OT: The nail is on the coffin...UAW leader says no more concessions

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Submitted by Coronita on November 15, 2008 - 11:17am

WOW..... I think it's a done deal......Someone please help me understand UAW's position....From my viewpoint, it seems like the choices are either

1) Concessions or (2) BK.... Seems like a no brainer to me if UAW was really interested in protecting it's workers....

What am I missing here?????

UAW leader says no more concessions
Saturday November 15, 1:07 pm ET
By Mark Williams, AP Business Writer
UAW president insists workers will make no more concessions; says workers have done enough

COLUMBUS, Ohio (AP) -- Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger says workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy.

Gettelfinger also on Saturday called on Congress to act quickly on a bailout plan for the auto industry. He says something needs to be done before President-elect Obama takes office in January.

Gettelfinger says it is unfair to call on workers to make more sacrifices, noting that previous cuts workers have agreed to have helped steady the automakers.

Submitted by Coronita on November 15, 2008 - 11:19am.

More bad news....

http://www.autoblog.com/2008/11/15/europ...

European insurers quit covering Ford and GM suppliers

Posted Nov 15th 2008 9:18AM by Michael Harley

Soaked in bad news, GM and Ford received yet another dousing when their three big European credit insurers dropped them this week. Euler Hermes, Atradius, and Coface have all refused to write policies for suppliers trading with both automakers. The three giant insurance companies control more than 80 percent of the world's credit insurance (insurance companies typically pull their coverage when a client stops proving insurers with enough information to calculate a credit risk, or their overall risk profile has deteriorated). Without their credit cover, suppliers will be forced to either trade uninsured, cease trading, or ask for payment up front. Supply issues aside, this news only compounds the automaker's problems as it also weakens investor confidence, already completely slumped.

Submitted by an on November 15, 2008 - 11:23am.

European Union may complain to WTO over Detroit bailout

Linky dinky

The US Congress is contemplating a bailout of $25 billion or more for US automakers, and the European Union is watching closely. European Commission President, Jose Manuel Barroso, told Europe 1 Radio that he is prepared to rat out the US government to the World Trade Organization if the EU considers the bailout illegal.

Barroso wants to look over any aid package to determine if it's "illegal state aid." European new car registrations are down 14.5% in recent months, and we're guessing the EU wants to ensure that any relief the US government may give domestic automakers doesn't afford them an unfair advantage overseas. We aren't exactly sure what the WTO could do to stop aid to the domestics, and it would likely be difficult to prove that state aid would help US automakers in Europe, especially since Ford and GM's biggest issues are here at home.

Submitted by TheBreeze on November 15, 2008 - 11:24am.

It looks like the UAW is making a stand. They are tired of making all the concessions while the management fat cats who have managed the company poorly get rich. Seems like a reasonable position to me. Let the management fat cats take cuts to their salary/benefits in order to save the company.

Alternatively, maybe the UAW president has been in touch with some politicians who have assured him a bailout is coming so he comes out firing in order to take the initiative. Negotiating 101.

Submitted by an on November 15, 2008 - 1:03pm.

TheBreeze wrote:
It looks like the UAW is making a stand. They are tired of making all the concessions while the management fat cats who have managed the company poorly get rich. Seems like a reasonable position to me. Let the management fat cats take cuts to their salary/benefits in order to save the company.

Alternatively, maybe the UAW president has been in touch with some politicians who have assured him a bailout is coming so he comes out firing in order to take the initiative. Negotiating 101.


You would have thought UAW would have learned from the Teamster and Performance Transportation Services fiasco recently. Linky for those who are not familiar with it. The gist of it is, Performance Transportation Services went out of business and layoff everyone because Teamster "made a stand".

If you're talking about fat cats, you should look at the average wages paid to UAW worker after benefits. $150k/year is by your definition, rich, since married couple working for GM, on average would make $300k/yr. Weren't you the one who insisting on drawing the line of $250k/yr as rich. Rich = fat cats baby.

Submitted by cooperthedog on November 15, 2008 - 2:42pm.

asianautica wrote:
If you're talking about fat cats, you should look at the average wages paid to UAW worker after benefits. $150k/year is by your definition, rich, since married couple working for GM, on average would make $300k/yr. Weren't you the one who insisting on drawing the line of $250k/yr as rich. Rich = fat cats baby.

