And another one after that?
First of all, we should stop using the term bailout; it paints a false picture. If you’re one of those glass is half empty’ types, consider these transactions as loans against assets — and there are LOTS of assets. For us ‘glass is half full’ types these transactions are investments that may garner large rewards.
The auto makers need these loans to stay in business for two reasons: 1) they are, by all indications, badly managed companies and 2) they are dealing with the UAW (United Auto Workers Union) one of the most corrupt unions in the country. Now there is the perfect picture of a troubled company: bad management AND the UAW. But even with good management, dealing with the UAW would eventually bankrupt any company.
UnionFacts.com has documented the UAWs unethical practices and how much these practices have cost automakers. Read it — its a real eye opener. Following as an excerpt from UnionFacts.com’s profile of the UAW; this excerpt discusses “job banks”:
Thousands of UAW members are being paid between $70,000 to $85,000 per year not to work. (By some accounts, the expense is even larger, costing the “Big Three” up to $130,000 for each job banker). For 4,200 of these union members, their 8 hour “work day” consists of filling out crossword puzzles, watching World War II movies and even taking naps. These job bankers have drawn nearly full pay and all benefits, often for years, no matter the companies’ health. As shown by the $4.5 billion the Big Three earmarked to fund job banks, this practice is costing the companies billions of dollars at a time that they are losing billions.
(NOTE: This post is not intended to be an anti-union rant. There are many companies that work well with unions and many unions that actually help companies increase productivity and profits — my point is, the UAW is not one of these unions.)
An editorial in the Orlando Sentinel titled: “We think: Taxpayers shouldn’t bail out the auto industry without big changes” has it, in my opinion, just right. They say:
“The United Auto Workers union needs to step up with significant concessions on salaries and benefits for its members working at the Big Three. That would help bring compensation at American car companies more in line with the nonunion, foreign-based competitors that have set up shop in the United States and (have) steadily gained market share. The union faces a choice between jobs with less-generous benefits at the U.S. companies or no jobs if they go under.”
Its possible that UAW members have starting realizing the damage their union is doing; the UAW has, since the 1970s, lost more than half of its membership.
President Bush or Congress should jump on the Orlando Sentinel’s idea and insist that no loans be made to auto makers unless they get considerable concessions from the UAW and come up with a profitable business plan. Essentially, the Big Three are looking for Venture Capital and that should be the minimum requirement from any lender — including the U.S. Government.
Failing some positive steps on the part of the auto makers and the UAW millions of workers will be unemployed and the U.S. Government would loose lots of revenue. Its a pretty bleak picture and it suggests that there WILL be a “bailout,” without many conditions, and perhaps another one after that.
One other note: Radio Broadcaster Neil Bortz was on CNN yesterday making many of these same points. Bortz said on his radio show this morning that, before he was even off the air, he had received numerous death threats through CNNs switchboard and via e-mail. Draw your own conclusions about that!
News Links:
Orlando Sentinel: We think: Taxpayers shouldn’t bail out the auto industry without big changes
ABC News: Car industry turmoil forces US to mull bailoutStart Thinking Right Obama Democrats Pull Out All Stops To Bail Out Auto Industry Carcass For Union LeachesThe Long Goodbye Automakers Need a Bailout, While McCain-Palin Try to Rescue Their Reputations
5 users commented in " Is an Auto Industry Bailout Inevitable? "
Follow-up comment rss or Leave a TrackbackI am 20 year UAW member, I gross about $62,000/year and I have health insurance including dental and vision care. I make a good living, but I am obviously not wealthy. What is it that makes people like this writer so angry at me? Isn’t a comfortable living what we all strive for? Some security from the worries of health problems. The ability to go into retirement with some hope that I will not have to slave until the end of my days. What is it about this that infuriates so many?
Job bankers are there due to layoffs and plant shutdowns, not because they want to be.
As for people threatening Neil Bortz, there are plenty of morons everywhere. The insinuating comment about drawing conclusions is a poor ploy and cheapens this writer’s credibility.
The generous protection granted by Chapter 11 is more stable and predictable than depending upon government. When the government goes broke from bailing out private industry, who will be left to bail out the taxpayer?
Car markets in rich countries are saturated. The last thing we need is to subsidize cars. Please help to make the anti car subsidy group on Facebook grow and join now!
To ffny:
No one is mad with the UAW members, its the union itself that raises so much bloodpressure. They have taken the automakers to the laundry and bare a large part of the blame for the current situation; a blame shared with the automakers management and with the U.S. Government itself.
You seem to feel that the job bank concept is justified. Are there any other industries that lay people off and then continue to pay them? Doesn’t sound like a sound business practice to me.
62,000 $/yr!!! Unless you have a graduate degree of some sort (which at 20 it is extremely unlikely) you are way above what people with lower credentials are entitled to.
It is immoral that people that had busted their asses off going through college and graduate school are making the same amount of money you are when your qualifications are in extremely high supply in the labor market.
Unbelievable and unfair!
First for whymrhymer:
I agree, there is a lot of blame to go around. It’s just that when people start looking for villains, unions seem to be first on the list. I suggest we start looking at high ranking management, their inability to accept constructive criticism, their inflexibility, their personal greed. Take a look at Friday’s Detroit Free Press article about executive compensation guarantees at Chrysler. If any of them give up a dime during this crisis I will be very surprised. And we’re not even talking about Nardelli.
As to the job bank, ideally it is meant to be temporary, during times of layoff and shutdowns. The problem has become, the layoffs and shutdowns have become permanent in some cases. Transfers to different plants are part of the solution, but what’s happening in one plant is probably happening in another. The real solution is to get this industry healthy again. Sound business practice? Maybe not. But no worse than some others. Golden parachutes? American sweatshops? False advertising? There are plenty of bad business practices, at least job banks keep food on the table, roofs overhead, kids in college…
To drkrk9:
Actually, I have a degree. I busted my ass, also, and continue to. I guess that in your ideal world, only the educated elite should be able to succeed? I thought the “American Dream” was a little more inclusive.
Thanks to both for replying.
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