Senator Corker's Corker - Automaker bailout

[frayne]

Corker actually hosted VW officials at his residence prior to VW announcing they would choose Chattanooga as their new US manufacturing site. Maybe not any conflict of interest but who knows.


Chattanooga Times Free Press | Chattanooga: VW incentives could top $400 million over 20 years

[ChrisC]

Quote:

Originally Posted by ziggy29 Sure, they don't like it. Why would Toyota want Detroit to get a handle on its labor costs? That's one of Toyota's biggest competitive advantages right now.

I see Toyota thinking it's more profitable by having Detroit stick around than completely disappearing; sounds counter-intuitive, but increasing market share in a rapidly decreasing market might not translate into bigger profits for Toyota when (1) bankruptcy for one or two of the Big 3 will likely result in liquidation; (2) the supply chain for the manufacturers will be screwed-up for a while; (3) no manufacturer in this environment has the stomach to invest, or the current capacity, to take advantage of the loss of these competitors by ramping up production. By the way, I don't think it's the wages for unionized workers at GM that skews the labor costs when compared to Toyota, but essentially the "benefits" and legacy costs associated with retires, as this article suggests. GM Vs. Toyota Wages And Benefits

[ziggy29]

Quote:

Originally Posted by frayne Chattanooga Times Free Press | Chattanooga: VW incentives could top $400 million over 20 years

To some degree, I think providing after-the-fact tax incentives to create viable new jobs is a little more defensible than throwing good money after bad -- and that's what this bailout would be without significant restructuring of business model and labor costs.

[ziggy29]

Quote:

Originally Posted by ChrisC By the way, I don't think it's the wages for unionized workers at GM that skews the labor costs when compared to Toyota, but essentially the "benefits" and legacy costs associated with retires

Yes, that's substantially true, though I'd add that future retirement obligations to senior employees who still have the sweetheart deal is still a problem just as it is for those already retired. Newer hires (as if there were many) are on a pay and benefits scale closer to what Toyota is paying.

[FinanceDude]

Quote:

Originally Posted by ziggy29 Yes, that's substantially true, though I'd add that future retirement obligations to senior employees who still have the sweetheart deal is still a problem just as it is for those already retired. Newer hires (as if there were many) are on a pay and benefits scale closer to what Toyota is paying.

So, just throw the pensions into PBGC, remove the job banks, and tell the retirees they have to buy their own healthcare? Senator Corker makes sense, but not the type of sense we are used to in Washington.........

[Midpack]

Quote:

Originally Posted by ziggy29 Yes, that's substantially true, though I'd add that future retirement obligations to senior employees who still have the sweetheart deal is still a problem just as it is for those already retired. Newer hires (as if there were many) are on a pay and benefits scale closer to what Toyota is paying.

You realize that this is happened to millions of Americans over the last 10-20 years (including me, and I never expected someone to would fight it for me), and most of them never had the wages of a D3 worker either.

I don't get this 'we have to keep autoworkers and their retirees whole' assumption when no one else in private industry ever had that kind of support. My whole retirement planning world got turned upside down, and I had to fight my way back over the past 14 years. And you know what, it actually turned out they were doing me a favor, since now I am FI without relying on some MegaCorp...

[ziggy29]

Quote:

Originally Posted by FinanceDude So, just throw the pensions into PBGC, remove the job banks, and tell the retirees they have to buy their own healthcare? Senator Corker makes sense, but not the type of sense we are used to in Washington.........

I've always wondered what kind of morale there is in these shops where there are "tiered" pay and benefits depending on hire date and whether one is grandfathered into the sweetheart retirement deal.

I can imagine that a newer employee earning $15-20 per hour, with no retiree health insurance and only a crummy 401K, sees someone next to them getting $30-40 per hour with a gold plated pension and retiree health care package, and the only difference was their hire date, it's hard to imagine how that could *not* foster resentment.

[ERD50]

Quote:

Originally Posted by Midpack I don't get this 'we have to keep autoworkers and their retirees whole' assumption when no one else in private industry ever had that kind of support.

Exactly.

My hope is that the voting power of people who feel that way will outweigh the voting power of the recipients of that sort of support.

-ERD50

[frayne]

If the White House lets Paulson use TARP funds to bail out the big three I guess the senate vote is a non issue ?

