News Are UAW Union Bosses Abusing Their Positions for Pay?

[mgb_phys]

Pity their designers and engineers weren't as creative as their lawyers and accountants.

It's odd that the same pollsters show that 90% of consumers are happy with DRM music and movie downloads - must be how you ask the question.

 

[Astronuc]

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?

I wonder if it is a personal matter with the CEO's, i.e. their reputation, as in they don't want to be known as the CEO under which their company became bankrupt. GM and Chrysler are the most vulnerable and Ford can apparently hang on a little longer.

Perhaps Chapter 11 won't fit their business model.

There is a difference between Airlines and Auto manufacturers. Airlines are a service organization. They lease equipment and rent most of their facilities, and their infrastructure is largely subsidized by the government and taxpayers. Still I'm not sure the airlines are OK. Service has been reduced, routes discontinued, Delta and Northwest just merged, several have downsized - and some are hanging on because the price of oil just plummeted. Had the price of oil/fuel remained high, I think more airlines might not survive.

The auto manufacturers own their facilities (manufacturing and retail) and real estate, procure the material inputs, develop and own the technology, finance the purchases of their products, provide technical support and service of the products, . . . . They are capital intensive, as well as labor intensive, and therein lies a problem if they can't cover their capital and labor costs.

I believe there is a critical mass below which a company cannot survive. Perhaps the US automakers are close, if not at that point.

 

[WhoWee]

I wonder if it is a personal matter with the CEO's, i.e. their reputation, as in they don't want to be known as the CEO under which their company became bankrupt. GM and Chrysler are the most vulnerable and Ford can apparently hang on a little longer.

Perhaps Chapter 11 won't fit their business model.I think these articles demonstrate the point you are making.

http://www.google.com/search?q=gm+m...s=org.mozilla:en-US:official&client=firefox-a

They suggest a desperation by GM executives to obtain/maintain a global leadership position at ANY cost. The UAW seems to operate with the same philosophy as well. As it stands, the Big 3 ARE TOO BIG TO FAIL...the BIGNESS might just be EXACTLY the problem to address. Remember when they paid Ross Perot to go away (from the Board)? He thought too much like an entrepreneur...not a bureaucrat.

A short term (bailout) financing package ($14 to $34B) is fine IF it leads to a productive restructuring of some type...not just business as usual. Under NO CIRCUMSTANCES should these CEO's be allowed to perform a mega-merger with bailout funds...as we know the banks put at the top of their priority lists of late.

Instead, I think GM should go back to it's shareholders for some type of a secondary offering...(perhaps several rounds) in order to spin-off ALL of the divisions into stand alone entities.

Under these circumstances, it might even be palatable to have the government absorb a PORTION of the retiree benefits costs...up to $50 Billion to insure success.

Unpalatable is the argument of needing several brand names to spread costs and of building the same car under 2 or 3 brand names...in order to realize economies of scale (?) was always ridiculous. I think they just wanted to sell more dealer franchises. If they need to sell 5 million frames to justify re-tooling...then design a good frame and use it for a longer time.

A company worth looking at to make comparisons is Pepsico. During the 80's, while continuing to expand global soda operations and market share (Cola wars), they started buying everything in sight...Frito Lay, Taco Bell, Pizza Hut, KFC, then A&W and Long John Silvers. Eventually, they made the decision that the value would be greater if the restaurant brands were spun off...and Yum Brands was created.

While the reasons for Pepsico's decision were complicated and the results arguable...it makes the point that sometimes BIG for the sake of BIG is not the answer. Smaller companies are always more responsive to market conditions.

If one or 2 of the spin-off ventures fail...they fail...afterall, we are still a capitalist country...I hope.

 

[Vid]

"Already Bankrupt’ GM Won’t Be Rescued by U.S. Loan "
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ai5KpbywxqiQ

The whole article is fantastic, but here a particularly damning section.

After 77 years as the world’s largest automaker, GM and its executives were unable to embrace change. The company continued to plow resources into sport-utility vehicles and make bad alternative-fuel bets, even after consumer buying habits shifted. It rejected an offer from Carlos Ghosn, CEO of Renault SA and Nissan Motor Co., to form a global alliance. And it dismissed calls for radical restructuring from former board member Jerome York and other critics.

