News Are UAW Union Bosses Abusing Their Positions for Pay?

[Greg Bernhardt]

Bailout fails for the meantime
http://money.cnn.com/2008/12/11/news/companies/auto_bailout_senate/index.htm

 

[WhoWee]

One of the frustrating themes of the bailout discussion is the changing amount of need

http://online.barrons.com/article/SB122852234976384303.html?mod=googlenews_barrons

How does one underestimate by even $1 Billion?

An overlooked, but major component of this problem, is dealer inventory...cars ARE NOT selling. An infusion of cash into the manufacturers will not solve this problem...just buy some time.

However, there is an interesting proposal being discussed in Congress relating to a $7,000 tax credit for anyone who purchases a new (Big 3) vehicle. (Can't find a news story...saw an interview a few days ago on a cable news show).

To fix the problem long term, something needs to be done at the dealer to consumer level.

http://www.nada.org/Advocacy+Outreach/LegislativeAffairs/autostability

When credit markets tightened, Big 3 sales dropped about 40%.

http://www.icis.com/blogs/chemicals-and-the-economy/2008/12/november-us-auto-sales-down-37.html

The solution to the problem MAY actually be in the bank bailout. Instead of banks using the funds to acquire other banks

http://pittsburgh.bizjournals.com/pittsburgh/stories/2008/10/20/daily53.html

perhaps a portion of the bank bailout funds should be used to STIMULATE Big 3 SALES...AND guarantee warranties...just in case GM needs to reorganize under Chapter 11.

We can't allow the industry to fail...but we need to address ALL of the problems...at the end of the day, SOMEONE has to be able to buy a car (and with confidence).

 

[Art]

It will be interesting to see how the rest of the world reacts to any subsidy or bailout of the US auto industry as any such actions would almost certainly be in breach of the GATT agreements.

 

[mgb_phys]

An overlooked, but major component of this problem, is dealer inventory...cars ARE NOT selling. An infusion of cash into the manufacturers will not solve this problem...just buy some time.

There are 250,000 UAW workers in the big three but 1.2M people work in car dealerships. Do these guys get bailed out?

The dealer network is one of the main problems in cars today, it's a far too expensive way to sell small economic cars. The $2K/vehicle dealer mark up isn't sustainable and the 1K/year in dealer servicing is going to go away with plug-ins.

However, there is an interesting proposal being discussed in Congress relating to a $7,000 tax credit for anyone who purchases a new (Big 3) vehicle. (Can't find a news story...saw an interview a few days ago on a cable news show).

Now that will annoy GATT. A loan/bailout to the industry you can probably get away with - since everyone is doing it. Govermenty money (tax break) if you buy an American car - is harder to justify.

 

[Astronuc]

White House considers help for car makers
http://news.yahoo.com/s/ap/meltdown_autos

WASHINGTON – Running out of time and options, the White House said Friday it would consider using money in the Wall Street bailout fund to prevent the U.S. auto industry from collapsing after the Senate refused to pass a rescue bill endorsed by President George W. Bush and congressional Democrats.

"The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry," White House press secretary Dana Perino said.

The Wall Street bailout fund is one of the few remaining options for General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks. Bush had originally refused to use the bailout fund to help the automakers, insisting that help come from Congress. But the White House said it must reconsider after the Senate failed to agree on a $14 billion rescue plan.

. . . .

 

[turbo]

In the county seat (the largest town within 35 miles or so), one family owns ALL the new car dealerships, except one (Saab). If you want to buy a new Chevy, GMC, Pontiac, Buick, Ford, Chrysler, Jeep (ANY big-3 car), you will be dealing with the same outfit. There is a similar monopoly in the state capitol, with a half-mile stretch of Route 202 lined with foreign-car and big 3 dealerships... all owned by one person.

 

[Art]

The dealer network is one of the main problems in car today, it's a far too expensive way to sell small economic cars. The $2K/vehicle dealer mark up isn't sustainable and the 1K/year in dealer servicing is going to go away with plug-ins.

I fully agree. I made the point on a thread here a couple of years ago that the auto industry needs to redesign it's business model along the same line as Dell's direct model and it's build to order program.

 

[jal]

I have just been listening to the union's response that accuses them of being responsible for the failure of the bail out.

