Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
Markel writes:
Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
" Markel writes:
Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
Markel | 12.12.08 - 10:29 am | # "
So what? Is the UAW made up of Republican constituents?
Reuters News Editor-in-Chief David Schlesinger is skeptical that financial journalists could have done much more to predict the depth of the crisis. âJournalists do best when reporting whatâs happening and giving the news context and analysis,â he said. âWe also do well when we look backwards and discuss past events from the perspective of the present. We do least well when we prognosticate. While our reporting and commentary did discuss potential weak points in the economy, we did not â and nor frankly could we â accurately predict the calamitous events of this year.â
why you want to save the auto indsutry - there is a name for a nation which produces nothing and consumes from forign powers - Client State.
pharniel | 12.12.08 - 10:32 am | #
This bailout was not for the auto industry. It was for GM and Chrysler, 2 companies that epitomize poor management and the excesses of the UAW (Ford will manage onwards). The auto industry around the rest of the country, using American labor, and in some cases American designs, is doing much better, though it's still a tough environment for any company.
Watchers of the Stupidity industry tonight expressed grave concerns on the future supplies of stupidity.
One industry watcher, who wisshed to remain anonymous, stated: "Einstein thought that stupidity was infinite, but, really, we doubt that anything is truly infinite. However, we thought we had enough for the next 100 years until this Congress started trying to 'fix' things."
The first ripples of angst over stupidity supplies came last year when, acting on advice from Ben Bernanke, Congress increased the conformiing limit on GSE loans.
"That had some the more bearish Peak Stupidity people concerned, but we still thought the supplies would be good."
Then in October, Congress passed the $700 Billion dollar bailout of bankers and other scum.
"This wouldn't have been such hit to the reservoirs, except after defining the oversight, they gave Paulson the money before the oversight was in place. There really was a giant sucking sound on that one, and we know Monica and Bill are out of town."
However, there is panic on the Dumb futures tonight, after the Senate failed to reach agreement on even a bridge loan for the formerly-big 3, upon which as many as 3,000,000 jobs depend.
"We have no idea how to function in this environment. We looked all over flyover country, and cannot find anything like the dumbass deposits we had in D.C. - we are trying to arrange imports from Europe, but if that doesn't work, we'll have to fall back on Sean Penn amd Rosie O'Donnell. We think that'll probably do it for a while."
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Isn't that the New Housing Starts graph on the chest of the Freddie and Fannie pony? It even stops right at the peak (we wouldn't want to frighten the kiddies with the plunge).
The only way for the automakers to survive is through bankruptcy. Bond holders need to get less, UAW needs to get less, and the franchise agreements with all the dealerships need to be redone. There are way too many dealerships, way too many brands and way too many models. Bankruptcy is the only legal way that these things can be re-negotiated. I am all for a government back-stop during the re-org but writing blank checks will not solve the problem.
Bancruptcy. New Management. Re-negotiate, cut wages especially at high level management, rebuild. The new owners (the current bond holders) should put the engineers in charge.
Treasury prepares to usurp power from Congress yet again, in an on-going joke related to America & Constitutional Powers, where Paulson will do anything he can to fuck up things more than they already are:
See: he Treasury Department said Friday it's prepared to act to avoid any possible collapse of nation's three largest auto companies given that rescue efforts in Congress have failed.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said Treasury spokeswoman Brookly McLaughlin.
THE FLAG CODE
Title 36, U.S.C., Chapter 10
As amended by P.L. 344, 94th Congress
Approved July 7, 1976
� 176. Respect for flag: No disrespect should be shown to the flag of the United States of America; the flag should not be dipped to any person or thing. Regimental colors, State flags, and organization or institutional flags are to be dipped as a mark of honor.
(a) The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.
Most individuals who have served in the military service of our nation will (or should) recognize this signal.
As a result of the many traitors and enemies we as a free people have, both foreign and domestic, as a result of the many unconstitutional acts, legislation and atrocities passed and/or committed against US citizens and their life, liberty and property, and as a result of policies that have allowed (and continue to allow) enemies of this nation to enter in large numbers through a porous border policy, I believe the life, liberty and property of US Citizens are in dire danger and distress.
Treasury will now ignore the will of Congress? James Monroe | 12.12.08 - 10:48 am | # Just throwing this out there, but given that the vote was fillibustered, I'm not sure that the will of congress was to deny the Big 3 a bailout. Seems to me that a majority of congresscritters were happy to pass out the cash for dinosaur life support.
The collapse of American enterprise is truly something to behold.
I was embarrassed when the auto execs were humiliated (rightfully perhaps) on TV in front of congress, twice. I don't know how America gets past this without a permanent hit to relative international prosperity.
xxxxx writes: So what? Is the UAW made up of Republican constituents?
Not after this. Any Reagan Democrats left in the union movement will think twice before leaving the fold now over "hot-button social" (i.e., non-economic) issues.
Assume Crash Position @ 10:33--Those were the good old days indeed. We were all so simple and childlike, basically running around naked in the Garden of Eden compared to today.
(a) The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.
Most individuals who have served in the military service of our nation will (or should) recognize this signal.
One year in college one of the kids in the frat flew the flag upside down. A state trooper actually pulled over and asked us if the house had been taken over or something.
"Nope just an idiot who woke up drunk, sorry officer"
BTW, can anyone remind me the original source of the Pony meme? It's become such a part of the everyday discourse that I can't recall ever not chuckling about it in the past.
I really hope the constitution gets amended to implement the result of an election in days not monthsto keep fiascos like this from not happening again.
When the US taxpayer is bailing out Wall St. to the tune of $2 Trillion++++ to date (with no oversight!), what makes these US taxpayer auto workers think that their companies should be getting help?
The foreign owned automakers without the 'burden' of retired workers pensions and health care costs are doing fine (besides the 40% decline in sales), so let the Invisible Hand of Free Markets decide.
All this government meddling and regulation is killing us.
Re: given that the vote was fillibustered, I'm not sure that the will of congress was to deny the Big 3 a bailout
This is just trash novel politics and manipulation by the union and Congress called the bluff, and Congress should be calling the shots, not the union or Treasury. Treasury is usurping power from congress, because congress is weak. Paulson should be be arrested IMHO!
....figure if GM is bailed out by TARP, come end of January no accounting of the $15-billion spent will be reported. Transparency? Oversight? Yeah right - go talk to our lawyers....
BTW, can anyone remind me the original source of the Pony meme? The Strong Fundamental | 12.12.08 - 10:56 am | # I think I 1st saw it on atrios years ago. Don't think that's where it originated though
One reason VW and Honda build cars here is to hedge against protective tariffs. If Detroit implodes, no local competition, no credible threat to penalize foreign cars.
Just how secure are those jobs in Kentucky, Mitch?
"Clean Stupidity" should be the GOP motto. It is kind of like 'Clean Coal', which doesn't exist, except that it is as widely found as hydrogen and carbon within the rump of the GOP that remains after the sane ones have all be removed.
I think this Madoff story is a much bigger story than the auto bailout when it comes to the markets. The automakers will get their bailout - that was always expected and will happen. No one expected the Madoff situation and it will not be the only one....
One reason VW and Honda build cars here is to hedge against protective tariffs. If Detroit implodes, no local competition, no credible threat to penalize foreign cars.
Just how secure are those jobs in Kentucky, Mitch?
and Congress called the bluff Anonymous | 12.12.08 - 11:00 am | #
See, I don't think Congress called the bluff, I think a rump minority in Congress called the bluff! Don't get me wrong, I think BK is the way to go here, but a Congressional majority definitely would have given out three big ponies.
While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.
Will the Treasury demand concessions up front, or is this just empty rhetoric?
The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.
Treasury is not to be engaged in commerce and fascism, so is this Treasury coup, to act against the will of Congress a time to fly Old Glory upside down?? Something aint right!
Re: given that the vote was fillibustered, I'm not sure that the will of congress was to deny the Big 3 a bailout
The vote was not filibustered. It was defeated as a procedural motion by the GOP when the Dems could only get 52 (needed 60) votes to bring the measure to an up or down vote.
Rick Wallick moved into a new, three-bedroom $200,000 home in Maricopa, Ariz., in October 2005. Today, the home is worth $80,000.
The disabled software engineer stopped making mortgage payments this month. His $70,000 down payment is now worthless. His dream house will be foreclosed on next year.
...As painful as the decline has been, history suggests home values still may have a long way to drop and may take decades to return to the heights of 2½ years ago.
"We will never see these prices again in our lifetime, when you adjust for inflation," says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. "These were lifetime peaks."
Let's be honest, real estate made a lot of really dumb people rich (I guess I should include my self). The planet is not a better place because of this.
.
The Strong Fundamental writes: BTW, can anyone remind me the original source of the Pony meme?
I think it originates form an old joke: a kid is given a pile of horse manure and happily starts digging, saying "I know there's a pony in here somewhere!".
Either that, or just emblematic of a magnificent gift.
The only way for the automakers to survive is through bankruptcy. Bond holders need to get less, UAW needs to get less, and the franchise agreements with all the dealerships need to be redone. There are way too many dealerships, way too many brands and way too many models. Bankruptcy is the only legal way that these things can be re-negotiated. I am all for a government back-stop during the re-org but writing blank checks will not solve the problem.
Mark, that is probably true. But you are ignoring two things.
First, the Southern Party wanted only the UAW to get less. No one else. They didn't want to hose management, shareholders, dealers, or any other stakeholders. Just the unions, which we now have written proof was for reasons of retribution for the election.
Second, there is no time for a prepack BK right now. None. You are proposing a six-week chemo treatment while the patient is in cardiac arrest. First stabilize, then treat.
You know, I come from a union family, which makes me genetically repulsed by union leadership. However, we are now looking at a situation that could potentially tip the entire globe into the Great Depression Times Two. And people want to cut off their noses to spite their faces, simply because they like their role as lickspittles to the cheap labor party.
