companies,
> but failed to mention the actual education that the workers have,
> and are striving to obtain. The current model of wage is abnormally
> high, but so are the wages of Financial managers of companies that
> are fialing and have failed. I am talking about MBA's, & Professors
> from the likes of Harvard, and Yale. The good ol' boys network got
> them in a position that their fathers might have been able to handle
> with LESS education.
>
> The author had indicated that the conversation was with a "fellow
> student". The Author is obviously in the process of getting an education.
> Every education comes with a cold shower of reality once in the marketplace.
>
>
> The Autoworker are getting paid exactly what the marketplace demanded.
> There are varying degrees of education by these workers. The SMART
> ones can get a comfortable income, while not having to deal with
> a lot of stress.
>
> My advise to the Author.....Try and get a job (and Keep it!!)

2008 Nov 22 01:02 PM

[djsunshine:]

Real issue is :
Is this a viable business?
I think so.
As it stands?
NO.
Needs to reinvent.Structured bankruptcy is more liberating. All CEOs will have to give up private jets..get a co-op jets. or fly first class.
Set an example for corporate America.

2008 Nov 22 01:06 PM

[herbert hoover:]

The auto companies should only get the money that AIG doesn't need. Maybe GM should have been one of Hank Paulson's buddies, they would have found it so much easier to raise cash

2008 Nov 22 02:53 PM

[cz:]

"Dumb backs, monkeys, clean toilets…"

"I think society, (and by society I mean the US taxpayer) is better served by having an overpaid segment of society go find some other work to do."

"Obviously they’re (Nissan and Honda) opposed to the bailout because it use’s their tax money to help the competition."

"He has a Masters Degree in Computer Science from the University of Southern California and hopes to graduate with an MBA from UCLA's Anderson School of Business in the vague near future."


You gotta’ be a real ‘dumb-back, toilet cleanin’ monkey’ to believe that load of bullshit!!! Masters Degree… MBA?????

2008 Nov 22 03:02 PM

[working at ...:]

The break up of the auto happened about 25 years ago when the began to outsource everything but the body, motors and transmissions. some the final assemble work is also done by suppliers. Many of these suppliers are small to mid-sized companies located in just about every state, Canada and Mexico. Many of these companies also supply the transplant autos. They number in the thousands and employee millions. Even the tech sector is a supplier and will be hurt by demise of this industry. Nobody should be smiling. I have hear the phrase "recession proof" when some gloat about their job. But, I have yet to hear someone say "DEPRESSION PROOF". Stealing is not even depression proof since
most will be willing to defend whats left of their property with lethal force when survival of the fittest is the law of the land( no taxes, no police). On second though undertakers are as close to "anything proof" as it gets as people are always dieing to get in. I often wonder how long the media will be able to hold on to the "experts" when ad revenues from all industries are lost. How many college degrees or phd's will be required to be a greeter at wal-mart.

On Nov 22 12:13 PM Drew Horn wrote:

> In all phases of the current economic cycle, subsidies have been
> justified by the concept that banks, insurance, and car manufacturers
> are ---"TOO BIG TO ALLOW THEM TO FAIL" ---.
>
> Cash has been given to them with no visible control and the results
> have been to make things worse. Some banks are using the cash to
> buy their competitors and become even larger. AIG is into us for
> $150 billion much of which has been used to pay off their gambling
> debts (credit default swaps). GM attempted to get us to enable them
> to buy Chrysler. The result would have been to make them much larger
> and TOO BIG TO FAIL! Fannie and Freddy have been nationalized and
> told to subsidize all the idiotic, bad real estate loans they can
> find and in the process their bad asset portfolios grow TOO BIG TO
> FAIL!.
>
> Encouraging companies in trouble to grow is exactly the wrong thing
> to do but our government is so inept they don't know what else to
> do. Breaking up companies into units to small the be a threat and
> devising ways to insulate the overall economy from the bad judgements
> of a few, and making their owners take the risk, needs to be the
> objective.
>
> Propping up the US auto industry is the wrong thing to do. They should
> be forced into chapter 11, reorganize into several smaller companies
> and then allowed to compete. This will have a lot better result
> for all of us. Continuing to have the oligopoly of hucksters in
> Detroit sell us cars that are bad for us individually and as a nation,
> is the wrong thing to do.

