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Help for U.S. Automakers Is a Good Deal for Everyone |
The U.S. auto industry “cannot succeed in today’s unstable economic environment without immediate help from the federal government. And the costs of failure are unacceptable,” UAW President Ron Gettelfinger said in a Washington Post op-ed today.
If even one U.S. automaker fails, he warned, it would cost the entire country millions of lost jobs and hundreds of billions of dollars in lost sales and revenue.
The auto industry crisis, exacerbated by stalled consumer spending and lack of credit, affects much more than the Big Three automakers and the 240,000 people who work for them, Gettelfinger said. It also endangers thousands of car dealerships, small and medium-size businesses that provide parts and services to the auto giants and more than a million retirees and dependents who receive pension and health care benefits from Chrysler, Ford and General Motors.
According to Gettelfinger:
If these companies are unable to meet their obligations, the human toll on retirees and their families will be devastating. It’s also possible that the failure of these companies could impose severe costs on the federal pension guaranty program and public health care programs.
Gettelfinger also took exception to “Detroit-bashing.”
It is not the actions of our members that have caused the crisis in today’s auto industry; the crisis is being driven by economic factors that have nothing to do with labor costs or factory performance. To the contrary, our contracts have put our employers in a position to compete. The reality of today’s auto industry is that union-made vehicles are winning quality awards and that union-represented factory workers are winning productivity awards.
Recent auto industry labor negotiations are reducing or eliminating cost differences between union and nonunion car makers, Gettelfinger said.
The various demands for cuts in the wages and benefits of active and retired autoworkers as a condition of federal assistance are curious—and extremely unbalanced. To my knowledge, no one has proposed cutting the compensation of everyday active or retired bankers, bond traders and office or building personnel who work at AIG, Bear Stearns or the numerous banks that have received billions in federal aid. Why is it only autoworkers who are singled out for this dubious honor?
Gettelfinger said bipartisan efforts under way in Congress to aid U.S. automakers are “a good deal for U.S. taxpayers—because the alternative is lost jobs, closed businesses and shattered communities, which would impose severe human and economic costs on all of us for many years to come.”
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Right on Ron G!!!!! I’m a proud UAW member!!! Funny how they never talk about cutting executive pay? The media never talks about it either. Workers are always the ones forced to sacrifice so the rich can keep riding high. Corporate America’s leaders are a bunch of inhumane savages who worship money day and night. God Bless Unions!!!! They’re the only voice workers have.
Funny that the AFL-CIO is not for a Wall Street bailout but they are for a car company bailout. Guess they were lukewarm on bailouts in general. Everyone talks about executive pay, which I believe is high, but so is the pay of the line workers. I have been told I could be trained to do a line workers job in a matter of a couple of hours, yet they make over 100K a year. Could that possibly be a problem? Paying unskilled workers lots of money????? BTW, I am not anit-union, just anti-unskilled union.
If the $25 billion auto bailout loan goes to retooling to build almost fuel-free cars like the Volt, the savings on foreign oil purchases alone could pay back many multiples of the principle — ever year! — leaving T. Boone Pickens’ program for freedom from foreign oil dependence in GM’s dust.
Free upgrade to plug-in hybrid?
Reported by Tom Krishner, AP Auto Writer Monday, July 21, 2008: …”lithium-ion battery packs needed to power even a small car now cost in excess of $10,000…”
A couple of years ago, I came up with the fun dollar-savings equation that: if America needed only half as much imported oil (meaning 5 million bbl/day then) and if we needed to pay only half the price ($30/bbl then) due to said lowered demand, then, we could save $165 billion a year (by spending only 5,000,000 bbl/day X 365 days X $30 instead of 10,000,000 bbl/day X 365 days X $60 = a saving of $164,250,000,000/year)…
…or, exactly enough to subsidize buidling the 16.5 million cars and trucks we manufacture every year as LITHIUM, PLUG-IN hybrids — at $10,000 per vehicle!
Now, with oil recently approaching the $150/bbl range, we could be shipping $500 billion more a year overseas; potentially justifying any form of subisidy for the manufacture of lithium plug-in hybrids.
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/21/financial/f184312D31.DTL&type=autos
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For 30 years it has been known that building lithium ion batteries with silicon wires (instead of carbon wires) could yield ten times the power holding ability but, because silicon wires expanded and contracted too much as they cycled, they quickly destroyed themselves. The development of silicon nano wires – about a thousandth of the width of a sheet of paper — has solved that drawback — while potentially making lithium ion batteries more stable (safer) at the same time!