One reason VW and Honda build cars here is to hedge against protective tariffs.
Perhaps. Another was protecitonist sentiment here at a time when many in the US believed Japan was 'buying up America'. That is, if foreign auto makers wished to continue to participate in the US market, they needed to commit to plants here and to employ Americans and American suppliers.
Pony is the wrong breed. Draft Horses would fit the bill. Ponies are lightweights and one ton Drafts would look right. Right on that grossly overweight kids are needed. Back to the drawing board.
The vote was not filibustered. It was defeated as a procedural motion by the GOP when the Dems could only get 52 (needed 60) votes to bring the measure to an up or down vote. Phil Gramm | 12.12.08 - 11:08 am | # Well, yeah it was fillibustered. That is a fillibuster! It failed a cloture vote to "end debate", which means that debate continued and there was no vote. Fillibusters used to be old duded reading from phone books. Now that the minority in the Senate from either party simply fillibusters everything, it's just the cloture vote.
"Perhaps. Another was protecitonist sentiment here at a time when many in the US believed Japan was 'buying up America'. That is, if foreign auto makers wished to continue to participate in the US market, they needed to commit to plants here and to employ Americans and American suppliers."
But both the tariff issue and this one become moot if there is no domestic auto industry, don't they?
The vote was not filibustered. It was defeated as a procedural motion by the GOP when the Dems could only get 52 (needed 60) votes to bring the measure to an up or down vote.
Another feather in Harry "Weak Tea" Reid's cap. He never makes the Southern Party actually go through the inconvenience of a real filibuster. Giuliani only wore a skirt once. Harry lives in one.
Let's just pin the whole thing on the unions and there inability to cut off it's source for continuing due's from it's worker's. Seriously if they were able to get that ridiculous hourly rate from the manufacturer's I would have taken it too. Blaming them (UAW) for the management's inability to negotiate anything resembling a real business labor model and using the threat of job losses is just to "neat".
They are not in this position solely because of the labor rate. It contributes to the overall problem but it is not the sole cause.
Markel writes:
Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
Markel | 12.12.08 - 10:29 am | #
So? Ninety-plus percent financial support for one party might well generate a reaction from the other side, you think?.
First, the Southern Party wanted only the UAW to get less. No one else. They didn't want to hose management, shareholders, dealers, or any other stakeholders. Just the unions, which we now have written proof was for reasons of retribution for the election.
Markel:
Did you even read the Corker proposal, specifically the 30% payout to the bondholders?
...seems this "Union" thread is kinda like an "Abortion" thread for guys. Same kind of emotion on both sides.
I don't think it much matters though. Just slows down the inevitable march into the sea for this country....that's the saddest part - everyone thinks the light at the end of the tunnel is stationary.
So? Ninety-plus percent financial support for one party might well generate a reaction from the other side, you think?.
JohnR(VA) | 12.12.08 - 11:15 am | #
Yep, tribal shakedowns ARE the way to define national economic policy - and paint as a principled stand - riiiiiiiight...
The Strong Fundamental writes:
BTW, can anyone remind me the original source of the Pony meme? It's become such a part of the everyday discourse that I can't recall ever not chuckling about it in the past.
The Strong Fundamental | 12.12.08 - 10:56 am
Calvin and Hobbes:
This strip was originally published in the newspapers on January 13, 1987.
Susie wipes a tear from her eye. She wonders why Calvin is so mean. She wishes she had a hundred friends, then she wouldn't care what Calvin said. She goes on to say she and her hundred friends would go do something fun and leave Calvin all alone. But then, Susie sits down. She says that as long as she's dreaming, she also wants a pony.
Did you even read the Corker proposal, specifically the 30% payout to the bondholders? anonymous | 12.12.08 - 11:15 am | # Yeah the Corker proposal had a haircut for everybody in it. When he took it back to his caucus, they decided that the workers should go to the barber first. That may make sense financially, but it don't make sense politically for the GOP. When you need that rust belt every four years it's not so smart to crap on it.
But both the tariff issue and this one become moot if there is no domestic auto industry, don't they?
Point is, it was a fine compromise in an otherwise poisonous, jingoistic environment - they kept the market, we picked up a major contributor to productive GDP.
. . . and they now are a component of the domestic auto industry. Probably a good thing, under the circumstances.
There will be no economic recovery
Until the Southern party is banned and Reaganomics finally killed.
The Wall Street pigmen have finally gone to far.
2 Trillion stolen by Bush and Paulson on their way out
Wonder if this is another generational buying opportunity...
Wells Fargo takes $40B charge for Wachovia
The planned acquisition of Wachovia Corp. will cut into the balance sheet of buyer Wells Fargo & Co.
Wells Fargo (NYSE: WFC) intends to take a $40 billion charge in the fourth quarter for the Wachovia purchase, according to a report from Richard Bove, an analyst in Lutz for Ladenburg Thalmann.
Bove said Wells Fargo officials told him that the company would account for the charge through a balance sheet adjustment and it would not flow through the income statement.
Bove said there apparently is another $11 billion in charges due to write downs that also will not be shown on the income statement. But the balance sheet charges will be offset by a $12.6 billion equity offering and $25 billion from the governments troubled assets relief program, among other benefits, said Bove, who has a buy rating on Wells Fargo stock. Wells Fargo takes $40B charge for Wachovia - Tampa Bay Business Journal:
"The disabled software engineer stopped making mortgage payments this month."
Why stop making payments? You still have a roof over your head. And it sounds like it's a break-even on cash involved. I must be denser than I thought.
The two non-negotiable demands of the GOP minority (Corker proposal) were (1) cut worker hourly wages to make them equal to import manufacturers in 2009; (2) retire 2/3 of the company debt by April 2009.
The UAW was willing to agree to cut pay when the new contract is negotiated in 2011. A law requiring a change to the existing contract is unconstitutional and the UAW was not going to renegotiate the existing contract with only the wages portion being changed.
There is no way the debt holders would vote 2/3 to convert to equity (thus losing their senior position ahead of equity in an eventual bankruptcy).
These demands were just lipstick. They real reason was to punish (just) the UAW/workers - which is no surprise since the GOP has been anti-union forever.
The crazies are in control of the GOP and crazies act crazy.
Ironically, the Dem. position (Pelosi) in the beginning that TARP funds should be redirected to the auto companies. Bush rejected that and said take it out of the energy efficiency subsidy, thus making the bill the Bush bill, which the House passed and the Senate Dem. supported. The GOP Senate vote to not allow a vote on the Bush bill will now lead to the TARP being used, thus returning to the original Dem./Pelosi proposal. Note that the GOP refused to allow a vote on a GOP-Corker proposal outlined above as an alternative to the Bush bill.
Does anyone have a link to the memo? I am shocked that anyone was foolish enough to write it in an email.
It was read out loud at the UAW press conference around an hour ago. Don't see it online yet. One line said something like "attack the unions first before they attack us."
" YYYYY writes:
xxxxx writes:
...There's no shortage of stupidity anywhere in this world...
Don't mistake your america for the world. Even if megalomania is a beloved american pastime please, keep your stupidity to yourself.
YYYYY | 12.12.08 - 10:52 am | # "
Guess what, yyyyy; Hitler, Stalin, Lenin, Mao, Pol Pot, Mugabe, and a host of others didn't come from America. You may think that Americans are that bad, but odds are, we've bailed you @$$es out more than once.
In 2000 I sat next to one of the 9/11 hijackers flying out of Providence, RI, and a year later, this @$$hole flew a plane in which one of my former supervisors was traveling into one of the world trade center towers. Why don't you jack@$$es keep YOUR stupidity to yourselves, and quit yer bitchin'.
\tI have even less sympathy for the union mob bosses than I do for the car co. execs. \t bearly | \t \t \t \t12.12.08 - 10:59 am | # Very few of those left. Why would you steal nickels from union coffers when you can run ponzi's on Wall Street for BILLIONS?
There was a day when unions were rife w/ mob bosses - those days are mostly gone (still some mob from what I've heard in big city muni unions but can't confirm/deny).
JohnR(VA) writes:
"The disabled software engineer stopped making mortgage payments this month."
Why stop making payments? You still have a roof over your head. And it sounds like it's a break-even on cash involved. I must be denser than I thought.
Do the math. Paying down the mortgage will get him back to zero equity in about a dozen years. Stop paying, bank the payment and by the time he gets kicked out in 18 months he'll have half his down payment back.
They real reason was to punish (just) the UAW/workers
No link to that "memo?" Until then, it's somebody's imagination--just the thing to get a sympathetic reporter from one of the Detroit newspapers to crank out a tear-jerking story how persecuted those poor little defenseless UAW workers are. (Not that the UAW doesn't deserve to be punished!) On the other hand, if it's indeed a real memo, payback is bitch, huh?
Well if the Big Three represent all that's left of the U.S. economy, then it's time to move to Belize.
Can't figure out if all the obtuseness on this thread is intentional.
Demand is collapsing globally. An abrupt additional collapse before year end to the tune of 2-3 million jobs in a disorderly bankruptcy is enough to wipe out the economy.
A law requiring a change to the existing contract is unconstitutional
JimPortlandOR | 12.12.08 - 11:24 am | #
How exactly?
JP | 12.12.08 - 11:26 am |
Constitution, Art. I, Section 10:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Jim:
The first two words: "No State." From what I understand, no court has held that the Contracts Clause applies to the Federal government. The prohibition against modifying contracts usually gets filtered through the Fifth Amendments Takings Clause.
JohnR(VA),
It sounds like with $70k (40%) down this was a home to live in but like the family silver in the days of the Hunt brothers it stopped mattering when the entire asset class started getting gamed. At this point the incentive to renege is too great and the penalty too small. Sadly, had he put zero down he'd be even better off.
I'm working from home, listening to CNBC (why?).
