 |
|
Add to My Group
|
November 27, 2008 at 18:03:19
Promoted to Headline (H2) on 11/27/08: by Stanley Heller Page 1 of 2 page(s) |
|
|
1
1
1
There’s an old story about a man who comes home and finds his wife in bed with his best friend. He pulls out a gun and points it to his own head. His wife starts laughing and he says, “Don’t laugh. You’re next” The point is when we’re upset we sometimes take actions that we don’t think out properly.Casino Capitalism has crashed and when the Lords of Detroit come to Uncle Sam (by private jet) asking for another $25 billion people are understandably outraged. The gut reaction is, “Not another bailout. Let the S.O.B.’s go under.” The problem is if Big Three auto go under there will be millions unemployed, quickly. The Center for Automotive Research estimates that if the three companies shut down 3,000,000 jobs will be lost in the first year. Three million! Now forget for a moment about the devastating impact to the people thrown out of work. If this was 1998 and auto went down, it would be a nasty shock but the economy would recover. But now we’ve been staggered by a terrific slump in housing, a worldwide credit freeze, and a worldwide recession. To add to that mix a US Midwest collapsed into an industrial black hole is a recipe for turning recession into a Depression.
Some say if the Big Three goes bankrupt those terrible “lavish” labor contracts can be redone to make the companies competitive.
Let’s take a look at the contracts.
In 2008 General Motors, paid its production workers an average of $28 an hour. That would be a base of about $56,000 a year, based on a 2,000-hour work year. That’s scarcely a princely sum. Add to that $12,000 a year in health care premiums (because the backward USA doesn’t have national health care). That brings the cost to GM up to $34 dollars an hour. Add money set aside for pension and GM’s cost goes up to a final total of $41 an hour. (A recent retiree made $30,000 a year in pension. Nothing fantastic there, probably what retired teachers average.)
GM’s biggest burden is “legacy” costs, pension and health-care payment for retirees. GM has 2.5 retirees for one active worker. As Kevin Zeese has reported, “GM spends $5 billion annually on health care for 1.2 million people – only 150,000 of whom work for the company.” On this the United Auto Workers can be criticized, not for getting these benefits, but for thinking the auto workers could enjoy these benefits in isolation. Instead of turning into “realistic” Democrats, they should have stayed union militants and spearheaded a determined fight for single-payer national health care and better Social Security.
This year GM forced a lousy contract down the throats of the UAW. New hires pay the price. They’re going to get $14 an hour in base pay and get reduced benefits. They’ll be second class workers, indefinitely. Plus health care for retirees is being done in a new way. Instead of GM paying for you health insurance, GM will fork over a one time payment of money and thereafter the union would pay for health care from this fund (from which they have to depend on the stock market to keep healthy!) With this drastic cost cutting at the end of the new contract worker costs could be no more and perhaps less than the Asian car companies in the US.
It’s easy to blame pampered workers if you’ve never actually worked in an auto factory. Publicity pictures of auto factories are always gleamingly clean. Right. Walter Reuther, the legendary UAW head once called them “gold plaited sweatshops.” Not many are talking about the Big Three blunders in buying up the Saab, Fiat, Suzuki, Daewoo, Jaguar, Volvo, and Land Rover brands and or their adventures in the happy world of High Finance or their SUV mania.
Working people would have to be mad to sit by while auto workers are reduced to menial wages. This would force down every worker’s pay just at a time when the country needs increased spending to counteract the hoarding going on by the banks. This country is immensely rich with (apparently) unending credit from other countries. The money is there for another way.
That way wasn’t in view at the Congressional bail-out hearing. The hearings were a PR disaster for auto. People saw through the claims that prosperity for the car companies was just around the corner. They saw a bailout as only delaying the inevitable.
As far as I can see there are two paths. One is to be “realistic” and support the auto execs as they come up with a new plan, one with even more devastating cuts in worker pay and benefits. The other is to reorganize the industry from top to bottom as public enterprise. I’ve never worked in auto, but I offer these suggestions as a way to get auto workers and other interested people thinking about how a successful “Uncle Sam Motors” might be run.