150k a year? That can't be right.

I did some research and the actual wage of an assembler is 28/hr or ~60k a year. Which is good, but nowhere near 150k a year.

It appears that GM quotes the total cost of labor, which includes overtime pay, FICA and other taxes that all employers pay. But the biggest factor is the underfunded accounts for healthcare and retirement. From what I can tell these accounts were dipped into by GM over the years and they are adding the cost of the shortfall as a labor expense (otherwise the annual healthcare premiums for each current employee would be 40k). I find this deceiptive and misleading.

This is akin to blaming all US workers for the upcoming social security deficit. The "cost" per current US worker is really high when you factor in all the underfunded and gov't raided retirement and healthcare accounts. The mgmt (politicians) aren't to blame, its the citizens fault - so what if the USG spent the entitlement funds and managed the country so poorly. The real problem is the enormous cost per citizen for all the debt the USG racked up. In light of this, citizens make/keep too much of their income, so we need to raise FICA/taxes so the US can become more competitive... [sarcasm off]

Submitted by an on November 15, 2008 - 3:15pm.

cooperthedog wrote:
asianautica wrote:
If you're talking about fat cats, you should look at the average wages paid to UAW worker after benefits. $150k/year is by your definition, rich, since married couple working for GM, on average would make $300k/yr. Weren't you the one who insisting on drawing the line of $250k/yr as rich. Rich = fat cats baby.

150k a year? That can't be right.

I did some research and the actual wage of an assembler is 28/hr or ~60k a year. Which is good, but nowhere near 150k a year.

It appears that GM quotes the total cost of labor, which includes overtime pay, FICA and other taxes that all employers pay. But the biggest factor is the underfunded accounts for healthcare and retirement. From what I can tell these accounts were dipped into by GM over the years and they are adding the cost of the shortfall as a labor expense (otherwise the annual healthcare premiums for each current employee would be 40k). I find this deceiptive and misleading.

This is akin to blaming all US workers for the upcoming social security deficit. The "cost" per current US worker is really high when you factor in all the underfunded and gov't raided retirement and healthcare accounts. The mgmt (politicians) aren't to blame, its the citizens fault - so what if the USG spent the entitlement funds and managed the country so poorly. The real problem is the enormous cost per citizen for all the debt the USG racked up. In light of this, citizens make/keep too much of their income, so we need to raise FICA/taxes so the US can become more competitive... [sarcasm off]


So, you're rich if you make $150k/yr as a contractor w/out benefit, but you're not rich if you make $60k in W2 but $90k in benefits? I'm not blaming UAW for this, I just think it's foolish to do what Teamster did. The big 3 are down. I don't think it's very smart of kick them when they're already down.

Submitted by meadandale on November 15, 2008 - 3:30pm.
Submitted by HereWeGo on November 15, 2008 - 4:29pm.

We've seen this game before. I suspect we'll see a bankruptcy filing from GM before Thanksgiving.

Submitted by cooperthedog on November 15, 2008 - 4:38pm.

asianautica wrote:
So, you're rich if you make $150k/yr as a contractor w/out benefit, but you're not rich if you make $60k in W2 but $90k in benefits? I'm not blaming UAW for this, I just think it's foolish to do what Teamster did. The big 3 are down. I don't think it's very smart of kick them when they're already down.

You're missing the point. The current UAW workers don't actually receive 90k in benefits. GM pays them the 60k salary, plus some fraction of that 90k for actual benefits. The bulk of the money is needed to pay for *retired* employee pensions and healthcare, which were massively underfunded by GM over the years.

Imagine that you currently work for UAW, you receive a gross "paycheck" of 150k per annum, you net 60k in cash, 15k goes to fund YOUR benefits. The remaining 75k is the GM FICA/Medicare tax for retirees. Why so much? GM decided to underfund these accounts in fat times, expecting to have them covered in the future (promise now, worry about it later...), in addition to poor planning, their lack or relative quality and foresight into product lines has caused revenue shortfalls (as well as GMAC's massive losses on credit). So instead of blaming the company for its failures, accounting tricks are used to scapegoat the current workers.