Kudlow is screaming about the SEC not catching Madoff's ponzi scheme. Every other time I've heard kudlow, he's complaining about govt intervention, get rid of Sarbanes, etc. At the behest of their benefactors on Wall St (and lauded by many on the financial news), our Congress has cut the SEC's budget to the point where they have a hiring freeze.
These accounting scandals are manna from heaven for me. Bad for nearly everyone else.
\t'We are 10% of the labor costs. If [the UAW] worked for nothing, it wouldnât help [the auto industry] limp into January.' â Ron Gettelfinger,United Auto Workers >>
I bet a lawyer wrote that line. \t REBear | \t \t \t \t12.12.08 - 11:32 am |
Those numbers are common knowledge - direct labor is approximately 10% of the cost of mfg in automotive. Some cases even less. The big money is in the supply chain - something like 60% of the cost. That is why the job multiplier is so high in automotive - the OEMs ar the tip of the iceberg. And the suppliers can't work for nothing - they are on the edge of BK themselves. Plus they are already owed something like 120 days now - that was all the concern about 'cash for delivery'. That would shut the OEMs down pronto AND force BK now. It would probably be a chain reaction... auto OEM BKs, then Tier Ones, Tiers Twos, etc. Bigger and bigger down the pyramid.
Can't figure out if all the obtuseness on this thread is intentional.
Demand is collapsing globally. An abrupt additional collapse before year end to the tune of 2-3 million jobs in a disorderly bankruptcy is enough to wipe out the economy. Markel | 12.12.08 - 11:34 am | # Markel I'm only ever obtuse intentionally! Actually, I'm not convinced that BK is going to lead to the loss of 2-3 million jobs. I'm thinking more on the order of a few hundred thousand (not that that doesn't suck). I think the companies would manage through receivership, slash down, and come out the other end stronger and lither. And I don't see this money saving these companies, because I don't think that the oversight will be there to maange the changes they need to make. I think a bailout would guarantee another few years of zombiefication before an inevitable collapse. Look, this isn't the workers' fault in any way. We can safely lay all blame on management, but that's where things stand, FWIW. Sh-t sux. Also, I reserve the right to admit that I could be absolutely, disastorously wrong.
Demand is collapsing globally. An abrupt additional collapse before year end to the tune of 2-3 million jobs in a disorderly bankruptcy is enough to wipe out the economy.
Markel | 12.12.08 - 11:34 am | #
Color me skeptical.
This presupposes that there's no market at all for what a restructured Big Three would produce and that there is no dynamism in the economy except for what emanates from Detroit. This was true in the 1950s, we'll see if it still holds true in the 21st century.
If these companies were actually managing based on circumstances they would have started idling plants this summer. Tell the workers that we will need to re-negotiate the labor contract as the demand for it's products fell. And then tell them that if you don't then we simply leave the plants idle. Being paid a lower hourly rate is better then not being paid at all. The management would still start to accomplish it's goal of depleting the union strike pay (because you know they would have had a strike vote and passed it) and they would have been in a much better position to get concessions.
Now I don't really subscribe to the theory that it's all about pay rates but if you did methinks that would have been the smarter more results oriented route to have taken.
Those numbers are common knowledge - direct labor is approximately 10% of the cost of mfg in automotive. Some cases even less. The big money is in the supply chain - something like 60% of the cost."
Aren't union pensions and medical cost one of the big drivers in cost? Is that included in "direct labor"?
Do the supply chains have union labor too, and if so, is that calculated into your "direct cost"?
Unless you're drilling or mining for natural resources, you're going to have a supply chain. Why even mention that? Companies usually try to develop their suppliers as a means of "outsourcing" work that is not fundamental to their business, and to do it more cost effectively.
This presupposes that there's no market at all for what a restructured Big Three would produce and that there is no dynamism in the economy except for what emanates from Detroit. This was true in the 1950s, we'll see if it still holds true in the 21st century. \t JohnR(VA) | \t \t \t \t12.12.08 - 11:43 am |
They mostly won't restructure - BK w/out strong gov't oversight & financial backstop means liquidation. And not just the 'Big Three' - right on down the supply chain to the raw material producers. That is what has the Treasury & Fed scared. They should be scared too.
Also understand that the transplants don't use domestic suppliers much - they bring their own supply chain with them from Asia - again do the menial labor here but most of the high end work stays offshore. Very little high value added work is 'transplanted'. BTW - we do the samething with our transplants in China (design develop here - assemble over there - it's a common SOP).
What is the pension fund cost? \t REBear | \t \t \t \t12.12.08 - 11:48 am |
I don't know - the 10% number is ALL associated direct labor cost - health care, pension, take home salary, FICA - all of it.
Labor is a tiny fraction of the problem - if you walked factories like I do you'd see that. It's capital & white collar (overhead) and supply chain where the cost is.
That's why there is going to be a blood bath - in whitr collar this recession - it's where the money is & where the money is is where the cuts have to be made.
Dryfly, the injection of facts into this discussion is a real buzz kill for the onanistic fantasies about the dirty effin unions.
Markel | 12.12.08 - 11:53 am | #
Yes. We got a few Rushbot Freeper wingnuts here at CR. A lot of great people here, but we also have jg, El Cliffo, JohnR(Venereal Ahole), Broward Porne, etc. etc. etc.
Based on last years unit production GM paid the equ. of $1500 per auto to cover pension and retired health benefits. BTW the single largest buyer of Viagra is GM by way of their health benefits (something the UAW took a tough stand on to get this included as a necessary medical treatment)
When listening to Ron G speak, I thought the answer of only 10% cost savings was the UAW administration not being paid. Maybe I just misunderstood what he was claiming
Sounds like a Ponzi arrangement \t Barley | \t \t \t \t12.12.08 - 11:43 am | #
No it's called 'supplier-OEM Partnership'. The OE's wanted their supply chains to commit to them & they did - now that the OEs are going down so will the supply chains - the job losses associated with this will be something like 4-5X what is lost at the OEs directly.
Gary, some of those folks write interesting posts once in a while. But to be honest, if somebody doesn't come to CR to learn, I don't know why there coming here at all.
You know, Tanta made a very, very strong impression on me. Anytime I read a story about this crisis, I feel like she's looking over my shoulder. And ready to hit me on the head with a bong whenever I believe the easy, superficial talking points. Or fail to try to understand an unfamiliar industry--at least just a little bit--before parroting somebody else's spin on it.
Well if the Big Three represent all that's left of the U.S. economy, then it's time to move to Belize.
Hey, I think you're finally starting to get it! Selling crap to each other is not an economy; making crap to sell to each other is. More importantly, paying each other enough to actually buy crap from one another is fundamental.
25 years of essentially uninterrupted Reaganomics has looted the economy and middle class...you have to recharge the aquifer on occasion.
paying each other enough to actually buy crap from one another is fundamental.
Funny how quickly people lose the point, Scott. These comment threads have been replete with condemnations of our fake economy, where consumers are kept strung out on credit crack because the one percenters won't pay them enough to detox.
But mention a union and the knee jerks like it was hit with an RPG.
And it will always be that way. Folks will in principle accept the need to pay Americans middle-class wages for the economy to work. But there will always be an excuse, a special exception for this guy.
As I said before, when you're a lickspittle to the one percent, at least there's no shortage of work.
\tdryfly - I was being sarcastic... \t Barley | \t \t \t \t12.12.08 - 12:02 pm | # Sarcastic or not - it is a very good & relevant question. Something the folks touting the transplants don't realize...
1) The workforce at the transplants are aging too. Their health issues & costs are climbing. 2) They mostly offer defined benefit - their workers are in 401Ks & such. The market is killing them & they aren't happy about it.
At the end of the day the transplants are going to want a similar deal the Big Three get - just watch. The silence from Toyota, Nissan, etc. Is a testament that they are starting to feel the same pressures. Only a fool wouldn't be able to see this.
...now that the OEs are going down so will the supply chains - the job losses associated with this will be something like 4-5X what is lost at the OEs directly.
I hear all sorts of different multiplier effect numbers tossed around, but the maximum I've heard so far is 3x, with the lower end at 1.4x.
I have no idea what to believe in this regard. I imagine that there will be some overall demand loss if the big three are allowed to fail, but some of that demand has to shift to the other quasi-domestic/quasi-foreign manufacturers. Why can't some of the production capacity in the existing supply chains follow that? Even if "following" takes the form of workers migrating south to anti-Union states for lower wages?
At the end of the day the transplants are going to want a similar deal the Big Three get - just watch.
The transplants and their non-Union companies have been 'drafting' the UAW for years - they undercut the big three ever so slightly, and operate in lower COLA locations. That has the practical effect of reducing their costs vis-a-vis the Big 3 while offering competitive employment to workers. Classic arbitrage. But that is, as you say, a temporary phenomena.
If the foreign makers can cut wages (or now allow for greater wage stagnation - the real goal of UAW busting), those workers will find their situation less cushy, and eventually, labor problems will arise. Of course, it's taken 25 years to get where we are now, and that allows for years and years of short term lucre.
I have no idea what to believe in this regard. I imagine that there will be some overall demand loss if the big three are allowed to fail, but some of that demand has to shift to the other quasi-domestic/quasi-foreign manufacturers. Why can't some of the production capacity in the existing supply chains follow that? Even if "following" takes the form of workers migrating south to anti-Union states for lower wages?
::::
Won't happen - the plants are too focused & automated. They can't just sell stuff to somebody else. These are NOT flexible operations. It is not uncommon to invest a million dollars in one cell to make one part - that part might go on 3-4 vehicles inside the same OE platform envelope but it won't go on other OEMs or other transplants. They are CUSTOM parts CUSTOM applications.
And a 3x-5x multiplier is very realistic from what I can see - might actually be higher if the community fallout is greater.
Why spend that money on automation? Because that is how you reduce labor content - you can pay a guy (and the white collar support staff) very well and still make money if you automate like crazy.