Ignoring Advice

York, 70, a former Chrysler Corp. finance chief, was advising Tracinda Corp. CEO Kirk Kerkorian, who had amassed a 9.9 percent stake in GM. He told analysts in January 2006 that the time had come for the automaker “to go into a crisis mode and act accordingly.” York calculated that GM was burning through cash at a rate of $24 million a day, which meant it had about 1,000 days before it ran out -- in October 2008.

GM ignored York’s advice to reduce its number of models, including getting rid of the Hummer and Saab brands, and to cut both management and labor costs in what he called an “equality of sacrifice.” He resigned nine months later, in October 2006, frustrated by the board’s unwillingness to take action. Only after York left did GM decide to sell Hummer. Now it’s talking about getting rid of Saab and Saturn, as well as Pontiac.

“Three years ago I thought GM had the time and financial resources to save itself,” York, now CEO of Harwinton Capital LLC, said in an interview. “Now I’m not so sure. Who’s responsible? Top management and the board of directors.
...

Wagoner unveiled a “turnaround plan” in November 2005. It called for closing nine plants, eliminating 30,000 jobs, boosting employee contributions to GM’s health-care plan, increasing investment in its best-selling models such as the Hummer and revamping marketing efforts.

To Kerkorian and York, who joined GM’s board in February 2006, that wasn’t bold enough. The plant closings and health- care changes saved only $2 billion a year, they said, and the company’s idea of innovation was more versions of the same thing: the SUVs and trucks whose sales had been carrying GM.

Others had come to a similar conclusion. A month after Wagoner’s plan was announced, S&P again downgraded GM’s debt and called bankruptcy “not far-fetched.”

 

[jreelawg]

Why is this relevant to this thread?

I was just reading through the wikipedia articles about the big three to get a better understanding. It is just kind of a counter argument to the people who think they should be bailed out because they were so important to us in our war effort during WW2. I just want to point out that these companies are "multinational corporations", and that in fact GM as well as Ford played a big role in our war machine, but were playing both sides, and actually were contributing to Hitlers war machine as well. I just wanted to debunk the myth that the big three are loyal to America.

 

[mgb_phys]

"Already Bankrupt’ GM Won’t Be Rescued by U.S. Loan "

Daimler Benz already wrote off it's remaining 20% stake in Chrysler

 

[mheslep]

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

Yes this is exactly their argument (one of them) and in answer the WSJ editorial page said today:

...The bailout's backers argue that a GM bankruptcy would hold as much systemic risk for the real economy as a huge bank failure, but those risks are overstated. Chapter 11 is a well-established tool for financial restructuring. It is not tantamount to collapse or liquidation. If White House economist Ed Lazear is worried that no one will accept a car warranty from a bankrupt company, then Congress can address that specific problem rather than write an open-ended check. Chapter 11 could well offer a speedier resolution to the auto makers' plight than a slow-motion, politically infected catastrophe that could easily cost $125 billion or more.

I agree completely. Federally guarantee the warranty's for a few years, or something like that, if it is really a valid concern.
http://online.wsj.com/article/SB122912631328803145.html

 

[mgb_phys]

Surveys have consistently shown

Surveys can prove anything - it's all in the questions.

Q1, Do you think that if Ford went bust tomorrow all fords would stop working?
Q2, Do you ever use non-dealer tires/oil changes/servicing
Q3, Would you ever fit non-ford parts if they were just as good but cheaper

Q1, Do you think an airline should put safety first?
Q2, Do you think a bankrupt airline might cut corners on safety ?
Q3, Would you fly on an airline in chapter 11 ?

 

[OmCheeto]

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

...

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

Just my .02

You think you're so smart.
Solving not just one problem, but two, with such a simple idea.
It might even solve three or four problems.

But do you think any of the 40,000 or so engineers in Detroit could manage such a design?
I think I posted somewhere that I thought they seem to all have graduated with PhD's in Dome light design.

I say let them drown, and let 100 small, innovative auto companies take their places. We'll have a new big 3 in 20 years or so.

 

[edward]

Surveys can prove anything - it's all in the questions.

Q1, Do you think that if Ford went bust tomorrow all fords would stop working?

Repairs and parts would be needed at the same rate they are now. There are very few alternative aftermarket parts for newer vehicles.

Even when after market parts become available for emissions systems, for instance, they must have an EPA approval.

Several years ago the big three started to get patents on their parts to get a bigger share of the parts business.

Q2, Do you ever use non-dealer tires/oil changes/servicing

There is no need to with tires and oil changes. But the corner mechanic may have to get a replacement part from Ford if the vehicle is less than five years old.