2008 Nov 22 05:26 PM

[working at ...:]

It is exactly the point. The old phase "those that can work and those that can't teach" is an insult to real educators( school teachers and parents not professors) every where. When all the dust settles from this mess all that will be left is those that can(survive). This great union(THE UNITED STATES OF AMERICA). was built by common folk with real educations. Some how in the last 15-20 years the emphasis has shifted from what we know to what we been taught(not the same thing). Book smart idiots have replaced the real world genius that made this country. Beyond the obvious fields that do require special training(doctors,scien... to and combat.... )The rest of the world could go on without a degree. Practical learned knowledge that you get from doing it yourself is priceless. If you screw up the first time you will be better the second and so on. How many out there do not know how to fish, hunt, grow a garden,change a tire, built a fire(without a match). Those are the real ones who do not deserve a bail out( free ride). Survival of the fittest mentality or law for that matter, mean if your not fit you will not survive. That is good for the undertakers, but bad for those who can not do.


On Nov 22 01:02 PM djsunshine wrote:

> 'American citizen' and him being student have nothing to do with
> topic.
> Seems you have a hard time focusing on the issue.
>
>
> On Nov 21 04:42 PM Bababooie wrote:

2008 Nov 22 06:00 PM

[raising4dau...:]

Do the car makers deserve a bailout? The answer is simple.

Would you invest your own money to own shares in GM, F, or Chrysler? If you would, then by all means, go ahead, put your money where your mouth is, and give them your money on Monday in exchange for common stock. If you aren't willing to give them your own money, what gives you the right to demand that I give them MY money?

Should we give them a loan? Well, if you think so, then buy some GM, F, or Chrysler bonds on Monday. If you're not willing to do that, then what gives you the right to demand that I loan them MY money?

2008 Nov 22 06:29 PM

[joyboy:]

many years ago, I worked on the frame line at a G.M. plant. It was tough work. As I see it, chapter ll is the only viable alternative for g.m. and possibly the others. Yes, it will hurt for awhile. Unemployment will be staggering for awhile..however, when the reorganization takes place, the industry will pick up again. Lookat Safeway, or Continental Airlines to name a few that went belly up. We have the capability to make fine autos in the U.S. Easing credit will be the first start for those that are qualified buyers. Cutting the wages and benefits brought on by the unions should help a great deal. Better a cut in wages than no job at all.

2008 Nov 22 06:44 PM

[Joey:]

1) GM needs to cut their total car models to 25 (from 60). What they could do is get rid of all Buicks expect Lucerne and Terraza; get rid of all Pontiacs except G6; get rid of all GMCs except Sierra and Yukon; get rid of all Saturns except the Vue; get rid of Saab all together; get rid of at least three Chevy models; get rid of at least two Cadillac models.

2) Get rid of half the dealerships. Chevy seems to have the best distribution so change the Chevy dealerships to Chevy, BPG, Saturn, and Cadillac

3) Close at least three of the five regional offices

4) Close all Zone offices and have employees work out of their homes

5) Get rid of 50% or more of white collar workers in the field

6) The factories will close based upon which models will be discountinued

7) Have upper management take a 35% pay cut

8) Have middle management take a 20% pay cut

9) Cut advertising from $2.3 billion per year to $750 million

10) Get rid of advertising groups and have national advertising only

11) Get rid of co-op advertising dollars

12) Get rid of all promotional advertising

13) Cut all regional and national meetings that cost more than $100,000

14) No parties for auto shows

15) Have special cash incentives for cash only purchases

Comment by Saving GM - November 22, 2008 at 7:02 pm

2008 Nov 22 07:12 PM

[Joey:]

A private jet is around $20 million dollars and flying per year at $20,000 each way for the daily workday trips probably averages $20 million dollars in air travel per year, per plane. That is $40 million dollars total (for air travel and plane cost) for just one plane. If GM has 7 planes – that is $140 million GM could save in selling the planes. Traveling in coach is probably no more than 5 million so that is a net savings of $135 million dollars. If the average factory worker makes $60,000, that is a yearly equivalent of saving 2,250 jobs.

2008 Nov 22 07:13 PM

[RECON605:]

AS NEAR AS I CAN SEE:

THE AUTO EXECS DON'T WANT TO FILE BANKRUPTCY BECAUSE THEY WOULD HAVE TO OPEN THEIR BOOKS!

tHE AIRLINES FILED BKS AND CAME OUT OF THEM ALIVE, SO CAN THE AUTO INDUSTRY.