As for move south? They are ALREADY in the south! I've visited them. They are nationwide - NAFTAwide really... it's the HQs that are in Detroit!
People don't know squat about this biz yet yap all day. It really is a difficult situation all around.
I imagine that there will be some overall demand loss if the big three are allowed to fail, but some of that demand has to shift to the other quasi-domestic/quasi-foreign manufacturers.
The economy lost over half a million jobs in one month. Why didn't the efficient market simply redirect the demand created by those paychecks somewhere else instantly?
The workforce at the transplants are aging too. Their health issues & costs are climbing.
I was heartened to see Obama is going to seize this window of opportunity for doing something pro-business and pro-worker: healthcare reform. The transplants derive a huge advantage in their labor force cost, and it's not due to unions or the lack thereof - it's due to their home governments providing healthcare and retirement to their home labor forces!
We force those costs onto the domestic manufacturers here - you want to get the big three out from under 'legacy costs' - well, provide the kinds of social benefits to US citizens that Germany, Japan and the rest provide to their labor forces. Why the hell is US business in the business of paying for health care in the first place?
Is it too simplistic to put the whole crisis off on the Unions, providing an opportunity to break them, which has been a coprophagic CorpoRat wet-dream since the Pullman Strike?
My guess is CR will be forced to enter more on this story. It isn't going away - either messy ugly bailout or BKs. One or the other will be on the docket & soon.
People don't know squat about this biz yet yap all day.
I completely agree dryfly. I work at a tier 1 manufacturer making parts for Chrysler, GM and Ford. I enjoy the dicussions on CR, and have learned a lot here. However, it really amazes me the level of ignorance and misunderstanding that I see posted here regarding automotive manufacturing, and manufacturing in general. I would estimate that 99% of the readers here have absolutely no idea how difficult it is to actually convert 3,000 pounds of steel, aluminium, plastic, rubber, and glass into a vehicle that will run for 150,000 miles, start every time at temperatures between -40F and 130F, and proctect the occupants from injury in the event of a crash.
I see the same level of ignorance in the congress and senate. When did those clowns ever think that they knew how to run an automotive company better than the people who are already doing it? They have no idea how demanding this industry is.
AlterNet. 9/30/08:...Toyota Driving Automakers' Global Race to the Bottom
"And in Japan, at its flagship operation in Toyota City, some 30 percent of the workforce is temporary workers who earn as little as half what permanent employees do. In the surrounding area, a network of closely-related supplier companies utilizes thousands of foreign guest workers under conditions that, by many definitions, qualify as human trafficking.
Toyota Japan has also created a work environment so stressful that, each year, an estimated 200 to 300 employees are incapacitated or killed from overwork and stress related illness.
Company Union Supports Management, Not Workers
In line with the usual practice in Japan, Toyota's official union, which represents only that company's permanent employees, functions as a human resources management mechanism that doesn't oppose management or stand up for worker interests. According to a number of long-time Toyota employees interviewed by National Labor Committee researchers on an April 2008 research trip to Toyota City, the company union works hand-in-hand with management, and worker demands for raises, job actions or even challenges to management policy are out of the question."
Cont'd AlterNet: "Toyota's supplier plants also make extensive use of guest or "trainee" workers -- under conditions that in some respects qualify as human trafficking: The workers, most of whom come from China and Vietnam, pay manpower agencies in their home countries as much as $8,000 to $10,000 for a two- or three-year contract.
Toyota's foreign workers in Japan are second-class citizens. On arrival the guest workers' passports are confiscated. During the first year as "trainees," they are not covered by Japan's labor or minimum wage laws. They work alongside Japanese workers, putting in the same long hours, but often earning less than half the minimum wage -- as little as $2.76 an hour, or $479 a month. As guest workers, they are required to remain with the same employer -- no matter how bad the working conditions -- and to live in the company housing assigned to them -- even though some are charged twice what their Japanese colleagues pay for comparable accommodations...."
Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
I like the stitches in the chest of the AIG pony. Maybe it needed bypass surgery? Plus the crazed eyes. Very nice.
Well yeah actually ...
Uh.... those ponies have heads coming out of their *SSES?
Freaky, dude.
...OF ORANGE COUNTY?
wherz conjure bagz?
Markel writes:
Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
Source please
wherz conjure bagz?
ScoProLaw | 12.12.08 - 10:30 am | #
Stocking ammo?
" Markel writes:
Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
Markel | 12.12.08 - 10:29 am | # "
So what? Is the UAW made up of Republican constituents?
Looks good.
But I would have made the Fannie, Freddie and AIG kids massively overfed and overweight to match their real life greedy counterparts.
wheee
15 billion loan? YOU NORTHERNFUCKTARDS MAKE TOOMUCH!!!!111!!!!eleventyone!!
50 billion stolen? "Just the cost of doing buisness"
700 billion dollar give away "NECCESARY FOR THE ECONOMY"
80 Billion of that give away for bonuses and divvy's being paid by companies bailed out 'WHY DO YOU HATE AMERICA AND THE FREE MARKET'
fuck the GOP tribal politics and the single-issue voters who enable these teamkilling fucktards.
why you want to save the auto indsutry - there is a name for a nation which produces nothing and consumes from forign powers - Client State.
also, i'm now sad i missed the Gander mountian half off ammo sale on black friday.
but i'm thinking of going long on ammo anyway.
Ponies grow up and reproduce.
Remember back in the good old days when the $30B thrown into the Bear Stearns money pit seemed like a lot? 9 months ago seems like an eternity.
Some interesting comments from the News Editor-in-Chief at Reuters.
Reuters News Editor-in-Chief David Schlesinger is skeptical that financial journalists could have done much more to predict the depth of the crisis.
âJournalists do best when reporting whatâs happening and giving the news context and analysis,â he said. âWe also do well when we look backwards and discuss past events from the perspective of the present. We do least well when we prognosticate. While our reporting and commentary did discuss potential weak points in the economy, we did not â and nor frankly could we â accurately predict the calamitous events of this year.â
Yeah David Schlesinger's journalists are nowhere as good as CR and Tanta. Huzzah to the bloggers!
pharniel writes:
...
why you want to save the auto indsutry - there is a name for a nation which produces nothing and consumes from forign powers - Client State.
pharniel | 12.12.08 - 10:32 am | #
This bailout was not for the auto industry. It was for GM and Chrysler, 2 companies that epitomize poor management and the excesses of the UAW (Ford will manage onwards). The auto industry around the rest of the country, using American labor, and in some cases American designs, is doing much better, though it's still a tough environment for any company.
.
The Coming Stupidity Crunch
Watchers of the Stupidity industry tonight expressed grave concerns on the future supplies of stupidity.
One industry watcher, who wisshed to remain anonymous, stated: "Einstein thought that stupidity was infinite, but, really, we doubt that anything is truly infinite. However, we thought we had enough for the next 100 years until this Congress started trying to 'fix' things."
The first ripples of angst over stupidity supplies came last year when, acting on advice from Ben Bernanke, Congress increased the conformiing limit on GSE loans.
"That had some the more bearish Peak Stupidity people concerned, but we still thought the supplies would be good."
Then in October, Congress passed the $700 Billion dollar bailout of bankers and other scum.
"This wouldn't have been such hit to the reservoirs, except after defining the oversight, they gave Paulson the money before the oversight was in place. There really was a giant sucking sound on that one, and we know Monica and Bill are out of town."
However, there is panic on the Dumb futures tonight, after the Senate failed to reach agreement on even a bridge loan for the formerly-big 3, upon which as many as 3,000,000 jobs depend.
"We have no idea how to function in this environment. We looked all over flyover country, and cannot find anything like the dumbass deposits we had in D.C. - we are trying to arrange imports from Europe, but if that doesn't work, we'll have to fall back on Sean Penn amd Rosie O'Donnell. We think that'll probably do it for a while."
.
Source please
This box on my living room with sound and pictures.
This bailout was not for the auto industry. It was for GM and Chrysler, 2 companie
LOL.
"bobn writes:
.
The Coming Stupidity Crunch"
There's no shortage of stupidity anywhere in this world.
also from the cartoon...
Isn't that the New Housing Starts graph on the chest of the Freddie and Fannie pony? It even stops right at the peak (we wouldn't want to frighten the kiddies with the plunge).
I'm perfectly solvent dude. More solvent than you are.
The only way for the automakers to survive is through bankruptcy. Bond holders need to get less, UAW needs to get less, and the franchise agreements with all the dealerships need to be redone. There are way too many dealerships, way too many brands and way too many models. Bankruptcy is the only legal way that these things can be re-negotiated. I am all for a government back-stop during the re-org but writing blank checks will not solve the problem.
KB toys files BK.
philly.com: Philadelphia local news, sports, jobs, cars, homes
more fu
I like cartoons
Bancruptcy. New Management. Re-negotiate, cut wages especially at high level management, rebuild. The new owners (the current bond holders) should put the engineers in charge.
BK toys BK.
Second time in four years? Big surprise.
When BK is part of your company name, you might be a redneck !
Treasury prepares to usurp power from Congress yet again, in an on-going joke related to America & Constitutional Powers, where Paulson will do anything he can to fuck up things more than they already are:
See: he Treasury Department said Friday it's prepared to act to avoid any possible collapse of nation's three largest auto companies given that rescue efforts in Congress have failed.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said Treasury spokeswoman Brookly McLaughlin.
Because Congress failed to act ... and do what Treasury wants, Treasury will now ignore the will of Congress?
Because Congress failed to act...
This is a ay to fly your American flags upside down!!!!
Anyone have a good tri-fecta box for BFF? TIA!
.......
Treasury will now ignore the will of Congress?
James Monroe | 12.12.08 - 10:48 am | #
You must not have been paying attention recently.