Near term, only the anode side of the batteries will be manufactured with nano wires, yielding the quadruple jump (up powering GM’s Volt to go 160 miles on one charge instead of 40?). Long term, manufacturing the cathode side with silicon nano wires is expected to reach the ten multiple target (introducing hybrid, long distant trucks?).
http://news-service.stanford.edu/news/2008/january9/nanowire-010908.html
RE: Detroit Bailout funds
Any funds being considered to “help” out our US auto industry should be tied to developing new technologies for designing and building vehicles that get higher gas mileage and produce less pollution.
While several European and Japanese companies are aggressively perusing the Scuderi Split Cycle Engine technology, the US auto companies have shown little interest. This technology is about to explode across the globe, and the US auto companies are going to be left behind once again. It is sad that these huge behemoths refuse to open their eyes to this homegrown technology that will increase fuel mileage and substantially reduce emissions.
http://www.scuderigroup.com/ http://www.airhybridblog.com/
The timing of this technology and the current debate on how to help our US auto companies presents a perfect storm to “open the eyes” of the US auto companies and the US politicians so the US is not behind the curve again
Exactly the wrong moment to quit on the Big Three:
Abandoning gas drive and multi-speed transmissions for almost overly simple electric motors and one speed gasoline generators — with no transmission — is a great leap in technological simplification — even inviting boutique startups at a rate impossible with chemical technology. Point being, this is not the time to give up on the Big Three (who have re-invented themselves before — remember the first high price gas crisis in the late 70s?), not when the “perfect” 100 mpg technology is just over the next hill and is almost foolproof to boot!
The companies are not only too big and important to fail, they are too big and important to remain in private hands. I’m totally for taking them over– nationalizing GM, Ford and Chrysler and putting the autoworkers in charge of running them. That’s the only way to get actual energy conservation in our lifetimes PLUS decent pay and pension protections.
Henry
IAM751, retired
and Freedom Socialist Party
Seattle
“RE: Detroit Bailout funds
Any funds being considered to “help” out our US auto industry should be tied to developing new technologies for designing and building vehicles that get higher gas mileage and produce less pollution.
While several European and Japanese companies are aggressively perusing the Scuderi Split Cycle Engine technology, the US auto companies have shown little interest. This technology is about to explode across the globe, and the US auto companies are going to be left behind once again. It is sad that these huge behemoths refuse to open their eyes to this homegrown technology that will increase fuel mileage and substantially reduce emissions.”
Well worth repeating. The American auto manufactureres should hire the foreign engineers who design Nissans and Toyotas to make their products easy to sell. With a bailout, I’m afraid the Merry-go-round will continue unlwess closely supervised by foreign auto makers to see to it they produce a car the general public wants instead of making a huge profit on each individual unit.
No Bailouts for anybody. That is the simple answer but our government is not listening to the will of the people. We jammed the phones and emails in D.C. on immigration, and bailouts but they are not listening.
If a company or an industry fails because of poor management or market conditions that is capitalism. That allows other companies to prosper because the have better insight and management. The industry will survive in a better more efficient form.
Companies and unions will have to learn to be much more nimble in the 21st century. The old ways are just a big anchor holding us down.
No Bailouts, business will learn to survive and so will labor. That is what I call hope and change!
Not until the executives of these companies fork over the money they paid themselves for producing a bad product should we even consider bailing out the companies. Aren’t there any foreign buyers who could take over the companies and produce a car for the American public? After all, the “foreign” car companies are providing work for the American worker right here, producing the cars that Americans buy.
Now is not the time to strip GM’s management, either — not when the company is finally being run by an engineer, Japanese style (a Boeing guy) instead of a salesman; not just when said engineer is directing GM through a giant leap forward to simple, almost foolproof, 100 mpg electric drive-hybrids.
The Big 3 re-invented themselves once before — remember the first oil crises of the late 70s. More digital (electric) and less analog (gas) technology make the engineering more a matter of chalking equations on a blackboard then endlessly dueling with mother nature’s whims.
As for all the bellyaching about high Big 3 labor costs: just when America should (hopefully) be stepping back from the homegrown race to the bottom as well as the downward pressure on wages from both (!) foreign born workers at home (at levels unique in all the OECD) as well as abroad — via legislation that puts strong supports under the price of American labor (hopefully doubling the minimum wage to half the “true” average wage and hopefully mandating a version of sector-wide labor agreements) — is not the time to be crushing the auto industry’s gold standard of wages and (just imagine!) benefits.