1. GM., Ford and Chrysler would be merged into one company to be run as a car/bus/transportation business
2. Its cars would come with bumper to bumper warranties of 10 years (up from three years now) and become instantly competitive.
3. The government would provide high quality health care for all auto workers and auto worker retirees. It would be a model program, the prototype for single payer for everyone.
1 | 2
The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.
 Contact Author |
Contact Editor |
 View Authors' Articles |
|
| 13 comments |
|
best idea in the piece
"GM's biggest burden is "legacy" costs, pension and health-care payment for retirees. GM has 2.5 retirees for one active worker. As Kevin Zeese has reported, "GM spends $5 billion annually on health care for 1.2 million people – only 150,000 of whom work for the company." On this the United Auto Workers can be criticized, not for getting these benefits, but for thinking the auto workers could enjoy these benefits in isolation. Absolutely str8 on... the truth; and what a difference it would have made to the nation if the unions (not just the UAW) had fought for ALL workers in this way. by Rady Ananda (182 articles, 374 quicklinks, 49 diaries, 1718 comments [201 recommended, 2 rejected]) on Thursday, Nov 27, 2008 at 7:05:38 PM  (0+)
|
|
Reply: legacy is the problem
the big three were gready and in bed with big oil--none of the big three had a truly economical car to offer---we were all forced to buy cars that we did not really want-and forced to borrow more than we wanted to perchace one n order to work and live--so dont shed a tear for them--let them go under for that will cause a new auto company that will address real transportation . gone are the days of the past when new models were a sign of pride--gone are cars that fall appart the same time the loan is payed off---get real-these companies have ripped off the american people long enough--let the bastards die-----and its happening with lots of other companies who deserve the same----we all were led by our governments to believe that the economy was peachie keen , which led to massive overpopulation-do we all really know how many resorces it takes to live the life we live----we waste on the order of 90% of the resorces we have because it was falsely portrayed that the resorces were never to run out--- well now we all know that it is all falling appart---to fix it -if we can --means a radical new way of life--and that cannot even begin to happen till we stop all taxes on modest housing---forcing people to have full time jobs to pay for taxes on housing is detremental to resorces which are running out---people could live a plain and simple life--if not for forcing them to pay for taxes--soon people will rise up and take what they want because they see the hopelesness of the world --and the greedy who do not share -we must share or the less fortunate will take all down--money is truely evil in the way it is reflected in our lives---get ready trickle down greed is getting its just deserts by TRADESMAN (0 articles, 0 quicklinks, 12 diaries, 335 comments [40 recommended, 1 rejected]) on Friday, Nov 28, 2008 at 9:56:04 AM (0+)
|
|
government auto company
I have discussed very same idea with friends the last couple of years and they laughed, now they are not laughing. What I basically told them was that our government, using people of very modest intelligence and without asking for any government capital could ask for private investments and operate an auto company that would put all others out of business. My reasons were that with much lower executive pay and massively reduced waste( the private sector is more wasteful than any government) coupled with model changes at ten to twenty year intervals, much lower prices would be the result. By keeping a model run for twenty years replacement parts would be very inexpensive as well and plentiful. Advertising would not be used any information could be obtained on the internet for free. The new government car company could be ran like a true democracy giving power to the workers instead of some buffoon who makes 30 million a year to do little or nothing. by Gary Denson (2 articles, 0 quicklinks, 1 diaries, 283 comments) on Thursday, Nov 27, 2008 at 9:31:44 PM (0+)
|
|
Who Speaks for Profit?