THE FLAG CODE
Title 36, U.S.C., Chapter 10
As amended by P.L. 344, 94th Congress
Approved July 7, 1976
� 176. Respect for flag: No disrespect should be shown to the flag of the United States of America; the flag should not be dipped to any person or thing. Regimental colors, State flags, and organization or institutional flags are to be dipped as a mark of honor.
(a) The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.
Most individuals who have served in the military service of our nation will (or should) recognize this signal.
As a result of the many traitors and enemies we as a free people have, both foreign and domestic, as a result of the many unconstitutional acts, legislation and atrocities passed and/or committed against US citizens and their life, liberty and property, and as a result of policies that have allowed (and continue to allow) enemies of this nation to enter in large numbers through a porous border policy, I believe the life, liberty and property of US Citizens are in dire danger and distress.
xxxxx writes:
...There's no shortage of stupidity anywhere in this world...
Don't mistake your america for the world. Even if megalomania is a beloved american pastime please, keep your stupidity to yourself.
Credit crunch? What credit crunch?
| Reuters
Treasury will now ignore the will of Congress?
James Monroe | 12.12.08 - 10:48 am | #
Just throwing this out there, but given that the vote was fillibustered, I'm not sure that the will of congress was to deny the Big 3 a bailout. Seems to me that a majority of congresscritters were happy to pass out the cash for dinosaur life support.
The collapse of American enterprise is truly something to behold.
I was embarrassed when the auto execs were humiliated (rightfully perhaps) on TV in front of congress, twice. I don't know how America gets past this without a permanent hit to relative international prosperity.
Future doesn't look promising to me...
xxxxx writes: So what? Is the UAW made up of Republican constituents?
Not after this. Any Reagan Democrats left in the union movement will think twice before leaving the fold now over "hot-button social" (i.e., non-economic) issues.
Assume Crash Position @ 10:33--Those were the good old days indeed. We were all so simple and childlike, basically running around naked in the Garden of Eden compared to today.
(a) The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.
Most individuals who have served in the military service of our nation will (or should) recognize this signal.
One year in college one of the kids in the frat flew the flag upside down. A state trooper actually pulled over and asked us if the house had been taken over or something.
"Nope just an idiot who woke up drunk, sorry officer"
AIG is the fat kid - perfect !
BTW, can anyone remind me the original source of the Pony meme? It's become such a part of the everyday discourse that I can't recall ever not chuckling about it in the past.
Sigh,
I really hope the constitution gets amended to implement the result of an election in days not monthsto keep fiascos like this from not happening again.
When the US taxpayer is bailing out Wall St. to the tune of $2 Trillion++++ to date (with no oversight!), what makes these US taxpayer auto workers think that their companies should be getting help?
The foreign owned automakers without the 'burden' of retired workers pensions and health care costs are doing fine (besides the 40% decline in sales), so let the Invisible Hand of Free Markets decide.
All this government meddling and regulation is killing us.
I have even less sympathy for the union mob bosses than I do for the car co. execs.
Re: given that the vote was fillibustered, I'm not sure that the will of congress was to deny the Big 3 a bailout
This is just trash novel politics and manipulation by the union and Congress called the bluff, and Congress should be calling the shots, not the union or Treasury. Treasury is usurping power from congress, because congress is weak. Paulson should be be arrested IMHO!
....figure if GM is bailed out by TARP, come end of January no accounting of the $15-billion spent will be reported. Transparency? Oversight? Yeah right - go talk to our lawyers....
BTW, can anyone remind me the original source of the Pony meme?
The Strong Fundamental | 12.12.08 - 10:56 am | #
I think I 1st saw it on atrios years ago. Don't think that's where it originated though
One reason VW and Honda build cars here is to hedge against protective tariffs. If Detroit implodes, no local competition, no credible threat to penalize foreign cars.
Just how secure are those jobs in Kentucky, Mitch?
Detroit needs to be bulldozed to make room for McMansions
I have even less sympathy for the union mob bosses than I do for the car co. execs.
That's important to know. Because it's all about your subjective feelings of sympathy.
"Clean Stupidity" should be the GOP motto. It is kind of like 'Clean Coal', which doesn't exist, except that it is as widely found as hydrogen and carbon within the rump of the GOP that remains after the sane ones have all be removed.
Was a rough night. My hands are sore from sitting on them for 9 hours.whew!
"There's no shortage of stupidity anywhere in this world."
Sadly, even the fringe groups aren't trying to make a case for peak stupidity.
I think this Madoff story is a much bigger story than the auto bailout when it comes to the markets. The automakers will get their bailout - that was always expected and will happen. No one expected the Madoff situation and it will not be the only one....
One reason VW and Honda build cars here is to hedge against protective tariffs. If Detroit implodes, no local competition, no credible threat to penalize foreign cars.
Just how secure are those jobs in Kentucky, Mitch?
Wow. That is a great point!
and Congress called the bluff
Anonymous | 12.12.08 - 11:00 am | #
See, I don't think Congress called the bluff, I think a rump minority in Congress called the bluff! Don't get me wrong, I think BK is the way to go here, but a Congressional majority definitely would have given out three big ponies.
I want one of those ponies to pull my Amish buggy.
Got this link from jessescrossroadscafe.blogspot.com/
YouTube - Richard Whitney: Regulation Will Destroy Capitalism
Excellent. We dont need regulation.
Does anyone understand this statement?
While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.
Will the Treasury demand concessions up front, or is this just empty rhetoric?
.....Doesn't Paulson need the second $250b to bail out Detroit? He has to request it? Does Congress vote on it again before dispensing it?
The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.
Treasury is not to be engaged in commerce and fascism, so is this Treasury coup, to act against the will of Congress a time to fly Old Glory upside down?? Something aint right!
up on the day!
reality be Da****
thought that was the woosh to UNCH for sure......
Re: given that the vote was fillibustered, I'm not sure that the will of congress was to deny the Big 3 a bailout
The vote was not filibustered. It was defeated as a procedural motion by the GOP when the Dems could only get 52 (needed 60) votes to bring the measure to an up or down vote.
Rick Wallick moved into a new, three-bedroom $200,000 home in Maricopa, Ariz., in October 2005. Today, the home is worth $80,000.
The disabled software engineer stopped making mortgage payments this month. His $70,000 down payment is now worthless. His dream house will be foreclosed on next year.
...As painful as the decline has been, history suggests home values still may have a long way to drop and may take decades to return to the heights of 2½ years ago.
"We will never see these prices again in our lifetime, when you adjust for inflation," says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. "These were lifetime peaks."
Let's be honest, real estate made a lot of really dumb people rich (I guess I should include my self). The planet is not a better place because of this.
Doesn't Paulson need the second $250b to bail out Detroit? He has to request it? Does Congress vote on it again before dispensing it?
Executive requests it. Unless Congress passes a resolution against the second disbursement, then Exec gets it.
UAW is getting to be tarped by the Tarpior himself.
I think I 1st saw it on atrios years ago. Don't think that's where it originated though
koan0215 | 12.12.08 - 11:01 am | #
Doesn't Atrios usually offer the Pony to Holden . . . maybe from First Draft?
.
The Strong Fundamental writes:
BTW, can anyone remind me the original source of the Pony meme?
I think it originates form an old joke: a kid is given a pile of horse manure and happily starts digging, saying "I know there's a pony in here somewhere!".
Either that, or just emblematic of a magnificent gift.
thought that was the woosh to UNCH for sure......
Give it time. The Pump & Dump leads the way, and it's already feeling all kermitty all over.
The only way for the automakers to survive is through bankruptcy. Bond holders need to get less, UAW needs to get less, and the franchise agreements with all the dealerships need to be redone. There are way too many dealerships, way too many brands and way too many models. Bankruptcy is the only legal way that these things can be re-negotiated. I am all for a government back-stop during the re-org but writing blank checks will not solve the problem.
Mark, that is probably true. But you are ignoring two things.
First, the Southern Party wanted only the UAW to get less. No one else. They didn't want to hose management, shareholders, dealers, or any other stakeholders. Just the unions, which we now have written proof was for reasons of retribution for the election.
Second, there is no time for a prepack BK right now. None. You are proposing a six-week chemo treatment while the patient is in cardiac arrest. First stabilize, then treat.
You know, I come from a union family, which makes me genetically repulsed by union leadership. However, we are now looking at a situation that could potentially tip the entire globe into the Great Depression Times Two. And people want to cut off their noses to spite their faces, simply because they like their role as lickspittles to the cheap labor party.
Madoff will be pardoned by Bush and baled out with TARP
One reason VW and Honda build cars here is to hedge against protective tariffs.
Perhaps. Another was protecitonist sentiment here at a time when many in the US believed Japan was 'buying up America'. That is, if foreign auto makers wished to continue to participate in the US market, they needed to commit to plants here and to employ Americans and American suppliers.
Pony is the wrong breed. Draft Horses would fit the bill. Ponies are lightweights and one ton Drafts would look right. Right on that grossly overweight kids are needed. Back to the drawing board.
The vote was not filibustered. It was defeated as a procedural motion by the GOP when the Dems could only get 52 (needed 60) votes to bring the measure to an up or down vote.
Phil Gramm | 12.12.08 - 11:08 am | #
Well, yeah it was fillibustered. That is a fillibuster! It failed a cloture vote to "end debate", which means that debate continued and there was no vote. Fillibusters used to be old duded reading from phone books. Now that the minority in the Senate from either party simply fillibusters everything, it's just the cloture vote.
"Perhaps. Another was protecitonist sentiment here at a time when many in the US believed Japan was 'buying up America'. That is, if foreign auto makers wished to continue to participate in the US market, they needed to commit to plants here and to employ Americans and American suppliers."
But both the tariff issue and this one become moot if there is no domestic auto industry, don't they?
Though on second thought I probably shouldn't be arguing about senate procedural rules with Phil Gramm himself!!!!
