Taxpayers to support UAW contract - Auto Bail-out

Here we are 1 month later, the Democrat lead congress could not push through a bail-out (loan) package for the auto makers. The Politics at play is pathetic. Republicans say that the Congress is trying to push this through using fear, to support their constituency to retain votes. The Democrats are attempting to minimize the UAW impact on the big 3 by saying that even if they worked for free, the company would still go bankrupt.

Some facts as I see it.

The significant difference between the Big 3 and foreign automakers is the fully burdened hourly rate. For example - GM and Toyota have the same amount of revenue on a similar number of cars, but Toyota makes profit and GM makes a loss. The fully burdened hourly rate (not the pay rate) for the big three is around $75/hr and the Toyota's, Hondas, Nissans are running in the low $40's/hr. On a pay rate basis, they are likely similar. However, the workrules and the job banks and the obstacles the union places on the big 3, cause the profits to be lower - actually a loss.

In addition, look at all strong union industries, and union regions, and you'll see weakness over the past 20 years, while nonunion industries and regions of the country have flourished.

Does anyone believe that the Management at the big 3 feel the Union is a good thing for their business? Have you heard any of them state that the union is a burden, something that one would expect to be the first thing addressed - but not a peep - why? - because they are asking a Democrat controlled congress for money, and the Union heavily supports democrat over republican.

People need to voice their opinions - do you want your tax money going to support job banks, and pensions that we can't have ourselves?

If you are worried about the millions of jobs affected if the big 3 go into bankruptcy - here is the logic I'm following.

Pro bail-out folks say that 1 in 10 jobs are related to the auto industry, and that bankruptcy will cost all of those jobs - makes no logical sense.

For the US to lose those millions of jobs, the big 3 would have to completely fail and close. Restructuring would mean some layoffs, maybe 20%. For all of the supply chain jobs to disappear, the big 3 would have to completely close. If they restructured, and laid off 20%, likely the suppliers, who not only supply the big 3 but also have other customers would survive. Those that are mismanaged, with too much weight into the big 3 as customers would fail, as it should be, no diversification is a big risk. Consolidation would occur, improved profits would be seen by all.

It is pure fear mongering. Don't let the rhetoric sway you. Think logically about the info - the companies have to be competitive to survive. Supporting the excessive union costs with taxpayer money will not allow their success, so we are throwing good money after bad. Look forward to hearing your thoughts.

Union is severly handicapping US Automakers

It is very obvious, after watching the Senate Hearings with the CEOs of the big 3, Pres of the UAW and Maryland Economist, for 30 minutes, that the cost of the union on the big 3 has basically put them out of business.

The best result of the contract negotiations year after year, having a strong union which provided an environment fostering a strong, secure future wage, severance, healthcare and retirement package for their workers, what many may call a silver parachute, compared to all other worker, is to lose to the competition.

There was a time for the union, but the union is now the albatross aroung the big 3's neck, which now the US tax payers are supporting. This is the root cause and until it is addressed we will continue to watch these companies bring up the rear and continue to struggle.

As a tax payer, I don't believe I should have to pay my money to subsidize the autoworkers net worth, on top of all of the other social programs. I have enough difficulty growing my net worth. This is a gross insult to the intelligence of regular people.

Auto Makers - To Bailout or Not to Bailout

Bailouts, Bailouts, Bailouts everywhere for everyone, Christmas is coming early. Every one needs a bailout of course - we are moving into a global recession. Businesses are losing money, demand is down, jobs are being lost, etc. etc. Auto makers, home builders, banks, retailers, PC makers, technology companies, are all having problems due to the global recession - caused by the housing bubble, Fannie Mae, Freddie Mac, which became a credit crunch, that then rippled across the globe.

Should we give them all money?

I think not. But we may need to do something for those companies that will cost us significantly more if they fail. But will they really fail? Can't they file bankruptcy, and restructure their costs, like the Airlines and all other businesses with financial problems have used for years? Why not, isn't that why Chapter 11 is available?

I think if any industry MAY qualify, it would likey be the auto industry - their losses ripple thru many businesses, suppliers. Many businesses, cities, people will all be negatively be impacted, much more so than other industries.

The reason the auto makers are havng their financial troubles is the significant overhead they carry due to union contracts. GM, Ford and Diamler Chrylser are all paying all retirees full benefits. Something the rest of us lost long ago. They continue to pay tens of thousands of laid off employees their full salaries, while the employees sit in malls and conference rooms all day, per contract. Other industries reduced costs to compete globally by reducing retiree benefits - for those laid off, they have to find other work, but not Auto Workers - they continue to get paid for doing nothing.

Utilizing bankruptcy, auto makers will lower costs, improve financial performance, and allow them to compete better with global players. However, the downside is that the ex-employees are really the ones that lose. They will lose the great healtcare plans they have, lose the pentions they have, those in malls and conference rooms will lose their income but can go out and get another job, any kind.

What are your thoughts and reasoning?