One point that he made stood out for me.
He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

In my part of the world ... at $14/hr it is impossible to have a mortgage and a car payment.
It is even considered slow death. It is not a sustainable level of income for middle class.
It is no surprise that the credit card companies can charge a spread of 15% and that even frugal people are obliged to use their credit cards to make it to the end of the month. It is no surprise that so many people are one paycheck away from bankruptcies.
When driving through a supposedly middle class neighborhood (older houses not new developments) you can see the signs of lack of maintenance on their properties for even minor things like a new coat of paint.

With what is projected to be coming down the pipeline there will be major "social shifts".
cough ... cough ... I hope that they don't end up taking the other 50% of my saving to try to fix the financial mess. If they do, I'll be decoration a tin cup to attrack your attention for a donation of spare change.
jal

 

[Evo]

I have just been listening to the union's response that accuses them of being responsible for the failure of the bail out.

One point that he made stood out for me.
He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

In my part of the world ... at $14/hr it is impossible to have a mortgage and a car payment.
It is even considered slow death. It is not a sustainable level of income for middle class.
It is no surprise that the credit card companies can charge a spread of 15% and that even frugal people are obliged to use their credit cards to make it to the end of the month. It is no surprise that so many people are one paycheck away from bankruptcies.
When driving through a supposedly middle class neighborhood (older houses not new developments) you can see the signs of lack of maintenance on their properties for even minor things like a new coat of paint.

With what is projected to be coming down the pipeline there will be major "social shifts".
cough ... cough ... I hope that they don't end up taking the other 50% of my saving to try to fix the financial mess. If they do, I'll be decoration a tin cup to attrack your attention for a donation of spare change.
jal

People will be paid according to their skill level. An engineer would not be a union member working on an assembly line. An engineer is management. If someone doesn't want to get hired as pretty much unskilled labor at $14 an hour, then they should go to school and get a better job. That's reality. The days of being highly paid for doing nothing are ending.

 

[Jimmy Snyder]

In the county seat (the largest town within 35 miles or so), one family owns ALL the new car dealerships, except one (Saab). If you want to buy a new Chevy, GMC, Pontiac, Buick, Ford, Chrysler, Jeep (ANY big-3 car), you will be dealing with the same outfit. There is a similar monopoly in the state capitol, with a half-mile stretch of Route 202 lined with foreign-car and big 3 dealerships... all owned by one person.

When I was there last month, I saw a lot of businesses owned by the Maine-ly family. Is that the one you're talking about?

 

[Jimmy Snyder]

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

The reason you incorporate is to prevent such questions from arising. The British term 'Limited' gives you a better idea of what incorporated means: Limited liability.

 

[mgb_phys]

He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

If the media is factoring in payments to retirees to claim UAW are all on $200,000/year I think the UAW is also doing some massaging of figures to claim $14/hour.
My bet is that this is either for janitors/apprentice trainees or it's is the base salary and is doubled with shift allowances/bonuses/skills payments etc.
If UAW members on $14/hour then the let the industry collapse - McDonalds in Edmonton is begging for people at $15/hour.

 

[turbo]

When I was there last month, I saw a lot of businesses owned by the Maine-ly family. Is that the one you're talking about?

Ooh, I HATE that! Everybody that uses that gimmick seems to think they're being soooo clever.

In Skowhegan, all the car dealerships are owned by Walter and Louie Hight. In Augusta, the car dealerships are all owned by a fellow named Charlie. The Quirk family has much of the Bangor market tied up, and John Pulsifer had the Portland market pretty much to himself until he ran into some legal, er... difficulties.

 

[Art]

The reason you incorporate is to prevent such questions from arising. The British term 'Limited' gives you a better idea of what incorporated means: Limited liability.

Not at all. Rights issues are pretty standard. However you do need to convince would be investors they are not simply throwing good money after bad.

Perhaps it's because they do not have a realistic roadmap to take them back to profitability that they have the begging bowl out in Washington instead.

 

[mheslep]

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).

Oh they already paid, they paid and paid.

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.

Who's going to buy new GM shares at $40? Thanks but I'll pass.

 

[RonL]

Why not a plan that not only helps the Big Three, but will also move more money across the general economy.