The vote was not filibustered. It was defeated as a procedural motion by the GOP when the Dems could only get 52 (needed 60) votes to bring the measure to an up or down vote.
Another feather in Harry "Weak Tea" Reid's cap. He never makes the Southern Party actually go through the inconvenience of a real filibuster. Giuliani only wore a skirt once. Harry lives in one.
Let's just pin the whole thing on the unions and there inability to cut off it's source for continuing due's from it's worker's. Seriously if they were able to get that ridiculous hourly rate from the manufacturer's I would have taken it too. Blaming them (UAW) for the management's inability to negotiate anything resembling a real business labor model and using the threat of job losses is just to "neat".
They are not in this position solely because of the labor rate. It contributes to the overall problem but it is not the sole cause.
Ciao
MS
Markel writes:
Smoking gun displayed during UAW press conference: GOP internal email revealing that the purpose of opposing the bailout was to punish the unions for the election.
Markel | 12.12.08 - 10:29 am | #
So? Ninety-plus percent financial support for one party might well generate a reaction from the other side, you think?.
First, the Southern Party wanted only the UAW to get less. No one else. They didn't want to hose management, shareholders, dealers, or any other stakeholders. Just the unions, which we now have written proof was for reasons of retribution for the election.
Markel:
Did you even read the Corker proposal, specifically the 30% payout to the bondholders?
...seems this "Union" thread is kinda like an "Abortion" thread for guys. Same kind of emotion on both sides.
I don't think it much matters though. Just slows down the inevitable march into the sea for this country....that's the saddest part - everyone thinks the light at the end of the tunnel is stationary.
pharniel:
They say we aren't spending enough on education, and the results of 12-16 years of schooling in the US are dismal. Looks like "they" are right.
So? Ninety-plus percent financial support for one party might well generate a reaction from the other side, you think?.
JohnR(VA) | 12.12.08 - 11:15 am | #
Yep, tribal shakedowns ARE the way to define national economic policy - and paint as a principled stand - riiiiiiiight...
Canadian UAW wants tarrifs on autos.
The Strong Fundamental writes:
BTW, can anyone remind me the original source of the Pony meme? It's become such a part of the everyday discourse that I can't recall ever not chuckling about it in the past.
The Strong Fundamental | 12.12.08 - 10:56 am
Calvin and Hobbes:
This strip was originally published in the newspapers on January 13, 1987.
Susie wipes a tear from her eye. She wonders why Calvin is so mean. She wishes she had a hundred friends, then she wouldn't care what Calvin said. She goes on to say she and her hundred friends would go do something fun and leave Calvin all alone. But then, Susie sits down. She says that as long as she's dreaming, she also wants a pony.
Calvin and Hobbes Extensive Strip Search
While it is a big side show, the automaker bailout hooraw here is still a side show...
So? Ninety-plus percent financial support for one party might well generate a reaction from the other side, you think?
You mean a reaction like driving a stake through what's left of the economy?
Sure. From that side.
Kermit went back to Miss Piggy
Let's face it, if Paulson and Bush blew up The Lincoln Monument, no one would give a fuck!
Great cartoon. Where does it all stop? Check out gloomboom.com
Did you even read the Corker proposal, specifically the 30% payout to the bondholders?
anonymous | 12.12.08 - 11:15 am | #
Yeah the Corker proposal had a haircut for everybody in it. When he took it back to his caucus, they decided that the workers should go to the barber first. That may make sense financially, but it don't make sense politically for the GOP. When you need that rust belt every four years it's not so smart to crap on it.
Does anybody seriously believe that if the UAW cut wages, pensions, medical and jobs, the US auto industry would be in fine shape?
Thought not.
But both the tariff issue and this one become moot if there is no domestic auto industry, don't they?
Point is, it was a fine compromise in an otherwise poisonous, jingoistic environment - they kept the market, we picked up a major contributor to productive GDP.
. . . and they now are a component of the domestic auto industry. Probably a good thing, under the circumstances.
. Just the unions, which we now have written proof was for reasons of retribution for the election.
Does anyone have a link to the memo? I am shocked that anyone was foolish enough to write it in an email.
There will be no economic recovery
Until the Southern party is banned and Reaganomics finally killed.
The Wall Street pigmen have finally gone to far.
2 Trillion stolen by Bush and Paulson on their way out
Let's face it, if Paulson and Bush blew up The Lincoln Monument,
is that on right before Idol?
Wonder if this is another generational buying opportunity...
Wells Fargo takes $40B charge for Wachovia
The planned acquisition of Wachovia Corp. will cut into the balance sheet of buyer Wells Fargo & Co.
Wells Fargo (NYSE: WFC) intends to take a $40 billion charge in the fourth quarter for the Wachovia purchase, according to a report from Richard Bove, an analyst in Lutz for Ladenburg Thalmann.
Bove said Wells Fargo officials told him that the company would account for the charge through a balance sheet adjustment and it would not flow through the income statement.
Bove said there apparently is another $11 billion in charges due to write downs that also will not be shown on the income statement. But the balance sheet charges will be offset by a $12.6 billion equity offering and $25 billion from the governments troubled assets relief program, among other benefits, said Bove, who has a buy rating on Wells Fargo stock.
Wells Fargo takes $40B charge for Wachovia - Tampa Bay Business Journal:
"The disabled software engineer stopped making mortgage payments this month."
Why stop making payments? You still have a roof over your head. And it sounds like it's a break-even on cash involved. I must be denser than I thought.
The two non-negotiable demands of the GOP minority (Corker proposal) were (1) cut worker hourly wages to make them equal to import manufacturers in 2009; (2) retire 2/3 of the company debt by April 2009.
The UAW was willing to agree to cut pay when the new contract is negotiated in 2011. A law requiring a change to the existing contract is unconstitutional and the UAW was not going to renegotiate the existing contract with only the wages portion being changed.
There is no way the debt holders would vote 2/3 to convert to equity (thus losing their senior position ahead of equity in an eventual bankruptcy).
These demands were just lipstick. They real reason was to punish (just) the UAW/workers - which is no surprise since the GOP has been anti-union forever.
The crazies are in control of the GOP and crazies act crazy.
Ironically, the Dem. position (Pelosi) in the beginning that TARP funds should be redirected to the auto companies. Bush rejected that and said take it out of the energy efficiency subsidy, thus making the bill the Bush bill, which the House passed and the Senate Dem. supported. The GOP Senate vote to not allow a vote on the Bush bill will now lead to the TARP being used, thus returning to the original Dem./Pelosi proposal. Note that the GOP refused to allow a vote on a GOP-Corker proposal outlined above as an alternative to the Bush bill.
With all the shit news, DOW should be headed for 9K today!! Yippie!
"They didn't want to hose management, shareholders, dealers, or any other stakeholders."
I thought Sen. Corker was requiring convertibility of equity to bonds and the bonds taking a substantial haircut?
Does anyone have a link to the memo? I am shocked that anyone was foolish enough to write it in an email.
It was read out loud at the UAW press conference around an hour ago. Don't see it online yet. One line said something like "attack the unions first before they attack us."
" YYYYY writes:
xxxxx writes:
...There's no shortage of stupidity anywhere in this world...
Don't mistake your america for the world. Even if megalomania is a beloved american pastime please, keep your stupidity to yourself.
YYYYY | 12.12.08 - 10:52 am | # "
Guess what, yyyyy; Hitler, Stalin, Lenin, Mao, Pol Pot, Mugabe, and a host of others didn't come from America. You may think that Americans are that bad, but odds are, we've bailed you @$$es out more than once.
In 2000 I sat next to one of the 9/11 hijackers flying out of Providence, RI, and a year later, this @$$hole flew a plane in which one of my former supervisors was traveling into one of the world trade center towers. Why don't you jack@$$es keep YOUR stupidity to yourselves, and quit yer bitchin'.
A law requiring a change to the existing contract is unconstitutional
JimPortlandOR | 12.12.08 - 11:24 am | #
How exactly?
OPEC to stop drilling for oil and raise prices back to $147?
the market must not have read the inventory and retail report...
UM consumer sentiment is joke...
the ponzi scheme is the market..not just maddoff..
The rescue money will do nothing..go into bk and pay the suppliers who are owed money..
GM stand for greed manifested
"You mean a reaction like driving a stake through what's left of the economy?"
Sure. From that side.
Markel | 12.12.08 - 11:19 am | #
Well if the Big Three represent all that's left of the U.S. economy, then it's time to move to Belize.
When to take a shower (taking day off) and am already hopelessly far behind.
Off to Save the World.
I. e., going Christmas shopping.
I expect to be duly appreciated.
Paulson wears poodle skirt at Detroit bailout fundraiser and dances with pigs. Happy Days Are here Again!
\tI have even less sympathy for the union mob bosses than I do for the car co. execs.
\t bearly | \t \t \t \t12.12.08 - 10:59 am | #
Very few of those left. Why would you steal nickels from union coffers when you can run ponzi's on Wall Street for BILLIONS?
There was a day when unions were rife w/ mob bosses - those days are mostly gone (still some mob from what I've heard in big city muni unions but can't confirm/deny).
..."The rescue money will do nothing..go into bk and pay the suppliers who are owed money.."
That actually makes me feel better about it then.....
I took a rather large haircut from a reputable company once - made food harder to come by for the family for months after...
JohnR(VA) writes:
"The disabled software engineer stopped making mortgage payments this month."
Why stop making payments? You still have a roof over your head. And it sounds like it's a break-even on cash involved. I must be denser than I thought.
Do the math. Paying down the mortgage will get him back to zero equity in about a dozen years. Stop paying, bank the payment and by the time he gets kicked out in 18 months he'll have half his down payment back.
Paulson rumored to be immingling TARP funds for sex change operations
They real reason was to punish (just) the UAW/workers
No link to that "memo?" Until then, it's somebody's imagination--just the thing to get a sympathetic reporter from one of the Detroit newspapers to crank out a tear-jerking story how persecuted those poor little defenseless UAW workers are. (Not that the UAW doesn't deserve to be punished!) On the other hand, if it's indeed a real memo, payback is bitch, huh?
