The Auto Bailout (update) Posted by: McQ
on Thursday, December 04, 2008
The UAW is finally stepping up to the table and announcing its willingness to make concessions to help the Big 3 automakers avoid bankruptcy. Of course it is predicated on the government extending them loans.
At a news conference in Detroit, the U.A.W.’s president, Ron Gettelfinger, said that his members were willing to sacrifice job security provisions and financing for retiree health care to keep the two most troubled car companies of the Big Three, General Motors and Chrysler, out of bankruptcy.
“Concessions, I used to cringe at that word,” Mr. Gettelfinger said. “But now, why hide it? That’s what we did.”
Labor experts said the ground given by the union underscored the precarious condition of the Detroit companies, as the U.A.W.’s own prospects for survival are also in doubt. “It is an historic and awfully difficult moment for the U.A.W.,” said Harley Shaiken, professor of labor studies at the University of California, Berkeley.
"We're going to make modifications; we're not opening the contract, if you will," Mr. Gettelfinger said at a news conference at Detroit's Renaissance Center, the corporate home of GM.
They're not a "re-negotiation", but changes made by the UAW, based in their constitution, which would lead one to believe they're temporary and could be again "modified" back to original terms in better times.
Meanwhile, polls indicate that a solid majority of the public does not favor a bailout for the auto industry:
A full 70% of respondents indicated that a bailout is unfair to taxpayers.
In addition to being unfair, the poll showed that a majority of those surveyed think a bailout would not help the economy.
Most politicians, of course, are motivated by different issues than voters. Like trying to stay in office. Consequently they'll look at the possible job loss associated with the car maker's failure and the resultant "reflection" on them (which, right or wrong, is precisely what will happen) and deem their failure to big a risk to their political future.
Some lawmakers, however, know that a) the government shouldn't be in the loan or bailout business and b) that bankruptcy would actually end up being a better way of "re-starting" the domestic auto business:
“Not only should bankruptcy be an option for domestic automakers, but it is considered by most experts to be the best option,” Representative Jeff Flake, Republican of Arizona, said in a statement on Wednesday.
Meanwhile the automakers have come up with plans they've submitted to Congress outlining what they would do to become competitive again:
In its plan to Congress, G.M. said it would significantly reduce jobs, factories, brands and executive compensation in a broad effort to become more competitive with American plants operated by Toyota, Honda and other foreign auto companies.
Of course, you'd think a company which had been hemorrhaging money and only had 2 billion in capitalization might have considered some other cuts as well - like in not paying millions in stock dividends. But as an emailer notes, that's not been the case:
In 2004 GM reported earnings of $4.76 per share and paid a dividend of $2 per share
In 2005 GM reported earnings of -$18.78 per share and paid a dividend of $2 per share
In 2006 GM reported earnings of -$4.29 per share and paid a dividend of $1 per share
In 2007 GM reported earnings of -$76.52 per share and paid a dividend of $1 per share
In 2008 GM has reported earnings of -$37.52 per share in 3 quarters and paid dividends of $0.50 per share
Other than corporate jets, the $50 million they spent lobbying Congress this year and high union wages, can anyone else understand the reluctance of the public to save these companies? Like AIG and Citi, they simply don't seem to get it do they? They don't seem to live in the same world as the rest of us do. And that's what stirs the anger - here we are contemplating, again, rewarding stupidity, mismanagement and failure.
What 70% of the country seems to understand that GM, Ford, Chrysler and our politicians don't, is that isn't the way America is supposed to work.
You know, it really is irrelevant what the Big 3 CEOs, or the UAW, or anyone else says or thinks about this matter.
The votes do not exist right now on Capitol Hill for this thing to pass. And with 61% of the people opposed, Dems are too shy to buck that trend. Republicans should just sit back, enjoy the view of the minority, and let the Dems stew on this issue.
GM or Chrysler will be bankrupt by the time The Clown™ becomes President on January 20. So none of this means a thing.
And by then, with 1 or 2 of the Big 3 in Chapter 11, the appetite to save the last one or two will have eroded even further. After all, once one has been thrown to the sharks, is it fair to save the others?
I think Chapter 11 Bankruptcy would be preferable to a bailout. It gives them more flexibility to cut costs, etc. and is supervised by the courts rather than the Congress. If they can whip together a good recovery plan in a week or so, as they claim to have done, reorganizing under Chap. 11 should be a breeze for them. Either way there will be job losses. And I reiterate, under Chap. 11 the Congress would not be involved, a definite double-plus-good.
Please consider this option for the auto bailout. This will make Congress look like heroes to the American taxpayers and help the auto manufactures.
The auto manufactures would be able to sell 2.5 million vehicles which would keep people employed and the taxpayers would get a benefit from the bailout money which came out of their paid in taxes.
Instead of just giving the auto manufactures $34 billion dollars for a bailout, give each person who filed an income tax last year and made less than $100,000.00, a government voucher for $20,000.00 to be used toward the purchase of a new American made vehicle.
I’m not sure exactly how many people would fall in this category but the figures could be adjusted. Vouchers could be only good for the original holder and the car dealers would have to verify with the federal government that the voucher presented to them was truly sent to the person trying to use it and the vehicle would be titled in that name.
The $20,000.00 cap would keep sales targeted toward the smaller, more energy efficient models.
I say it is good the they got the bridge loans. why not give them a golden gate bridge loan at the end of march. Let the UAW coast thru the recession and let us give them cost of living increases. I don’t have benefits for life and don’t get 95% of my pay when off, but why be envious. If they can get it and it cost the govement and texpayers billions, but then that is just the cost of doing business. Let the goverment fund auto loans for the 25% of people they say want to buy cars but can’t get loans. I don’t have a job right now but could use a car and can come up with a plan in 3 months on how i intend to pay it back but give me the car no. They can have a plan but do not have to follow it. We waste billions on worthless projects, and need to waste some more money on broke companies. Talk to you at the end of March when deja vu will be in play.