If most SUV's and some large pickups (up to 2500 series) are retrofitted with (almost) all electric drive systems, these larger units are already able to carry the loads, using common and proven lead acid battery packages a temporary market would develop, and maybe become the first big step to a larger electric transportation program.

Electric motors turning the automatic transmission would keep the feel of driving, much the same. The electric motor would stop at any point the vehicle stops. Top speed of no more than 45 mph, plenty for almost all inter-city travel. 75 miles +/- range. A computer controlled very small diesel, air cooled, generator would run continually or cycle the batteries through a 20% range. (depending on use of the vehicle)

This would fall between the extreme examples of the well proven golf cart, and the now on the market, Tesla Roadster.

In order to create demand, a consumer incentive package is set up, something like this ?

A. 0% financing, and 0% down
B. 100% free replacement of batteries (life of the note ?) (lead acid is almost 100% recycled)
c. Some kind of tax credit (fed, state, local) For driving such a limited vehicle.

Car makers still keep tooling and production much the same, and at the same time make a market for those larger units that are, (not so green).

Fuel suppliers still sell fuel for those little generators (they can be bypassed if plug in options are at hand).

Jobs are increased in all areas related to keeping up with this spin off line of cars and trucks.

I for one would step up to a program like this, as I think it would help the economy and a much larger portion of the general population. At the same time move us closer to the clean air environment that has been so popular a topic the past few years.

If our tax dollars are going to take a hit, why not in an area that we all can use?

Just my .02

 

[mheslep]

There are 250,000 UAW workers in the big three but 1.2M people work in car dealerships...

That figure is for ALL dealer makes including foreign, not just the big three.
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES4244110001
Googling around looks like the big three supply about 60% of the dealer jobs, or ~750k.

 

[mgb_phys]

That figure is for ALL dealer makes including foreign, not just the big three.

Yes but they are American jobs - wherever the car is made. If the point of saving the Detroit is to protect American jobs - then there are more jobs selling foreign cars than there are making American ones.

 

[BobG]

I have just been listening to the union's response that accuses them of being responsible for the failure of the bail out.

One point that he made stood out for me.
He said that the agreement in place for 2010 that new employees will be earning $14/hr and that older employees at $28/hr would be retiring and getting buy outs.

In my part of the world ... at $14/hr it is impossible to have a mortgage and a car payment.
It is even considered slow death. It is not a sustainable level of income for middle class.
It is no surprise that the credit card companies can charge a spread of 15% and that even frugal people are obliged to use their credit cards to make it to the end of the month. It is no surprise that so many people are one paycheck away from bankruptcies.
When driving through a supposedly middle class neighborhood (older houses not new developments) you can see the signs of lack of maintenance on their properties for even minor things like a new coat of paint.

With what is projected to be coming down the pipeline there will be major "social shifts".
cough ... cough ... I hope that they don't end up taking the other 50% of my saving to try to fix the financial mess. If they do, I'll be decoration a tin cup to attrack your attention for a donation of spare change.
jal

People will be paid according to their skill level. An engineer would not be a union member working on an assembly line. An engineer is management. If someone doesn't want to get hired as pretty much unskilled labor at $14 an hour, then they should go to school and get a better job. That's reality. The days of being highly paid for doing nothing are ending.

$14/hour is pretty low, but it's a consequence of demanding that current workers not have an exhorbitant hourly wage cut. Having that $14/hour wage doesn't do much in the current sales slump, anyway. Those $14/hour workers are the first ones laid off.

Right now, wages at non-union companies are still kept high since going too much lower than UAW rates would result in employees joining the union.

Cutting wages for all workers by at least 25%, including workers at foreign owned US plants would be realistic. The big 3 aren't just competing with foreign competitors manufacturing cars in the US. There's no way cars made in the US can compete with cars made overseas at current wages.

If autoworkers don't like those wages, they should move... In fact, forget about going to college - they should move to California where they can earn about $117,000 a year as a dock worker. Or get a job as a skycap (even if you have to bribe someone) - they make about $30,000 in salary, plus about $300 a day in tips. No school required (and no liability if your luggage goes to the wrong city). It amazes me how much some people make.

On the other hand, if we're going to use the big-3 crisis as a lever to break the union, we better be prepared to pay a cost. The auto industry affects quite a few jobs across the entire nation. (There's a lot of dealer jobs, but a lot of those must not be full-time. They don't seem to make a very high annual salary.)