2008 Nov 22 07:31 PM

[11togo:]

Japan, Germany, France all support their auto companies, through subsidies, tax policy, and union cooperation..
This government has always shown complete apathy towards the industry and its' long term future. It's a history of CAFE standards, ever changing environmental rules, safety mandates.
Congress should look in the mirror. It has nothing to be proud of.
You get the feeling that Congress wants to stick the knife so far in the back of the Big 3, that both management and the union will have to find the COURAGE to implement a NEW way of running their business.
All three are close to death. If given a chance to survive by our elected representatives, they just may surprise us.

2008 Nov 22 08:09 PM

[woodsey:]

Where to begin? Mr. Nirav has been defended FROM stereotyping. I feel constrained to defend him FOR stereotyping. I am aware that monkeys are held in high regard in India, and well they should be, for they ARE our cousins, as are dogs and cats et cetera. When Mr. Nirav mentioned training monkeys to work in auto plants my first impulse was to call my union committee person to protest this cruelty. But then I realized that at least one monkey had already been trained to be an essayist.
No, Mr. Nirav, please do not apologize to this old broken down retired auto worker. I would have loved to have worked with one of my cousins. We could have had such great fun using that computer controlled numerical control machining center. We would have saved GM a pile of money. I made that machine pay for itself on just one job. Just think what we could have done together. Hail to the monkeys.
And in the words of Joe Hill, "Don't mourn; organize!"

Love y'all MONKEYS, Lou

2008 Nov 23 03:18 AM

[ATWshop:]

Well thought out and presented "miken"... excellent post. I would also add that any State unable to present a 'viable' plan should be forced to merge with an adjoining State to save money on State governmental costs. If one governing body can run a State the size/population of California... shouldn't we then combine other states to approximately the same size for cost efficiency? We would combine WA, OR, MT, UT into one State and save the cost of Three (3) State governments!!!
Think of the Savings nationwide if we decrease the number from 50 states to maybe 16!


On Nov 22 10:40 AM miken wrote:

> California is facing a $22.2 billion budget deficit in 2009. Massachusetts
> is $1.2 billion, Alabama is $784 million. I think Nancy Pilosi, Maxine
> Waters, Barney Frank and Senator Shelby should be required to do
> the following:
>
> 1. Submit a plan to the tax payers of their respective states, and
> to the American people that would eliminate the debt in their respective
> states as well as the U.S. debt.
>
> 2. Until such time as these debts are eliminated, they will give
> up all preferential parking at airports.
>
> 3. Receive a salary of $1 per year.
>
> 4. Be required to introduce a bill to eliminate the governmental
> air fleet (including Air Force 1).
>
> 5. Plan on having their generous retirement program turned over to
> the PBGC and be capped at $3500 per month.
>
> I mean, if it's the thing to do for a company that is $50 billion
> in debt, why wouldn't it be appropriate for a country that is $11
> trillion in debt.

2008 Nov 23 05:39 AM

[dadlivonia:]

How can so many people be so sure that they are right, have opposing views, and each of you be wrong on one or more of your points. Stop making so many shallow comments and think about what you say. Don't allow your alligator mouths (or in this case, fingers) overload your hummingbird brains. Put a little depth into your comments.

2008 Nov 23 10:11 AM

[CLH:]

How many million workers will lose there jobs? Yes but they can get new jobs by going south and working for Honda, Toyoto, etc. These companies will take on the extra workers (at fair wages not the bloated wages of the union workers)

Pass a federal right to work law. Everyone deserves a job without joining a union and having to fork over $1000 a year to these blood suckers.

2008 Nov 23 10:29 AM

[dadlivonia:]

Union workers are far overpaid for the work they perform - any bailout should mandate at least a 25% rollback in wages - eliminate the Jobs Bank, as inb was an example of strong-arming used by the unions to attempt to exact retribution for many years of "forced labor" - the pendulum swung way to far - remember that the worker is not the entrepreneur, he/she did not put their future on the line to start or run the company that provides their livelihood, he/she does not have a college degree, in more case, went to a some training that coulod be completed by someone of average intelligence in less than 6 months, and now earns far more than they should - I worked in factories, helping put myself through college, and I know what goes on - I did jobs that the longer time workers wouldn't or couldn't do - unions systematized and institutionalized laziness and indolence - this must be eliminated

