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Stakes High as Auto Plan Deadline Approaches |
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The nation’s Big Three automakers face a Dec. 2 deadline to bring to Congress a detailed plan on how they would use federal funds to turn the industry around.
Economists, executives, union leaders and President-elect Barack Obama have said bankruptcy is not an option because of the devastating consequences to workers and retirees and to the U.S. economy.
The stakes are high. Should the auto industry collapse, more than 3 million jobs would be lost; pension and health care benefits would be cut for 1 million retirees, spouses and dependents; and thousands of other businesses—dealers, suppliers and others—would be threatened.
To find out ways you can take action to help save millions of auto jobs, click here.
UAW President Ron Gettelfinger told a congressional panel earlier this month that the situation facing the auto industry is critical.
It is a crisis….If the Detroit–based auto companies are forced into liquidation, the consequences would be truly devastating, not only for UAW members, but also for millions of other workers and retirees across this nation, and for the entire economy of the United States.
Whatever auto recovery package is approved by Congress, the UAW says it ought to meet certain basic principles:
- It must provide an emergency bridge loan to the companies to ensure that they can continue operations and avoid bankruptcy.
- It should impose tough limits on executive compensation, prohibit the companies from paying dividends, and give the government an equity stake in the companies to protect the interests of taxpayers.
- It should establish a government advisory board that will oversee the operations of the companies to ensure that any taxpayer funds are spent in the United States, and that all expenses are consistent with the business plans and any additional requirements imposed by Congress.
- It should require the Obama administration, early in 2009, to develop and submit to Congress a plan for the long-term revitalization of the domestic auto industry. This plan should involve all stakeholders, and should include commitments by the automakers to retool facilities in the United States to produce more fuel-efficient vehicles, as well as approaches for dealing with retiree health care and pension legacy costs and other issues facing the domestic automakers.
Meanwhile, Jonathan Cohn, writing in The New Republic, debunks the myth that overpaid union autoworkers contributed to the crisis. As he points out:
The figure is wildly misleading. Let’s start with the fact that it’s not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research…average wages for workers at Chrysler, Ford and General Motors were just $28 per hour as of 2007.
More important, and contrary to what you may have heard, the wages aren’t that much bigger than what Honda, Toyota and other foreign manufacturers pay employees in their U.S. factories. While we can’t be sure precisely how much those workers make, because the companies don’t make the information public, the best estimates suggests the corresponding 2007 figure for these “transplants”—as the foreign-owned factories are known—was somewhere between $20 and $26 per hour, and most likely around $24 or $25.
To read Cohn’s entire column and to find out where the misleading $70 an hour figure comes from, click here.
8 Comments
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It is great to read the article in The New Republic that puts some realistic numbers to the debate. These are the things the general public needs to be informed of. There is a big difference between what you get on your check and the total package that is negotiated in a contract.
The government rushed 20 billion to citi bank with no plan, no strings. Anything wall street wants is what they get-no transparency so we don’t know what it’s used for. But when the big 3 ask for a loan, they get dumped on!! Think about it- we are buying up toxic debt worth nothing from these crooks that no one else would buy with a blank check from us– and we may or may not get our 700 billion back!! The big 3 want a loan– not a handout like these banks– they will repay it– If wall street crooks hadn’t wrecked the credit market they wouldn’t be going to the government for the loan. Our elitie politicians need a reality check!!
To the membership and bloggers:
The country is in a serious financial crisis we seem to have lost our way due to greed and excessive spending, forgetting how automobiles and houses were purchased once upon a time. When the union movement was for the benefit of the American workers, American… not for the few. The pride in the “Made In America” sloggin. But those management wizzards, the good old boys club, those CEOs that are only concerned with their take first, second, and third similar to the four that showed up before Congress asking for 25 billion dollars. The issue is not the jet, Rolls Royce, the muiltiple homes, the millions in salary, the issue is business.
