Auto Execs Fly Corporate Jets to D.C., Tin Cups in Hand

[Munchkin03]

Originally Posted by preciousjeni

They could continue to make the same pay without being so expensive to the employer, at least for now while things are so grim. I'd like for them all to keep their jobs, but it won't happen if the businesses go under.

Unions don't seem to be as flexible as they should be, considering so many unions are made up of semi-skilled laborers who could be replaced at a minute's notice. There are plenty of other industries that thrive in settings where there's both union and non-union labor, like construction.

How is the Canadian auto industry doing? Back in the 80s, the Canadian branch of the UAW split from the parent union, created the Canadian Auto Workers, and negotiated their own deal with the automakers. There's a great documentary about that whole time.

[preciousjeni]

Originally Posted by Munchkin03

Unions don't seem to be as flexible as they should be, considering so many unions are made up of semi-skilled laborers who could be replaced at a minute's notice.

I'm probably too cynical, but I can't believe that the union leaders are really being so inflexible for the sake of the workers. There's got to be more to it or they would have already done what was necessary to make sure everyone's job was as secure as possible.

[UGAalum94]

Originally Posted by PM_Mama00

I take it you've never met a Union line worker. You've never seen the blood sweat and tears they put into their job. The hours they spend away from their family to put food on the table, going to bed before their own children go to bed because they have to be up at 2 or 3am to make it in for the early shift. They deserve that money. Auto workers are the hardest workers I know. And most aren't even Union. Most are temps who are trying to get into the Union so that they don't lose their job and can get benefits that are hard to come by these days.



Dee we've already felt that fallout. Non Michiganders won't know until shit hits the fan. With every factory or shift closing, more small businesses keep closing. More foreclosures. More job losses. More homeless people out on the street. Everyone's easy answer is to move out of Michigan. Unfortunately for some, it's not that easy. Moving takes money, and some people are lucky if they can even pay their rent or taxes.




You are highly mistaken. While they are headquartered in Detroit (actually Dearborn and wherever), they are NOT the Detroit Three. They are the Big 3 who employs people all over our country, not just in Detroit. These companies going bankrupt isn't going to affect only Detroit, but the cities in which they have factories as well.

You didn't really address the issue though. Do you think they can be profitable again? What do you think it will take? Shouldn't the companies be able to show a plan for what they will do with the money?

I don't doubt the effects will be felt all over, but are the Big Three just a jobs program for the workers and the general economy? If so, wouldn't it be better to develop a plan to give money directly to the workers for retraining at companies with a track record of profitability?

I don't want to see them go under and I'm not indifferent to Michigan's immediate problem, but what's the long term plan?

Apparently, the author of the article doesn't think the companies should have to offer one.

[AGDee]

Originally Posted by UGAalum94

You didn't really address the issue though. Do you think they can be profitable again? What do you think it will take? Shouldn't the companies be able to show a plan for what they will do with the money?

I don't doubt the effects will be felt all over, but are the Big Three just a jobs program for the workers and the general economy? If so, wouldn't it be better to develop a plan to give money directly to the workers for retraining at companies with a track record of profitability?

I don't want to see them go under and I'm not indifferent to Michigan's immediate problem, but what's the long term plan?

Apparently, the author of the article doesn't think the companies should have to offer one.

The auto companies were holding their own until the following things happened all at once:
1) Gas prices skyrocketed to over $4.00 causing people to stop buying the SUVs. The auto companies make the cars that people want to buy. People WANTED SUVs. They bought SUVs and big trucks like nobody's business. They didn't do that because other things weren't available. I have also chosen to drive small/compact sedans but most people did not want cars, they wanted SUVs. Men did not want little pick ups, they wanted F350s. GM has spent more money on research and development on alternative fuel cars than NASA spends a year. They have gone to the Bush administration repeatedly to encourage the infrastructure required to move to these alternative fuels. The Bush administration has been very invested in keeping oil as our main fuel source for obvious reasons. GM has hydrogen cell engines ready to go. They are planning on releasing the Volt in 2010. GM released the E85 flex fuel engine and guess what? There are 100 E85 gas stations in Michigan. People with flex fuel cars are lucky to be able to find somewhere to fill it up. When the auto makers started releasing hybrids, the reaction of the people was "I'm not driving something that can't accelerate fast and that's a small car". So Ford came out with the Escape hybrid and Saturn made the Vue hybrid and they couldn't keep them in stock. Yet the Malibu hybrids sit on lots. You cannot blame the auto industry for making what their customers wanted to buy. You can blame numerous government administrations for still not having a solid energy policy to make us independent from foreign oil. Not one of them has made a move in that direction.
2) The credit market froze. People who want to buy cars are having a hard time doing so because they can't get credit. I may be facing this myself this week because my car is in the shop and it may not be worth paying for the repairs given the value of the car. If I have to buy a car and cannot get credit, I honestly don't know what I'm going to do. I'm renting from Enterprise right now at the tune of $40-60 a day (depending on the day of the week), but I surely can't keep that up forever. Because of the banking crisis, people can't buy cars. The auto companies foreign market is still doing fine. Sales have dropped to nothing in the US in the past few months.
3) The stock market crashed. No business can survive their stock going from $24 a share in January to $3 in November.
4) They cannot borrow money because of the credit crisis. The money they can borrow is at double digits %. Yet, the Federal Reserve rates have dropped to almost nothing for banks to borrow money from each other.