If I can take a paycut from 180K to 45K. Unions can too..
No one is going to buy cars..They need to shut down factories for 6 months to work out excess inventory.
Home builders should be bk and stop building homes..
Build, build, build seems to be why were all consumers..
I think everyone should be required to read Walden and think about how he lived..Being simple works and it leads to serenity...
Thanks, Rob. What I don't get is that I thought a home was for, like, living in it. You know, a roof over your headfor quite some years.
Oh, well, I am not very good on picking up cultural behavioral patterns.
This just in:
DEPARTMENT OF TREASURY TO DECLARE A PROFIT HOLIDAY...TO LAST INDEFINITELY.
Well if the Big Three represent all that's left of the U.S. economy, then it's time to move to Belize.
Can't figure out if all the obtuseness on this thread is intentional.
Demand is collapsing globally. An abrupt additional collapse before year end to the tune of 2-3 million jobs in a disorderly bankruptcy is enough to wipe out the economy.
There was a day when unions were rife w/ mob bosses
True, they just moved into politics, especially the IL governor's office.
Two governors in a row...
America will miss Liberalism. Not today, perhaps, or tomorrow, but soon. As soon as it is too late.
A law requiring a change to the existing contract is unconstitutional
JimPortlandOR | 12.12.08 - 11:24 am | #
How exactly?
JP | 12.12.08 - 11:26 am |
Constitution, Art. I, Section 10:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
blackhat writes:
This just in:
DEPARTMENT OF TREASURY TO DECLARE A PROFIT HOLIDAY...TO LAST INDEFINITELY.
blackhat | Homepage | 12.12.08 - 11:33 am | #
Whew! Thanks for that, blackhat. Now I can proceed with my daily chores in complete serenity.
Ciao!
Law impairing the Obligation of Contracts
I don't think the law objects to nulling of contracts by mutual consent.
I'm no lawyer.
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Jim:
The first two words: "No State." From what I understand, no court has held that the Contracts Clause applies to the Federal government. The prohibition against modifying contracts usually gets filtered through the Fifth Amendments Takings Clause.
JohnR(VA),
It sounds like with $70k (40%) down this was a home to live in but like the family silver in the days of the Hunt brothers it stopped mattering when the entire asset class started getting gamed. At this point the incentive to renege is too great and the penalty too small. Sadly, had he put zero down he'd be even better off.
I'm working from home, listening to CNBC (why?).
Kudlow is screaming about the SEC not catching Madoff's ponzi scheme. Every other time I've heard kudlow, he's complaining about govt intervention, get rid of Sarbanes, etc. At the behest of their benefactors on Wall St (and lauded by many on the financial news), our Congress has cut the SEC's budget to the point where they have a hiring freeze.
These accounting scandals are manna from heaven for me. Bad for nearly everyone else.
\t'We are 10% of the labor costs. If [the UAW] worked for nothing, it wouldnât help [the auto industry] limp into January.'
â Ron Gettelfinger,United Auto Workers
>>
I bet a lawyer wrote that line.
\t REBear | \t \t \t \t12.12.08 - 11:32 am |
Those numbers are common knowledge - direct labor is approximately 10% of the cost of mfg in automotive. Some cases even less. The big money is in the supply chain - something like 60% of the cost. That is why the job multiplier is so high in automotive - the OEMs ar the tip of the iceberg. And the suppliers can't work for nothing - they are on the edge of BK themselves. Plus they are already owed something like 120 days now - that was all the concern about 'cash for delivery'. That would shut the OEMs down pronto AND force BK now. It would probably be a chain reaction... auto OEM BKs, then Tier Ones, Tiers Twos, etc. Bigger and bigger down the pyramid.
Can't figure out if all the obtuseness on this thread is intentional.
Demand is collapsing globally. An abrupt additional collapse before year end to the tune of 2-3 million jobs in a disorderly bankruptcy is enough to wipe out the economy.
Markel | 12.12.08 - 11:34 am | #
Markel I'm only ever obtuse intentionally! Actually, I'm not convinced that BK is going to lead to the loss of 2-3 million jobs. I'm thinking more on the order of a few hundred thousand (not that that doesn't suck). I think the companies would manage through receivership, slash down, and come out the other end stronger and lither. And I don't see this money saving these companies, because I don't think that the oversight will be there to maange the changes they need to make. I think a bailout would guarantee another few years of zombiefication before an inevitable collapse. Look, this isn't the workers' fault in any way. We can safely lay all blame on management, but that's where things stand, FWIW. Sh-t sux. Also, I reserve the right to admit that I could be absolutely, disastorously wrong.
Need more bailouts!
Hyperinflation - it's what's for dinner!
Demand is collapsing globally. An abrupt additional collapse before year end to the tune of 2-3 million jobs in a disorderly bankruptcy is enough to wipe out the economy.
Markel | 12.12.08 - 11:34 am | #
Color me skeptical.
This presupposes that there's no market at all for what a restructured Big Three would produce and that there is no dynamism in the economy except for what emanates from Detroit. This was true in the 1950s, we'll see if it still holds true in the 21st century.
auto OEM BKs, then Tier Ones, Tiers Twos, etc. Bigger and bigger down the pyramid.
dryfly | 12.12.08 - 11:41 am | #
Sounds like a Ponzi arrangement
Dryfly, stop fighting. You should know by now that we are in this fix because of labour costs... oh wait...
ew thread
With gas prices under $2, I would think G< woud be ramping out a new BIGGER SUV, like a tsunami wave of Stretch-SUVs
Hummer Stretch Limousine
YouTube
- Hummer Stretch Limousine
Ford will make this job number one to make a bigger SUV called The TARPster
Koan,
Exactly..
A fast track BK with credit line of 10 Billion will get suppliers paid faster,
I work with auto dealers every day for last 20 years..
Cerebus can pony up thier money...
GM needs bk..
Ford not an issue..
I'm tired of bailing out every bad business model..
I can attest to the insane business model of the OEMS..
I've taken my hit to keep my company alive..I volunteered to take paycut based on revenue attrition from our dealers...
Let them take the hit now...Do it for country then UAW...
Hi dryfly,
Thanks.
Not all of the 60% supplier cost is because of labor. Ron said "We are 10% of the labor costs"
What is the pension fund cost?
If these companies were actually managing based on circumstances they would have started idling plants this summer. Tell the workers that we will need to re-negotiate the labor contract as the demand for it's products fell. And then tell them that if you don't then we simply leave the plants idle. Being paid a lower hourly rate is better then not being paid at all. The management would still start to accomplish it's goal of depleting the union strike pay (because you know they would have had a strike vote and passed it) and they would have been in a much better position to get concessions.
Now I don't really subscribe to the theory that it's all about pay rates but if you did methinks that would have been the smarter more results oriented route to have taken.
Ciao
MS
The first two words: "No State." From what I understand, no court has held that the Contracts Clause applies to the Federal government.
Thanks, that was my confusion too. Anyone know for sure?
"dryfly writes:
.......
Those numbers are common knowledge - direct labor is approximately 10% of the cost of mfg in automotive. Some cases even less. The big money is in the supply chain - something like 60% of the cost."
Aren't union pensions and medical cost one of the big drivers in cost? Is that included in "direct labor"?
Do the supply chains have union labor too, and if so, is that calculated into your "direct cost"?
Unless you're drilling or mining for natural resources, you're going to have a supply chain. Why even mention that? Companies usually try to develop their suppliers as a means of "outsourcing" work that is not fundamental to their business, and to do it more cost effectively.
SUVs are the future, just like plastics; get in now.
This presupposes that there's no market at all for what a restructured Big Three would produce and that there is no dynamism in the economy except for what emanates from Detroit. This was true in the 1950s, we'll see if it still holds true in the 21st century.
\t JohnR(VA) | \t \t \t \t12.12.08 - 11:43 am |
They mostly won't restructure - BK w/out strong gov't oversight & financial backstop means liquidation. And not just the 'Big Three' - right on down the supply chain to the raw material producers. That is what has the Treasury & Fed scared. They should be scared too.
Also understand that the transplants don't use domestic suppliers much - they bring their own supply chain with them from Asia - again do the menial labor here but most of the high end work stays offshore. Very little high value added work is 'transplanted'. BTW - we do the samething with our transplants in China (design develop here - assemble over there - it's a common SOP).
Anyone brave enough to buy a 2009 produced piece of detroit metal? build date fall '08?
Dryfly, the injection of facts into this discussion is a real buzz kill for the onanistic fantasies about the dirty effin unions.
Markel, they will mostly miss that dig lol
What is the pension fund cost?
\t REBear | \t \t \t \t12.12.08 - 11:48 am |
I don't know - the 10% number is ALL associated direct labor cost - health care, pension, take home salary, FICA - all of it.
Labor is a tiny fraction of the problem - if you walked factories like I do you'd see that. It's capital & white collar (overhead) and supply chain where the cost is.
That's why there is going to be a blood bath - in whitr collar this recession - it's where the money is & where the money is is where the cuts have to be made.
Dryfly, the injection of facts into this discussion is a real buzz kill for the onanistic fantasies about the dirty effin unions.
Markel | 12.12.08 - 11:53 am | #
Yes. We got a few Rushbot Freeper wingnuts here at CR. A lot of great people here, but we also have jg, El Cliffo, JohnR(Venereal Ahole), Broward Porne, etc. etc. etc.
What is the pension fund cost?
REBear
Based on last years unit production GM paid the equ. of $1500 per auto to cover pension and retired health benefits. BTW the single largest buyer of Viagra is GM by way of their health benefits (something the UAW took a tough stand on to get this included as a necessary medical treatment)
SUVs are the future, just like plastics; get in now.