The management should be forced to do their mea culpas - they did not do this in front on the strutting peacocks of Congress, and got their heads handed to them - deservedly so, in most cases - they should explain why they didn't use the TMS 30 years ago, when it was fully available to them - force them to take a written test on The Machine That Changed The World and Lean Manufacturing (same authors) and all books by Eli Goldratt, to see if they have truly learned anything, force them into supplier collaboration, not supplier club-oration, give them some credit for what they have done in the last 10 years - fire Waggoner, as he deserved it many years ago for sanctioning the manufacture of cars no one wanted and continuing to adhere to old, outmoded manufacturing methodologies- as was suggested above, force them all to take wage cuts and repay bonuses paid when the company was unprofitable, including those who are retired, and their trusts, if they are dead - they were truly evil

Give the car companies credit for making better cars than they did when they dug this hole they are currently in - make sure they understand that Kaizen is the only process that should drive every move they make

Force Congress to speak from some level of understanding of where the industry is today, not 10-20 years ago - make Congress control their standard rectal-cranial insertion that dominates all hearing of these types - no one can be this stupid - yes, I guess they can, as they have proven Einstein right (insanity, or in this case, gross stupidity, is doing the same thing thing over and over and expecting a different result

Give them the money, put force all these strictures on them -

Understand that bailout should be only partially repaid, as anything else will hamstring them for a decade, or longer - use common sense (not very common) to understand the facts, pointed out by many over the last month, that the impact of failure by the auto companies and their suppliers will be far greater than $25 billion or triple that, in unemployment, healthcare, etc., - if you think that people will not think many times before buying a car from a company that is in bankruptcy, even reorganization, you have serious thinking process flaws - so, they will spiral into oblivion -

You do not want to contemplate a future where our potential war machine is put into the hands of Japan, China, Korea, and Europe - if you question this, just look back at WWII - this can and will happen again - it is like thinking that the big quake will not happen in California - it may not happen today or tomorrow, but it will happen sometime, as long as their are people who do not learn for their mistake (read George Santayana) - boutique car makers, who spring up from the ruble of the auto companies, would take decades to attain the critical mass necessary to replace this capability

So, think, plan, do - don't ready, fire, aim

2008 Nov 23 10:46 AM

[jdl51:]

The republican mantra that the big three auto workers get $77 an hour or whatever the figure is now, is totally misleading. Workers on the line get around $24 an hour which in some cases is less than workers for Toyota and Honda get in their U.S. plants. The difference comes with UAW retirees because they include their pension benefits in the total. The idea that auto workers are making more than doctors, lawyers, etc is just totally idiotic. On the other hand, Nardelli of Chrysler got $200 million severence from Home Depot after he left that company in terrible shape and now he's getting millions more a year for screwing up Chrysler. The problem with the big three isn't the workers, it's management. Why are people buying Hondas, Toyotas, etc. and not GM and Ford? It's because of the product mix which has nothing to do with autoworkers, but management. Management has been a miserable failure at these three companies and for them now to go to Washington and ask for handouts without even a hint at a plan on what they're going to do with it other than what they've been doing is ludicrous. They've lobbied successfully for years to block efforts to raise CAFE standards and now they're crying when they were caught flatfooted when oil went through the roof. After almost four decades of foreign auto companies eating their lunch, you'd think they'd adapt, but they haven't. All of these problems are the direct result of mismanagement and not union workers, yet everyone seems to have it out for the unions and not the billions wasted over the years for substandard management.

2008 Nov 23 02:43 PM

[Howard_T:]

After the high-demand times of WW2, the textile industry in the Northeast began to fall on hard times. The mills were old, energy costs were high, and the workers didn't come cheaply. One-by-one, the manufacturers packed up and moved south. There was no such thing as a bailout available. In my home town, there was no industry left to speak of. What was still available was "Yankee Ingenuity". Electronics moved in where cloth moved out, and the Northeast, particularly in areas where good colleges were located, began to boom. It would seem to me that the educational institutions of the industrial Midwest could take a hard look at their curricula and start putting out graduates who could lead the recovery. If bailed out, the "Big 3" will just keep on with the old ways, the fat cats will get out with their bonuses, and the rest of the workers will watch the industry die. I don't blame the unions for what they get. The old adage is that you do not get what you are worth, but what you negotiate. It will not be easy on the workers, but the mill hands of 60 years ago survived and are now the parents and grandparents of today's engineers and technicians.