With all that said, the reality is that GM will eventually go bankrupt w/o restructing these legacy costs, and the UAW and retirees will get hosed in the process one way or the other, unless the gov't bails them out... Essetially GM has gone to the public well for 25b to retool (ie, we didn't plan our product line well, give us money). Now they need 50b for legacy costs (we didn't plan our HR well,give us money).

I think this example correlates to the upcoming Social Security shortfall. The USG will have huge "legacy costs" that were promised, but through underfunding, demographic shifts, and piss poor management the same scenario will unfold. As a taxpayer you may get the same treatment as the UAW, as the govt shifts the underfunded ss/medicare shortfalls onto non-retired citizens while claiming them as benefits you receive. Will you kick the gov't when its down, or will you voluntarily raise your taxes to meet the shortfall, or reduce retiree benefits? Unfortunately, we probably won't have a choice...

Submitted by an on November 15, 2008 - 5:01pm.

cooperthedog wrote:

You're missing the point. The current UAW workers don't actually receive 90k in benefits. GM pays them the 60k salary, plus some fraction of that 90k for actual benefits. The bulk of the money is needed to pay for *retired* employee pensions and healthcare, which were massively underfunded by GM over the years.

Imagine that you currently work for UAW, you receive a gross "paycheck" of 150k per annum, you net 60k in cash, 15k goes to fund YOUR benefits. The remaining 75k is the GM FICA/Medicare tax for retirees. Why so much? GM decided to underfund these accounts in fat times, expecting to have them covered in the future (promise now, worry about it later...), in addition to poor planning, their lack or relative quality and foresight into product lines has caused revenue shortfalls (as well as GMAC's massive losses on credit). So instead of blaming the company for its failures, accounting tricks are used to scapegoat the current workers.

With all that said, the reality is that GM will eventually go bankrupt w/o restructing these legacy costs, and the UAW and retirees will get hosed in the process one way or the other, unless the gov't bails them out... Essetially GM has gone to the public well for 25b to retool (ie, we didn't plan our product line well, give us money). Now they need 50b for legacy costs (we didn't plan our HR well,give us money).

I think this example correlates to the upcoming Social Security shortfall. The USG will have huge "legacy costs" that were promised, but through underfunding, demographic shifts, and piss poor management the same scenario will unfold. As a taxpayer you may get the same treatment as the UAW, as the govt shifts the underfunded ss/medicare shortfalls onto non-retired citizens while claiming them as benefits you receive. Will you kick the gov't when its down, or will you voluntarily raise your taxes to meet the shortfall, or reduce retiree benefits? Unfortunately, we probably won't have a choice...


The way I see it is, they get paid $60k in cash, $15k (your #) in current benefit, but $75k in benefit they'll receive when they retire themselves. My question is, why draw a hard line in the sand when negotiating w/ a company that is on the verge of bankruptcy?

Submitted by patientrenter on November 15, 2008 - 5:26pm.

I don't give a damn if the costs killing the big 3 are for past retiree costs or future retiree costs. They and the UAW negotiated all of them, and they have to live with all of the consequences.

If they don't want to live with all the consequences, then they have to give up some of the retiree benefits. They can figure out how to do that amongst themselves. I don't need to hear or negotiate the details. If they don't want to clean up their own mess, then bankruptcy can do it for them. This is what should happen to any normal business.

Submitted by cooperthedog on November 15, 2008 - 5:46pm.

asianautica wrote:
The way I see it is, they get paid $60k in cash, $15k (your #) in current benefit, but $75k in benefit they'll receive when they retire themselves. My question is, why draw a hard line in the sand when negotiating w/ a company that is on the verge of bankruptcy?

So, do you count your future social security benefits in your reported income? If you make 60k, do you say you actually make 100k, due to the benefit you'll receive when you retire? Will you increase your "total" income when social security has its inevitable shortfall? Under this logic, the bigger the social security deficit, the more you make...

As to the UAW not negotiating, I agree, its their funeral. If they were wise, the UAW would've required these retiree benefits be funded and set in a trust. Hindsights always 20/20.

