Good for GM & America

[LSFan00]

We keep hearing the argument, originally put forward last month by Rick Wagoner, GM's delightfully named CEO, that people won't buy cars from companies that have filed bankruptcy, for fear that parts and service will become unavailable. Are consumers really so stupid that they would have more confidence in a company that goes on welfare to support an unsustainable business model than in one that is being restructured through bankruptcy court?

 

No, according to a USA Today poll:

 

The survey of 1,008 adults Friday to Sunday found that 82% would at least consider a Detroit-brand vehicle. Of those, 67% would do so even if the company were in bankruptcy court.

 

Link.

 

Most surprising finding: "Union households are no more apt than those without a union member to favor the plan, 44 percent compared with 42 percent." The United Auto Workers wants government money so as to protect the work rules and artificially high emoluments that have helped make Detroit uncompetitive.

 

But, but, but

[NickF1011]

The thing ALL of these articles miss:

 

GM and Chrysler aren't asking for a loan so they can carry on "business as usual". They are asking for a loan so they can restructure without resorting to a bankruptcy filing to accomplish it. Either way, restructuring is involved.

[jpd80]

A survey of 1,008 adults, doesn't sound all that scientific to me.

I wonder if any of them are serious buyers.....

[lfeg]

If that survey was like many I am familiar with, the average respondent would also answer the question "What was your overall average in school?" with the response "Two pair a week".

Edited December 17, 2008 by lfeg

[grbeck]

The thing ALL of these articles miss:

 

GM and Chrysler aren't asking for a loan so they can carry on "business as usual". They are asking for a loan so they can restructure without resorting to a bankruptcy filing to accomplish it. Either way, restructuring is involved.

 

The plan that GM unveiled in response to Congress' demands didn't go nearly far enough to restructure the company. It was basically "more of the same."

 

To truly make GM viable, any plan will have to shed divisions, dealers and blue- and white-collar workers. GM needs to shrink until it can profitably service about 13-15 percent of the market. The Jobs Bank also needs to go. Nothing I've seen from GM so far achieves that goal.

 

I agree that the demand for the UAW to accept wages in line with the transplant operations is a distraction. The problem is that the real cure is, in many ways, even worse - job cuts, and no Jobs Bank for the laid-off workers, both blue-collar and white-collar.

 

Chrysler is basically toast at this point. Daimler and Cerberus have gutted the company. Federal money will not make it viable - unless it receives enough to basically rebuild the company. The best Chrysler can hope for is to have its viable parts - the dealer network, Jeep, the minivans, the Dodge Ram - scooped up by another company.

[LSFan00]

GM can't dump obligations to retirees or force the UAW to concessions absent bankruptcy. End of story.

[NickF1011]

GM can't dump obligations to retirees or force the UAW to concessions absent bankruptcy. End of story.

 

They can if the government makes them. Or simply say to the UAW: "Hey, do it or we go bankrupt and you'll all be out jobs. How does that sound?"

[davdog]

They can if the government makes them. Or simply say to the UAW: "Hey, do it or we go bankrupt and you'll all be out jobs. How does that sound?"

 

 

They should have gone the bankruptcy route sooner. I don't see any other route. Stupid decisions on both side have put labor costs way out of whack. I don't care what the tranplants pay becuase they aren't asking for money, BUT I do care that what it would take to fill those factory postions with a competent person is at least 33 percent beyond what it needs to be and that is only pay.

 

Why does a company offer high pay and benefits? To attract employees. The auto industry could offer $20 an hour and average benefits and have no issue filling their postions. There is no need for them to be offering what they do.

[NickF1011]

They should have gone the bankruptcy route sooner. I don't see any other route. Stupid decisions on both side have put labor costs way out of whack. I don't care what the tranplants pay becuase they aren't asking for money, BUT I do care that what it would take to fill those factory postions with a competent person is at least 33 percent beyond what it needs to be and that is only pay.

 

Why does a company offer high pay and benefits? To attract employees. The auto industry could offer $20 an hour and average benefits and have no issue filling their postions. There is no need for them to be offering what they do.

 

Yeah, so fire all the guys who have been building cars their whole lives. That would work wonders for quality. You pay people because you want them to be happy and stay employed with you. If they aren't happy, they will do worse work for you and they will probably quit sooner. The end result is a worse product any way you slice it.

 

The problem, for the millionth time, isn't what current employee benefits are -- those are almost in line with the transplants and other manufacturing jobs. It is what the retirees are still getting that spikes up labor costs into the stratosphere.

[LSFan00]

They can if the government makes them. Or simply say to the UAW: "Hey, do it or we go bankrupt and you'll all be out jobs. How does that sound?"

 

Retirees won't vote to cut their benefits. Ever. The Democrats running congress won't/are not legally empowered to force them to do so. In bankruptcy this can be done. Everything else you hear is bs.