 

[mheslep]

Yes but they are American jobs - wherever the car is made. If the point of saving the Detroit is to protect American jobs - then there are more jobs selling foreign cars than there are making American ones.

Right, so if Detroit just closed down, and it won't just close down in chapter 11, only a share of those 1.1m dealer jobs would be effected. Many posts continually throw around nationwide auto employment figures as if all of them work for the big three which of course they don't.

 

[drankin]

Right, so if Detroit just closed down, and it won't just close down in chapter 11, only a share of those 1.1m dealer jobs would be effected. Many posts continually throw around nationwide auto employment figures as if all of them work for the big three which of course they don't.

I don't see any of them just closing down. I would think that they would be bought by another manufacture. Possibly from Europe or Japan. They at least have a very valuable manufacturing infrastructure. Surely, there are corporations waiting for a collapse to create a bargain purchase of these facilities.

 

[jreelawg]

It's not like the demand for cars will be less if the big three fail. Just raise the foreign auto import tariff, and foreign companies will continue to make cars in America like many already do(honda, toyota). Maybe even a tax on auto parts imports?

The same amount of cars would be built here, the same amount sold, why would there be any kind of long term job loss?

At this point, I'm not so sure the big three are loyal american companies any more than ones with Japanese names. Can Americans not buy stock in Honda? Can saudis not buy stock in GM? The big three are loyal only to personal profit, and they have shown to not even be very loyal to their own stockholders.

 

[turbo]

I don't see any of them just closing down. I would think that they would be bought by another manufacture. Possibly from Europe or Japan. They at least have a very valuable manufacturing infrastructure. Surely, there are corporations waiting for a collapse to create a bargain purchase of these facilities.

I agree. Toyota could buy GM, and Mitsubishi could buy Chrysler. Knowing how the Japanese operate, they would use the time in the slack market to rebuild production lines and retool. Then someone would have to come in and buy Ford after the newly-refurbished plants start eating Ford's lunch with superior products. Honda bought Ford's shuttered Marysville, OH plant 'way back when and started producing the Accord (highest car quality, highest percentage of US-made parts, highest sales volumes...) I can't see why we should throw money at these companies when they are so badly managed.

 

[Proton Soup]

There are 250,000 UAW workers in the big three but 1.2M people work in car dealerships. Do these guys get bailed out?

The dealer network is one of the main problems in cars today, it's a far too expensive way to sell small economic cars. The $2K/vehicle dealer mark up isn't sustainable and the 1K/year in dealer servicing is going to go away with plug-ins.

i think it'll cost several thousand to replace the batteries every few years, and expect that there would even be laws put in place requiring licensed technicians and proper disposal that will protect the industry. there'd be a big time lag, but it'd probably be more money for less work, which would ultimately work in the dealerships' favor (if not the employees).

 

[WhoWee]

The reason you incorporate is to prevent such questions from arising. The British term 'Limited' gives you a better idea of what incorporated means: Limited liability.

I understand the reason for incorporation...that's not the point. The shareholders (as owners of the company) are certainly in line to lose their entire investment without a bailout and turnaround...but they are also the ONLY ones who are guaranteed to benefit (some of the workers WILL lose their jobs when plants are closed) IF the bailout is successful.

Again, if the current shareholders don't want to exercise their WARRANT(or whatever other form/method of investment could be utilized)...then they could allow someone else (maybe a UAW member or a Dealer owner/employee) to participate. Being diluted in a secondary offering/re-capitalization is better than $0 value.

Please take a look at their ticker

http://finance.google.com/finance?q=NYSE:GM

and please be sure to notice they haven't missed a dividend since 1987.

