The automakers would also have been required to cut wages and benefits to match the average hourly wage and benefits of Nissan, Toyota and Honda employees in the United States.
It was over this proposal that the talks ultimately deadlocked with Republicans demanding that the automakers meet that goal by a certain date in 2009 and Democrats and the union urging a deadline in 2011 when the U.A.W. contract expires.
I didn't even know that the U.S. automakers paid more than the two big Japanese companies. How could they afford to do that if they were on the edge of bankruptcy? And why would the damn union come out and say "Yea, you know how we were willing to do anything to save these jobs? Well, we'll do anything but that." It just breeds a climate of distrust, and there already was quite a bit of distrust leading up to the vote on this bill...and now the average American can look at UAW Chief Ron Gettlefinger, and lump him in the same breath as Wagoner, Mullaley, and Nardelli.
Thomas Friedman once again rails against the bailout in his Wednesday column
Here's what each company submitted as their reformed plans for the second testifying session:
General Motors: Request $18 in loans, reduce its $60 billion debt by half, explore selling Saab, Ponitac, and Saturn, break even in 2012
Ford: $9 billion in reserve loans, launch hybrid and electric cars in 2010, convert truck plants to small car ones, become profitable in 2011
Chrysler: $7 billion in loans at low interest (just to make it through 2009), cut work force and health care benefits, CEO Nardelli will take a salary of $1 (Ha !)
This has turned (wrongly) turned into a political battle, with people in Detroit trying to point fingers at the GOP for killing the industry -- just because Mitt Romney writes a blunt editorial a month ago -- and the fact that no one in Detroit batted an eye when the White House decided to pull the proposed funds from legislation marked for making more fuel efficient technology! And watching Gettlefinger this morning, he is dodging the question coming from a smart reporter. The reporter is repeatedly asking him, "So, are wage cuts an option?" and Gettelfinger just spouts off something about how they're working hard and they love their country.
If the only casualty in this mess is that the UAW is dissolved (fat chance) I would dance in the street. But don't worry, the all-powerful Henry Paulson will step in and just hand these guys a check because Bush told him to.
8 comments:
I was pretty happy, too.
There is one thing that really ticks me off when the Big Three say that they are willing to change the way they do business: the suit against the State of California to resist the new environmental standard has NOT been dropped.
Quite frankly, the UAW and Big Three deserve each other. They are completely inept at running their business in America. Either pledge to fix things now and get some government help or "stay the course" and let chap. 11 bankruptcy do it for you.
I don't understand why they say bankruptcy is not an option, either. Isn't that why Chapter 11 exists, so that it forces the company to restructure?
Oh man...ok, I apologize in advance for putting a missive in your comment section Kevin. Nothing personal but it's a public blog and I had to give you my response.
First off, consumer surveys indicate that over 80% of people currently planning to buy a car would not buy a car from a company that has gone bankrupt: http://www.reuters.com/article/domesticNews/idUSN1644326220080716
So, while bankruptcy sounds well and good, this is the end of at least two of these three companies. No amount of restructuring matters if you can't sell your product. And as we've mentioned before, that means the end of their dealerships, service centers, parts suppliers, etc.
Second, Toyota or whoever is not going to swoop in and buy up their assets as some people (maybe not you) love to tell us. No one is buying anything right now, no one can get credit to buy anything right now, and even if they could, I imagine the reasons that have caused Toyota to open plants in Tennessee instead of Michigan will continue to hold true.
So, what you will see is the permanent dissolution of at least half a million jobs in a state with 8 million people. This is going to make everyone a hell of a lot poorer than simply paying for the...oh, right, the money was ALREADY appropriated meaning you've already paid for this bailout whether you like it or not. But whatever. At least now it can remain in fuel efficiency investments for companies that no longer exist, or at best be reappropriated by Congress for god knows what.
I guess what it boils down to is, I'm just not sure WHY you wanted this to fail. It will be harder for you to find a job. It will lay off hundreds of thousands of consumer in your state. It will kill the nascent renewal of Detroit - the stadiums, casinos, Greektown, Corktown, Book Hotel, Riverfront redevelopment - all of that will now be a temporary phase instead of the first phase. And what did you get out of it? Maybe you "upheld the free market?" Stood up for "principles?" I'm not sure - you certainly aren't saving any money, and I think principle went out the window about $700 billion worth of nationalized banks ago. I guess you showed those big bad unions - the one that have made concession after concession over the last ten years, agreeing to plant closures, wage reductions, etc, and were what allowed millions of people over the last fifty years to live in a low end house instead of a Walmart trailer park. What assholes. Also note that the Republicans were obviously looking for a way to scuttle this by increasing their demands at the 11th hour.
Look, I get that these companies have not been that well managed. The existence of other car companies that aren't going to go bankrupt proves that. I'm just trying to figure out why you are so happy about the impending devastation. You seriously seem to hate at least the city of Detroit and maybe the entire state of Michigan and I can't figure it out. Wouldn't you rather the place you live not get economically destroyed? We pay more taxes into Washington than we've ever gotten back out - some people might say it's only just that once every thirty years the other states subsidize us for a fraction of what we subsidize them.