[NickF1011]

Retirees won't vote to cut their benefits. Ever. The Democrats running congress won't/are not legally empowered to force them to do so. In bankruptcy this can be done. Everything else you hear is bs.

 

The retirees will do it if it means a reduction in benefits from a solvent company or no benefits at all from a company that no longer exists.

[Critic]

ALL RETIREE PENSION FUNDS ARE FULLY FUNDED.

 

END of story. now find something else to gripe about

[davdog]

Yeah, so fire all the guys who have been building cars their whole lives. That would work wonders for quality. You pay people because you want them to be happy and stay employed with you. If they aren't happy, they will do worse work for you and they will probably quit sooner. The end result is a worse product any way you slice it.

 

The problem, for the millionth time, isn't what current employee benefits are -- those are almost in line with the transplants and other manufacturing jobs. It is what the retirees are still getting that spikes up labor costs into the stratosphere.

 

 

thats' funny, a whole day and no one disputes the fact that the d3 could fill those jobs for 33 percent less.

[NickF1011]

thats' funny, a whole day and no one disputes the fact that the d3 could fill those jobs for 33 percent less.

 

Could they fillt he jobs? Yes.

 

Could they fill the jobs with people who will do as good or better a job than the current employees? No.

[rn4]

Retirees won't vote to cut their benefits. Ever. The Democrats running congress won't/are not legally empowered to force them to do so. In bankruptcy this can be done. Everything else you hear is bs.

Retiree's don't get a vote.

[NickF1011]

Retiree's don't get a vote.

 

I was thinking that, but wasn't sure so I didn't say anything.

[LSFan00]

Retiree's don't get a vote.

 

If about 1/2 of the excess figure of "$72 bucks an hour avg" is for healthcare/retiree benefits; why couldn't the UAW accelerate wage concessions then prior to 2011?

[Critic]

Retiree's don't get a vote.

Actually Retiree's DO get a vote, the most feared voting of all and that is in national elections that every politician fears the most. The retiree vote. Millions and millions of them.

If about 1/2 of the excess figure of "$72 bucks an hour avg" is for health-care/retiree benefits; why couldn't the UAW accelerate wage concessions then prior to 2011?

Your talking 2 different things. First you say health-care/retiree benefits. Those were to be removed from the automakers bottom line financial statements beginning 2010. Called VEBA. Second part of your question; wage concessions are already in the contract with new hires entering at $14.00/HR. Basically 1/2 of current avg. wages now. And without ever getting a pension or other benefits of current employee's.

[LSFan00]

The guys working right now may have to take a hit; I think the $14B bandaid approach is likely to tick off more consumers and just leave a mess to deal with in March-June. Joe Sherlock (quoting Dan Fitzpatrick):

 

"If General Motors, Ford and Chrysler [collectively referred to herein as "your employer(s)"] have contractually agreed to pay total labor costs (which include benefits along with wages) of about $73/hour vs. the $44/hour that non-union competitors like Toyota Motor pay, who are we to judge? A deal is a deal, and your contract with your employer is none of our business. We respect your right to make as much money as you possibly can under the concept of "capitalism." If you are not familiar with the term, just Google it - it's a concept that has served us well for over 200 years."

 

"While the binding contract between you and your employer is none of our business, we think it's important to point something out. The guys who signed the contracts on behalf of your employer are largely inept, incompetent, arrogant and not particularly self-aware. Many epitomize the The Peter Principle. While this is not your fault and is not a reflection on your fine union, neither is it our problem. Your employer is about to go out of business and will be unable to live up to the deal that was struck with you. Remarkably, you are now asking us to come up with about $15 billion to bail out your employer."

 

"Let's cut to the chase. You insist that you are entitled to receive our tax dollars when many of us are facing the same hardships currently facing you? While you were negotiating deals with your employer, we were busy working and struggling to pay for our own health care expenses. We were putting money into our 401(k) accounts that rise and fall with the market. We "get what we get" and our only entitlement is from an unfunded Social Security system."

 

"You complain about the horrible devastation that would ensue from a reduction in your retirement benefits. Rest assured that we understand your plight, because that has already happened to many of us. So while we do empathize with you, we are unmoved. Why? Because we are too busy dealing with our own problems."

 

"We do not understand your refusal to make concessions that will at least give your employer a fighting chance to survive?"

 

"In America, we work as a team when the chips are down. It is time for you to jump in, be patriotic, and be a part of the deal. If you refuse, then we can only assume that you are a part of the problem rather than the solution, and we will cease to do business with you or your employers."

[NickF1011]

It's a LOAN for crying out loud, not a GIVEAWAY. And read the fine print of the loan -- if GM or Chrysler fail to show they are viable by March 31, 2009, the government will collect the loan amount and return it to the treasury, likely in the form of Chapter 7 bankruptcy at that point. The taxpayer has little to lose in this, especially in comparison to some of the other ways the federal government wastes our money.