A quick look at their balance sheet is un-nerving at best...(from the ticker article above)

Financials (In millions of USD)
Income Statement Quarterly(Sep '08) Annual(2007) Annual(2006)
Total Revenue 37,941.00 181,122.00 205,601.00
Gross Profit 3,020.00 14,543.00 18,912.00
Operating Income -883.00 -4,390.00 -5,823.00
Net Income -2,542.00 -38,732.00 -1,978.00
Balance Sheet
Total Assets 110,425.00 148,883.00 186,304.00
Total Liabilities 170,364.00 185,977.00 191,956.00
Total Equity -59,939.00 -37,094.00 -5,652.00
Cash Flow
Net Income/Starting Line - -38,732.00 -1,978.00
Cash from Operating Activities -7,473.00 7,731.00 -22,896.00
Cash from Investing Activities 997.00 -1,760.00 19,695.00
Cash from Financing Activities 3,473.00 -5,593.00 -3,767.00
Net Change in Cash -3,547.00 694.00 -6,603.00

They've lost approx $76Billion in assets since 2006 and only reduced liabilities $21B...for a total loss in equity of $53Billion roughly.

Maybe they should put a little box on the top of this years Federal Income Tax Return...___ check here if you'd like to throw $100 into the auto bailout fund...and issue us a share or 2?

 

[jreelawg]

GM Scrutinized for Alleged Nazi Collaboration
In August 1938, a senior executive for General Motors, James Mooney, received the Grand Cross of the German Eagle for his distinguished service to the Reich. Hitler "would never have considered invading Poland" without synthetic fuel technology provided by General Motors. [57],[58]

http://en.wikipedia.org/wiki/General_Motors

Alleged Nazi collaboration
Further information: Henry Ford
Other accusations were that the company collaborated with the German Nazi regime and relied on Germany. The German Ford company used slave labor in Cologne between 1941 and 1945 and it had produced military vehicles such as jeeps, planes, and ships used by a fascist regime. Many of these allegations were made in a series of United States lawsuits in 1998. The lawsuit was dismissed in 1999 because the judge concluded "the issues...concerned international treaties between nations and foreign policy and were thus in the realm of the executive branch."[58][59]
Detractors point to Henry Ford's outspoken anti-semitism, including his newspaper, The Dearborn Independent, which published The Protocols of the Elders of Zion. They also point to the fact that in 1938, four months after the German annexation of Austria, Ford accepted the Grand Cross of the German Eagle, the Nazi regime's highest honor for foreigners before the outbreak of the war.[60]
Defenders of the company argue that the Ford German division, Fordwerke, had been taken over by the Nazi government after it rose to power, claiming that it was not under the company's control, though Henry Ford, according to court records, did stay in touch with the company. Although Ford's initial motivations were anti-war, the company was heavily involved in the war effort after the outbreak of war.[59]

http://en.wikipedia.org/wiki/Ford

Why is it that nearly every auto maker was once linked to Nazis. You have the German auto makers, the japanese auto makers, even GM and Ford were linked to Nazis.

 

[Proton Soup]

Why is it that nearly every auto maker was once linked to Nazis. You have the German auto makers, the japanese auto makers, even GM and Ford were linked to Nazis.

probably because they already had business interests there and were trying to hang onto them.

as for the synthetic fuel, it was invented by germans. http://en.wikipedia.org/wiki/Fischer-Tropsch_process#History

 

[russ_watters]

Why is it that nearly every auto maker was once linked to Nazis. You have the German auto makers, the japanese auto makers, even GM and Ford were linked to Nazis.

Why is this relevant to this thread?

 

[russ_watters]

What I want to know is why the automaker CEOs said that Chapter 11 is not an option: it's bailout or close down. Why? Airlines have gone into Chapter 11 and come out ok. Why not the car companies? Is this just a ploy - a bluff to get bailout money instead of doing real reorganization?

 

[franznietzsche]

What I want to know is why the automaker CEOs said that Chapter 11 is not an option: it's bailout or close down. Why? Airlines have gone into Chapter 11 and come out ok. Why not the car companies? Is this just a ploy - a bluff to get bailout money instead of doing real reorganization?

The argument they put forward to explain why they are different is that

Buying a car is a significant investment. The promise of the availability of future parts, repair services, warranty guaranties, and resale value are important to consumers. Surveys have consistently shown that 90% of consumers would not buy a car from a manufacturer that had declared bankruptcy.

Basically, they think if they enter chapter 11, their market share will drop to zero and so they will never make enough money to come out of chapter 11. I don't know that I buy that, but it is what they have been saying. The difference between them and the airlines is that a plane ticket is such a short term purchase bankruptcy doesn't affect consumers' willingness to buy from that airline.

Again, I'm not really sure that argument holds water, but that's their argument.