Bailing out the automakers

The auto makers need to realize the world has changed, executive salaries and bonuses must reflect reality, all company salaries and benefits need to be cut.  Likewise the unions must accept the fact that $70/hour (including benefits) is just not sustainable, I don't know what the number needs to be, significantly lower for sure.  I doesn't matter how good your productivity is if the vehicle costs more to build than the public is willing to pay.

It is amazing to hear all the good folks say buy a car made in North America. When you have a look you find two things:

1) there are no economy cars made here by any of the big three-- The Ford Focus etc. - all imports.

2)  North American cars mostly are not fuel efficient.

It is not as if I would not be willing but I simply cannot afford to buy a North American vehicle since I am only likely ever to be in the market for a fuel efficient econo-box. The Vibe/matrix is out of my price range while they are fairly fueld efficient.

If the big three want us to support them they really need to make cars people want and I know this is an old refrain but I actually went through and found not a single affordable car that is good on gas made here -- not one!

In my case I guess it likely won't be a big deal since I can't afford new anyway and I guess that means it does not matter where it comes from if it is not new.

Brian White wrote:

Why are we rescueing companies that have never tried to compete?  And that have never tried to make a fuel efficient car?   Is it worse to lose 40,000 jobs in an auto industry that is going to die anyway or to sacrifice 140,000 jobs trying to save those 40,000?

Because the billions of our tax dollars that we have to throw down that bottemless pit are not going to stimulate any part of the economy ever again.

Brian

What we need to do is buy out the auto companies, retool the plants to produce products that don't destroy the enivronment, and keep the 40,000 workers employed at decent wage levels.

Because he is anti-union. Yes, that's right, the CBC goes to an anti-union auto analyst every single time.

It sounds to me like Tony Clement is trying to bust the union (CAW) by making impossible demands on it.

so really we should be insisting that when any media person at the CBC or wherever opens their mouth to talk about the auto industry, they should first and foremost talk about how, as madmax says, "the NA companies are heavily leveraged". 

i gather this means that the financial management of the auto companies took the profits which the workers produced, and gambled them away at the casino.  now they want the workers to pay for management's greed and bad choices. 

Clement should be fired.  The auto management should be fired and replaced with workers.  They'd do a better job.  We had a taxi company in our area some time ago that got into financial difficulty and the drivers took over the company and run it better than those before.

A few facts:

The Focus is not an import. It is built in Michigan. Designed partly in Europe- but Ford has a global design operation.

The "issue" of restrictions on imports to Asia are a complete red herring. Lift them and it has, or would have had, ZERO effect. Its just a dodge for the CAW to weep for the Big Three [or was- they don't bother with trying to get that preferential treatment anymore... events having moved Far past that].

The automakers did not play the casino economy. There peoblem is that they have been consistent failures at making profits on producing smaller cars. They did try. Even the wildy successful Focus ony made Ford an unsustainable few hundred profit per vehicle. While the Asian manufacturers made profits on every car, wherever it was built.

 When North Americans stopped buying the bigger vehicles, the Big Three ran out of time for trying and failing.

When you listen to him, or he's quoted for more than a sentence, even DeRosier says that labour costs are just one factor, and not the dominant one they are made out to be.

 IF Lewenza said that the CAW has 'no control over legacy costs'- thats at best very disengenuous. I'm not advocating they give anything away- but 'out of our hands' is just not true.

Look legacy costs are wrong. The fact of outsourcing is why legacy costs are high. The more employees you have the cheaper the legacy costs. We have seen the Chrysler employees go from 25000 to 5000 in the last 20 years and ford going from 5 plants to 1, gm left entirely once they finish closing the tranny plant.

Now lets examine Chrysler. If legacy cost is 30 bucks an hour right now, what do you think it would be if they employed say 2500 people...that's right 60 bucks an hour despite it still costing the same in benefits, but those numbers sound a lot scarier don't they! Now if they hadn't outsourced 80% of their jobs the legacy cost would be something like 5-8 an hour. But we don't want to talk about that reality.

DesRosier is a smug asshole that gets published regularly in our rag paper. The guy is nothing more than a friedman evangelical who only loves to bash unions all the while he has his smug laugh when he thinks he is clever, when he just looks like an ass.

Dennis has never blamed management for not producing the cars in canada that people want, or that mexicans scrap 50%(in the past not sure of current numbers) of product.  That our medicare covers a lot of costs, that the non north american companies are also suffering and also need credit and have asked the government for help as well. Nor that the are starting to get their own legacy cost as some of thier employees have finally started retiring.