Submitted by an on November 15, 2008 - 6:19pm.

cooperthedog wrote:

So, do you count your future social security benefits in your reported income? If you make 60k, do you say you actually make 100k, due to the benefit you'll receive when you retire? Will you increase your "total" income when social security has its inevitable shortfall? Under this logic, the bigger the social security deficit, the more you make...

As to the UAW not negotiating, I agree, its their funeral. If they were wise, the UAW would've required these retiree benefits be funded and set in a trust. Hindsights always 20/20.


Are you suggesting that UAW worker won't get social security? Social security is a tax that I paid into. I can't negotiate with the government as to how much I want from social security. Pension is not like social security, since I don't have an option to pay less social security tax and get less social security benefits. However, UAW have an option to reduce the pension cost. If anything, you should compare it to 401k. I do consider company match as income. Although the government doesn't make me report it as income right now, there's already talk in Washington to remove tax benefits from 401k. That however, is a whole different story.

Submitted by EconProf on November 15, 2008 - 6:39pm.

UAW members average $73 per hour in total compensation, according to several accounts I've read. While their actual paycheck may only be around $30, from these same accounts, SocSec, health benefits, vacations, OT, retirement, etc. etc. pushes up the true cost to the big 3.
When someone takes a job, they buy into a bundle of benefits, of which pay is just one element. They weigh their decision to take or refuse a job, to retire, to work OT, or to switch jobs, on ALL those factors, including even nonmonetary ones such as status, team environment, patriotism (the military), dirty vs. clean, etc.

Submitted by cooperthedog on November 15, 2008 - 10:11pm.

asianautica wrote:
Are you suggesting that UAW worker won't get social security? Social security is a tax that I paid into. I can't negotiate with the government as to how much I want from social security. Pension is not like social security, since I don't have an option to pay less social security tax and get less social security benefits. However, UAW have an option to reduce the pension cost. If anything, you should compare it to 401k. I do consider company match as income. Although the government doesn't make me report it as income right now, there's already talk in Washington to remove tax benefits from 401k. That however, is a whole different story.

What I'm trying to point out is that the 150k/$73 per hour average "compensation" number is an accounting fiction. Do you really think that a current UAW worker is receiving a 60K salary and 90K in benefits? Do you think 75K is actually being set aside each year, for each employee's retirement?

The social security example is as close an analogy as I can think of (not that UAW won't receive social security), since it is a similar issue for non-UAW workers, in that ss & medicare will be massively underfunded in the future, much like the UAW pensions & health benefits are now.

Imagine 30 years from now the average worker makes 60k a year, plus 15k in benefits (and they pay the same percentage for ss/medicare tax as they do today). Their total compensation is 75k. Now assume that SS/medicare are massively underfunded. There are many more retirees then workers, and the current workforce can't pay the expected benefits to retirees without raising the FICA/medicare taxes to 100% of your income. So the gov't (the analogy to GM in this case) states that current workforce "makes" 150k in total compensation (75k in direct wages/benefits and another 75k in "benefits" for legacy costs of former workers). Is this future workers compensation really 150k? Assuming the govt funds the 75k legacy shortfall, will the current worker receive that exact amount as a benefit in the future, or just a small fraction of that amount.

Submitted by urbanrealtor on November 16, 2008 - 12:06am.

Interesting discussion.

I see some good point put together here.

While some posters, (eg: patientrenter and econprof) frame things in non-analytical and facile ways, they still have good points.

I think that I would like to know more about this before putting forward an opinion. I wish someone would put together a cnn-style explainer on it. The specific question I would like to see answered is:

Why does GM have so many problems that Toyota does not?

I would like to see this answered for just these 2 companies and I would like to see an answer that includes more than just the shitty end product.
I would like to see someone put numbers in terms of actual percentages of earnings that go where and to whom. I suspect the percent of earnings for GM to legacy costs is comparatively high and that earnings are low (see shitty product above). But I would still like to see hard numbers and apples to apples comparisons of operating models.