I agree that the unions need to make more concessions. The $70/hr tossed around is full cost, including what they pay for health care benefits, retirement, dental, Social Security, etc. My employer gives us a statement once a year of our "actual cost" to them which is more than double our salaries when you add in all the other stuff. In truth, they make about $20 an hour straight time although they make much more when they work overtime, sometimes as much as triple time (Sundays). They also sometimes have to work 12 hour shifts 7 days a week which is pretty brutal. I've also seen them injured for life at age 40 so some of it is hazard pay. I was shocked at times when their profit sharing checks were more than my annual income. But then they go through times where they end up laid off for a couple weeks several times a year too. At the same time, GM going bankrupt is going to affect hundreds of thousands retirees who have already lost their health care beginning January 1st and now may also lose their pensions. Their GM stock option plans that they invested in their whole lives have dwindled down to nothing. In 1988, GM stock was over $65 a share. Now it's $3. Those retirees spend money in this economy too. The health care systems are going to be completely overwhelmed by the number of people who no longer have insurance. The ramifications are going to be huge and widely felt and it won't just be in Michigan. Any idea how many GM retirees are spending their money in Florida? North Carolina? Arizona? This isn't a Michigan problem. This is any state that makes polymers and coatings, plastics, tires/rubber, steel, fiberglass, paint, leather, fabric and parts.

This was a very sudden short term crisis that our government officials didn't appear to foresee. GM has a lot of investment into the future with alternative fuels. Their OnStar product is one of the best ideas that anybody has come up with regards to cars in decades. Their handicap accessibility innovations like the moving car seat was the first of it's kind. Do you know that GM developed the first infant car seat? It was called the Love Seat and it came out in the early 70s.

I don't disagree that they should have a plan. They should have driven to Washington in a Volt or hydrogen cell battery car. But, do you punish 5 million people with job losses and send the country into a depression because 3 CEOs took private jets to Washington? Seriously?

[UGAalum94]

Originally Posted by AGDee

The auto companies were holding their own until the following things happened all at once:
1) Gas prices skyrocketed to over $4.00 causing people to stop buying the SUVs. The auto companies make the cars that people want to buy. People WANTED SUVs. They bought SUVs and big trucks like nobody's business. They didn't do that because other things weren't available. I have also chosen to drive small/compact sedans but most people did not want cars, they wanted SUVs. Men did not want little pick ups, they wanted F350s. GM has spent more money on research and development on alternative fuel cars than NASA spends a year. They have gone to the Bush administration repeatedly to encourage the infrastructure required to move to these alternative fuels. The Bush administration has been very invested in keeping oil as our main fuel source for obvious reasons. GM has hydrogen cell engines ready to go. They are planning on releasing the Volt in 2010. GM released the E85 flex fuel engine and guess what? There are 100 E85 gas stations in Michigan. People with flex fuel cars are lucky to be able to find somewhere to fill it up. When the auto makers started releasing hybrids, the reaction of the people was "I'm not driving something that can't accelerate fast and that's a small car". So Ford came out with the Escape hybrid and Saturn made the Vue hybrid and they couldn't keep them in stock. Yet the Malibu hybrids sit on lots. You cannot blame the auto industry for making what their customers wanted to buy. You can blame numerous government administrations for still not having a solid energy policy to make us independent from foreign oil. Not one of them has made a move in that direction.
2) The credit market froze. People who want to buy cars are having a hard time doing so because they can't get credit. I may be facing this myself this week because my car is in the shop and it may not be worth paying for the repairs given the value of the car. If I have to buy a car and cannot get credit, I honestly don't know what I'm going to do. I'm renting from Enterprise right now at the tune of $40-60 a day (depending on the day of the week), but I surely can't keep that up forever. Because of the banking crisis, people can't buy cars. The auto companies foreign market is still doing fine. Sales have dropped to nothing in the US in the past few months.
3) The stock market crashed. No business can survive their stock going from $24 a share in January to $3 in November.
4) They cannot borrow money because of the credit crisis. The money they can borrow is at double digits %. Yet, the Federal Reserve rates have dropped to almost nothing for banks to borrow money from each other.