In any business large or small, the challenge is to have revenue exceed expense. Government is not an exception; but it has control over revenue (taxes) that business does not. The US has been running in the red for years. Non-government businesses either make a profit or close. Customers vote with their dollars, and companies that deliver the best perceived value get the business. Those that don't go bankrupt. That's how free enterprise works. All of the centrally managed, non-market driven economies have failed miserably, that is why totalitarian communism is dead. Even communist China has had to adopt capitalist practices to have business thrive. Where do you get the idea that the board of directors you propose would produce policies that would make the company successful in competition with the other automakers of the world? Is our government doing such a great job of managing its functions that you are persuaded to believe it could run an auto company? Get real! Those over-paid auto executives are not failing because of personal greed, they are failing because they didn't see all this crisis coming. It seems to me the problem is finding executives who do have better vision, and sustaining the business until it operates in the black again. I seriously doubt we will find those executives on the assembly line, in the union, or in the government. by Richmond Shreve (30 articles, 70 quicklinks, 17 diaries, 157 comments [5 recommended, 0 rejected]) on Thursday, Nov 27, 2008 at 9:55:49 PM (0+)
|
|
Reply: Executives
Were would you suggest finding a good executive? one that hasn't been raised on a principle of socialize the losses and privatize the profits. A true free market has yet to be tried. Government has subsidized and donated to business for as long as most can remember. I have worked my whole life in the private sector and have seen many of the same problems government operations possess. How about privatizing police and fire protection? have you ever had to deal with a rent a cop? I rest my case! Its a very sad fact that communist China would probably supply the best sweat shop operating profiteer executive to run your idea of an Auto company by Gary Denson (2 articles, 0 quicklinks, 1 diaries, 283 comments) on Thursday, Nov 27, 2008 at 10:18:14 PM (0+)
|
|
Reply: Executives
Where would I find one? Well, I would start looking among profitable automotive manufacturers around the world. Failing there I would look for one in another manufacturing industry that has successfully weathered market shifts akin to those we have seen in the auto industry. In arranging compensation, I'd make sure he or she was a stakeholder and not simply playing the game with other people's money. by Richmond Shreve (30 articles, 70 quicklinks, 17 diaries, 157 comments [5 recommended, 0 rejected]) on Friday, Nov 28, 2008 at 10:15:14 AM (0+)
|
|
One more thing
The reason our government is doing a lousy job is the fact that they have become completely controlled by corporate special interests. government has lost sight in its mission and has been brainwashed into believing that they should privatize away its very existence, completely deregulate all business and give away the treasury and then some to wall street. Speaking of lousy jobs what about that wonderful private sector? by Gary Denson (2 articles, 0 quicklinks, 1 diaries, 283 comments) on Thursday, Nov 27, 2008 at 10:25:53 PM (0+)
|
|
Create Uncle Sam Motors
In the late 1990's GM destroyed all chances for success with their EV1 model. They ground the units into dust. They sold the vital battery component patent to Chevron/Texaco. Every household in the USA could buy a windmill to generate electricity. A tremendous market, why do the three automakers ignore it? Similarly, the most humble Israeli family heats water with solar cells. $400 will put the nifty apparatus on the roof. Uncle Sam Motors deserves our respect. by Jason Paz (68 articles, 88 quicklinks, 112 diaries, 1386 comments [97 recommended, 1 rejected]) on Friday, Nov 28, 2008 at 5:41:59 AM (0+)
|
|
Reply: Money Talks
Congress needs to say to the big three here are your options and there are only two. One we take you over and all the top executives are replaced and their stocks options and warrants are turned over to Uncle Sam and the taxpayers. Two you can get a small initial loan with a number of strings attached. Once those conditions are met you will get the rest of the loan. And with the loan we get some type of stock equity. The time for hand-holding is over. They created an electric car in the 90's that they then destroyed. They have hybrid prototypes that can get 70-80 miles to the gallon. They have the technology but no one has pushed them out of their comfort zone to compete with the Japanese. Now is the time to do it. A good example of this was when the Brazilian government decided to mandate that all their cars run on ethanol. They said to Ford we need you to build us cars that can do this. Ford said we can't possibly do that. Brazil said, fine I guess you won't be selling any more cars here in Brazil and you can start packing up your plants and moving out. Guess what ..... within three months Ford came back to the government of Brazil and said we've had a break-through and we have figured out a way to meet your conditions. The time of pandering to the executives at the big three is over. by E. Nelson (40 articles, 8 quicklinks, 26 diaries, 511 comments [57 recommended, 2 rejected]) on Friday, Nov 28, 2008 at 3:17:33 PM (0+)