White House Bails Out Automakers: Everybody Wins, Save Taxpayers: Tech Ticker, Yahoo! Finance


I gotta laugh about the comment the Senate failed to act. I thought they did and voted down the bail-out. Sounds like they acted to me.

[haha]

My question, basd on this video- does Henry Blodgett have Parkinson's?

[FinanceDude]

Quote:

Originally Posted by frayne If the White House lets Paulson use TARP funds to bail out the big three I guess the senate vote is a non issue ? White House Bails Out Automakers: Everybody Wins, Save Taxpayers: Tech Ticker, Yahoo! Finance I gotta laugh about the comment the Senate failed to act. I thought they did and voted down the bail-out. Sounds like they acted to me.

Yeah, they acted NOT to give money, but Bush is going to overrule them. Since most Republicans don't like Bush anyway, might as well piss them off one last time. Maybe Obama will give Bush some nice X-mas gifts as thanks.........

[youbet]

Quote:

Originally Posted by clifp Morningstar has good article which discusses the implication in greater detail, in summary I think it is safe to say that all options stink.

Excellent article clifp. Thanks for posting.

From the article and in reference to Option 1: No bailout followed by bankruptcy.....

Quote:

This outcome is the least likely outcome, however, as we do not think the Obama administration will want to put more factory workers in key electoral states out of work, and Speaker Pelosi stated on Dec. 2 that bankruptcy was not an option.

I think this statement from the article shines light on the future administration's thinking. Given a choice, I believe Obama would provide a bailout to the D3 companies sufficient to keep them in business until legislation making it easy for the UAW to organize the Toyota/Honda, etc., plants and thereby level the playing field is in place. Not only would this level the playing field by increasing the cost structure of the currently non-UAW car makers, it would provide a Dem-loyal union foothold in several Red states.

[ERD50]

Quote:

Originally Posted by youbet Given a choice, I believe Obama would provide a bailout to the D3 companies sufficient to keep them in business until legislation making it easy for the UAW to organize the Toyota/Honda, etc., plants and thereby level the playing field is in place. Not only would this level the playing field by increasing the cost structure of the currently non-UAW car makers...

Oh boy, don't get better, make the other guy as bad as you. I feel better now.

But why would the Toyota/Honda plants want to go UAW? The Union head just told us that they make as much as UAW workers

-ERD50

[youbet]

Quote:

Originally Posted by ERD50 Oh boy, don't get better, make the other guy as bad as you. I feel better now.

Hmmmmm... I was trying to NOT make good - bad value judgements in regard to pay and benefits, so let's not go there other than to say that having the UAW successfully organize the foreign owned car manufacturers operating here would go a long way towards making the D3 long term viable.... especially if the foreign companies were required to share in the legacy expenses.

Quote:

But why would the Toyota/Honda plants want to go UAW? The Union head just told us that they make as much as UAW workers -ERD50

One of Obama's positions during the campaign was that he would support legislation making it easier for union organizing activity. I believe this impacts his thinking on D3 bailouts and forcing UAW give-backs.

Let's not get this thread moved to the soapbox......

[FinanceDude]

Quote:

Originally Posted by youbet Hmmmmm... I was trying to NOT make good - bad value judgements in regard to pay and benefits, so let's not go there other than to say that having the UAW successfully organize the foreign owned car manufacturers operating here would go a long way towards making the D3 long term viable.... especially if the foreign companies were required to share in the legacy expenses.

Now THAT would be a stroke on American genius........

Quote:

One of Obama's positions during the campaign was that he would support legislation making it easier for union organizing activity. I believe this impacts his thinking on D3 bailouts and forcing UAW give-backs. Let's not get this thread moved to the soapbox......

Nah, no Soapbox. Maybe now WalMart, Target, all the import carmakers, etc, will be FORCED to unionize. Think how much that will "help".......

It's a form of protectionism without putting any tariffs on the Chinese.........BRILLIANT!!!

[ziggy29]

Quote:

Originally Posted by youbet Let's not get this thread moved to the soapbox......

Thank you.

[Bikerdude]

Quote:

Originally Posted by FinanceDude Nah, no Soapbox. Maybe now WalMart, Target, all the import carmakers, etc, will be FORCED to unionize. Think how much that will "help"....... It's a form of protectionism without putting any tariffs on the Chinese.........BRILLIANT!!!

