With 3 million jobs at stake Republicans are on the case. They and some Libertarians have discovered the culprit,
“The financial straits that the Big Three find themselves is not the product of our current economic downturn, but instead is the legacy of the uncompetitive structure of its manufacturing and labor force,” said U.S. Senator Richard Shelby (R-Ala.). “The financial situation facing the Big Three is not a national problem, but their problem. I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers in such a way that allows them to continue and compound their ongoing mistakes.”
Its nice that Republicans have discovered meritocracy after five decades of being the world’s biggest support network for rewarding crony based capitalism, when they weren’t shipping jobs off to Asia and India in order to, you know compete in the global market. Had to blame unions of course. These Republican and libertarians never explain why German, Japanese and Swedish car companies remain competitive with a union work force. let’s help them out. Ford makes a good example because they make fairly good, profitable cars on European and Asian assembly lines, but don’t have to worry about paying health-care benefits – national health-care takes care of one of biggest headaches of American business. The NYT’s David Brooks even mentions what a boost managed health-care will be here, even as he plays tough daddy and declares that letting Detroit die is all for the best. Some folks such as The Agonist are weary of giving Detroit a basket of cash. Though as tantalizing as forcing them into regular bankruptcy might be, it’s probably a mistake. The Big Three are a disgrace, but they still need our help
More significantly, Chapter 11 proceedings for GM would be far more complicated than that of a retailer, or of Lehman Brothers. Recent experience shows that for auto companies, Chapter 11 is like the Hotel California. You can check in any time you like, but you can never be able to leave. Auto parts supplier Delphi filed for Chapter 11 in October 2005, and still languishes there. Getting out of Chapter 11 can be tough when (a) the bankrupt companies are capital-intensive manufacturers; and (b) creditors are reluctant to give up on their claims. Among those with the biggest claims on the automakers, and GM in particular, are the United Auto Workers. It’s common, especially in the fever swamps of the right, to blame the UAW for the Big Three’s high cost structure and legacy costs. (Never mind that management for generations willingly entered into the labor pacts, consciously trading salary increases for longer-term liabilities like guaranteeing health insurance for retirees. Such pacts allowed the Big Three to report higher profits in the short term, and pushed the hard choices to the future.). Last year, the UAW and the auto companies set up a health-care fund that, as the New York Times writes, would “shift a $100 billion burden off the companies’ backs.” Would the UAW simply give up on the health care benefits and tell hundreds of thousands of 40- and 50-something members to just go out and buy their own health insurance?
What Daniel Gross at Newsweek is basically arguing for is a kind of bankruptcy, but one in which the government – taxpayers, including those 3 million car industry related job holders would hold a stake in GM and Ford (forget Chrysler – unless Ford for instance wanted to buy the relatively profitable Jeep label). Almost shocking to read this from the usually looney far Right, IBD
More to the point, numerous studies have shown bankruptcy would ravage auto sales. Consumers say they would be far less inclined to buy from a company in Chapter 11. If they make a $25,000 investment, they want to know the manufacturer will be around to service the vehicle and honor warranties, notes Merkle.
“GM sales would probably be cut in half” in bankruptcy, he said.
The federal government, in theory, could use aid as a carrot for automakers and unions to agree to restructurings that typically occur in Chapter 11 — but without bankruptcy’s stigma.
OK they do take a wholly unsupported jab at Democrats and a President Obama, stating they would be unlikely to pressure unions into making the required concessions – see goofy cartoon above.
Already, GM has moved virtually abreast of Toyota in productivity, said Harbour.
With its new UAW deal and further improvements, it should be able to further trim costs by $1,000 per vehicle in the next few years.
All the things said about Detroit have a nugget of truth – pitiful management, lousy products and too many model lines that overlapped, the industry lobbying against higher CAFE ratings which has certainly come back to haunt them, not pushing Washington for health-care reform which does bring down the cost per vehicle. Moving toward a new improved viable American automotive industry will probably mean cutting its size by forty percent. That is the kind of employment and economic pain that we might be able to deal with until the credit crunch is over, new models hit the street and people start buying again. Did I mention that if the domestic auto industry goes down so does Michigan and Ohio and a good chunk of California. Nursing the auto giants back to health might be expensive, but a bargain as the ripple effects bring down other businesses and states. INSTANT VIEW: Jobless claims higher than expected
The number of U.S. workers drawing jobless benefits hit a 25-year high this month and imports suffered a record fall in September, according to reports on Thursday that underscored a rapid drop-off in the U.S. economy.
The number of workers filing new claims for jobless benefits rose by an unexpectedly steep 32,000 last week to 516,000, the highest since the weeks following the September 11, 2001 attacks on the United States, the Labor Department said.
CIA Director Michael V. Hayden said yesterday that al-Qaeda remains the single greatest threat to the United States but that Iraq is no longer the central front in the broader war on terrorism.
“Today, the flow of money, weapons and foreign fighters into Iraq is greatly diminished and al-Qaeda senior leaders no longer point to it as the central battlefield,” Hayden told an audience at the Atlantic Council, a bipartisan group that deals with international affairs. But he warned that al-Qaeda remains “a determined, adaptive enemy” that is resilient and operating “from its safe haven in Pakistan’s tribal areas.”
Iraq never was the front. Bush got us into Iraq, opening the door from foreign fighters around the world into his clever flytrap. They just used our troops for target practice while al-Qaeda reorganized in Pakistan and Afghanistan – Bush’s plan turned out to a giant tar pit rather then a plan to prevent the spread of radicalism and another 9-11.