If you detest it here so much, just pick up a Yankees hat and a Texas Longhorns jersey while you're at it.
Please don't put on a Yankees hat! I wouldn't mind the Longhorns paraphernalia after this season with a crappy Michigan team and Texas getting hosed by the Big 12/BCS.
Maybe I've been drinking too much of the free market/anti-bailout Kool-aid, but I can't help but feel that these car companies and the UAW are not willing to take their fair share of the blame for this situation.
The UAW wants to maintain an unsustainable level of benefits when I have never heard stories of poverty from blue-collar employees at Toyota or Honda. I hardly think it is unreasonable for the UAW make these kind of sacrifices if it will save jobs (if that is what they are really interested in).
To update my argument about the California emissions lawsuit, Rick Wagoner has said that GM would drop support for the lawsuit in the event of a bailout. Still, the spectre of emissions standards resistance haunts the domestic car industry. It really shouldn't. Ford and GM have been making cars that meet strict European emissions/mileage standards for YEARS. I suppose that is an indictment of the freer free market belief that less intervention results in progress.
The Republicans scuttling of the bill was a bit low, but hardly surprising for a party desperately seeking a sliver of identity and relevance. I've brought it up before, but another sticking point for me is the unwavering and uncompromising support of the car industry by Michigan representatives, on both sides of the aisle, in Washington. I respect and vote for a number of these politicians, but I can't stand the way they pander to the Big Three's interests.
On a less substantive note, why is there so much concern for oversight with the Big Three bailout, but the financial bailout has been a bit lacking in oversight (PNC buys National City after getting bailed-out?!).
On an even less substantive, but perhaps more relevant note, I am extremely apprehensive about this bailout attitude pervading America today. Our generation is already destined to pay for the social security and medicare waste of previous generations. I cannot help but fear that we will have to pay for the bailouts, too. Combine bailouts with huge government deficit spending over the past eight years and, most likely, over the next four and we are creating a grim financial future for the US.
Hopefully, our new soon-to-be president and somewhat new-ish Congress can push forward some reform that will prevent future deficits, debt and bailouts.
Quick addendum
I probably don't understand all aspects of the PNC-National City thing (http://www.nytimes.com/2008/10/25/business/25bank.html), but it does seem a bit strange that bailout money is used to purchase other firms (debt riddled ones at that).
Jackson, your subsidizing other states point really captured my attention. It goes against a lot of the federalist tendencies (err, constitutional ones too), but it is very convincing.
Finally, the BBC America evening news this week has been covering the situation at the Los Angeles port. There are massive storage lots where imported cars are held before being loaded onto trucks and trains. Today, this temporary holding area is loaded with thousands of cars that are not being loaded onto those trucks and trains. Though not important for the Big Three bailout, the image is no less poignant.
Yeah, I share the concern. I don't like the idea of bailing out companies for billions of dollars and I don't like the idea of all the debt we are accruing. And yes, if things are this dire I would expect the UAW (and GM management) to make all necessary cuts to stay in business, though of course in negotiations the admission by one side that they will accept anything is pretty rare. Ugh. It's a mess. But I guess my ideal world is one where we bail out GM, and five years from now they have successfully launched the volt, gas prices are back at 2.50-3.00 where hybrids make sense to people, their SUVs still sell to the people who want SUVs, Chrysler has gone under and GM/Ford has snapped up their brand and a few assets on the cheap. We need some consolidation. But the world I fear is one where we let them go bankrupt like we did Lehman, six months later are going "oh shit" and then this state goes into a twenty year depression as both GM and Chrysler (and maybe Ford) go under.
For me the two main points as I see them are:
1) do the least harm in the long run http://www.nytimes.com/2008/12/14/opinion/14kristof.html?_r=1
I'm not sure if this means bailing out or not bailing out. I obviously would lean towards bailing out at this point but I understand that people have objections.
2) if we're going to let these companies die at least have some respect for the hundreds of thousands of people whose lives are being upended by it and for the truly disastrous consequences it will visit on the city of Detroit and state of Michigan.
Oh my god I agree with Bill Kristol.
http://www.nytimes.com/2008/12/15/opinion/15kristol.html
Hehe, your comments are well-taken Jackson :)
I don't hate Detroit...I want it to do well. I think I'm more in the camp of just not being proud of how those guys have run those companies. Like, I was upset when the first solution was to pull money out of the funds that were allocated for alternative energy research. And my brother has done enough live blogging during both sets of hearings for me to know that this probably is not good if GM goes bankrupt. In the past I would have been all "bah let the free market handle it" but I truly think, in order to get out of this economic mess, that our federal government is going to have to spend an enormous amount of money to invest in our infrastructure. I'm just praying that whatever solution they come up with for Detroit is more well-thought out than what we've seen. :)
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