Submitted by Eugene on November 16, 2008 - 12:21am.

meadandale wrote:
http://mjperry.blogspot.com/2007/07/uaw-pricing-themselves-out-of-market.html

First of all, these numbers are outdated. The contract between GM and UAW was renegotiated in late '07 and the gap between workers of GM and Toyota is now considerably smaller.

If you assume that $146,520 figure is correct, you have to subtract payroll taxes, employer-side social security & medicare contributions, 401k matching contributions, etc.

As has been correctly pointed out, an average UAW worker gets 60-70k gross unless he works overtime. On top of that, he's promised retirement benefits which aren't nearly as lavish as the ones received by workers who retired in the 90's (which GM is, unfortunately, forced to provide). Renegotiating existing contracts would do nothing to change the fact that GM is on the hook for huge amounts of money.

http://biz.yahoo.com/ap/081115/auto_bail...

Quote:
"The focus has to be on the economy as a whole as opposed to a UAW contract," Gettelfinger told reporters on a conference call, noting the labor costs now make up 8 percent to 10 percent of the cost of a vehicle.

Cutting labor costs in half (well below Japanese costs) would increase profit on a Chevy Silverado or a Ford Focus by $700-$900. GM is currently losing $2300 per vehicle.

Submitted by CardiffBaseball on November 17, 2008 - 3:12pm.

My dad is retired UAW (they never say GM). I am not going to staunchly defend GM as a business entity, and in fact GM/UAW was one of the early catalysts that caused me to become more conservative. Quick aside, I was an enlisted electronics/avionics guy and felt well-qualified to enter the skilled trades when a big opening occurred in our hometown plant in the 90s. As it turns out, there were quotas so it didn't work out and all I've ever really wanted to do was live around that area (youngstown) but it's such a depressed economy I've not been able to pull it off. Not with niche tech skills and an advanced degree. I managed to live there from 2000-2005 as a consultant, but had to give up traveling.

Now back to my dad's retirement. As near as I can tell for his 29 or so years he collects about $2300 per month. I am not sure what healthcare premiums are, but they are not free. When he hits SS age, his pension will be reduced by the amount of money he gets from SS. I am not even sure if he's set this up well so that my mom gets roughly the same amount if he should pass.

When I was a little toddler he was probably making $4-5 per hour, and by the time he retired, I'd guess he was up around $25/hour. I don't think these people are living high on the hog at all. I cannot fathom how it's said that these folks are making what's routinely reported. My neighbor where I lived before coming here told me once his salary was about 33. I took that as a per year, but let's say it was monthly. At the time I was making 89K and thinking shit how does this guy do it.

Certain positions pay well, the trades for instance. Many guys make good money by working as many Saturday's (time X 1.5) or Sunday's (double time). Of course they had no life, just work.

In any event my parents didn't have college money for me, lived in a tiny little house in need of much repair, and did for us what they could. Neither were educated and they had me at such a young age, that priorities of parenting were more important than getting back to school. My feeling is that we were not poor, and didn't need welfare, but outside of that we weren't living it up, taking fancy vacations, etc.

Submitted by patb on November 17, 2008 - 9:33pm.

well told story

if you work a lot of overtime you can make serious coin at GM
or if are a skilled trade, it pays well.

a shift electrician on overtime makes real bucks
but the real problems at GM is just crappy management

Submitted by no_such_reality on November 17, 2008 - 9:50pm.

CardiffBaseball wrote:
...
When I was a little toddler he was probably making $4-5 per hour, and by the time he retired, I'd guess he was up around $25/hour. I don't think these people are living high on the hog at all. ...

That's cuase they report $73/hour in wages in benefits.

In reality, average wages are $28/hour.

Which means $45/hour are benefits. Medical, retirement, etc. That's for the 350,000 employees and the ONE MILLION retires and dependents.

Which really means, GM has mismanaged the pension plans and is playing catch up.

So it's $28/hour for the worker. Another $15 or so in retirement contributions and health coverage and another $10 for the 1st retiree, another $10 for the 2nd still living retiree, and another $10 for the third retiree's still living dependents...

Submitted by Coronita on November 17, 2008 - 10:44pm.

tick tock tick tock. Time really is running out...

