Of course, these people's livelihoods are directly related to a thriving auto-industry, so it is in their own personal best interest that the government step-in and I perfectly understand their wanting it to happen.
On the other hand, where does it end? Retail and entertainment is a huge part of our economy. Do we bailout every store closing? A caffeinated work-force would arguably produce a more productive work-force, should Starbucks be bailed out preemptively?
By now most people are aware that the corporate executives of the big three automakers flew into DC on individual corporate jets to beg for the handout. They obviously don't understand how to live within their means, but they do know who to turn to when they blow all their companies' revenues on personal indulgences.
At least they produce something tangible - an automobile. This is much more than can be said for Wall Street, where each individual workers' average salary is ridiculously high, and at the end of the day they don't create anything. In fact, the demand for companies to 'meet expectations' often results in short term responses instead of taking the necessary steps needed for long-term gains. Worse is the mortgage mess, but I digress.
If we go down the path of bailing out every failing industry, we might as well bailout every family with credit and give them all a clean slate.
Then we'll only need to find some country willing to come in and bail out the government.
4 comments:
Unfortunately, the bailout for such a large industry as the automotive one is probably needed. One doesn't have to look far to see how big of a ripple effect there will be. Auto dealerships and their service departments, parts manufacturers, trucking that delivers the cars and parts, etc. It would be huge.
What they will ultimately fail to do is address the real root cause of the problem, and it is not executives flying on private jets to a meeting in Washington.
USA Today ran a blurb the other day that showed it costs around $50 an hour to produce a car in the Southern states, where there are right to work laws. However, the cost in union states were well over $70 per hour. There is no way you can stay competitive in a global marketplace with this drastic difference in operating costs.
I know this area is pro-union, and have the blinders on when it comes to this discussion. However, I will point to Mack Truck and Bethlehem Steel, both cases where it became to expensive to produce and compete. One is gone forever, and the other is again moving its operations down South where they can operate in a more cost effective manner.
NOC is right, what is next to be bailed out? Every aspect of our economy is intertwined, and when one segment fails, it sends shock waves through the rest. The first President Bush was ridiculed for talking about trickle down economics, and surprise, we are now seeing how he was dead on the money, literally.
"USA Today ran a blurb the other day that showed it costs around $50 an hour to produce a car in the Southern states, where there are right to work laws. However, the cost in union states were well over $70 per hour. "
The problem with this statistic is that it is wrong and has a very limited basis in reality. It's a cooking of the numbers. The $70 and $50/hour include ALL costs related to the workforce, not what is paid to individual workers. So all the retirement benefits and retiree healthcare is rolled in. The executives of the Big 3 have for years underfunded their contractual obligations to these funds and now have to pay more money due to poor management. Also, there are a lot more retirees in Detroit from 90 years of making cars, than there are in the South.
You also mention the bugaboo of Bethlehem Steel. I remember growing up reading the news about the contracts where the union had given up raises and taken concessions so that Bethlehem Steel could modernize and compete in the world market against the cheap Japanese steel. The gave huge concessions. Bethlehem Steel used the money gained from that to add onto Sparrow's Point in Maryland.
I worked at Victaulic for a couple of years while putting myself through college. I have been a union member. I have seen the laziest and worst worker being paid just the same amount as the hardest worker. There is a problem with that compensation model. However, I have also seen the hardest workers you could hope for. The men who aren't afraid to get a little dirty and sweat a whole lot to make a decent wage. Men who take pride in building something and making this country stronger.
If you work 40 hours a week or so instead of 60 to 70, you have unions to thank.
If you have health coverage at work, you have unions to thank.
If you have paid holidays, you have unions to thank.
I'm off the subject, but it really irks me that these companies were so poorly run for so long by men making millions and millions of dollars, who then turn around and point the finger at the guy sweating his butt off with grease under his fingernails saying, "It's his fault." "Sure I made all the decisions, and I have my yearly membership the Lehigh Valley Country Club paid for, but Earl down on the pour deck took 6 time and a half shifts last month so he could save a bit of money for his kid to go to college. Those extra shifts are what caused us to go bankrupt."
Thorcha,
Yet a typical come back saying that all the problems are managements fault.
I seem to remember union workers getting 14 WEEKS of vacation a year at Beth Steel. That is outrageous.
The problem, pure an simple, is it cost more to manufacture something in the US than it does in other countries. Why might you ask? Because they don't have unions. Try to form one in China and see what happens.
Why are the pension benefits such a drag on these companies? Because the unions were able to threaten the manufacturers into giving them every demand so as not to stop production. Pensions with every bell and whistle are part of this.
Look deeper into it. Unions were formed to protect the worker before there were labor laws. Guess what, today we have OSHA and volumes of laws on the books, so what is there purpose other than to collectively take more. There is a reason that Asian and European auto manufacturers built their plants down South, and it was not just for the nicer weather.
If you tell me that every business that has a union component that has failed to date is because of management, then you are fooling yourself.
Look around you. There are cars everywhere. There is no reason these companies shouldn't be making tons of money. CEO's and executives need to do without multi million dollar bonuses and employees can't be paid $55.00/hr. to hang rear view mirrors on a windshield with no education needed to do so. Then and only then will the companies boom and the shareholders get what they deserve.
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