Government proposes Federal stake in Big Three

[Matt CLC#18621]

By JULIE HIRSCHFELD DAVIS, Associated Press Writer Julie Hirschfeld Davis, Associated Press Writer â€" 37 mins ago

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are pressing for quick passage of an auto bailout during a postelection session of Congress that begins Tuesday.

The legislation being drafted by Democratic Rep. Barney Frank, chairman of the Financial Services Committee, would dip into the $700 billion Wall Street rescue money approved by Congress last month for the auto aid. President Bush is cool to that idea, although the White House says he is open to helping the troubled industry.

[Herb]

What I don't understand is how the bailout would help the auto companies. It seems that it would just extend the inevitable. ' Like giving morphine to a terminally ill patient. Herb #21704

[Otto Skorzeny]

I agree. The only way I see it helping is if it comes with a lot of strings attached.

First and foremost, acceptance of bailout money should allow companies to cancel all union contracts and renegotiate wages and benefits with their employees. The bailout should also be in the form of a loan like the Chrysler deal 30 years ago.

The companies should have to provide business plans which show how they will be able to pay the money back. The only way they can do this is by starting from scratch with their labor contracts.

In a way, it may be better for them to file for bankruptcy and reorganize under the protection that status grans them. All contracts would be void and they could then decide how to procede in their dealings with the UAW. Their is no reason cars have to be builrt in Detroit, either. GM would be wise to move it's domestic production to Georgia or Alabama where union membership is not required.

[Alan Harris CLC#1513]

Otto is right. Unfortunately, the exact reason that the money is being offered is so that GM will not bail out on the UAW. This is the Democrats' gift to the UAW and to the governor of Michigan, who needs to keep the car makers where they are.

All the bailout will do will do will be to enable GM to continue its ongoing death throes for a longer period. The federal stake can only make things worse. With the federal stake will come increased federal regulation and micro-management.

History repeats itself. This is exactly the situation that led to the formation of government owned British Leyland. That did not work and niether will this. If BL had not been formed, the British auto industry might have adapted to changing times and saved itself. The government rescue insured that it continued along its path to extinction.

[Mike Josephic CLC #3877]

I fully agree with all of the forgoing comments.

I don't want my tax Dollars going to bail out the UAW and let GM continue on it's
path to eventual bankrupcy.  Better to declare Chapter 11 now, reorganize this sick
business, cancel these obscene union contracts and let GM emerge a stronger,
leaner company.  In that way, perhaps we can have a domestic auto business
here in the U.S. that's globally competitive and can provide what U.S. consumers
want. The same goes for the other two members of the former "Big Three".  No
tax Dollars should be spent for Ford or Chrysler either.

Oh, and by the way, no golden parachutes for these poor examples of management
that led them into this mess to begin with.  They should be paid for performance, and in
this case that's zero.  I'm not picking on the UAW, their management approved these
wages and benefits to "keep peace in the family" and avoid potential labor issues.
However, somebody in upper management should have had the foresight to know that
this was eventually going to come to an unhappy end.  For these folks, I have no
sympathy.

BTW, I just sent a copy of this to Preident Bush at the White House.  Speak now
or live with the consequences.  E-Mail address is: comments@whitehouse.gov <comments@whitehouse.gov>

Mike

[Otto Skorzeny]

That's right. It takes two to sign a contract.

I will grant, however,  that going into a deal with the UAW is like paying blackmail or protection money. The automakers are are/were at a definite disadvantage with extortion in the form of threatened strikes.

[jaxops]

Remember AMTRAK?  Yikes!  The Government has pumped money into them since Penn Central went bust.  I'm glad that they're still here, and maybe the time for train is returning...but why do the taxpayers have to foot the bill an give it to people who will have no accountability for taxpayer money?

[Otto Skorzeny]

As someone pointed out in a parallel post, this is what the British did with all their failing car makers in the 50s and 60s. The end result was crappy, outdated cars that lost money for the taxpayers of the UK until their ultimate demise in 1979.

Loan them money? Fine with me as long as they produce viable business plans that include new , more realistic contracts with labor.

[Jeff Maltby 4194]

http://online.wsj.com/article_email/SB122688631448632421-lMyQjAxMDI4MjE2NzgxODc2Wj.html

http://www.local.org/pg&ebank.html

http://www.reuters.com/article/domesticNews/idUSTRE49069R20081001

Jeffo 49er chapter :<)

[PHIL WHYTE CLC 14192]

Hello everybody, I live in the UK and our government , like yours has just spent my tax money on bailing out the banks - no unions to blame there. At the end of the day our auto industry , our motorcycle industry and all the rest of our industry has dissapeared due to extremely bad management , political campaigns [blaming the unions] , globalisation [opening up our borders to imports from countries where they use child and/or slave labour] and extremely greedy CEO's /directors. Enron wasn't run by the unions, nor was the sub prime scandal. I have been an employee, have been self employed and have run my own business with a small number of employees. I've seen it from all sides. The buck stops with the management, not the workers , the only millionaire auto workers are the ones who are supposed to be running the industry.  Stop blaming the working man, after all he's only trying to pay off that sub prime mortgage they sold him !!
I await the backlash !!
Phil             

["Cadillac Kid" Greg Surfas 15364]

Hellow guys.  Everyone always mentions the "high" cost of labor in today's new vehicles.  According to the Society of Automotive Engineers (SAE) latest figures, the total labor in each and every new car is less than 3 hours.  At an imagined $100.00 per hour that would be $300.00 per car.  I can't see how that has any relavence on the cost.  My personal belief is that this is a "red Herring" issue.
Greg

[Otto Skorzeny]

GM  and Ford are publicly held companies. You can see their balance sheets yourself. Labor is huge. Much more than $300 per car. Health care and pensions are eating GM alive.

