Are UAW Union Bosses Abusing Their Positions for Pay?

[Proton Soup]

I think that one major problem is that bankruptcy is the system designed to save companies and allows the government to get involved and work the problems out. In this case, they say it is different because people won't buy a car from a company in that position. So, in my opinion, if that is really the case, then the law is flawed, and there is no system for car companies in this position. If the government decides that car companies cannot go bankrupt, then a new system unique to the car industry needs to be established that allows the same kind of process as bankruptcy under another name, and that going through that system is required in order to get bailout money.

it's BS. there will be no shortage of spare parts or mechanics. dealerships handle multiple brands these days, and will gladly service your chevy. only drawback is the warranty may go bad, so ask for a discount on that basis.

 

[mgb_phys]

I'm not sure what he thinks that would do to help - GM needs operating capital and just buying the stock doesn't change that.

I think his point was - would you loan a loss making business worth $3Bn, $25Bn and hope they turned around? And if you did wouldn't you like some seat on the board and more control on how they spend it than a promise to pay the CEO in bonuses rather than salary and reduce the number of executive jets?

 

[turbo]

I'm not sure what he thinks that would do to help - GM needs operating capital and just buying the stock doesn't change that.

Buying the stock gives control over the company, including voting in a board that will make needed reforms. I certainly wouldn't turn over GM to a loose cannon like "Chainsaw" Al Dunlap, but that company really needs a good enema at the corporate level.

When Ford closed its Marysville OH plant saying that it was unproductive, Honda bought it, retooled and started producing the Accord - the car (at the time) with the highest percentage of US-made parts, using skilled labor from the old Ford work-force. Neither the plant nor the workers were "unproductive" - Ford mismanaged that place into the ground, and Honda bought it for a song and stole their lunch. Until Ford started "selling" huge volumes of Taurus sedans to themselves (Ford Leasing, which supplied rental-car companies and corporate fleets), the Accord was the highest-volume-selling car in the country and all the sales were one-at-a-time sales to retail customers.

 

[Proton Soup]

I'm not sure what he thinks that would do to help - GM needs operating capital and just buying the stock doesn't change that.

it gives you complete control over the situation. and you get something for all that risk you're taking.

 

[WarPhalange]

I'm not sure what he thinks that would do to help - GM needs operating capital and just buying the stock doesn't change that.

$3B won't change that?

 

[turbo]

$3B won't change that?

$3B and a drastic house-cleaning at the top would sure have a better chance than giving GM unsecured loans for many times that amount. If the new management managed to turn the company around, the Treasury might make a nice profit taking the company public after the turn-around.

 

[OmCheeto]

$3B and a drastic house-cleaning at the top would sure have a better chance than giving GM unsecured loans for many times that amount. If the new management managed to turn the company around, the Treasury might make a nice profit taking the company public after the turn-around.

How many employee's do the big 3 employ? 500,000.
3 gigadollars is enough to pay each of those employee's about $6000.

Hmmmm...

I say we have Obama buy the companies, put Johnathan Goodwin and Neil Young in charge of the whole thing, and see what happens by May.

About time them god, um, er, um, gosh darned hippies went to work.

 

[mheslep]

I'm not sure what he thinks that would do to help - GM needs operating capital and just buying the stock doesn't change that.

Well it can. What's done in those cases is the company would just make another stock offering, and in this case the government is the buyer. Tends to irk the existing stock holders.

 

[mheslep]

$3B won't change that?

He meant that if the government just buys existing public shares on the market, the money just goes to into the hands of the existing public shareholders who are selling their shares, and not to the company. The government would indeed gain control and the shareholders get bailed out, but the company is still illiquid and goes under.

 

[mheslep]

A very good discussion, as always.
http://abcnews.go.com/Video/playerIndex?id=6315870

George Will makes a point about GM that has had me concerned as well. They intend to market the plug-in hybrid, Chevy Volt, as a part of their recovery plan, but they can't yet make a profit with that car. The government is providing a $7500 tax credit to motivate the buying public, and even then, GM makes no money. I forget the exact number, but the break-even price for for the Volt was something like $35,000. Who wants, in effect, a $40,000 Corolla? I am all for plug-in hybrids, but there appears to be profoundly unrealistic expectations, esp in a collapsed economy.

It may be worse than that. As understand the bankruptcy laws, a company in Chapter 11 is prohibited from running any operations at loss. At least was my experience working with a large firm that went Chapter 11 years ago. They thought it would be business as usual, but their competitors took the market away from them by bidding on contracts at below cost where it was known follow-on work would be profitable, and the Chap 11 firm could not follow.

