"Car Politics"

[Ashliana]

There's been more and more talk recently of the government bailing out another industry--the auto industry. Can someone explain to me why this makes any sense, and is necessary on any level?

I realize that GM, Ford, Chevy, etc, are symbols of America's fading manufacturing sector.. but why would it be necessary for the federal government to bail them out, compared to any other business that is allowed to fail?

If a company can't compete worldwide, as American car companies have been struggling to do, why should the government arbitrarily pick them to survive versus an upstart knick-knack manufacturer who fails or a restaurant who fails? Simply because they already employ people in states whose tax policies discourage investment?

I'd appreciate input from both conservative and liberal viewpoints, if possible. I could understand--even if I don't agree with--bailing out the banks. But the auto industry? Maybe I'm just missing something.

[crb]

I live in Michigan, and if they go under it is going to suck, my house will lose even more value, crime will likely increase, my taxes may go up. Though we plan to move as soon as my wife is done with residency.

But I agree, it makes no sense.

The unions have sucked the US automakers dry. Their labor costs are 150% of Toyota's. They cannot compete. Michigan has been in a recession for about 3 or 4 years now, and last fall they fucking went on strike. What they went on strike over was letting temp workers join the union (more dues for the union) the workers are letting the union bosses lead them around like sheep. Even here, in a GM town, the public opinion on that strike was very very harsh. Our unemployment rate was already up around 6 or 7 and people were like "I'll take your job."

The days of not going to college and getting a $60 an hour (equivalent to all benefits) job are over, and GM needs to drastically cut their labor costs. They need to offload their legacy retiree pension and healthcare costs as well.

Then, Michigan has brought it on ourselves. Our douche of a Governor has presided over a huge slide in jobs. 300k or so jobs lost during her first term, and she was reelected. Now she is on Obama's economic team? Talk about pandering to the union vote. It could be one of them could go bankrupt before Obama takes office, if so, good, if not, Obama will bail them out. He owes the unions too much.

The fact is the auto industry is doing fine... in Texas, in North Carolina, in Alabama, in Tennessee. In pro business right to work southern states. Granholm begged and pleaded for a new Volkswagon plant to be built here in Michigan, nope, Tennessee.

This wouldn't be a bailout of the automakers, it would be a bailout of the UAW and of Michigan and it is wrong. The UAW is the parasite that killed the host, and Michigan went along for the ride.

Now.. to be specific... GM (and Chevy is GM by the way), is actually doing really well internationally. Their Chinese operations for instance are great. GM could split off it's international and domestic businesses and one would fail and the other would be really successful. Of course, they don't have the UAW in China.

Chrysler is mostly domestic, and mostly trucks, and mostly dead.

Ford is also in really bad shape, well they all are, but GM atleast has one iota of good news (China).

My problem with bailing out the the big three is that you had unions negotiate really ridiculous pay and benefit packages years ago, and the fair thing is if they took too much, if they killed the host, they should be penalized by losing their pensions and benefits. Instead, the tax payers should be on the hook for their suped up benefits? A whole lot of tax payers would LOVE to have the benefits they've got.

The only way they can restructure their labor agreements sufficiently is through bankruptcy, it is really really going to hurt, but it needs to happen. It will hurt me personally as well, but it needs to happen.

[Ignot]

My problem with bailing out the the big three is that you had unions negotiate really ridiculous pay and benefit packages years ago, and the fair thing is if they took too much, if they killed the host, they should be penalized by losing their pensions and benefits. Instead, the tax payers should be on the hook for their suped up benefits? A whole lot of tax payers would LOVE to have the benefits they've got.



Wow CRB, you actually summed it up pretty well and I actually totally agree with you on this because you hit the nail on the head. It's a tough decision to bail out the automakers or any big company that not only employs alot of people but some states are really dependent on them. We are in tough economic times and are forced to battle numerous problems that are all related in some fashion, unemployment rates for example. Imagine the unemployment rate after all these automakers go out of business and the chain reaction it would cause. On the other hand, would the country be better off getting rid of the companies that are not fit to survive?

I don't know the answer and I'm glad I don't have the responsibility of making those decisions.

[Atlanteax]

Save the auto companies by giving them full reign to fire workers and lower wages & benefits w/o UAW interference.

[TheWitch]

Save the auto companies by giving them full reign to fire workers and lower wages & benefits w/o UAW interference.

If only.

My husband works with the Teamsters on a regular basis, and the crap they raise a stink about blows my mind. The money they waste in meetings and arbitrations - over things like parking spots.

I can't even imagine the reaction to that. But yea, here's the choice: you accept a decrease in workforce of 30% (or whatever) and remaining employees wages frozen for two years, and we can stay open and the other 70% keep their jobs OR we close and you're all out. The short sighted union will close them down.

As to whether we should bail them out or not...no. They've failed in many respects to keep up with the market, they take years to bring in new technology, it's another good 'ole boy industry and if they need to take it on the chin, so be it.

On the flip side of that, however, is another aspect of policy I think Washington needs to get involved with and that's the trade deficits in that industry. There was a guy on Bloomberg a just a few minutes ago, pointing out that while Toyota goes great guns in this country and has actually seen the least decline in US sales of the major manufacturers, they allow nothing into Japan of ours. I would be happy to see a little more protectionism.

Ultimately, and this is anissue I had with The Obama from word go, we need less union BS, not more. Or this is just going to keep happening.

[crb]

I can't even imagine the reaction to that. But yea, here's the choice: you accept a decrease in workforce of 30% (or whatever) and remaining employees wages frozen for two years, and we can stay open and the other 70% keep their jobs OR we close and you're all out. The short sighted union will close them down.

It isn't even the current workers insomuch as the old workers who are retired and have rich pensions and medical benefits.

Did you know GM had this thing called a "jobs bank" whereby if they didn't need a worker but couldn't fire them because of the union they'd task them on doing meaningless busy work?

[Daniel]

Ultimately, and this is anissue I had with The Obama from word go, we need less union BS, not more. Or this is just going to keep happening.

While I agree with your problem assessment, I disagree with your solution. I'd rather see tough negotiations to ensure market access instead of walking down the road of protectionism.

World Wars are not very fun.