Auto industry bailout plan dies in the Senate

[jdobbin]

http://www.msnbc.msn.com/id/28166218/

A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.

Guess that is over the for the bail out.

I wonder which one of the companies will go under first.

[marcinmoka]

I wonder which one of the companies will go under first.

It'll be back, albeit in a slightly revised form. Too politically vital.

As per which ones goes first, my money's on Chrysler. Both GM and Ford have some assets they could at least sell on the cheap to boost their short term liquidity.

Question is, should we let them fail? Whatever remains after a Chapter11 could surely be no worse then it is today. But what a painful pill that would be to swallow in the short term.

[White Doors]

Good. I hope it stays dead. The final nail was from the UAW, which I thought was appropriate enough.

Chapter 11 is there for a reason, let them use it.

[Smallc]

Chapter 11 is there for a reason, let them use it.

GM can't. They don't have the money to go through it and I doubt they could get the money. Chrysler can get money if they want, but I'm not sure how much Cerberus wants to sink into the pit. Ford says they won't be in trouble until 2010 (they still have $29B in the bank and they already told congress they didn't want any of this money or the strings that come with it, why the media keeps reporting it as the Big 3 bailout, I'll never understand. Ford never even asked for money. The asked for a line of credit if necessary, but they were more on the hill for moral support than anything.) but a GM bankruptcy would kill most of their suppliers and so they would be helpless....as would many of the domestic operations of all other brands.

[OddSox]

How does this affect the Canadian industry? If the coalition had it's way, they would already have cashed the cheques! Is GM Canada a separate entity from the US company or would they go under together?

[moderateamericain]

How does this affect the Canadian industry? If the coalition had it's way, they would already have cashed the cheques! Is GM Canada a separate entity from the US company or would they go under together?

I live in Michigan and while I work in a pretty recession proof industry, I see the pinch all around me. These people are hurting here.

[Topaz]

Leave it to the Republican senators to this deal stop. They knew when they asked the UAW to take pay cuts to what the foreign auto sector workers made would turn it down but the UAW did say please gives a year before this comes into effect. Part of the problem also is that some of those senators from the south, especially from Alabama, Senator Shelby, is protecting the Japanese auto sector in his own state. So if Bush doesn't come through with the money, every American is going to feel it especially the Japanese auto makers who use the same auto parts makers. I think the real blame of all this mess is the politicians themselves. They didn't fix the Fannnie Mae and Freddie before and now its hit the auto sector is slowly hitting other business. For ie, the largest mushroom producer in Canada, third on NA, has filed bankruptcy due to the down turn in the economy. I think before non-union people start to slam the union, listen to what the leaders of the UAW and CAW has to say before giving your view. It's ALWAYS the workers that have to give things up.

[jdobbin]

It'll be back, albeit in a slightly revised form. Too politically vital.

Bush is stepping in now.

To have one of the major car companies shut down while he was in office would be a capper. I don't think he wants that to happen.

As per which ones goes first, my money's on Chrysler. Both GM and Ford have some assets they could at least sell on the cheap to boost their short term liquidity.

It seems a likely candidate.

Question is, should we let them fail? Whatever remains after a Chapter11 could surely be no worse then it is today. But what a painful pill that would be to swallow in the short term.

I don't know that it couldn't be worse.

They solution might be to close and liquidate stock. That would affect around 2 1/2 million direct and indirect employees.

The market is already shaking. It is probably why Bush spoke up right away.

[jdobbin]

How does this affect the Canadian industry? If the coalition had it's way, they would already have cashed the cheques! Is GM Canada a separate entity from the US company or would they go under together?

How could it affect the Canadian industry? They could simply shut down capacity in Canada. Chrysler has already threatened that.

[M.Dancer]

This is a prime example of the Union committing suicide. Rather than a needed paycut, they would prefer to stick to their guns and see their members be unemployed.

[noahbody]

They knew when they asked the UAW to take pay cuts to what the foreign auto sector workers made would turn it down but the UAW did say please gives a year before this comes into effect.

The pay cut expectation is a fair demand, IMO.

[M.Dancer]

The pay cut expectation is a fair demand, IMO.

Didn't one of the CEOs offer to work for nothing?

[Topaz]

This is a prime example of the Union committing suicide. Rather than a needed paycut, they would prefer to stick to their guns and see their members be unemployed.

