Monday, November 17, 2008

UAW Refuses to Help Detroit

From paying thousands of union employees to not work, to paying full health and pension benefits to tens of thousands of retiree's the Detroit's big three can no longer afford to operate under the burdens of current labor agreements that are costing the industry giants an average of $72 per hour per employee. Instead of protecting their members' interests by agreeing to renegotiating those agreements so that U.S. automakers can cut costs and continue operating, UAW is refusing to make any concessions.

Diverting the blame for the big three's woes on the current economic crisis, UAW President Ron Gettelfinger said, "the focus has to be on the economy as a whole as opposed to a UAW contract."

“We’re here not because of what the auto industry has done”, Mr Gettelfinger said during a rare press conference. “We’re here because of what has happened to the economy.”


Mr Gettelfinger said that “we need a package approved by this lame-duck session of Congress. If we don’t get it, I’m not sure some of these automakers will make it to mid-January when Barack Obama becomes president.”

UAW has chosen not to work with the companies that employ their members and alternatively push for the federal government to partially nationalize the companies and take on the long-term health care and pensions costs for UAW retirees. With the current class of Democrats in congress and President-Elect Obama endorsing such a plan, UAW is not likely to reconsider its decision.

Gettelfinger doesn't want the blame for the dire state of the companies put on U.S. automakers themselves because that would mean UAW's labor agreements are partially responsible. That;s why he's working hard to try and convince the public that the big three's problems are simply related to the slow down in the U.S. economy. But, under scrutiny this argument doesn't hold up.

When you look at the auto industry's foreign competitors, who manufacture cars in the U.S. at an average employment cost of $46 per hour per employee, 36% lower than their U.S. counterparts, you get a much different economic outlook. Companies like Toyota, Honda, and Nissan are generating annual profits of $17, 6, and 5 billion respectively, while U.S. automakers continue to lose billions. GM lost $43 billion and Ford $3 billion. Adding fuel to the fire, U.S. automakers' international sales are operating at a profit, which means those divisions are being used to subsidize losses from domestic operation.

UAW leadership clearly understands that the labor agreements they currently hold with the big three are unsustainable to free market companies that must make a profit to survive. By nationalizing a portion of those companies and offloading the costs for health care and pension benefits to U.S. taxpayers, UAW believes the companies will be able to return to profitably without having to reduce any of the benefits to their union members. This means that while the average American struggles to pay their own rising health care costs and declining 401k assets, they will have to help pay for the cost of UAW's members' health care and pensions through higher taxes.

1 comment:

Anonymous said...

Maybe a little chapter 13 reorganization is what the big 3 need. Hell, even Harley Davidson came back from the dead.

The biggest problem with American Automobile manufacturers are that they have a Looooong TRACK RECORD of putting their hands in their pockets, refusing to budge no matter what's going on around them, and throwing a fit when times get tough.

Let's see...
Tucker was implementing safety devices long before the Big 3.
Honda was selling Civics by the dozen while Americans driving American cars were sitting in long gas lines in the 70's.
While the rest of the world was switching to higher-mpg vehicles, Detroit was cranking out 4-ton gas guzzlers so a 108-lb mom can drive her 50-lb kid to soccer practice.


Now Toyota and Honda are making vehicles that actually last a good deal of time, and what was Detroits answer? Same vehicle, just slap a longer warranty on it ("we'll figure it out at some later time")

Half of this crap-sandwich is what the auto industry did to THEMSELVES. The other half is full of over-paid union workers that's responsible for most of the cost of the car. You would think that if we paid more for a car, the better quality it is. Yeah right. When my mom bought a 2005 Malibu, she asked my the windshield washer tank leaked and the sales guy said he'd knock off $50 and have it replaced. Why was this even allowed to leave the factory floor? It's not like they didn't know it: it's got an electronic read-out on the dash that constantly flashed the wiper fluid was LOW... LOW... LOW.

Auto workers make waaaay too much money for the results they create. It doesn't matter what bullshit excuse they have.

In the end, I think we need to turn our backs on Detroit and the UAW. They got themselves into this mess, they need to figure a way out of it. No more stupid bailouts.