Also to be noted is this asshole advocated that union deals should only be ratified with PUBLIC CONSENT, because we the people should be allowed to determine the wage of people who we don't even know what they do. I don't think it's right for someone who is uninformed to make the rules fro something they don't know about as is evident about the auto companies. I work in the Industry an dthe media ALLWAYS gets it wrong.

Judging from the CBC board it would immediately resault in no unions ever again. No one asked the public let alone dennis weather CEO should be earning 10 times what the made in the 80's while paying half as much taxes, or the fact it is 400 times what the average worker makes. CEO's have made your(average income) wage by 9:05 am  January 3rd poor babies, plus being on salary they can take time off work to go golfing or see the doctor or spend time with junior and not get penalized like those of us that have a wage.

GM had an electric car but scrapped it, this is from 2002 we would already be far ahead of the curve if we had continued. We as a nation could support the canadian Volt, but our government won't even allow them to put a car on the road as it would only further erode market share for the poor wee  auto companies, this includes BMW/Toyota/ Honda etc. Yet say it is a safety issue while motor powered bicycles are apparently not. 

 This is nothing more than an attempt to bust the union and further more push all wages down so the fat cats can further their strangle hold over everyone.  Like on the national they covered detroit where the rich are buying up the real estate of whole blocks for as little as 25,000 dollars"It's an opportunity" they will then turn around and redevelop it into some walled community that is hip because it is in the city.  Because they got out before the whole system crashed. Or to be more precise, when they got out after speculating they crashed the system and are no reaping the benefits of the cheap real estate. Even if they created the bubble that made it possible to do. Shock Doctrine is real even if Naomi is a little ham fisted in the book. They made the crisis and they are taking advantage of it.

 Oh, november an economist said companies would take advantage of the down turn to lay off, even if it wasn't required. They where just waiting for an excuse. What more needs be said. What a bunch of jackholes these business "leaders" are. Nice that they are actively hurting the economy because it looks better for their bottom line, not because they need to.

 Not quite the succinct comment he gave on 'Politics' but similar:

from: Canada bails out carmakers, says they could fail

excerpt: 

CAW President Ken Lewenza dismissed the idea of reopening the contract with GM to address legacy costs, saying there was nothing the union could do even if it wanted to.

"You can't do it in bargaining, and nor will we," he said at a press conference in Toronto. "I mean, at the end of the day, it's not legal to say to pensioners that you're not entitled to the pension benefits that you left on."

I admire any attempt to protect pensioners, if that is in fact what he is doing - depending, of course, on how generous those pensions are. I'm on a long term disability pension, and it's not a hell of a lot of money - I'd be really pissed off if someone tried to claw some of it back. On the other hand, if those CAW pensions are overly generous (and I have no idea of they are, or not) then perhaps a bit of clawback might be justified. But, in general,  I find the idea of making pensioners pay back their benefits a tad bit reprehensible, and unprogressive.

I was just trying to see what excuse Tony Clement was using for saying that 'legacy costs' need to be reduced. I should have worded my post differently. I thought I was being supportive of pensions! I've always believed that the struggle for decent pensions was a progressive thing, and any attempt to reduce or steal them is an infringement on workers' rights.

Pensions and mutual funds and private market speculation through RRSPs are all part of the means of creating an individualized, non co-operative political-economic climate so that just such imbalances become the norm and the autoworkers vote for the  Flaherties of this world because, after all, he knows how to handle their investments, take care of them.

So put the pension money not into speculative and risky investments but into government controlled (if lower paying) public projects and institutions - green ones for the future.

Or didn't you folks know that the Conservatives counted on private speculation by the working class to keep 'em in line?  They never thought such controlling thoughts?

Boom Boom wrote:

Lewenza is standing firm for the hard earned rights of workers - shouldn't the rest of us?

Maybe I shouldn't be a wet blanket. But what Lawenza is doing is talking standing firm. That has its uses in its own right- no matter what follows.

But I'm afraid its only a question unltimately of how far they cave. Perhaps not very far. But in the end it isn't going to look like standing firm- its going to look [again] like making the best of a bad situation.

Quote:

I thought I was being supportive of pensions! I've always believed that the struggle for decent pensions was a progressive thing, and any attempt to reduce or steal them is an infringement on workers' rights.

What happens to these pensions if the automakers are put into bankruptcy?  Bleh, what would happen to them if just one went under...are we talking people completely losing these pensions?

@ Noise

Yes, potentially people could lose their entire pension.

@ Boom Boom

One could craft a provision with the bail-out to protect the pensioners, but this would require the Conservatives to advocate for such a programme, aka when pigs fly.