Looks like nothing is going to happen during the lame duck session....And we can most likely rule out private equity investments. I think private equity learned their lesson with Chrysler....And I don't blame them...Why would private equity or another company invest now when there's a higher probability of BK before the year end..at which companies can pick GM/ford/chrysler clean without dealing with existing contracts...

I really hope UAW realizes really soon GM isn't kidding this time about BK....

http://finance.yahoo.com/news/Aid-prospe...

As for Ford. I really hope they stick around....This is one bad boy I don't think I'd mind driving...

http://www.autoblog.com/photos/2010-ford...

Here's GM's plea on YouTube.
http://www.autoblog.com/2008/11/17/gm-ma...

Submitted by TheBreeze on November 17, 2008 - 10:41pm.

no_such_reality wrote:

That's cuase they report $73/hour in wages in benefits.

In reality, average wages are $28/hour.

Which means $45/hour are benefits. Medical, retirement, etc. That's for the 350,000 employees and the ONE MILLION retires and dependents.

Which really means, GM has mismanaged the pension plans and is playing catch up.

So it's $28/hour for the worker. Another $15 or so in retirement contributions and health coverage and another $10 for the 1st retiree, another $10 for the 2nd still living retiree, and another $10 for the third retiree's still living dependents...

I don't think the problem is GM mismanaging their pension. Instead, the problem was the UAW negotiating outrageously generous retirement plans for their members. The people I know who are retired from the UAW have been retired since their 40's. The UAW retirement plans are better than the militaries'.

The Big 3's fate was sealed long ago when the UAW negotiated these overly generous pension plans. GM is essentially a smaller version of the U.S. Social Security System with more generous retirement benefits.

The same thing that is now happening to GM will happen to SS in the future. And it won't be (totally) because of mismanagement. Nope, the main culrpit will be overly generous benefits that were fine when the base of the pyramid was wide but are unsustainable once the pyramid is inverted.

Submitted by equalizer on November 17, 2008 - 11:02pm.

FLU,

I hope UAW get some sense and brings some cuts to the table. Management should have played hardball during 2002 contracts negotiations, but its too late now. The current UAW workers have taken some cuts already and most of the problems are from the legacy pensions and health care costs. However, if the UAW just allowed plant closing and layoffs, that could really help out. But that move would make UAW leaders appear weak, so they will not make the courageous choice.

The economy is so fragile that an abrupt BK at Ford and GM could be final straw and start GD 2. No pressure UAW.

Submitted by bobby on November 17, 2008 - 11:22pm.

$28/hour. that's engineer's wage. A typical engineer is an above average student that have gone on to higher education for 4 years or more.
an typical UAW member is likely a HS graduate with likely average work ethics.

UAW does not play by free market pricing. market pricing for these folks is not $28/hour.
their spending habits are not supported by their skill level.

http://www.detnews.com/2005/autosinsider...

Submitted by peterb on November 17, 2008 - 11:28pm.

What's the odds that this kind of economic failure will follow other unions besides just the UAW? Like for example, the unions that work for the public sector? This may be a trend that coninues for some time as most of these unions got contracts that were basically unsustainable deals back in the day. Destined to blow-up in the future. And now, the future is just about here.

Submitted by Arraya on November 17, 2008 - 11:48pm.

Not a word on who they're planning to sell those cars to. And that in the end is all that counts, it's what stands between Detroit and the Bulgaria model. There's no way a country can forever subsidize an industry that bleeds dozens of billions of dollars every year, manufactures products that people don't want to buy, and has no intelligent plans to turn this around, but instead relies on magical thinking.

The US automotive industry is capable of producing 17 million vehicles annually, while sales have dropped to an annual rate of only 10 million vehicles. They can magically hope that the holy spirit will descend from heaven to sell their cars for them, but the reality is that chances of that happening are somewhat slim, and certainly not robust enough to throw hundreds of billions of dollars into. Car sales won't go up from the 10 million annual number we see today for a very long time, if ever; they will instead go down, and a lot too.