Many parts such as A/C controls are made by outside vendors who only manufacture parts on a specific contract with the automaker.. The only other source is a salvage yard.

Q3, Would you ever fit non-ford parts if they were just as good but cheaper

Non Ford parts will not fit. An aftermarket part that will fit may not be available for a number of years.

Q1, Do you think an airline should put safety first?
Q2, Do you think a bankrupt airline might cut corners on safety ?
Q3, Would you fly on an airline in chapter 11 ?

I think we are getting into oranges an apples here. The automobile industry doesn't have the FAA looking over their shoulder.

 

[mgb_phys]

I wasn't meaning to ask you the questions - I meant that if you wanted to prove that 90% of people would or wouldn't buy a car in chapt 11 you can just choose your questions. Similairly you could 'prove' people wouldn't fly on bankrupt airlines if you asked the same questions.

 

[edward]

I say let them drown, and let 100 small, innovative auto companies take their places. We'll have a new big 3 in 20 years or so.

We have already been there and done that. That is how the auto industry started. There were dozens of manufacturers in the early days. More than half of them folded during the great depression. Graham, Page, Essex, Hupmobile, Auburn, Cord, Duesenberg etc.

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

How long would it take 100 innovative auto companies to actually start production. I hate having to go to a salvage yards to get parts.

I really don't care what happens to the big three, but if they go down they take millions of auto industry related jobs with them. A lot of the parts that go into vehicles are made in small to medium sized factories all over the mid west.

 

[RonL]

You think you're so smart.
Solving not just one problem, but two, with such a simple idea.
It might even solve three or four problems.

But do you think any of the 40,000 or so engineers in Detroit could manage such a design?
I think I posted somewhere that I thought they seem to all have graduated with PhD's in Dome light design.

I say let them drown, and let 100 small, innovative auto companies take their places. We'll have a new big 3 in 20 years or so.

I would even be willing to LOAN them my book "Build Your Own Electric Vehicle" by Bob Brant, published in 1994.

But then why do the vast majority of people want to hold out for 400 miles on a single charge?

At 66 I don't think I have 20 years of wait time left.

 

[Proton Soup]

"Already Bankrupt’ GM Won’t Be Rescued by U.S. Loan "
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ai5KpbywxqiQ

The whole article is fantastic, but here a particularly damning section.

that article persuades me that a bailout will not work and the current economic situation is not the problem. in fact, i don't think i'd even be for cutting and pasting the law from chapter 11 and renaming it "auto bailout" because somewhere along the way lawyers would pull out its teeth, making it worthless.

chapter 11, the sooner the better. let's just get this over with.

 

[OmCheeto]

We have already been there and done that. That is how the auto industry started. There were dozens of manufacturers in the early days. More than half of them folded during the great depression. Graham, Page, Essex, Hupmobile, Auburn, Cord, Duesenberg etc.

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

How long would it take 100 innovative auto companies to actually start production. I hate having to go to a salvage yards to get parts.

I really don't care what happens to the big three, but if they go down they take millions of auto industry related jobs with them. A lot of the parts that go into vehicles are made in small to medium sized factories all over the mid west.

Like most people, I have my own personal interpretation of RonL's ideas and how they relate to the big 3. I've worked for a moderately large company, with currently 12,000 employee's, for the past 25 years. As far as I am concerned, my company is too large.

For most of my life, I've promoted the ideals of the economies of scale. But I've since learned that a company that grows too large, develops a head that does not know what it's feet are doing. Multi-layered management usually stops innovative ideas from ever reaching the top.

It does not surprise me that Detroit is stuck in the last century.

I'm not saying we should shut all the doors and melt down the factories. But their current structure does not warrant saving.

I would even be willing to LOAN them my book "Build Your Own Electric Vehicle" by Bob Brant, published in 1994.

1994? That might be outdated technology by now.

But then why do the vast majority of people want to hold out for 400 miles on a single charge?

Good question. I need about a 30 mile range.

At 66 I don't think I have 20 years of wait time left.

I wouldn't worry about it. Gas is down to $1.69 a gallon. But people have developed the habit of driving like it cost's $4.00 per gallon, which is how an electric hybrid will probably be like driving, so I'd say the stars are aligned for a change.

 

[RonL]

Like most people, I have my own personal interpretation of RonL's ideas and how they relate to the big 3. I've worked for a moderately large company, with currently 12,000 employee's, for the past 25 years. As far as I am concerned, my company is too large.