Management must take care of business a banker once told me. When an application for money is made to a bank, Congress, the taxpayer, it is done by presenting a BUSINESS PLAN, to include the current company balance sheet, financial statement, near term capital obligations 1month-two years, marketing plan, etc., etc. What will 25 billion dollars do for the three automakers when combined they are burning up 4-5 billion per month, their sales are down 30-45% going into the winter, in a recession, where the consumer is not purchasing??
The American Automakers dropped the ball. They were put on notice over 20 years ago about fuel efficiency, innovation, and other areas regarding their autos, warnings which were ignored or simply undermined by their management, a total disregard to their shareholders, bond holders, and employees. This is business, what should be the recourse under the circumstances?? These executives are speaking with “fork” tongue. On Dec. 2 when they go back to Congress make sure they have a proper business plan detailling how much money they really need, and how they intend to recapture market share and how they intend to pay the loan back to the taxpayer. As per the union and it’s membership, it’s your company that is in crisis, what will you do to help keep it in business, submit your proposal???
Good Luck
JC
The government should help the American auto industry but with strings attached: Not by lending them $25B directly but by buying shares as we are doing with the banking industry; This needs to include government oversight/regulation and an alignment of their business models with the energy policy roadmap of the new administration.
What is a pro-labor alternative to giving billions of dollars to the incompetant big three auto bosses? Check out this perspecitve from WSWS:
A tale of two bailouts
25 November 2008
http://www.wsws.org/articles/2008/nov2008/pers-n25.shtml
“Barack Obama used his press conference Monday to deliver a sharp rebuke to the US auto industry, ruling out any “blank check” to rescue it from bankruptcy. Virtually in the same breath, the president-elect reiterated his support for just such a “blank check” to US banks and financial institutions, insisting that he would do “whatever it takes” to save them.
…”
Soooo…..I ask again - Why did Wall Street get a “no strings attached bailout”, yet the auto industry has to follow very specific guidelines? I am trying to understand the logic in all this, and why Obama seems to be obliging the bank bailouts, yet is making it difficult for the auto industry to get a “loan”. It would be different if the banks were actually lending money in low interest loans so consumers could consolidate their debts, and free up some of their cash for “stimulating the economy”, but I am not seeing that happen. My credit card interest rates have gone up; my line of credit, across the board has gone down with every single account I have. Not only do I not have any available cash, but I couldn’t afford to borrow even in an emergency.
It doesn’t help to see that CEOs are still getting their bonuses, and they have not made any personal financial sacrifices to protect their banks’ assets. Citi Bank, just hours after receiving their bailout, went ahead with their plan to sink $400 million in order to put their name on the new Met stadium in New York. Amazing.
Dear union friend
You mention that the interest rates on your credit cards have gone up.
They sure have! That include the AFL-CIO-sponsored “Union Plus” card. It just sent out an “Important Notice Of Change Of Terms”. It’s going to raise its already predatory, usurious rates even higher. How can the Federation condemn predatory lenders and at the same time pimp for “Union Plus”? That’s wanting it both ways.
Cut the non-union cards in two. Get a card through your union’s credit union. The rates are less and the workers there are union.
FYI - Today’s analysis of the auto industry “bailout” and what it means to auto workers from WSWS. The future for auto workers and all working people
trying to earn a “living wage” appear increasingly desperate.
US Congress, Big Three, UAW conspire against auto workers
3 December 2008
Bill Van Auken
“Following the Democratic congressional leadership’s initial rejection of the bailout on November 20, intensive talks were held between Congress, the auto companies, the UAW and officials from the Obama transition team over the best way to use the crisis to extract massive concessions from auto workers.
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The UAW is reportedly offering to eliminate what remains of the Jobs Bank program, which subsidizes the income of laid off workers during the life of the four-year agreement. The program has already been largely gutted and its elimination is chiefly symbolic and a down payment for far more sweeping concessions.
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According to the Detroit News, General Motors will ask Congress for as much as $18 billion in emergency financial aid, pledging in return to ax 30,000 jobs, shut down nine plants and reopen the UAW contract.”
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Read the full story here:
http://www.wsws.org/articles/2008/dec2008/pers-d03.shtml