UAW's actions force bailout to die in the Senate

[GoldenBoy812]

By TOM KRISHER â?? 10 hours ago

DETROIT (AP) â?? General Motors is saving every cent it can, from shutting down escalators at night to limiting workers' choice of pens, in case it needs to fight to survive beyond year's end and until a friendlier Washington takes over.

Yet even a truckload of penny-pinching might not be enough.

GM has already cut its U.S. work force by almost 80,000 people this decade, reducing it to 96,000, and it has idled five factories and laid off 11,000 domestic workers this year alone.

The cost-cutting has accelerated as cash has dwindled. Factory supervisors who are seldom at their desks have had their landline phones and voice mail yanked. Elevators and escalators are shut down at night at GM's headquarters towers in Detroit.

The slimmed-down choice of pens in office supply cabinets: one each of black, red and blue.

"It seems trivial, but when you have 100,000 employees or however many using supplies, they don't need to be that prolific. It adds up," said spokeswoman Renee Rashid-Merem.

All the while, the once-mighty icon of American industry and its smaller competitor Chrysler LLC edge closer to bankruptcy.

Experts say their best shot is for President-elect Barack Obama to persuade the outgoing White House to free up emergency loans from the $700 billion federal bailout, or to have the Federal Reserve make a loan.

The $14 billion auto-industry bailout bill died in the Senate late Thursday after the United Auto Workers refused to accept Republican demands for swift wage cuts to bring UAW workers' pay in line with Japanese carmakers.

Senate Majority Leader Harry Reid said he hoped President George W. Bush would tap the Wall Street bailout fund for emergency aid to the automakers.

Barring that, GM and Chrysler must continue to cut even the smallest expenditures and hold off payments to parts suppliers as they hoard cash and try to stay alive until Obama takes office Jan. 20 and could take his own action.

GM has hinted it might not make it through the end of the year before running out of cash. But GM board member Kent Kresa said earlier this week that the company might make it into the first quarter, depending on auto sales.

"Certainly it has been stated that we need the money quite soon," Kresa told The Associated Press. "I can't specifically state before the end of the year, but certainly in the first quarter and early in the first quarter."

GM wants a total of $18 billion in government loans, including $4 billion before this year runs out. And Chrysler, which is looking for $7 billion in loans, may be even closer to the edge.

Its CEO, Robert Nardelli, said its cash would drop to $2.5 billion, its minimum to survive, at the end of the year. It has cut 32,000 workers since private equity firm Cerberus Capital Management LP took over control in August of last year, including 25 percent of its salaried work force last month.

The other of the Detroit Three, Ford, is not yet seeking government loans but wants a $9 billion line of credit that it might need to tap if the depressed U.S. auto market doesn't recover. It says it can last through 2009 because it borrowed billions two years ago, when credit was freely available.

The possibility remains that a deal can still be worked out in the Senate. Republican opponents, mainly from Southern states, probably don't want to bring the industry down, said David M. Hart, associate professor of public policy at George Mason University in Virginia.

"It's certainly not beyond the scope of possibility that they'll get this thing through," Hart said. "I think it's hard for Republicans to have this on them. There's a lot of pressure. They might work out a deal."

Hundreds of thousands of jobs hang in the balance. The Detroit Three employ 239,000 workers in the U.S. Counting other businesses that depend on the automakers, economists estimate that 2.5 million jobs would be lost if all three companies went out of business.

Susan Helper, a professor of economics at Case Western Reserve University in Cleveland who has studied the auto industry, said GM and Chrysler's suppliers are the key to keeping the automakers out of bankruptcy protection if they are forced to stretch and try to make it past Obama's inauguration.

Suppliers, also cash-strapped, may start demanding payment in advance before shipping parts. If enough suppliers get nervous and start demanding cash, the companies could run short.

"Then you have this game of musical chairs where everyone wants to make sure they're not the one left without a chair," she said. "That very process can bring the whole structure down. Right now the suppliers have been incredibly disciplined and not saying, 'Hey, pay us first,'" she said.

Already, a small number of GM suppliers have sought cash on delivery, but the company is working through the situation, CEO Rick Wagoner said last week.

"I would say there are a couple situations that we are managing, but on balance I'd say it's really held in there quite well," he told the AP.