I agree that the unions need to make more concessions. The $70/hr tossed around is full cost, including what they pay for health care benefits, retirement, dental, Social Security, etc. My employer gives us a statement once a year of our "actual cost" to them which is more than double our salaries when you add in all the other stuff. In truth, they make about $20 an hour straight time although they make much more when they work overtime, sometimes as much as triple time (Sundays). They also sometimes have to work 12 hour shifts 7 days a week which is pretty brutal. I've also seen them injured for life at age 40 so some of it is hazard pay. I was shocked at times when their profit sharing checks were more than my annual income. But then they go through times where they end up laid off for a couple weeks several times a year too. At the same time, GM going bankrupt is going to affect hundreds of thousands retirees who have already lost their health care beginning January 1st and now may also lose their pensions. Their GM stock option plans that they invested in their whole lives have dwindled down to nothing. In 1988, GM stock was over $65 a share. Now it's $3. Those retirees spend money in this economy too. The health care systems are going to be completely overwhelmed by the number of people who no longer have insurance. The ramifications are going to be huge and widely felt and it won't just be in Michigan. Any idea how many GM retirees are spending their money in Florida? North Carolina? Arizona? This isn't a Michigan problem. This is any state that makes polymers and coatings, plastics, tires/rubber, steel, fiberglass, paint, leather, fabric and parts.

This was a very sudden short term crisis that our government officials didn't appear to foresee. GM has a lot of investment into the future with alternative fuels. Their OnStar product is one of the best ideas that anybody has come up with regards to cars in decades. Their handicap accessibility innovations like the moving car seat was the first of it's kind. Do you know that GM developed the first infant car seat? It was called the Love Seat and it came out in the early 70s.

I don't disagree that they should have a plan. They should have driven to Washington in a Volt or hydrogen cell battery car. But, do you punish 5 million people with job losses and send the country into a depression because 3 CEOs took private jets to Washington? Seriously?

Me? No. My reaction doesn't have anything to do with how they got to Washington. I just don't see them ever really being healthy and competitive, and I question what the money will really do. From the long term survival of the companies perspective, I think their best hope may be bankruptcy because it will allow them shed a lot of their obligations and perhaps emerge strong enough to compete in the marketplace.

But if the main reasons we're concerned are the quality of life of their workers and retirees, the businesses dependent on them, and their impact on the general economy, I'm not sure that there's anything that can really be done to allow the companies to basically continue as they are but be profitable.

I find it kind of odd that you seem to think that the government could have or should have foreseen the issues here but that the corporations themselves were somehow victims of circumstances unrelated primarily to their own behavior or corporate culture.

How do you reconcile the ability of other car companies to stay in business when they've faced the same external conditions?

ETA: When you buy the new car do you think it will be from one of the Big Three? Part of my skepticism about the long term viability of the companies has to do with the fact that they haven't put a vehicle on the market in my car buying life time that I really had any interest in. Ultimately, they have to be able to put out desirable products at prices that people are willing to pay and that allow them to make a profit. Other companies seem to be able to do this better. EATA: Actually, I have to take this back at least in part. I do like Mazdas and their relationship with Ford means I shouldn't say anything this sweeping.

How much money do we give them today to ensure that they are healthy in 10-20 years and that we won't be right back here?

EATA: I feel like I need to add that I'd be really happy to see these companies be successful. It's going to be terrible if they go under, but I'm not completely sure it's avoidable. It's just a question of when and how or it's a question of whether the profitable forms that they will emerge in will meet the needs that we're really discussion when we talk about pension failures, health care costs, wide spread economic impact, etc.

[KSig RC]

So let's work through this logically:

Originally Posted by AGDee

The auto companies were holding their own until the following things happened all at once:
1) Gas prices skyrocketed to over $4.00 causing people to stop buying the SUVs.

