UAW's actions force bailout to die in the Senate

[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=maladroit]

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

Toyota supports US bailout

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?