|
|
Let's be open to this idea
Where in your personal experience with government enterprises is there a success story -- a model for how Uncle Sam Motors could operate without taxpayer subsidies and thrive in a competitive market? I like how Medicare works for me, but I don't think it generates a surplus (profit) for Uncle Sam. I like how the Government Printing Office works, but does it support itself? I like how my local post office works, but when something really, absolutely has to get there in one piece I use UPS or Fedex. We won't discuss Fannie Mae, obviously. On the state level, how much fun was your last encounter with a state run agency? (The NJ Department of state won't even reply to my letters about a business registration I've been trying to close out for two years. They did however deposit my check.) Notwithstanding, I REALLY do like how our NJ State Parks treat people - unfortunately they too are not self sufficient without subsidies and volunteer support. So how about your personal experience? What's your model of an efficient, sustainable, service-oriented government enterprise? Maybe that's where we could find a lean, mean corporate CEO to run GM, or Ford. by Richmond Shreve (30 articles, 70 quicklinks, 17 diaries, 157 comments [5 recommended, 0 rejected]) on Friday, Nov 28, 2008 at 10:10:13 AM (0+)
|
|
Reply: Richard your comment misses the point a little
You are correct in that Medicare has one of the smallest operating overheads of any health care plan and thus easily provides the most bang for the buck. And the reason for this is because it is NOT for profit health insurance. That is the point everyone is missing. Health insurance for profit will NEVER EVER work. It is an oxymoron. It is a failed concept. It goes against every theory in capitalism. For a private for profit health-insurance company to succeed in the eyes of their shareholders they need to continually find ways to kick the really sick people off their plans and increase the number of really healthy people who pay their premiums. Why do you think the vast majority of doctors in this country hate this system?? They don't like being told by the insurance companies who they should treat and how they should treat their patients. Until people can get this concept in their thick skulls our country will continue to spiral downward and corporate America will continue to be raped by privitized health insurance companies. by E. Nelson (40 articles, 8 quicklinks, 26 diaries, 511 comments [57 recommended, 2 rejected]) on Friday, Nov 28, 2008 at 3:03:49 PM (0+)
|
|
Reply: Open to idea
I suggest you go to wikipedia and check out the history of the volkswagon. by Gary Denson (2 articles, 0 quicklinks, 1 diaries, 283 comments) on Friday, Nov 28, 2008 at 5:16:00 PM (0+)
|
|
Capitalism Cannibalism and CEO salaries
I am working on a post related to this. I am from the rust belt area. I lived in a town almost entirely populated with Ford, GM, and steel mill employees. Of course there were the doctors, lawyers, teachers gas station attendants, truck drivers and parts manufactures that support the central business. The problem is that capitalism and free enterprise eventually started to cannibalize itself as the industry advanced. I remember my father raging every time they brought a new robot into the plant to do the job of 10 men. That was 10 men who were no longer consuming. Add in competition for the opening of globalization and ease of moving labor to lower cost areas, and you have a bad economic stew brewing. This problem replicated across the economy. From engineering drawings done in half the time by less people on computers and sent across the ether to automation of gas pumps. We have capitalism and ingenuity efficiency that is developing ways for less of us to do more work in the same time while we are increasing exponentially in population. What you end up with is 2.5 retired for every one active. My father has been retired from ford for 12 years. He just turned 65 last year. Have you ever bought an updated version of a product and asked, “That was perfect the way it was. Why did they have to change it.” The reason, engineers are paid to engineer. If they come up with the perfect version of a product, next year they still have to do something to keep their job. CEO salary? Easy solution there. Minimum percentages. Force the company to pay the lowest paid employee a certain percentage of the highest. Then sit back and watch capitalism fix itself. by Dwight Black (16 articles, 1 quicklinks, 0 diaries, 50 comments [1 recommended, 0 rejected]) on Friday, Nov 28, 2008 at 7:17:14 PM (0+)
|
Want to post your own comment on this Article? 
|
||||
|
||||||||||||||
News (0) 
Touching (0) 
Funny (0) 
Supported (0) 
Interesting (0) 
Inspiring (0)
|
|
|
|
|
|
|
|
|
Tell a Friend:
|
Copyright © 2002-2009, OpEdNews |