This is a simple supply failure - their inability to be flexible with their own supply line is actually a business decision, and a poor one at that. Japanese manufacturers have had to deal with this same issue, and had had no trouble re-tooling factory lines or accounting for sudden shifts in demand.

Additionally, gas prices have been on the rise for a long time, and are now below $1.50/gal - so what now? Is 6 months really that big of a deal? If so, again, that appears to be an endemic failure on their part.

Originally Posted by AGDee

2) The credit market froze. People who want to buy cars are having a hard time doing so because they can't get credit.

Seeing as the auto manufacturers themselves made the decisions that led to the current financing system (and its inbred nature with dealerships etc.) it's hard to be sympathetic, especially when this has affected dozens of other markets as well.

Originally Posted by AGDee

3) The stock market crashed. No business can survive their stock going from $24 a share in January to $3 in November.

This is an effect, not a cause - profitable companies still retained value. Companies built on archaic supply chain and manufacturing, with an upside-down pyramid structure, were appropriately priced by the market.

Originally Posted by AGDee

4) They cannot borrow money because of the credit crisis. The money they can borrow is at double digits %. Yet, the Federal Reserve rates have dropped to almost nothing for banks to borrow money from each other.

Again, effect, not a cause - this is akin to saying "I hit the ball directly at the center fielder, and he didn't drop it!"

I completely understand that this represents a damaging blow for Detroit and much of MI, and that the "everyday worker" is the one who will ultimately pay for the poor decisions of management - but it seems a bit far-fetched to pretend that this is simply a byproduct of circumstance. In reality, the auto manufacturers screwed up. It's really that simple - sure, Americans were buying SUVs, but Americans were also buying Priuses at record levels, too. The "Big 3" used internal strategy and marketing that was fundamentally flawed, allowing the confluence of circumstances to bring them down.

Now, should this earn a bailout? In the grand scheme of things, $25 billion isn't a ridiculous sum (irony alert) . . . but I, for one, would be loathe to have tax dollars go to allowing the same terrible management to run a private business using public money. It's similar to the airlines - two of the worst-managed industries since the Industrial Revolution, who are lucky to even exist today - and perhaps bankruptcy or nationalization would actually help. I simply would hate to abide the status quo using public money.

The UAW is complicit in this, by the way - while you can't fault a union for doing the best it can for its members, its rigidity really shows what an anachronism most unions have become in the modern economy. The $70/hr figure is ludicrous, considering the general skill level of the workers involved.

[ThetaDancer]

Originally Posted by AGDee

I agree that the unions need to make more concessions. The $70/hr tossed around is full cost, including what they pay for health care benefits, retirement, dental, Social Security, etc. My employer gives us a statement once a year of our "actual cost" to them which is more than double our salaries when you add in all the other stuff. In truth, they make about $20 an hour straight time although they make much more when they work overtime, sometimes as much as triple time (Sundays). They also sometimes have to work 12 hour shifts 7 days a week which is pretty brutal. I've also seen them injured for life at age 40 so some of it is hazard pay. I was shocked at times when their profit sharing checks were more than my annual income. But then they go through times where they end up laid off for a couple weeks several times a year too. At the same time, GM going bankrupt is going to affect hundreds of thousands retirees who have already lost their health care beginning January 1st and now may also lose their pensions. Their GM stock option plans that they invested in their whole lives have dwindled down to nothing.

Hey Dee (and others too )
Any chance you caught Olbermann tonight? He did a nice job of explaining this and I of course thought of this greekchat thread.

[KSigkid]

Originally Posted by PM_Mama00

I take it you've never met a Union line worker. You've never seen the blood sweat and tears they put into their job. The hours they spend away from their family to put food on the table, going to bed before their own children go to bed because they have to be up at 2 or 3am to make it in for the early shift. They deserve that money. Auto workers are the hardest workers I know. And most aren't even Union. Most are temps who are trying to get into the Union so that they don't lose their job and can get benefits that are hard to come by these days.

No one is disputing that they work really hard, but a lot of people work just as hard at jobs (construction, etc.) without getting anything close to those salaries. I understand you live in the area, but there are people all over the country working extremely hard during 90 and 100 hour weeks in manual labor jobs; the auto workers aren't unique in that regard. It's a terrible situation, especially when part of the problem has been poor business decisions at the top.

I think bankruptcy is going to be the best option, but it's a terribly difficult situation with no easy answer.