The rest of the article can be found here:
AP Source (http://www.google.com/hostednews/ap/article/ALeqM5hlZA9Rr02ymeXyMnpSr-dvJxITsQD950UOPG0)

[Dutch Pimp]

The Rise and Fall of the American Empire is near. It was fun, while it lasted....:thumbsup:

[killerweed420]

I don't think the failure of the loan is UAW's fault. They just wanted the rest of the company to take a pay cut just like they were going to do, but they wouldn't agree to it. Its just good old fashion greed that is making car companies collapse. Everybody wants to get rich. Good riddance as far as I'm concerned. I worked for Ford for over 15 years and they deserve to crash and burn. Even more so GM. Chrysler shouldn't be helped at all. They are a privately owned company. And all of them are primarily foreign owned now anyway. Let them collapse. Someone with a little common sense will buy whats left of them and rebuild them into stronger companies.

[RamblerGambler]

Let's hear it for the GOP. Why settle for a recession when you can have a full blown depression on your hands?

[maladroit]

"The $14 billion auto-industry bailout bill died in the Senate late Thursday after the United Auto Workers refused to accept Republican demands for swift wage cuts to bring UAW workers' pay in line with Japanese carmakers."

- i see you substituted in your own headline rather than use the associated press headline...your headline should read: republican actions force bailout to die in the senate

[RobPA]

Let's hear it for the GOP. Why settle for a recession when you can have a full blown depression on your hands?


Thats total bullshit. For once the GOP is standing up to President Bush. UAW are so thick headed, they dont realize they are lucky just to have a damn JOB right now, there companies are collapsing!! The UAW dident want to commit to pay cuts bottom line, you should see some of the crap these people complain about on the UAW messageboards. The UAW needs to make concessions in pay just like our hard working autoworkers in the south have done for years, they are thriving right now. When GM collapses and the UAW are out of jobs then maybe they will realize the idiocracy. Its like these people think they deserve money even if there damn company is COLLAPSING, what are they thinking??!!

[RobPA]

"The $14 billion auto-industry bailout bill died in the Senate late Thursday after the United Auto Workers refused to accept Republican demands for swift wage cuts to bring UAW workers' pay in line with Japanese carmakers."

- i see you substituted in your own headline rather than use the associated press headline...your headline should read: republican actions force bailout to die in the senate

Im so glad it died and I hope it continues to die. Good job GOP, this is the best work in 8 years. :thumbsup:

[8182KSKUSH]

BAILOUT!!:gunfighter2::jumphappy::jumphappy: :clap::clap::clap::dance:

[yokinazu]

having had my living made as a by-product of the auto industry i am really torn on on this issue of the bailout. on one hand i say yes we need to do this because of the fact our economy is mainly supported by the auto industry, or let me restate that, used to be mainly supported. so the impact of the auto industrys collapse would be horrific. i know some that only see the employees of GM or chrysler as lossing theyre jobs but in reality there are millions who (for lack of a better expression) leach off the auto industry. me being a leach my first job out off the army was as a machinist in a place that supplied GM, Ford and Chrysler. in the mid 90s we there started seeing the slow decline of the big three and started changing the product that we made to suit other industrys incase we couldnt beg from theyre table any more. this also met making parts for the japanese cars wich were made in Ohio. this whole thing with the auto industry and possibly even this recession has ben coming for a long time. but not only do these people lose theyre jobs but this will efect even that ccashier at wal-mart. who seemingly have nothing to do with the auto industry. but what kinda angers me is the fact that congress more or less hands the finacial insitiute 700 billion dollars with no strings attached, and wont give the auto industry 14 billion. the banks have effected mostly people who have or had money. GM going down effects the working class. i dont know can ya see my point.

but one part of me says screw them and the UAW they rode in on. im sick of hearing these over paid under work jackasses whine cause they cant live on 30 dollars an hour.(i grew up in Ohio wich is thick with UAW) while im out bustin my ass for a third of that and i seem to be makin it( ok 2/3). then the capilist way is you either sink or swim you dont sell your product - you make no money- you dont pay bills - you go outa businiss. now step four is - ask govt for bailout - continue sinking.

but my bleedin heart liberal self says that no matter what we do we have to help the people first and for most.( by the way i said help not welfare state)

[GoldenBoy812]

To be fair, for the most part it has been the same republicans who were against the financial bailout who are also against the Detroit bailout. Although Shelby represents Alabama, a state where Toyota and Mercedes produce cars via non union labor, he was also one of the nay's for wall streets version...


n your own headline rather than use the associated press headline...your headline should read: republican actions force bailout to die in the senate

With all due respect, it was not the republican senators who came to Detroit begging them to take their money. If wages are already similar, what was it specifically that UAW would not concede to?