For the sake of argument, shouldn't our tax dollars be spent to support all Canadians that are being hit by the economic downturn?  That is, if we are going to spend a lot of money to support pensioners then shouldn't we be spending to make OAS more generous?  I fail to see why public funds should be used to support the defined benefit pensions that were negotiated between a corporation and a union.  It seems to me that the state's responsibility is to provide the social and legal framework should this relationship break down.  If the automakers survive, then they will have continuing obligations to their pensioners, but if they fail, then the state will step in with OAS and CPP where individual workers qualify.

On an aside, I think that these circumstances will be used by the private sector to kill any defined benefit pension schemes going forward in favour of defined contribution plans.

Even with bankruptcy people do not lose anywhere near "all their pensions". They take a cut.

True. But only restructured bankruptcies are being discussed or compared to in this thread.

And even in a dissolution, there would generally be more than the government guaranteed amount of a pension left, unless there had been a prior fraudulent raiding of the fund.

George Victor wrote:

So the ending of defined income pensions will disappoint  those who were counting on them in the future, but an enhanced and guaranteed public scheme that depends on secure investments is going to be good in the long run because we will all be in the same boat, and the conservative inspired class wedge will be terminated as well,  right?

Automakers of the future will not be driven to watch market news at the end of their shift. Flaherty can't appeal to them as fellow investors who "know what is needed to make the economy grow."

 

Maybe a shift towards defined contributions pensions will encourage people to vote conservative with the mistaken belief that they are the best party to manage the economy, or maybe an experience of poverty and insecurity will encourage autoworkers to support collectivist policies that benefit all Canadians instead of just the small collective that they represent.

What is disturbing to me is that the political capital available to either side is dismal.  See Chantale Hebert's opinion piece in The Star today: http://www.thestar.com/News/Canada/article/611549

I fully understand the rhetoric coming from both the corporation and the union, but I fear that at the end of the day the hard line position of CAW has the potential to set back unionization dramatically, especially in the current economic and political climate.

I think that many Canadians are fed up with what they perceive to be largesse of both the auto executives and the autoworkers.

Hebert:

"But to all intents and purposes, the public disaffection that attends to their plight should leave GM and Chrysler and their workers under no delusion (illusion?) that they are anything but political orphans. The way the polls tell it, there is less political credit attached to bailing them out than to letting them sink."

-----------------------------------------------

More seriously, if Chantal's 17 per cent figure is correct (those Ontarians who are in favour of the bailout), we are in deep dung indeed.

But I would give one of my remaining eye teeth to see what number would respond positively to government assistance to an Ontario-built auto, financed in ONtario, and built by leftover autoworkers in the plants awaiting closure.  Maybe with  Magna's assistance?( and the union rules agreed to by CAW).

And I wish Chantal, while interpreting Quebec for Ontarians, could talk about an  "Ontarian  nationalism" with the same understanding that she gives the BLOC. The "why not?" of it. Just as Alberta's Tar Pits are positively sanctioned by the politicians and economists, are understood to be a western "given", sacrosanct.

It won't be that quick, and won't be brutal.

In fact, as far as GM goes, in terms of what everyone will actually see, the difference between restucturing out of bankruptcy versus in it, is becoming ever more negligible in practice.

Time is running out for a restructuring outside of bankruptcy- and if it does happen, the details will look pretty much the same as if it was Chapter 11- just no judge.

That's really how I feel. Try to rescue the workers and rescue their communities with what public money we have available and leave the car companies to sort themselves out. It's better than throwing money at dysfunctional organizations to sustain a status quo we already can't afford in a lot of ways.

Doug wrote:

That's really how I feel. Try to rescue the workers and rescue their communities with what public money we have available and leave the car companies to sort themselves out. It's better than throwing money at dysfunctional organizations to sustain a status quo we already can't afford in a lot of ways.

Why should these particular workers get special treatment?  Shouldn't they get the same assistance that all the other workers get, that being EI, welfare when that runs out (if they qualify), and OAS/CPP if you're of a retirement age?

Quote:

When you listen to him, or he's quoted for more than a sentence, even DeRosier says that labour costs are just one factor, and not the dominant one they are made out to be.

Not true. I've been listening to the CBC for years and it wasn't that long ago that DesRosiers was saying that the auto-industry isn't doing badly -it is the North American auto-industry, burdened with unions and high wages, that is doing badly. And still it is rare we hear that the entire auto industry has hit hard times as context when speaking of the NA auto-industry.

These workers shouldn't get special treatment and, indeed,  they're not. They are losing their standard of living and those cheering on the governments will be next. The workers getting special treatment are the executives and banksters who are reaping huge bonuses, even when getting fired, and being rewarded for bring the whole fucking system to its knees.

Unemployment for workers - trillions and trillions for the thieves: capitalism at work.

Suckers.