 

[mgb_phys]

You can't trade fraudulently - eg.you can't enter into contracts you know you can't pay.
You can run at a loss for years in chapter 11 - that's how the airlines survive.

 

[jreelawg]

I don't think it is any secret that the big three might fail. Plus the fact that the reasons seam to agreed by the public that they sell bad cars and have poor service. If anyone buys from the big three, they will probably just do it to help america out of patriotism. If people understood that bankruptcy doesn't mean out of business and that it is designed to keep them from going out of business, then they should be more assured buying from them under chapter 11 than not.

Thats why they need a new name for auto company bankruptcy, because no one knows what it means. Change the word to restructuring court, and people would be all for it.

 

[drankin]

I don't know why everything thinks they make bad vehicles. My Chevy has more than 100k miles and is still running strong. A good looking truck with lots of creature comforts etc. They make junk too but they all do if you get their lower lines. I don't think the competitors from Japan and Korea have the labor issues we do here.

 

[baywax]

It would be interesting to see what kind of vehicles came out of a Government owned auto manufacturing plant.

How much money has the American government already let slide in the direction of the oil companies, over the last 20 years, in the form of tax relief?
edit: Does the cost of the Iraq war figure into the benefits oil companies have received from Government...? (hefty figure)

Has the same amount been forgiven over the same period of time for the auto industry?

Is this request for 38 billion dollars a symptom of the auto industry playing catch up with the much molly coddled oil industry? Or is this a completely separate condition?

(I was thinking of buying a Chevy Optra or Aero just to help out the industry and I'm not even American. This crisis is a great sales pitch.)

 

[Ivan Seeking]

I don't know why everything thinks they make bad vehicles. My Chevy has more than 100k miles and is still running strong. A good looking truck with lots of creature comforts etc. They make junk too but they all do if you get their lower lines. I don't think the competitors from Japan and Korea have the labor issues we do here.

Toyota cars are just broke-in at 100K. Try 300K. That's how long we drove our first Celica. And over that time, we replaced brakes, clutches, standard maintenance [filters and fluids], and we had one leaky front engine seal at about 200K. I also had to replace an AC line that had cracked, and the heater fan motor went bad and had to be replaced. That was it. We sold the car running. We now have our third and forth Toyotas, and we are getting ready to buy our fifth.

Our Camry gets 35 mpg on the highway. It's a four-door and a sweet-driving car.

 

[Office_Shredder]

Has the same amount been forgiven over the same period of time for the auto industry?

Is this request for 38 billion dollars a symptom of the auto industry playing catch up with the much molly coddled oil industry? Or is this a completely separate condition?

Why are the oil and auto industries competing here? I'm confused

 

[baywax]

Why are the oil and auto industries competing here? I'm confused

I am using the two private industries as comparables not as competitors. In the past, gas and autos have gone hand in hand. Hopefully, for the sake of security, independence and the health of many nations, that will change.

I'm simply pointing out the fact that there is this great outcry against tax dollars supporting the private auto industry yet barely a whimper when it comes to tax dollars (in the form of tax relief and military intervention) supporting what was a burgeoning private gas and oil industry.

 

[BobG]

I don't know why everything thinks they make bad vehicles. My Chevy has more than 100k miles and is still running strong. A good looking truck with lots of creature comforts etc. They make junk too but they all do if you get their lower lines. I don't think the competitors from Japan and Korea have the labor issues we do here.

Here's the difference between wages foreign automakers pay at US plants and US automakers pay at US plants: UAW Losing Pay Edge

You can't make a direct comparison since the pay is usually structured differently. Foreign, non-union plants pay slightly lower base wages and require employees to contribute to their own health insurance plans, but foreign companies have paid bigger bonuses to employees. With auto sales down, period, I doubt the workers at foreign owned plants have made much in bonuses this year (and probably won't next year, either).

On the other hand, here's who the US companies pay: http://www.uaw.org/barg/07fact/fact02.php

US auto workers are paying 180,000 current employees and 540,000 retirees and retiree surviving spouses (at GM the ratio is 75,000 to 340,000). The retiree benefits are where the myth of $73 an hour labor costs for US companies. It's true, but it doesn't mean US assembly line workers are making $140,000 a year.

The solution for US automakers is obvious. Throw the retirees under a bus.

How ethical is that solution? Employees took less pay in return for the promise of retirement benefits - just the same as employees in any job pay money into Social Security with the promise they'll be paid back when they retire.

Of course, the solution to that problem will be the same as the solution to the US autoworkers problem. All these damn young people will vote to cut off our Social Security! They'll throw all of us old people under the bus!