Phil is sort of right in that management bears the final responsibility. After all, management did sign those ridiculous labor contracts. At this point, however, it's really irrelevant who's to blame - there are many reasons and plenty of blame to go around. What's important now is what to do about the situation.

When the president of the UAW said the other day that they're through making concessions and won't budge further, that tells me that he's either an idiot or just a jerk.

With an attitude like that, his minions will likely end up with no job or pension at all. It's getting down to the point where GM is going to have to make a decision - fight or flight. If they decide to fight, the UAW better get it's head out of it's collective nether region and deal with the problem seriously.

If GM decides to pull the plug, the UAW members are going to be thinking that half a loaf actually is better than none.

[Matt CLC#18621]

When the president of the UAW said the other day that they're through making concessions and won't budge further, that tells me that he's either an idiot or just a jerk.

"a WELL PAID"...

[PHIL WHYTE CLC 14192]

The healthcare and pension provisions were made when these companies were turning high profits. At the end of the day the money for health care and pensions can only come from money that people earn. If the company doesn't provide it then the wages should be enough to pay for it. Here in England we have the National Health Service , contrary to popular belief this is NOT free - we pay for it from our wages. The reason there is no money in the pot for the pensions and health care that the workers paid for is because these companies through bad business decisions have lost their share of sales and they have lost money. I wonder what the CEO's salaries have been over the last twenty or so years and what dividends have been paid to share holders over this period. The unions have bent over backwards to work with Ford and GM here in the UK over the last few years, I must admit that I am surprised to hear that the UAW are behaving in this way. As has been pointed out better to have half a loaf than no loaf at all. It seems to me that a real "them and us" situation has developed and all trust has been lost . All that said the buck stops with the management as this friction was probably minimal when the going was good and they were being good employers and providing good health and pension plans.
To me it seems the problem is a lot bigger than the banks, the auto companies etc. The USA and the United Kingdom had massive manufacturing bases. We had a lot stronger union organisation than you ever had in the USA, but we are both in the same boat. When you manufacture stuff you have goods to sell - both at home and abroad. This way your country gets rich [as you were in the 50's and 60's - we never were because we were paying you back for WW2 !!]. When you import the global companies get rich and your country gets poorer because you aren't selling anything. The only British manufacturing left is the arms industry, so maybe if we have a few more wars we can be world players again. Both our countries are heading down the toilet, we are switching places with the third world countries that now make all our goods.
I have travelled to the USA about thirty times over the last twelve years [on business!!!] and I love the things that made the USA what it was eg the Cadillacs of the 50's, Gene Vincent, Elvis, Little Richard, The Phil Silvers Show , old movies etc. etc. and I was born in '64! I don't like what my country has become - it is a mess.
I've gone on enough !
Phil     

[Otto Skorzeny]

I encourage everyone to watch this short video on the the most advanced automobile assembly plant in the world. It's in Brazil. Why? because the United Auto Workers Union will not allow it to be built in the United States.

I know this isn't the only reason the Big Three are in trouble but it's a big part of the problem.

I'll also post this in the other thread with a similar theme.

http://info.detnews.com/video/index.cfm?id=1189

[PHIL WHYTE CLC 14192]

I've watched the film. It is an impressive plant. I notice that the workers wages are not mentioned - I bet no one on this forum would work for what they are paid. I only have the word of the commentator that the UAW won't let suppliers set up production facilities in factories in the USA. I am not a spokesman for or against the UAW , but I would be interested to hear what t hey have to say about it. I would guess that Ford have more plants outside of the USA than in the USA, so if that is the case why are they going broke ? [aren't the UAW only in the USA and Canada?]I'd say it's because they aren't selling enough vehicles because people don't want them. How are the foriegn car manufacturers that have factories in the USA doing ?
BUILT ON A CLEARED PART OF THE AMAZON RAINFOREST - the lungs of the earth , not the best thing to shout about.
Before anyone attacks me as being some sort of green hippy , let me just say that I think a lot of this eco stuff is just an excuse that governments are using to get more money out of us. I do think that the Amozon should be left alone now though.
Phil   

[Brian Daum]

Phil, the largest problem in the Western World these days is that we are just not producing anything anymore. In this country (Norway) we manufactured most of our goods just a few years ago. We made our radios, shirts, refrigerators, you name it.  Not anymore, it all comes from China these days.

How long ago did you buy a radio or a TV manufactured in the US or the UK?

Most people are not emotionally attached to a radio or a refrigerator, but the automotive scene stirs some feelings in most of us. I don`t pay my taxes in the US, but in my opinion the Car industry in the US is more worth saving than all these banks. A lot of things can probably be said about the car industry, but the business practices of these banks are really shady, at the least.

But we all know the story: It`s easier for a slick, talkative banker to get his way than the automotive worker. That very worker has even produced large, polluting vehicles like Cadillacs...let`s get rid of him.

PS: I wonder who is going to produce the vehicles for the US Armed Forces in the future? The Japanese? The Chinese? The French??

[PHIL WHYTE CLC 14192]

I agree Brian, I believe I already stated that the problem was globalisation. Our police drive BMW cars and ride BMW motorcycles. When I was a kid it was usually British Ford and/or Rover cars and Triumph motorcycles. The problem is all our wealth here in the UK is just castles built on sand - we are just a stopping off point for money that is being shifted around the world. Once we used to sell goods and products all over the world , now it is China and India [tomorrows superpowers ?]. At the end of the day it doesn't matter how cheap these imported goods are, if we don't have jobs because they have all been "exported" we won't be able to buy them anyway !!
Phil   

[PHIL WHYTE CLC 14192]

Bearing in mind that the CEO's of the big three flew in their private jets to Washington to beg for your tax money to bale them out  do people still blame the unions for the imminent downfall ?
Phil