Our blue collar workers right now seem to be caught between the red, white and blue conservatives who don’t happen to care what happens to working Americans and supposed progressives who don’t seem to care at all about the survival of the red, white and blue’s flagship industries. Hopefully whoever is left will have enough sense to care about both; hopefully they make up the majority.
I’m in the market for a new car. Maybe I can find out if GM will finally produce a usable vehicle before I run down to the Toyota dealership. 100 MPG? I’ll buy.
Big Three Bailout Debate: Beware, the Game Is Rigged!
While closely following discussion and debate on the efficacy of a bailout of the Big Three, I notice that “guests” on Network and Cable TV stations all seem to be reading from the same script. They say that members of the United Auto Workers Union need to “step up to the plate and agree to concessions, thereby doing their part to solve the financial problems of the Big Three”.
Hold it a darn minute! The UAW has already made concessions!
Don’t you find it curious that none of the “guests” are from the UAW, or from organized labor? Don’t you find it disturbing that you’re only hearing one side of the “debate”?
Apologists for multinational enterprise are masters of the propaganda game. No wonder! They either own the media, or else they advertise on the media! Either way, the messages that we hear on TV and radio or read in the newspapers are devoid of objectivity. We only get to hear what they want us to hear.
Here is a glaring example of how neo-conservative soothsayers distort the truth: CBS invited Dan Ikenson, a spokesman from the right-wing Cato Institute to weigh-in on the bailout debate. The bald-faced liar from Cato reported that UAW members employed by the Big Three are paid over $74 dollars per hour. His assertions were neither questioned nor challenged by CBS. Guess what is happening now? The entire corporate media is running with that figure! It is being reported as fact! It is a lie, but the duplicitous media is now pawning it off as “fact”!
Corporations use various accounting schemes to report costs and earnings. The Big Three – and many other companies – assign “cost” on a per-active employee basis.
They assign current and future pension costs, and vacations, Medicare payments for both active and retired workers, paid holidays, health care premiums for both active and retired workers, disability insurance, etc., on a per-active employee basis. In other words, the costs of all of the Big Three’s obligations are reported by dividing those costs by the number of people in the active workforce. In actuality, active workers do not make anywhere near what is being reported. What is being reported are bookkeeping figures. And as we know, liars figure and figures lie.
What follows is a breakdown of UAW wages, and other information that will help us in our efforts to circulate the truth. If we do not tell the truth, the truth will not be told! The media sure as hell won’t do it! And UAW leaders won’t be invited on TV shows in order to counter the lies by the Cato Institute and other anti-labor mouthpieces in and out of government. It’s up to people like us to see to it that the vast anti-worker propaganda machine of corporate America and its media apologists don’t get away with telling their lies! We have to let others know that the game has been rigged!
When considering the bailout issue, think about how you would feel if it was your job that was on the line, then act accordingly. Those UAW workers are our frllow workers! “An injury to one is an injury to all”.
Wages and labor costs
How many UAW members work at the companies that will be a part of this year’s auto talks?
There are 180,681 UAW members employed at Chrysler, Ford and General Motors. Of these, 177,498 are covered by the national agreements that will expire Sept. 14, 2007. The remaining 3,183 UAW members at Chrysler Jeep in Toledo, Ohio, negotiate a local contract distinct from the national agreement. Certain Delphi employees who have rights under the GM Benefit Guarantee also will be affected by the outcome of these negotiations.
An additional 419,621 retired members and 120,723 surviving spouses will also be covered by the agreements negotiated this year. Their pension payments and retiree health care benefits are subject to the terms of the UAW national auto industry agreements.
Employer
Active members
Retired members
Surviving spouses
Totals
Chrysler*
48,927
55,183
23,252
127,362
Ford**
58,300
94,824
28,183
181,307
General Motors
73,454
269,614
69,288
412,356
Totals
180,681
419,621
120,723
721,025
* Includes workers at Chrysler Jeep, Toledo, Ohio
** Ford active total includes 7,180 workers at Automotive Components Holdings
Source: United Auto Workers based on company data. Figures are for the end of the first quarter 2007
How much are current UAW auto industry wages?