[8182KSKUSH]

but my bleedin heart liberal self says that no matter what we do we have to help the people first and for most.( by the way i said help not welfare state)


I understand what you are saying.
Let me re-tell a story I heard once, about a bird and cow.

You see, there was a flock of birds that lived on the prairie. Winter was coming and they were torn, torn between staying to eat, and leaving soon enough to avoid snow and ice.
They all decided to take off one day, all but one.
The one stayed behind, very happy that there was no more competition for food, he just ate to his hearts content. As the days went by it got colder. Then one day while eating some seeds, everything went black instantly. A cow had walked by and dropped a steamy hot pile onto the bird, completely burying him!
The bird was in some distress, panicking, and not able to get itself out of the pile. No one could hear his screams!!!
Just by chance the first snow had fallen, and while the bird did not make it south for the winter, he was ironically protected by the poo, and it kept him warm.
Soon, the bird noticed that something had found the pile'o'poo, and was saving him!
He was thrilled! He promised himself that he would join his brothers and sisters due south the moment he was free.
Just then, daylight pierced the poo walls, and the bird noticed that it was in fact a cat that had dug him out.

You can imagine what happened next, needless to say the bird never made it out of the pasture.
Moral of the story, sometimes when someone shits on you, they are doing you a favor, and sometimes when someone is getting you out of shit, they are just planning on eating you.:jointsmile:

[theforthdrive]

You wouldnt buy our shitty cars... So we'll be taking your money anyways! LOL


This is how I fee about it. I grew up in a steel industry household. The steel industry has all but left and America has moved on. yeah, maybe not better, but didnt just collapse. I feel for everyone that is going to suffer but the auto makers have had decades to make a better product. they chose to cut corners treat employees poorly all to make a few executives and share holders rich. well good job, now I really dont feel a bailout would help. why? because the product is still shitty and will continue to be. the problem isnt that we wont give money. the problem is that once we give the money they will just operate as business as usual.

[maladroit]

"what was it specifically that UAW would not concede to? "

- the senate republicans demanded further wage reductions to put them at wage parity with japanese and european automakers (an impossible demand to meet on short notice)...the republicans wanted a specific date when that would happen so the UAW replied with the expiration date of their current contract in 2011...after the bill was killed, the UAW president gave a long press conference that sounded similar to our earlier discussion comparing toyota to detroit...i think he said something to the effect that if unions were expected to make wage concessions, then the legislators should demand that management and suppliers make concessions too...it wasn't the unions fault that detroit made the wrong kind of vehicles of lower quality, and now they're being scapegoated for the republican opposition to bailing out the automakers

GM's total market capital is only $2 billion...it's gonna be hard to get that bailout money back if the GM doesn't start selling cars real soon

[GoldenBoy812]

the senate republicans demanded further wage reductions to put them at wage parity with japanese and european automakers (an impossible demand to meet on short notice)...

If they are to fall into chapter 11 bankruptcy, those wage contracts will be nullified anyway. The UAW decided not to renegotiate their current labor contract, where the act of doing so is not impossible.


the republicans wanted a specific date when that would happen so the UAW replied with the expiration date of their current contract in 2011


When told this is a no go, UAW refused to compromise. ...after the bill was killed, the UAW president gave a long press conference that sounded similar to our earlier discussion comparing toyota to detroit...i think he said something to the effect that if unions were expected to make wage concessions, then the legislators should demand that management and suppliers make concessions too...it wasn't the unions fault that detroit made the wrong kind of vehicles of lower quality, and now they're being scapegoated for the republican opposition to bailing out the automakers

As Ron Gettelfinger squabbles about fairness, millions of UAW members slide closer to unemployment... It seems that what is important to Gettelfinger conflicts with his constituencies best interests.