 

[Topher925]

If they do give the big 3 a bailout, then part of the decree better include getting rid of the UAW. The $73 per hour thing may be a myth but many auto-line works are still taking home six figure salaries. I know this for a fact because I know many of these workers personally. The UAW is helping kill the domestic auto-industry and EVERYONE knows it. Its time law makers and the corporations get together to get rid of the unions once and for all or else the big 3 are guaranteed to continue struggling.

This is a truly screwed up web that has been weaved. But I don't think it can be solved by throwing people under a bus. Maybe it will be better for the big3 to go under and just let the foreigners make our cars from now on. They certainly seem to be doing it a lot better than we are.

 

[mgb_phys]

It would be interesting to see what kind of vehicles came out of a Government owned auto manufacturing plant.

http://a905.g.akamai.net/7/905/36356/v0001/www.myride.com/images/vehicle/2008/audi/r8/oem/R8060005_large[1]_(400x300).jpg

(golden share owned by the lower saxony state government)

 

[jreelawg]

Toyota cars are just broke-in at 100K. Try 300K. That's how long we drove our first Celica. And over that time, we replaced brakes, clutches, standard maintenance [filters and fluids], and we had one leaky front engine seal at about 200K. I also had to replace an AC line that had cracked, and the heater fan motor went bad and had to be replaced. That was it. We sold the car running. We now have our third and forth Toyotas, and we are getting ready to buy our fifth.

Our Camry gets 35 mpg on the highway. It's a four-door and a sweet-driving car.

A friend of mine had an old honda accord, that got about 35-40 mpg, and its transmission finally failed at just over 400k miles. If he had replaced the transmission could have gotten more out of the engine.

 

[jreelawg]

If they do give the big 3 a bailout, then part of the decree better include getting rid of the UAW. The $73 per hour thing may be a myth but many auto-line works are still taking home six figure salaries. I know this for a fact because I know many of these workers personally. The UAW is helping kill the domestic auto-industry and EVERYONE knows it. Its time law makers and the corporations get together to get rid of the unions once and for all or else the big 3 are guaranteed to continue struggling.

This is a truly screwed up web that has been weaved. But I don't think it can be solved by throwing people under a bus. Maybe it will be better for the big3 to go under and just let the foreigners make our cars from now on. They certainly seem to be doing it a lot better than we are.

Foreign car companies like honda and toyota have decided to make cars for america in america to avoid the foreign tariffs on auto imports. Why not just unionize their workers so that it is an even playing field in america, or they have to pay the tariffs?

 

[BobG]

My daughter's first car was an '89 Nissan Sentra she bought for $1200 nearly 7 years ago. Have no idea what the mileage is since the odometer and speedometer quit working, but it's still clicking along at 20-years-old.

It has good brakes, too. I replaced the front rotors and the pads for both the front and back just a couple weeks ago. It leaks oil, though. Either from a lower seal or from the pan, itself (I don't think I've ever seen an oilpan with so many dents in it before - I can't remember exactly how the oilpan is, but it's definitely less than 7 years old).

 

[mgb_phys]

Foreign car companies like honda and toyota have decided to make cars for america in america to avoid the foreign tariffs on auto imports. Why not just unionize their workers so that it is an even playing field in america, or they have to pay the tariffs?

But then they would be more efficient with highly skilled union labour and would make the cars better and cheaper thus destoying American industry?

Just like the saying that there are no atheists in a foxhole - it appears there are no capitalists in a downturn.

 

[turbo]

Since my father bought his SUV (that Subaru Forester got 27 mpg on the mostly-highway trip to Bangor and back today), my wife has been telling me to buy one. She is very happy with her Legacy sedan, and since we live in a rural location with twisty roads, winter driving can be a thrill (not a good thrill). I finally broke down and had my father drive me to the dealership today. I got exactly the same model Forester as his at the same discounted price (under $20,000) WITH a set of Subaru roof racks thrown in. These vehicles are made in Japan and have to be transported LONG distances to end up on the East Coast of the US. Again, I have to ask, how can a country that has to import all of its raw materials manage to make a powerful, fuel-efficient, safe (5-star crash rating) SUV with full-time AWD, full-time independent anti-lock braking, and loaded with every creature comfort and retail them at under $20K?

People in the US seem to want SUVs (I know I like this one!) but the cars don't have to be hulking, gas-guzzling monsters built on heavy truck frames. Are the designers at the US auto-makers poor at their jobs? Are the marketing pros at these business poor at judging their consumers? Are the financial-types stifling innovation in efforts to hold down costs? I have no idea what's wrong with these companies, but there is something wrong, and I see no benefit in shoveling taxpayer dollars into this industry without REAL verifiable reform based on independent audits and recommendations, and a viable path for Treasury to recover the taxpayers' "investment".