In 2006 a typical UAW-represented assembler at GM earned $27.81 per hour of straight-time labor. A typical UAW-represented skilled-trades worker at GM earned $32.32 per hour of straight-time labor. Between 2003 and 2006, the wages of a typical UAW assembler have grown at about the same rate as wages in the private sector as a whole – roughly 9 percent. Part of that growth is due to cost-of-living adjustments that have helped prevent inflation from eroding the purchasing power of workers’ wages.
What is the compensation for auto industry executives?
The CEOs of Chrysler Group, Ford and GM earned a combined total of $24.5 million in salaries, bonuses and other compensation in 2006.
The next four highest paid executives received average salary and other compensation of $1.3 million at Ford and $1.4 million at GM. These substantial sums do not include the value of stocks and stock options that were also part of executive compensation.
Why is the figure cited as hourly labor costs by the companies so much higher than the wage rates?
In addition to regular hourly pay, the labor cost figures cited by the companies include other expenses associated with having a person on payroll. This includes overtime, shift premiums and the costs of negotiated benefits such as holidays, vacations, health care, pensions and education and training. It also includes statutory costs, which employers are required to pay by law, such as federal contributions for Social Security and Medicare, and state payments to workers’ compensation and unemployment insurance funds. The highest figures sometimes cited also include the benefit costs of retirees who are no longer on the payroll.
How much value do UAW members contribute to their employers?
American autoworkers are among the most productive workers in the world. According to the U.S. Census Bureau, the typical autoworker produces value added worth $206 per worker per hour.1 This is far more than he or she earns in wages, even when benefits, statutory contributions and other costs are included.
How much are labor costs in relation to the total price of a new vehicle?
The total labor cost of a new vehicle produced in the United States is about $2,400,2 which includes direct, indirect and salaried labor for engines, stamping and assembly at the automakers’ plants.
This represents 8.4 percent of the typical $28,4513 price of a new vehicle in 2006. The vast majority of the costs of producing a vehicle and transporting it to a dealership and preparing it for sale – including design, engineering, marketing, raw materials, executive compensation and other costs – are not related to direct or indirect manufacturing labor.
1 U.S. Census Bureau, Annual Survey of Manufactures 2005 data
2 UAW Research Department, based on hours-per-vehicle data from the 2007 Harbour Report and labor costs as reported in the companies’ 10-Ks
3 National Automobile Dealers Association
I noticed that Republican Senators from Alabama and South Carolina are actively opposing loans from the bank bailout funds to American auto makers. Foreign auto makers have factories in these states.
We should consider moving military bases from these states if the American auto companies fold as a result of these Senators. Shelby, Sessions and Republicans like them in the Senate certainly want taxpayer funded jobs in their states. If they cost other states auto jobs, those jobs should be replaced by moving military bases from places like Alabama.
Foreign car companies benefit from government provided healthcare in Japan, Europe, Korea, etc. American auto companies do not have this unfair competitive advantage from our government.
Sessions, Shelby and the other Republicans opposing the loans to American companies have always supported unfair, so-called “free trade” deals and opposed government provided universal healthcare coverage. They favor foreign companies over American workers!
Cutting auto worker’s wages and benefits is exactly the opposite direction we want to go after decades of the unopposed race to the wages and benefits bottom for most of America. With the 21st century Dems coming in it is time to raise the wages and benefits of America’s long suffering underpaid majority, not lower those of America’s few decently paid folks.
Auto manufacturing is one of the few hold out industries that pay on the same level as modern (fully unionized) European economies.
Here is the best graph that I have seen of (de-unionized and even sometimes unionized) American labor getting its throat cut since the 1970s:
http://delong.typepad.com/delongslides/2008/08/income-gains-19.html
And remember, the folks at the pay and benefitless bottom really had their throats cut — LBJ’s 1968 minimum wage ($10/hr adjusted) being 2008’s 10 percentile wage (double the average income later).
Partially nationalize them and put excess production capacity (we have made too many cars for too many years) into making things we need like buses, transit trains, wind turbines, etc. It was done for the great emergency of WWII to build the war machine. It could be done now to build a green machine to get out of this meltdown and avert a global climate disaster.
Cutting the working families wages cause recessions and needs for bailout to beging with. If the Americans don’t have enough money to buy products, then there is a recession. One depends on the other. Too simple for Big Business and the George Bush to understand
I do not know what to think… I am sick of Corporate (mis)Management begging for bailouts, then using the money on indulgences. I hear most GM manufacturing is actually done in Mexico, I do not know…
We have been duped into so many schemes. and it is us the workers that end up still suffering