GM's total market capital is only $2 billion...it's gonna be hard to get that bailout money back if the GM doesn't start selling cars real soon

Nobody is selling cars like its 2004, the behavior of the consumer is in hoard phase.
-------------------------------------------------------------------------

Dr Peter Morici: UAW - GM Pact leaves GM at Cost Disadvantage
By Professor Peter Morici, Robert H. Smith School of Business, University of Maryland
Sep 26, 2007, 15:26

The details that emerged in the press today about the â??historicâ?� UAW - GM labor pact indicate the deal may prove the death knell for yet many more Midwestern manufacturing jobs.

Although, GM, by funding an independent trust, has managed to move retiree health care costs off the books, the residual liability remains unclear. As with the Delphi spin off, if GM must step in when the health care trust runs out of cash, this may prove nothing more than a bookkeeping rouse. Otherwise, Mr. Gettelfinger has set up his successor to deliver the bad news to GM retirees, that there is just not enough money to meet their expectations. The actual outcome will like lie between those two extremes.

That aside, much of GMâ??s labor cost disadvantage lies in the wages and fringe benefits it pays workers making cars today--those are not legacy costs. The pact does not much reduce the premium GM pays over Toyota, except only new hires. Temporary workers will be upgraded to the existing pay structure, and according to the Detroit Free Press, only those new hires that are not directly involved in the production of vehicles will be offered the new, lower pay scale.

Toyota already has the ability to differentiate pay among production workers and those that mow the lawn, and the fundamental cost disadvantage imposed by GMâ??s high scale for workers on the line remains. The pact does not call for new pay raises but it does provide for significant bonuses in the out years of the contract; hence, the pact raises pay but GM and the UAW hope investors wonâ??t notice.

Lost in all the coverage has been the fact that legacy costs are only part of GMâ??s problem. This pact does a lot to reduce legacy costs but not enough to eliminate the actual costs GM faces making vehicles today.
Other disadvantages will also continue to apply. For example, the agreement constrains GM investments, such as commitments to make certain products in the United States, that Toyota and other Asians do not face. The same goes for burdensome work rules and limits on locating and selecting suppliers to maximize supply chain efficiency.

http://www.finfacts.com/irelandbusinessnews/publish/article_1011290.shtml (URL="http://www.finfacts.com/irelandbusinessnews/publish/article_1011290.shtml)["]source[/URL]

[Mississippi Steve]

Good points.... but......

The way I see it, stinkfinger.....ummmm I mean gettlefinger is only in the auto bail out frey because his job is on the line. At this point, the only thing that will save the big 3 is to declare bankruptcy, which will negate the union contracts, then kick out the unions, adopt the same business plan and wage scales as Toyota.

Toyota made a nice profit in the same market as the big 3 auto makers.

Also consider that folks who are only making $5.50 - $8.00 an hour(Walmart wages) cannot afford to buy a car made by assembly line workers that are getting paid $75/hr.

[maladroit]

"The UAW decided not to renegotiate their current labor contract, where the act of doing so is not impossible."

- it was impossible in the deadline required to get republican approval of the bailout


"As Ron Gettelfinger squabbles about fairness, millions of UAW members slide closer to unemployment... It seems that what is important to Gettelfinger conflicts with his constituencies best interests."

- i agree and so does mr gettelfinger who said last week: â??Concessions, I used to cringe at that word. But now, why hide it? Thatâ??s what we did.â?�...the squabblers were in the senate whose sense of fairness was unbalanced:
http://www.nytimes.com/2008/12/04/business/04auto.html?_r=1&partner=permalink&exprod=permalink


"Nobody is selling cars like its 2004, the behavior of the consumer is in hoard phase."

