Although the news has died down because Bush bailed them out, they will most likely come back with their hands out in a few months time. One solution that keeps getting mentioned, but that they want nothing to do with, is file for bankruptcy in order to renegotiate with the unions.
Well, who made bankruptcy law? Congress. So, why not have congress pass a law, signed by Obama of course, making the union contracts null and void, which would force management and the unions back to the bargaining table.
It’s unnecessary - Chapter 11 does those things already.
And if you think any politicians - *particularly *Dems - would so directly screw the unions, you’re dreaming. A Chapter 11 would provide political cover for the politicians and accomplish the same thing. Plus, all contracts, including dealership contracts, would be forced into renegotiation, and a great deal of debt would be wiped out.
I’m pushing hard for no bailout, and I think a Chapter 11 is perfect for the Big Three.
If you think renegotiating labor contracts would save the Big Three, I think you’re dreaming.
The automakers are doing poorly because they are businesses that sell mediocre products. No union leader made the decision to invest so much energy into building SUVs and to put so little effort into innovation to stay competitive over the next several years and decades. Furthermore, no labor contract mandates that the CEOs of the Big Three make more than 10 times what their Japanese counterparts do.
Since labor is 10 percent of an auto price ,what good would that do? Do you think they should get nothing and then the price will be only 90 % of what it is now. Would they be competitive with zero labor?
If you think renegotiating the union contracts will fix anything you are misinformed.
By the way. the Big 3 products are fine. Except for a Vega I had ,every American car I owned went over 150.000 miles. The frequency of repair is much like the imports. They really don’t have rust problems anymore. They are unfairly maligned.
The only reason I thought about this is because of the auto company’s complaints that no-one would want to buy a car from a bankrupt car company.
Now, I don’t buy this argument myself, plenty of other companies go bankrupt to reorganize and there isn’t a stigma attached, but I just thought that if renegotiating some contracts is necessary, then this would be another way to do it without any of the big 3 having to file for bankruptcy.
Of course I forgot that unions are big supporters of the Democratic party and something like this might ruin that.
As for what I think are the problems, basically I think it’s a combination of things, from bad executive decisions to needing to renegotiate union contracts. And I don’t just strictly mean money either. I think an entire overhaul is needed, and things like “Yeah, I know how to fix that, but I can’t help you because it’s not in my union contract.” need to be eliminated as well.
I guess this is one of the best places to bring this up, what about the CEO’s salaries? Will they be taking a cut? If not the bailout is pointless IMHO.
Even though it might not help much…
A few weeks ago, I heard that the CEO’s were willing to reduce their salaries if Congress would bail them out. Granted, they only planned to do that until their companies got back on their feet.
My understanding is that it isn’t that the wages of the union members that needs repairing, but the fringe benefits, especially medical benefits after retirement. This would also apply to the low and middle management, who gets more according to the union contract (not offically, but in practice). The salaries of the top management needs to be attended to, even though it isn’t a real factor in the needed savings. The best thing to do with top management is to change things so they benefit from planning for the future, rather than just grab what they can right now.
True.I wasn’t clear enough, I meant to say that without a show of interest from the management of the companies and a willingness to take responsibility for their industry’s failure, the bailout money will run out sooner.
There are legacy costs to deal with. Through negotiations the company has agreed to pay pensions and health costs for the people who worked there. So if you spent 30 or 35 years working there under such an agreement ,what are your rights? Should GM be able to walk away from the agreements? What about the retirees? Screw them . Many have heath care and pensions that help them survive in this country without medical coverage for the needy. Tough luck.
Story in the Detroit paper today, Visteon has slashed worker rates 20 percent. We are bringing our wages down to equal the rates in 3rd worlds. It is a step at a time ,but that is where we are headed.
The auto companies are hurting because the financial big wigs looted the country for every dime they could. Bankruptcy is rampant, unemployment is growing rapidly and it is difficult to secure a loan to buy a car. That is a tough atmosphere to sell big ticket items. Auto companies will have difficulty surviving. We sat by quietly and let the financial pros squeeze trillions of dollars out of the system. Then we forgive them because they are better than us. Who are we to question a thief like Paulson. ? He is worth 700 billion due to hedge fund manipulation and pressing for relaxation of regulation. He will now be your hero. Fuck him.
Gonzo - the problem I see is that there is a ton of misinformation out there & people who think (key word “think”) they will be unaffected by a Big-3 collapse, are eager to “stick it to the man” or the union or whomever - as long as its not themselves. I am hopeful that we will not see what happens if the Big-3 try bankruptcy. I suspect that some of these people who say “let the chips fall where they may” will find themselves in a bad spot, too. (Then they likely will just blame the party in power at the time).
I find many anti big 3 arguments specious. With wage earners at 10 % of the car cost, cutting wages more will not help much. It sounds simple but the unions have given back in 2 straight contracts and have slashed wages in between.
But the big picture is all wages in America are headed down. That is sad. The reason that America can get the Chinese and other countries to subsidize our stupid overspending is because we are by far the worlds biggest market. Cut wages, and layoff a few million more people and the economic buying power of America will dwindle until it no longer matters. Then see who makes the rules.We are in this mess together. Our fat cats looted trillions out of the world economy . And people suggest killing unions and cutting wages will make things better. Poor thinking. That is not where the problem lies.
There’s a big difference in something like an airline going bankrupt and a car company going bankrupt. For one thing, a plane ticket doesn’t cost you tens of thousands of dollars, and its not something you expect to have for about 5+ plus years.
Another issue you’d have, is that a good number of people would hear, “GM has filed for bankruptcy” and automatically think, “Ha! I no longer have to make my car payment!” Much hilarity will ensue, I’m sure.
The Chrysler bailout in the 1970s was identical to a bankruptcy filing except that term was never used (for fear of spooking consumers).
Well, like I said, if it will take something like a bankruptcy, but an actual bankruptcy would do too much damage, then maybe congressional intervention may be needed.
Would you really buy a car if the company might go under. What about fixing it? What about maintenance and spare parts? I seriously doubt that I would.
I’ll add this. my company purchased quite a bit of technology from Gateway; laptops, desktops, servers, etc. Now we are starting to have problems with the equipment. Our IT guy called Gateway only to be told that our warranty on many items will be covered by MPC.
No one answers the phone. There are reports of people being told that their machines will be returned repaired after the bankruptcy is complete. There are reports of people’s machines being returned unrepaired, with no means to contact the company complaints.
Now I don’t about you, but there’s no way I’m going to purchase a business class gateway while this mess is going on and my company is transitioning from Gateway to HP; specifically because of this. I’m personally looking to purchase a new laptop, but Gateway is out.
So yes, if the big three file for bankruptcy and unless there is something written in stone and backed by the National Guard as far as honoring warranties, I won’t be purchasing any new cars from them.
Well it’s supposed to be a “pre-packaged” bankruptcy, where the government will swoop in and save the day once the big -3 file, so theoretically operations should keep going just fine.