For most of my life, I've promoted the ideals of the economies of scale. But I've since learned that a company that grows too large, develops a head that does not know what it's feet are doing. Multi-layered management usually stops innovative ideas from ever reaching the top.

It does not surprise me that Detroit is stuck in the last century.

I'm not saying we should shut all the doors and melt down the factories. But their current structure does not warrant saving.


1994? That might be outdated technology by now.

Good question. I need about a 30 mile range.

I wouldn't worry about it. Gas is down to $1.69 a gallon. But people have developed the habit of driving like it cost's $4.00 per gallon, which is how an electric hybrid will probably be like driving, so I'd say the stars are aligned for a change.

Most of my working life was as a single operator, where I chased my own parts and estimated jobs, 50-100 miles in any given day would be about cover what I would drive, and this would be broken into several short trips in most cases.
I think most people would fall into a pattern of 2-4 movements during a 24 hour day, and the time between these movements would be a period that the small generator would restore some or most of the energy used, back to the batteries. In most cases where one goes to work and parks the car all day, the little generator will have restored the batteries and shut down before the trip back home.

About technology being outdated, I'm not sure I agree, but yes current control and distribution have improved a fair amount.

I think my biggest problem is not understanding all the considerations that need to be looked at, between the individual building a vehicle, and a large company producing a model for the masses.

Aside from waiting for that MAGIC battery, I think if more people had an opportunity to drive a comfortable and practical unit, they would find that most of the negative hype (of distance and acceleration) would fade into the background.
I know that an electric motor spinning the automatic transmission, is not the most efficient method, but it completely removes the learning curve of driving electric.

 

[JasonRox]

I would not give GM a penny, nor the others in the big 3.

In Canada, they would monopolize the government all the time. The government needs to realize that the billions of dollars are better invested in areas where it has future promise. The big 3 has been going downhill for a long time. In fact, GM hasn't pulled a profit in 4 years... not even during booming economic times! During times when everyone was loaning everyone money, GM still didn't pull a profit. The products of these 3 companies are garbage.

The Ontario government gave GM $600 million several years ago so that GM can start doing research and development into better vehicles... where did that go? Nowhere.

Chrysler has just threatened the Canadian government the other day. I wouldn't tolerate that if I were a top politician. I would let them do it, and use the money to support the employees to go to school, and help them find new jobs. It will actually be cheaper to do that.

Anyways, it's nice to see that this fantasy world that everything is ok, and you never have to think about politics/economy is over. All my friends were naive little nuts and still are, but with a big recession coming in, it's nice to see that they will finally see that getting a decent jobs requires more than just a nice resume.

 

[OmCheeto]

I think my biggest problem is not understanding all the considerations that need to be looked at, between the individual building a vehicle, and a large company producing a model for the masses.

The gentleman(P.C.) who graciously let me steal his signature just had a http://www.solarpowerrocks.com/solar-trends/what-powers-my-work-commute-the-sun/" published.

His 1997 full electric drive S-10 pickup truck was built by General Motors.

Even with the solution sitting in their data files, they still can't do it.

p.s. I see he has a new signature;

If you drive like there is no tomorrow, it may become self-fulfilling

 

[jal]

The big 3's problem is that the banks will not give them any more line of credit.

The problem is with the banks.

The bail out is for the banks.

The banks are is so much poo that they will no longer extend credit to the auto industry.

The solution is to give more money to the banks and make sure that it is earmarked for the auto industry.

Ohhhh!
Just put it on my bill! I'll pay for it on the way out.
jal

 

[edward]

Japanese car makers have had several financial advantages. When they built factories in the USA they were give large subsidies by the individual States.

Ironically, a major reason for the predicament of the one-time “Big Three” is the advantage of foreign car makers vis-à-vis domestic companies on the far from level playing field. A few week ago, United Autoworkers president Ron Gettelfinger said in a press conference that since 1992 foreign car makers received more than $3 billion in incentives to locate their plants in particular states and communities. Singling out the state of Alabama, the union leader said:

http://www.reflectivepundit.com/reflectivepundit/2008/12/subsidies-for-foreign-car-makers-he-fall-of-detroits-big-three.html

Then there is the Yen subsidy:

How much of a windfall advantage does the weak yen policy provide for an average Japanese vehicle?