Sorry Dancer but I guess you didn't hear the head of the UAW talk on CNN just now. He said why should the UNION worker make a pay cut when if you go to Toyota in Kentucky, they make more money than the union guys do. This thing about the union making a pay cut was just to turn people against the unions and to make the GOP look good. The UAW have been making cuts to their side since 2003 and the head of the UAW said they wanted ALL stakeholders to make concessions and it seemed to them the UNIONS were being blamed for the problems with the auto sector. He also said when people hear the word "union" they instantly have a dislike for them and that it was only the GOP that were giving the unions a hard time and that most of those senators have foreign automakers in their states which the taxpayers , GAVE them free land, buildings, etc that usually goes with creating a factory and those companies don't have pay anything back! The guy made a very good case for the UAW. BTW, what it SEEMS and what it IS are two different things.

[M.Dancer]

Sorry Dancer but I guess you didn't hear the head of the UAW talk on CNN just now. He said why should the UNION worker make a pay cut when if you go to Toyota in Kentucky, they make more money than the union guys do.

Toyota isn't on the verge of collapse. Comparing the two makes no sense. No, the unions killed this.

[M.Dancer]

http://img178.imageshack.us/img178/1418/att09760wk8.jpg

[blueblood]

Didn't one of the CEOs offer to work for nothing?

he offered to work for a buck. If the CEO's can take that kind of a pay cut for all the important managing they do, surely someone who puts lugnuts on a car can work for minimum wage. I mean, the mechanics in the repair shops don't make near what assembly line workers do and the mechanics do harder work.

[Renegade]

Sorry Dancer but I guess you didn't hear the head of the UAW talk on CNN just now. He said why should the UNION worker make a pay cut when if you go to Toyota in Kentucky, they make more money than the union guys do. This thing about the union making a pay cut was just to turn people against the unions and to make the GOP look good. The UAW have been making cuts to their side since 2003 and the head of the UAW said they wanted ALL stakeholders to make concessions and it seemed to them the UNIONS were being blamed for the problems with the auto sector. He also said when people hear the word "union" they instantly have a dislike for them and that it was only the GOP that were giving the unions a hard time and that most of those senators have foreign automakers in their states which the taxpayers , GAVE them free land, buildings, etc that usually goes with creating a factory and those companies don't have pay anything back! The guy made a very good case for the UAW. BTW, what it SEEMS and what it IS are two different things.

Topaz, I watched the UAW union rep on CNN. It was a completely self-serving argument. Arguing that the UAW shouldn't take any pay cuts because Toyota workers make more money is a ludcrious argument. The UAW has always argued that when the Big-Three were doing well, the workers should share the wealth. Doesn't that imply that when the Big-Three are in crisis, the union should also share the pain? Even assuming it were true that the Toyota workers make more money, that would indicate that Toyota is sharing its success with its workers, success that the Big-three cannot similarly claim.

BTW, the deal the UAW refused to accept was one to get their wages at par with Toyota, Nissan and others. If Toyota workers really did make more, they should have no objection to that clause.

In any failiure of the Big Three, the workers (and union) along with the shareholders, the bondholders, and suppliers will be the big losers. It would seem that the UAW would prefer to resort to brinkmanship to try and get the taxpayer to bail them out, and then resort to selling their flimsy argument to eaisly duped viewers on CNN. They, and workers who agree with them, get no sympathy from me. If I were an autoworker who depended upon my job, I would much prefer a pay cut than the uncertainty the UAW has caused.

[Shady]

Sorry Dancer but I guess you didn't hear the head of the UAW talk on CNN just now. He said why should the UNION worker make a pay cut when if you go to Toyota in Kentucky, they make more money than the union guys do.

That simply isn't true. And the answer to the question as to why the UAW needs to take a pay cut, is because they're the ones looking to the government for a multi-billion dollar bailout, not Toyota. Toyota spends $49 per labour hour while GM spends $71. You do the math. There's a reason why "the big 3" are in massive troubles, while other automakers are thriving.

Case in point:

General Motors is the largest private purchaser of Viagra in the world

Lifestyle drugs -- chiefly Viagra -- are costing General Motors $17 million dollars a year and the cost is passed along to car, truck and SUV consumers. The blue pill is covered under GM's labor agreement with United Auto Workers, as well as benefit plans for salaried employees.

Link

[M.Dancer]

One major reason why the US car industry is in trouble. The contracts negotiated by the UAW are out of step with the norm.