2008 Nov 24 11:51 AM

[bush wacked:]

BUY AMERICAN

2008 Nov 24 06:47 PM

[goofy2:]

The authors comment that auto workers make $70 an hour is false.

They do not even make close to that amount.

Check out his link:

mediamatters.org/colum...

The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers. [emphasis in original]

Indeed, according to this Associated Press report, a chunk of GM's $70-an-hour labor costs goes toward paying current retirees' pensions and health-care coverage. In other words, that's money that's not going to end up in the pocket of any autoworker when he cashes his paycheck this week. That's money GM has to set aside in order to pay off costs associated with workers already in retirement. That money has absolutely nothing to do with calculating the hourly wage of a full-time UAW employee today. None.

So, no, UAW workers don't make $70 an hour even if you factor in benefits, because a portion of those benefits are going to people who retired years ago.

Nonetheless, that formulation (wages+benefits=$70 an hour) has been widespread. That's what Sorkin did in his Times column: "The average worker was paid about $70 an hour, including health care and pension costs."

Not only is that inaccurate, but there's also a problem in terms of perception. It's true that autoworkers don't earn annual salaries and that when calculating hourly wages, the cost of benefits paid directly to the worker can be included. But some media outlets have been so casual and sloppy in presenting the facts that news consumers are left with the false impression that GM workers pocket $70 an hour. That's not true, and it seems some in the press are doing very little to correct that misperception.

2008 Dec 08 05:40 PM

[goofy2:]

The authors comment that auto works make $70 an hour is false.

They do not even make close to that amount.

Check out his link:

mediamatters.org/colum...

The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers. [emphasis in original]

Indeed, according to this Associated Press report, a chunk of GM's $70-an-hour labor costs goes toward paying current retirees' pensions and health-care coverage. In other words, that's money that's not going to end up in the pocket of any autoworker when he cashes his paycheck this week. That's money GM has to set aside in order to pay off costs associated with workers already in retirement. That money has absolutely nothing to do with calculating the hourly wage of a full-time UAW employee today. None.

So, no, UAW workers don't make $70 an hour even if you factor in benefits, because a portion of those benefits are going to people who retired years ago.

Nonetheless, that formulation (wages+benefits=$70 an hour) has been widespread. That's what Sorkin did in his Times column: "The average worker was paid about $70 an hour, including health care and pension costs."

Not only is that inaccurate, but there's also a problem in terms of perception. It's true that autoworkers don't earn annual salaries and that when calculating hourly wages, the cost of benefits paid directly to the worker can be included. But some media outlets have been so casual and sloppy in presenting the facts that news consumers are left with the false impression that GM workers pocket $70 an hour. That's not true, and it seems some in the press are doing very little to correct that misperception.

2008 Dec 08 05:41 PM

[Asbytec:]

Despite the lengthy arguments above...the simple answer is, "yes!" Throw them a bone...my God, the guys who started this mess got a cured ham!

2008 Dec 20 03:07 AM

[Bababooie:]

UH2l-

Liberal . . . .That explains it!!

Jan 23 12:46 PM

[Bababooie:]

DJSunshine-
Point taken on the Nort American Born Citizen. Until the author gives a bio I am assuming, not sterotyping. I work with a good number of people with origins of France, Poland, Russia, Germany , Pakistan, India, China , Japan, etc. I work with highly educated professionals who have been in the business a number of years. Inept is inept. American or otherwise. The background of an author is just as important as the position of a the author stock holdings. The author is living in a world away from the automotive industry. The numbers are close, but applied in a incorrect fashion. Please do misinterpet my statements for thinking that the wages that the unions are deserving. I am not a union member.
I work in the automotive industry and see that there are some that do not deserve the wages, and I see others with years of experience tha should be paid much more.

Accounting 101
The books of the Automotive companies do not swell with excessive wages. The major cost are in the Utilities, Taxes, and purchase of raw materials. The problem is that wages unlike the other expenses is an ongoing expense.


Oh did I say taxes above. . .of course I did . . . That is also another thing that the auto workers pay. I believe that taxpayers should be able to have some special interest groups looking out for them!


1) being a student the author has most likley had little interface with people working to support themselves.
2) The real world is the workers not the students

Jan 23 01:12 PM

[mobitronia:]

I think we are now living in an interesting times. Nice to hear that the congress are making ways to improve fuel-economy standards most especially to car enthusiasts. Btw, how about the oil demands?

Jan 23 09:19 PM