Anonymous | 12.12.08 - 11:51 am | #
At least their a step up from SIVs.
onanistic - I had to look up this word.
When listening to Ron G speak, I thought the answer of only 10% cost savings was the UAW administration not being paid. Maybe I just misunderstood what he was claiming
Barley writes:
onanistic - I had to look up this word.
Barley | 12.12.08 - 11:58 am
It figures.
Sounds like a Ponzi arrangement
\t Barley | \t \t \t \t12.12.08 - 11:43 am | #
No it's called 'supplier-OEM Partnership'. The OE's wanted their supply chains to commit to them & they did - now that the OEs are going down so will the supply chains - the job losses associated with this will be something like 4-5X what is lost at the OEs directly.
Gary, some of those folks write interesting posts once in a while. But to be honest, if somebody doesn't come to CR to learn, I don't know why there coming here at all.
You know, Tanta made a very, very strong impression on me. Anytime I read a story about this crisis, I feel like she's looking over my shoulder. And ready to hit me on the head with a bong whenever I believe the easy, superficial talking points. Or fail to try to understand an unfamiliar industry--at least just a little bit--before parroting somebody else's spin on it.
dryfly - I was being sarcastic...
JohnR(VA) @ 11:27 am:
Well if the Big Three represent all that's left of the U.S. economy, then it's time to move to Belize.
Hey, I think you're finally starting to get it! Selling crap to each other is not an economy; making crap to sell to each other is. More importantly, paying each other enough to actually buy crap from one another is fundamental.
25 years of essentially uninterrupted Reaganomics has looted the economy and middle class...you have to recharge the aquifer on occasion.
Is that a 3-headed pony in back?
paying each other enough to actually buy crap from one another is fundamental.
Funny how quickly people lose the point, Scott. These comment threads have been replete with condemnations of our fake economy, where consumers are kept strung out on credit crack because the one percenters won't pay them enough to detox.
But mention a union and the knee jerks like it was hit with an RPG.
And it will always be that way. Folks will in principle accept the need to pay Americans middle-class wages for the economy to work. But there will always be an excuse, a special exception for this guy.
As I said before, when you're a lickspittle to the one percent, at least there's no shortage of work.
\tdryfly - I was being sarcastic...
\t Barley | \t \t \t \t12.12.08 - 12:02 pm | #
Sarcastic or not - it is a very good & relevant question. Something the folks touting the transplants don't realize...
1) The workforce at the transplants are aging too. Their health issues & costs are climbing.
2) They mostly offer defined benefit - their workers are in 401Ks & such. The market is killing them & they aren't happy about it.
At the end of the day the transplants are going to want a similar deal the Big Three get - just watch. The silence from Toyota, Nissan, etc. Is a testament that they are starting to feel the same pressures. Only a fool wouldn't be able to see this.
How about we stop with the sexist bullshit about Paulson being a "woman"?
dryfly wrote:
...now that the OEs are going down so will the supply chains - the job losses associated with this will be something like 4-5X what is lost at the OEs directly.
I hear all sorts of different multiplier effect numbers tossed around, but the maximum I've heard so far is 3x, with the lower end at 1.4x.
I have no idea what to believe in this regard. I imagine that there will be some overall demand loss if the big three are allowed to fail, but some of that demand has to shift to the other quasi-domestic/quasi-foreign manufacturers. Why can't some of the production capacity in the existing supply chains follow that? Even if "following" takes the form of workers migrating south to anti-Union states for lower wages?
Re: How about we stop with the sexist bullshit about Paulson being a "woman"?
I thought there was just an allusion to a sex change operation being paid for by TARP?
Another dryfly:
At the end of the day the transplants are going to want a similar deal the Big Three get - just watch.
The transplants and their non-Union companies have been 'drafting' the UAW for years - they undercut the big three ever so slightly, and operate in lower COLA locations. That has the practical effect of reducing their costs vis-a-vis the Big 3 while offering competitive employment to workers. Classic arbitrage. But that is, as you say, a temporary phenomena.
If the foreign makers can cut wages (or now allow for greater wage stagnation - the real goal of UAW busting), those workers will find their situation less cushy, and eventually, labor problems will arise. Of course, it's taken 25 years to get where we are now, and that allows for years and years of short term lucre.
I have no idea what to believe in this regard. I imagine that there will be some overall demand loss if the big three are allowed to fail, but some of that demand has to shift to the other quasi-domestic/quasi-foreign manufacturers. Why can't some of the production capacity in the existing supply chains follow that? Even if "following" takes the form of workers migrating south to anti-Union states for lower wages?
::::
Won't happen - the plants are too focused & automated. They can't just sell stuff to somebody else. These are NOT flexible operations. It is not uncommon to invest a million dollars in one cell to make one part - that part might go on 3-4 vehicles inside the same OE platform envelope but it won't go on other OEMs or other transplants. They are CUSTOM parts CUSTOM applications.
And a 3x-5x multiplier is very realistic from what I can see - might actually be higher if the community fallout is greater.
Why spend that money on automation? Because that is how you reduce labor content - you can pay a guy (and the white collar support staff) very well and still make money if you automate like crazy.
As for move south? They are ALREADY in the south! I've visited them. They are nationwide - NAFTAwide really... it's the HQs that are in Detroit!
People don't know squat about this biz yet yap all day. It really is a difficult situation all around.
I imagine that there will be some overall demand loss if the big three are allowed to fail, but some of that demand has to shift to the other quasi-domestic/quasi-foreign manufacturers.
The economy lost over half a million jobs in one month. Why didn't the efficient market simply redirect the demand created by those paychecks somewhere else instantly?
Ok, last riff off of Dryfly:
The workforce at the transplants are aging too. Their health issues & costs are climbing.
I was heartened to see Obama is going to seize this window of opportunity for doing something pro-business and pro-worker: healthcare reform. The transplants derive a huge advantage in their labor force cost, and it's not due to unions or the lack thereof - it's due to their home governments providing healthcare and retirement to their home labor forces!
We force those costs onto the domestic manufacturers here - you want to get the big three out from under 'legacy costs' - well, provide the kinds of social benefits to US citizens that Germany, Japan and the rest provide to their labor forces. Why the hell is US business in the business of paying for health care in the first place?
I thought there was just an allusion to a sex change operation being paid for by TARP?
There's nobody tougher than somebody who undergoes a sex change. They take hell for it. That takes serious, um, balls.
Bad analogy for saying Paulson or Reid are wimps. As is the skirt ref; God knows there are plenty of tough women. Anybody think Tanta was a wimp?
Is it too simplistic to put the whole crisis off on the Unions, providing an opportunity to break them, which has been a coprophagic CorpoRat wet-dream since the Pullman Strike?
Mebbe...
But it's definitely part of the plan...
I got work to do - talk to you all later.
My guess is CR will be forced to enter more on this story. It isn't going away - either messy ugly bailout or BKs. One or the other will be on the docket & soon.
xxxxx writes: Guess what, yyyyy; Hitler, Stalin, Lenin, Mao, Pol Pot, Mugabe, and a host of others didn't come from America.
I invoke Godwin's Law!. This thread officially dead. On to Inland Empire Vacancy Rates...
Interesting visual aid to different ways of funding the bailout:
A Visual Guide to the Financial Crisis - The Bailout for the Economy | MintLife Blog | Personal Finance News & Advice
Where's MY pony?
Sulk.
dryfly writes:
People don't know squat about this biz yet yap all day.
I completely agree dryfly. I work at a tier 1 manufacturer making parts for Chrysler, GM and Ford. I enjoy the dicussions on CR, and have learned a lot here. However, it really amazes me the level of ignorance and misunderstanding that I see posted here regarding automotive manufacturing, and manufacturing in general. I would estimate that 99% of the readers here have absolutely no idea how difficult it is to actually convert 3,000 pounds of steel, aluminium, plastic, rubber, and glass into a vehicle that will run for 150,000 miles, start every time at temperatures between -40F and 130F, and proctect the occupants from injury in the event of a crash.
I see the same level of ignorance in the congress and senate. When did those clowns ever think that they knew how to run an automotive company better than the people who are already doing it? They have no idea how demanding this industry is.
AlterNet. 9/30/08:...Toyota Driving Automakers' Global Race to the Bottom
"And in Japan, at its flagship operation in Toyota City, some 30 percent of the workforce is temporary workers who earn as little as half what permanent employees do. In the surrounding area, a network of closely-related supplier companies utilizes thousands of foreign guest workers under conditions that, by many definitions, qualify as human trafficking.
Toyota Japan has also created a work environment so stressful that, each year, an estimated 200 to 300 employees are incapacitated or killed from overwork and stress related illness.
Company Union Supports Management, Not Workers
In line with the usual practice in Japan, Toyota's official union, which represents only that company's permanent employees, functions as a human resources management mechanism that doesn't oppose management or stand up for worker interests. According to a number of long-time Toyota employees interviewed by National Labor Committee researchers on an April 2008 research trip to Toyota City, the company union works hand-in-hand with management, and worker demands for raises, job actions or even challenges to management policy are out of the question."
Cont'd AlterNet: "Toyota's supplier plants also make extensive use of guest or "trainee" workers -- under conditions that in some respects qualify as human trafficking: The workers, most of whom come from China and Vietnam, pay manpower agencies in their home countries as much as $8,000 to $10,000 for a two- or three-year contract.
Toyota's foreign workers in Japan are second-class citizens. On arrival the guest workers' passports are confiscated. During the first year as "trainees," they are not covered by Japan's labor or minimum wage laws. They work alongside Japanese workers, putting in the same long hours, but often earning less than half the minimum wage -- as little as $2.76 an hour, or $479 a month. As guest workers, they are required to remain with the same employer -- no matter how bad the working conditions -- and to live in the company housing assigned to them -- even though some are charged twice what their Japanese colleagues pay for comparable accommodations...."