The average windfall cost advantage is $4,000 when the yen is valued at 118¥ to the dollar. The actual windfall varies depending on the model and product range (and the value of the yen). For higher end Japanese imported SUVs like the Toyota Highlander — and for the Lexus line, which is imported from Japan — it can range up to $10,000 per car.

http://www.autoyensubsidy.org/faq.html

http://www.autoyensubsidy.org/

Would Japan bail out it's automakers if they were in trouble?? I think that they would do it without hesitation.

 

[mgb_phys]

Japanese car makers have had several financial advantages. When they built factories in the USA they were give large subsidies by the individual States.

North carolina spent $4.7M on a bid to attract a Google data centre which will employ 50people, they expect state grants, tax breaks and infrastructure to be worth $250M

Nashville gave Dell
free land for the site worth $6.5 million
40 years of property tax abatements
$20 million in infrastructure improvements at the site funded by the city and state
one-time credits of $2,000 per employee against state franchise and excise taxes
Metro Nashville tax credits of $500 per employee for 40 years
industrial machinery state tax credits
$4,000 per employee to pay for job training costs (refundable after workers were hired).
all for a plant which Dell closed 18months later.

Of course this is nothing to the subsidy defence companies get - Boeing should just buy the car makers, they know they will get the money back later.

 

[Proton Soup]

Japanese car makers have had several financial advantages. When they built factories in the USA they were give large subsidies by the individual States.

http://www.reflectivepundit.com/reflectivepundit/2008/12/subsidies-for-foreign-car-makers-he-fall-of-detroits-big-three.html

Then there is the Yen subsidy:

http://www.autoyensubsidy.org/faq.html

http://www.autoyensubsidy.org/

Would Japan bail out it's automakers if they were in trouble?? I think that they would do it without hesitation.

as someone who has spent their whole life in Alabama, i have to say "tough luck" guys. detroit has had every opportunity to build here but hasn't. the north has been snubbing their nose at us and holding our heads under water since reconstruction, and frankly my dears, we just don't give a damn. as a matter of fact, yes, we do give out tax incentives to japanese, germans, or anyone else that wants to come build here. it's an investment in our futures. and we really don't care what anyone else thinks about it.

 

[edward]

as someone who has spent their whole life in Alabama, i have to say "tough luck" guys. detroit has had every opportunity to build here but hasn't. the north has been snubbing their nose at us and holding our heads under water since reconstruction, and frankly my dears, we just don't give a damn. as a matter of fact, yes, we do give out tax incentives to japanese, germans, or anyone else that wants to come build here. it's an investment in our futures. and we really don't care what anyone else thinks about it.

And if the Japanese car makers in Alabama were about to go in the tank you would probalby want them to be bailed out. It is all a matter of perspective.

 

[Proton Soup]

And if the Japanese car makers in Alabama were about to go in the tank you would probalby want them to be bailed out. It is all a matter of perspective.

no, i would not. thanks for playing.

 

[edward]

no, i would not. thanks for playing.

Sorry I didn't clarify. I don't think that you or the people in Alabama would have a problem with the Japanese government bailing them out.

 

[Proton Soup]

Sorry I didn't clarify. I don't think that you or the people in Alabama would have a problem with the Japanese government bailing them out.

nope, i don't think we would. i also don't think we'd have a problem with the people of Michigan bailing out GM.

 

[edward]

nope, i don't think we would. i also don't think we'd have a problem with the people of Michigan bailing out GM.

Only a small percentage of people employed in the American auto industry live in Michigan.

 

[WhoWee]

The big 3's problem is that the banks will not give them any more line of credit.

The problem is with the banks.

The bail out is for the banks.

The banks are is so much poo that they will no longer extend credit to the auto industry.

The solution is to give more money to the banks and make sure that it is earmarked for the auto industry.

Ohhhh!
Just put it on my bill! I'll pay for it on the way out.
jal

The banks were given their bailout to de-ice the credit freeze. Unfortunately, the banks don't seem to want to use the capital to make loans...they'd rather make acquisitions.

This deal has everyone in Ohio/Michigan and PA talking.

http://www.usnews.com/blogs/the-hom...ants-pnc-national-city-deal-investigated.html

 

[Proton Soup]

Only a small percentage of people employed in the American auto industry live in Michigan.

small? several of the UAW regions are located there. http://www.uaw.org/about/where/uawmap.html

either way, some states are more affected than others. those states most affected could all chip in a couple of billion.

 

[WhoWee]

Layoffs have never been a concern of autoworkers

http://www.startribune.com/business/35570244.html?page=2&c=y