Exactly, they will buy cheap products from the Chinese, put the union 'tariff' on it and pass it on to the American consumer. Problem solved. WalMart greeter wanted: 50K plus benefits.

[FinanceDude]

Quote:

Originally Posted by Bikerdude Exactly, they will buy cheap products from the Chinese, put the union 'tariff' on it and pass it on to the American consumer. Problem solved. WalMart greeter wanted: 50K plus benefits.

I can already sense my grocery bill going up....... Wonder what Congress will do when WalMart and Home Depot want bailout money? Maybe Gettelfinger can be the Union Czar under Obama?

[JOHNNIE36]

Very well written article. My own thoughts along these lines. I am a GM "salaried" retiree with 34 years service and have been impacted by the changes in the econ-omy and the auto industry. I just lost all my health care coverage effective 1-1-09. I out shopping now for coverage after 20 years of retirement. Yes, I've had it good. Retired 5-1-88 with full benefits and promises of full health. The fine print in our benefits package says they can change anything want and time they want.
Some years back the salaried retirees filed a class action lawsuit against GM for going back on their promises of free health health care for life. Gm stopped that long ago. Lost it at the highest level in court. I'm not scared for me because I'm pretty well set. My pension is a defined benefit guarantee trust which is backed by the Fed's. I'm concerned about the people still working inside the industry and the supporting industries. I'm listening as I write to Neil Cuvitto on Fox News. I don't think people have a clue as to the impact of the loss of the auto industry as we know it. It's been said there are six people working in the U.S. for every one in the auto industry; steel, rubber, glass, electrical and wire, carpet, fabric, nuts, bolts and screws, etc. Just read an article in the Tampa Tribune where they are against the bailout. They don't realize that the auto business could drive them out of business. No jobs, no money, no travel, no tourism, no ads in their paper for motels, hotels, lodging and meals. No ads for airfares or cruises. The general public just has no idea.

I feel sorry for everyone out there. In my 34 years with General Motors and in my 21st year of retireement, I've never been this concerned. I'm not talking about myself and my wife as we are in decent financial shape. I'm worried about my kids and grandchildren. Don't know how they will manage in the long term. Good luck!

[FinanceDude]

Quote:

Originally Posted by JOHNNIE36 Very well written article. My own thoughts along these lines. I am a GM "salaried" retiree with 34 years service and have been impacted by the changes in the econ-omy and the auto industry. I just lost all my health care coverage effective 1-1-09. I out shopping now for coverage after 20 years of retirement. Yes, I've had it good. Retired 5-1-88 with full benefits and promises of full health. The fine print in our benefits package says they can change anything want and time they want.

How old are you? if you started at GM at 18, worked for 34 years, and are retired for 20 years, should you not be on Medicare anyway??

Quote:

Some years back the salaried retirees filed a class action lawsuit against GM for going back on their promises of free health health care for life. Gm stopped that long ago. Lost it at the highest level in court. I'm not scared for me because I'm pretty well set. My pension is a defined benefit guarantee trust which is backed by the Fed's. I'm concerned about the people still working inside the industry and the supporting industries. I'm listening as I write to Neil Cuvitto on Fox News. I don't think people have a clue as to the impact of the loss of the auto industry as we know it. It's been said there are six people working in the U.S. for every one in the auto industry; steel, rubber, glass, electrical and wire, carpet, fabric, nuts, bolts and screws, etc. Just read an article in the Tampa Tribune where they are against the bailout. They don't realize that the auto business could drive them out of business. No jobs, no money, no travel, no tourism, no ads in their paper for motels, hotels, lodging and meals. No ads for airfares or cruises. The general public just has no idea. I feel sorry for everyone out there. In my 34 years with General Motors and in my 21st year of retireement, I've never been this concerned. I'm not talking about myself and my wife as we are in decent financial shape. I'm worried about my kids and grandchildren. Don't know how they will manage in the long term. Good luck!

Did you guys ever think that any of this would happen? the big difference is that the so-called "sweet deals" at GM were to be funded by the private sector, unlike the "sweet deals" that are funded by goverment. Maybe govt is the only folks who can offer such promises.........