All potential bail-out money would be far better spent trying to help the soon to be unemployed. There will be millions of jobs lost in the US, no matter what anybody does. The unwinding of an extremely diseased debt and credit situation guarantees it. If Washington keep refusing to offer support for citizens, and instead hands what little they have left to corporate interests, the whole country risks falling apart to pieces. And sooner than you think

Submitted by EconProf on November 18, 2008 - 8:06am.

Bobby: That Detroit News article about UAW workers going BK & overextending on credit cards was really telling. Their main problem, they allege, is the decline of overtime hours, suddenly putting a crimp on their spending. Their income falls from tripple-didget levels and suddenly they can't afford their second home or cabin at the lake, their toys, etc. Amazing!
The root of the problem for both these workers and their company and their union is "short-termism" the tendency to look only at the short run. Instant gratification, ignoring long-term costs, pretending agile foreign car companies won't eat their lunch, thinking American consumers will always be loyal to your crappy product, buying on credit, etc., etc.
If our domestic car companies are bailed out by our feckless congress, the companies, their union, and the workers will avoid facing the behaviors that have brought them to this point. As a result, they will be back for more within months as the bleeding continues. They will become a permanent drain on the government. And the taxpayers supporting these UAW workers will include some people making $20 - $25 per hour living and spending responsibly.
Ford and GM going bankrupt would be far less disruptive and damaging than it is being portrayed. The companies could void and rewrite all contracts, pensions, labor agreements, etc. that they have recklessly taken on. Retirees would be taken care of by the Feds under current law protecting BK pension plans. All the current factories, work force, distribution channels etc. would be bought out, reorganized, sold where appropriate, and run by the likes of Toyota, Honda, Mazda, etc. and run efficiently & profitably.
As a nation of consumers, taxpayers, and workers, we would gain in the long run. Short run? Lots of pain and necessary disruption, and especially attitude adjustment. The question is whether now, with elections behind us, we are ready to think about the long term or stay stuck with short term expediency that only dooms us.

Submitted by Colombo on November 18, 2008 - 11:00am.

GM should declare BK and put itself up for sale.

That's right. Yeah, it's not the best time to declare bankruptcy but that's like saying it wasn't the best time for the hurricane to hit.

The fact of the matter is that GM is for all intents and purposes, bankrupt, and the sooner it acknowledges that reality through Chapter 11 the sooner the healing process can begin.

Our politicians do us no favors by portraying the BK process as punitive: "they deserve it" "Those fatcat managers" "that greedy union" and all that.

Leaders nead to LEAD, not provide color commentary like this was some goddamn NFL football game. This is serious people. Serious.

Chapter 11 will allow the company to reorganize in the short term. They can abrogate labor contracts as well as bloated MANAGEMENT contracts. GM retirees can go buy their prescription meds at Walmart like the rest of us.

And don't get me started on those who would blame the UAW for GM's problems. The UAW did not cause GM's failures. They are a SYMPTOM not a cause.

The chicken littles running around crying about what will happen if American industry dies need to get a swift kick in the ass.

HELLO. We as a nation will still need cars. Economics dictates that a large portion of these cars will be manufactured on these shores.

HELLO. Americans will be working in the auto industry. Americans will be buying, selling, servicing, and investing in the auto industry. Only the owner's names will change. We're taught to believe as free market capitalists that this is a GOOD thing to ensure efficient deployment of scarce capital.

GM needs to be sold to new owners. The people working there need assistance to move into new lines of employment. [Infrastructure anyone? We've got some bridges and roads and power plants that need work, don't we?] We the taxpayers need some assurance that our leaders will do what they can to expedite this process and not drag it out.

Call your congressman or congresswoman today. Their number is in the phonebook in the blue pages.
Do it now.

Submitted by HereWeGo on November 18, 2008 - 1:19pm.

Amen to that, Columbo, although I could live with the government as DIP if management and the UAW show a willingness to work out a viable business plan going forward.

Submitted by CDMA ENG on November 18, 2008 - 3:06pm.

I am a Columbo "Ditto Head"

Actually Peter Schiff said almost the same thing the other day in one of his video spots on CNN or something.

We just need to take our lumps and let the market settle it.

But then again I can go surfing for the next two years without dipping into my umemployment... Been a saver waiting for our day of reckoning...

CE

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