 

[mgb_phys]

Again, I have to ask, how can a country that has to import all of its raw materials manage to make a powerful, fuel-efficient, safe (5-star crash rating) SUV with full-time AWD, full-time independent anti-lock braking, and loaded with every creature comfort and retail them at under $20K?

Engineering? Still GM owned 25% of them for the last 10years, so the AWD drive, boxer engine and build quality should have transerred over to GM's own models.

I have a subaru (in the less snowy bit of Canada) it is amazing when the weather gets bad.
Permament AWD costs you a bit in gas (35-40mpg) but they are as indestructible as Volvos.
If you have slightly more money and less sense the turbo version of the Impressa can leave many Porsches looking embarrased for 30K

 

[turbo]

Engineering? Still GM owned 25% of them for the last 10years, so the AWD drive, boxer engine and build quality should have transerred over to GM's own models.

I have a subaru (in the less snowy bit of Canada) it is amazing when the weather gets bad.
Permament AWD costs you a bit in gas (35-40mpg) but they are as indestructible as Volvos.
If you have slightly more money and less sense the turbo version of the Impressa can leave many Porsches looking embarrased for 30K

It's a puzzle to me. My father took his new Forester onto gravel logging roads a couple of days ago, then shifted over to crappy dirt roads (corduroy and mud, too) to traverse a pretty lonely piece of Maine. He had to leave the road once to navigate around a downed tree, and he's still raving about the way that Forester handled it. Subaru engineers their AWD systems such that only the individual wheels still getting traction (the ones not not spinning) have power applied to them. My father and I have traveled back-county for years to fly-fish remote ponds, and he says that he has never owned a 4x4 truck that handles as well in the dirt as the Forester does.

He is a typical crusty old (83 next month) Mainer, and I had to hammer on him pretty hard to get him to buy a foreign-made SUV. Now he's a walking, talking advertisement for Subaru.

 

[BobG]

It's a puzzle to me. My father took his new Forester onto gravel logging roads a couple of days ago, then shifted over to crappy dirt roads (corduroy and mud, too) to traverse a pretty lonely piece of Maine. He had to leave the road once to navigate around a downed tree, and he's still raving about the way that Forester handled it. Subaru engineers their AWD systems such that only the individual wheels still getting traction (the ones not not spinning) have power applied to them. My father and I have traveled back-county for years to fly-fish remote ponds, and he says that he has never owned a 4x4 truck that handles as well in the dirt as the Forester does.

He is a typical crusty old (83 next month) Mainer, and I had to hammer on him pretty hard to get him to buy a foreign-made SUV. Now he's a walking, talking advertisement for Subaru.

It's a twist on Electronic Stability Control (which evolved from ABS). I don't think it actually only applies power to the tires that have traction. It uses the old trick of barely pressing the brake to stop the tire without traction from spinning. It should work like a limited slip differential, which means you still lose some torque, but the computer pulls off the trick a lot more effectively than a human could. Some American SUVs do the same thing.

I've always been curious to actually take one off road. Most off-roaders have been pretty slow to move away from old fashioned 4WD.

 

[mgb_phys]

It depends on the car. The subaru automatic is a servo clutch joining the front and rear diffs, it monitors wheel speed and connects the rear diff almost instantly if there is any wheel spin. It's normally 90/10% front/rear and then 50/50 if there is a risk of a skid.

The subaru manual (stick) system is even simpler. The front/rear diffs are connected by a wet clutch like in a motorbike - the amount of power to each wheel just depends directly on the torque. The power division is completely analogue as the oil slips.

Serious off -oad SUVs like a Land Rover Discovery or Mercedes G wagon also have electronic limited slip clutches on each wheel so the computer can decide exactly how much power/torque goes to each wheel. This let's you do amazing descent control and wheels at different speeds and angles over obstacles without any driver skill.

 

[WhoWee]

The Big 3 have similar problems...UAW contracts and a difficult credit market to name 2...but their fates are not necessarily interlocked.

GM has a wide base of shareholders...more than 500 million common shares. On mainstreet in America, if a business needs funding, the owners go to the bank, sell an asset or dig deep.

Accordingly, why doesn't SOMEONE ask the GM shareholders to ante-up?

An investment of $40 to $50 per share should solve all of their problems. The shareholders approved the boards who approved the executives who make the decisions (including union agreements). Afterall, when a profit is produced, dividends are paid...now losses need to be covered.

If the current shareholders don't want to risk more, then they can be diluted. Either way, the problem can be solved without risking taxpayer funds.