- the foreign automakers were selling cars like it was 2004 for *years* after detroit saw their sales slide...detroit is begging for a bailout while the foreign automakers are not because detroit is poorly managed...nobody is selling as much cars now that the bush administration kickstarted a global economic crisis, but the foreign automakers will likely survive the downturn without passing their begging buckets for a whip-round


"GM Pact leaves GM at Cost Disadvantage Sep 26, 2007"

- that's last year's news...the UAW made significant concessions since then

[GoldenBoy812]

it was impossible in the deadline required to get republican approval of the bailout

It could have been made part of the agreement, to renegotiate...


i agree and so does mr gettelfinger who said last week: â??Concessions, I used to cringe at that word. But now, why hide it? Thatâ??s what we did.â?�...the squabblers were in the senate whose sense of fairness was unbalanced:
http://www.nytimes.com/2008/12/04/business/04auto.html?_r=1&partner=permalink&exprod=permalink

Obviously not, otherwise the bailout would not have failed...


the foreign automakers were selling cars like it was 2004 for *years* after detroit saw their sales slide...

Who cares what they were doing.


detroit is begging for a bailout while the foreign automakers are not because detroit is poorly managed...nobody is selling as much cars now that the bush administration kickstarted a global economic crisis, but the foreign automakers will likely survive the downturn without passing their begging buckets for a whip-round

There have been multiple auto bailout happening around the world.


that's last year's news...the UAW made significant concessions since then

Such as? Dr. Morici wrote this piece in response to the last major modifications made to UAW compensation via GM. Ford and Chrysler soon followed. Yet you recall the bold red highlight, the pact only reduced new employee compensation liability on behalf of the big three. Existing employees were and are still "on the books". Anything but overall cost reduction can not be considered significant, as the alternative is bankruptcy where concessions will be made a reality.

They have been drawing up this bill for a few weeks. The UAW has been notified prior and decided not to agree to an immediate arbitration hearing which would renegotiate wages to an acceptable level.

[SouthernGuerilla]

They should take that money and rebuild the American infastructor. It's long over due.

How many bridges, roads, rail roads, power lines and other "life lines" are in deperate need of upgrades and repairs?

Romans built roads that lasted thousands of years but we can't build a road that doesn't need to be torn up and rebuilt within 10-20years, or less.

Corporations control too much of the American government, not the American People.

[GoldenBoy812]

They should take that money and rebuild the American infastructor. It's long over due.

How many bridges, roads, rail roads, power lines and other "life lines" are in deperate need of upgrades and repairs?

Romans built roads that lasted thousands of years but we can't build a road that doesn't need to be torn up and rebuilt within 10-20years, or less.

Corporations control too much of the American government, not the American People.

It has been rumored that the second Obama takes office, a massive stimulus spending package will be passed through congress. Personally, i am thinking a $1 trillion stimulus. What they need though, is a carbon tax to help coordinate the efforts for when they pump $250 billion in renewable fuel technology.

Personally i am against bailouts. But..., if something like ATMS and debit fail, or if the unemployment costs of over a million people losing work dwarf the bailout, then gov might as well fix what they started...

[McDanger]

Let's hear it for the GOP. Why settle for a recession when you can have a full blown depression on your hands?
You do know the Democrats control both houses of congress, don't you?
They couldn't even get all of their own members to support it.

[GoldenBoy812]

Our current recession is caused by a rather large decrease in aggregate demand. The only way government can at all influence demand is by attempting to influence both the supply for goods, as well as but not limited to the supply of credit.

For example, if the US government wanted to make a certain substance illegal; for the most part that substance will automatically decrease in supply, and according to Say's law, that will create its own demand.

On the contrary, the demand for money/credit is at an all time high, but for some reason banks are not lending. Why? Because we are in a period of deflation that lacks adequate aggregate demand. Banks are now more willing to take a "holding" loss than risk potential default.

Of course, a truly transparent system would allow for banks to locate credit worthy individuals to get the ball rolling once again. The person(s) that create this type of system, whatever it may be, will be the next Bill Gates.

[maladroit]

"Who cares what they (foreign automakers) were doing."

- anyone who cares to know why toyota and honda aren't prowling around washington with their hand out


"There have been multiple auto bailout happening around the world. "

- NOW you care what foreign automakers are doing...good! toyota, honda, and nissan are still posting profits in japan...hyundai/kia is still profitable in korea...france's peugeot-citroen, italy's fiat, and germany's BMW & volkswagen, are still posting profits...the only foreign bailout i could find was general motors opel subsidiary which is begging for a handout from the german government...where are these multiple bailouts happening? canada?


"the UAW made significant concessions since then. Such as?"