Ailing GM looks to scale back generous health benefits

By Julie Appleby and Sharon Silke Carty, USA TODAY

Taking a cigarette break outside a General Motors (GM) assembly plant in Lansing, Mich., last week, Mike O'Driscoll admits he has problems: diabetes, high blood pressure, high cholesterol.

The GM assembly plant in Janesville, Wis., may be closed as part of the carmaker's cost-cutting efforts.

By Andy Manis, AP

But his arteries are cleaned out, thanks to a $160,000 heart-bypass surgery a few years back.

"I ate too many steaks and not enough veggies," says O'Driscoll with a laugh.

For as long as O'Driscoll has worked at GM, he hasn't had to worry about health care costs. He paid nothing for his heart surgery, and he estimates that during the past five years, he has paid his cardiologist a total of $500. GM doesn't take anything out of his paycheck for health insurance.

http://www.usatoday.com/money/autos/2005-0...care-usat_x.htm

[Drea]

Of course the unions killed the auto industry! Those buggers make (holy crap batman!) sometimes upwards of $30 whole freakin dollars AN HOUR!!! OMG they are rolling in dough!

usa today

GM CEO Rick Wagoner earned $9.3 million in salary and bonus in 2006, nearly double what he earned in 2005.

link

“I think I’m OK where I am,” pronounced Ford CEO Alan Mulally, who took home $21.67 million last year.

Without a middle class that has disposable income there is no economy.

[Shady]

Of course the unions killed the auto industry! Those buggers make (holy crap batman!) sometimes upwards of $30 whole freakin dollars AN HOUR!!! OMG they are rolling in dough!"rolleyes:

It's not necessarily their salaries, but the benefits that are crippling GM, Ford, and Chrysler. And in the real world, one's salary is dependant on the type of profit one earns in their respective industry. If a business is losing billions of dollars, than sometimes even $30 an hour, is still too high to be supported. It's simple math, and simple economics.

[Drea]

Remove just one executive and cover all the benefits and wages of all the workers.

That is the reality.

My company -- no I am not telling you who -- got rid of NO ONE from the "bottom". They restructured the executives. We were all offered a buy out but not laid off. The execs, however were not so lucky. They got golden handshakes, but they had to take them. Us minions (those people who actually bring money in) had the option to stay working.

As my father always said -- "when your broke never sell your tools" -- workers are tools in business and the Big 3 are selling their tools. Not smart in the scheme of things IMO.

[White Doors]

GM can't. They don't have the money to go through it and I doubt they could get the money. Chrysler can get money if they want, but I'm not sure how much Cerberus wants to sink into the pit. Ford says they won't be in trouble until 2010 (they still have $29B in the bank and they already told congress they didn't want any of this money or the strings that come with it, why the media keeps reporting it as the Big 3 bailout, I'll never understand. Ford never even asked for money. The asked for a line of credit if necessary, but they were more on the hill for moral support than anything.) but a GM bankruptcy would kill most of their suppliers and so they would be helpless....as would many of the domestic operations of all other brands.

Chapter 11 is a form of bankruptcy.. Not sure what you mean about not having the money to go through it?

[M.Dancer]

Remove just one executive and cover all the benefits and wages of all the workers.

That is the reality.

GM, which has more retirees than active workers, has been struggling to meet obligations to its aging former workforce as auto sales have fallen dramatically. The company reportedly spent $4.6-billion on health care in 2007 for its 1-million employees and retirees and their dependents.

http://tampabay.com/news/business/autos/article899862.ece

The Securities and Exchange Commission filings reported earlier this year that gave Mr. Wagoner, the company's chairman and chief executive, a 33% raise for 2008 and equity compensation of at least $1.68 million for his performance in 2007, a year for which the auto maker reported a loss of $38.7 billion.

http://online.wsj.com/article/SB1227029156...=googlenews_wsj

That is reality for the fruitloops set. The ones who find basic account too hard. On the otherhand, I wonder if the UAW would agree to cap their total benits package at $1.68 million...

...over to to fruitloop set

Edited December 12, 2008 by M.Dancer

[Renegade]

Remove just one executive and cover all the benefits and wages of all the workers.

That is the reality.

You're kidding right? By your figures above GM's CEO earned $9.3 million. GM has 266,000 workers. That works out to $35 per YEAR per EMPLOYEE. Please tell me how you can cover "all the benefits and wages of all the workers" for $35 per employee? Are you suggesting that that $35 should be their yearly pay (including benefits)?