- such as the concessions made in the week prior to the senate hearing of the bailout which included: suspending the job bank program, deferring billions in payments to health care fund for retired workers that was negotiated in 2007, and the UAW opened negotiations for *more* wage concessions with management...the republicans ganged up on the union, and demanded specific wage parity with foreign automakers without similar demands from management and suppliers

the union didn't put the big-three automakers in a sales slump back in 2004, 2005, 2006, and 2007...that was management's fault but the senate demanded full compliance from the union (who already made big concessions) while giving management a stern look and a wag of the finger

personally, i don't think detroit deserves a bailout (at least not GM) but not because of the unions...they managed themselves into this crisis and it would be foolhardy to give the same management more money

despite how it sounds, i am not pro-union...i helped bust two attempts to unionize a business i managed...i even hired a former union organizer to counter the same union's attempts to take over the staff (an arrangement that concluded with an exchange of gunfire in the parking lot)...as the current situation proves, unions are expensive, and stifle the ability of a business to adjust to changing market conditions...but in this case, the problems of the big three detroit automakers are bigger than that...i think at least one of them would fail even if the UAW agreed to everything the senate requested of them

[GoldenBoy812]

[QUOTE]NOW you care what foreign automakers are doing...good! toyota, honda, and nissan are still posting profits in japan...hyundai/kia is still profitable in korea...france's peugeot-citroen, italy's fiat, and germany's BMW & volkswagen, are still posting profits...the only foreign bailout i could find was general motors opel subsidiary which is begging for a handout from the german government...where are these multiple bailouts happening? canada?

They are in the makings as we speak. Nobody is selling cars, because there is a certain look of uncertainty. In a deflationary environment, the psyche is to hold cash until the bottom emerges. Look for prices to decrease even further.

Euro auto sales (http://www.forbes.com/afxnewslimited/feeds/afx/2008/12/16/afx5828662.html)

Toyota supports US bailout (http://money.cnn.com/2008/12/15/news/companies/overseas_automakers/?postversion=2008121609)


such as the concessions made in the week prior to the senate hearing of the bailout which included: suspending the job bank program, deferring billions in payments to health care fund for retired workers that was negotiated in 2007, and the UAW opened negotiations for *more* wage concessions with management...the republicans ganged up on the union, and demanded specific wage parity with foreign automakers without similar demands from management and suppliers

There have been many claims made, yet i have yet to see any real results... Supposedly the remaining 3500 or so members of the job bank were released, but i have only encountered hear-say, and no true conformation. Nothing at all on the UAW website.


the union didn't put the big-three automakers in a sales slump back in 2004, 2005, 2006, and 2007...that was management's fault but the senate demanded full compliance from the union (who already made big concessions) while giving management a stern look and a wag of the finger

Then the question is, why were house and senate democrats unwilling to reduce non manufacturing compensation? I have to wonder why the only concessions considered by the bill's engineers were in regards to UAW?


personally, i don't think detroit deserves a bailout (at least not GM) but not because of the unions...they managed themselves into this crisis and it would be foolhardy to give the same management more money

Me either. I want to see bankruptcy of all three, and a recapitalization of the market. There are countless auto firms who dip below the radar because they do not possess the marketing clout, or capital investment the big three have.

Instead of bailing out an unworthy industry, give that money in the form of grants/business loans to new innovative firms to design better domestic autos.


despite how it sounds, i am not pro-union...i helped bust two attempts to unionize a business i managed...i even hired a former union organizer to counter the same union's attempts to take over the staff (an arrangement that concluded with an exchange of gunfire in the parking lot)...as the current situation proves, unions are expensive, and stifle the ability of a business to adjust to changing market conditions...but in this case, the problems of the big three detroit automakers are bigger than that...i think at least one of them would fail even if the UAW agreed to everything the senate requested of them

I agree, but some things to take into consideration.

Quality control - Toyota's quality control principle is nearly impossible to replicate in UAW companies because of extra costs. Because Toyota's input cost is much less, there is more funding available to quality control systems.

Maneuverability - Firms who do not face contractual restructuring costs such as buyouts, job banks etc... will be more able to adjust input costs in the short run.

If any of the big three can reduce production to meet demand, then none of them will go bankrupt. Why is it they cannot just lay off 40% of their labor force?