<<<"It was more profitable for them, personally, to make lifetime healthcare promises to the UAW than to give instant wage hikes or accept a lengthy strike; so they did what was in their best interest.
In their defense, I believe they had no idea health costs would skyrocket as they have, and eventually bankrupt the company.">>>
I gave ya 5.
Like Paul Harvey would now the rest of the story.
Now there is nothing wrong with making U.S. plants the cleanest and
safest on earth or having U.S. autoworkers the highest-paid wage earners.
That is the dream, what we all wanted for America.
And under the 14th Amendment, GM, Ford and Chrysler had to obey the
same U.S. laws and pay at the same tax rates. Outside the United States,
however, there was and is no equality of standards or taxes.
Thus when America was thrust into the Global Economy, GM and Ford had
to compete with cars made overseas in factories in postwar Japan and
Germany, then Korea, where health and safety standards were much lower,
wages were a fraction of those paid U.S. workers, and taxes were and are
often forgiven on exports to the United States.
All three nations built "export-driven" economies.
The Beetle and early Japanese imports were made in factories where
wages were far beneath U.S. wages and working conditions would have gotten
U.S. auto executives sent to prison.
The competition was manifestly unfair, like forcing Secretariat to
carry 100 pounds in his saddlebags in the Derby.
Japan, China and South Korea do not believe in free trade as we
understand it. To us, they are our "trading partners." To them, the
relationship is not like that of Evans & Novak or Fred Astaire and Ginger
Rogers. It is not even like the Redskins and Cowboys. For the Cowboys only
want to defeat the Redskins. They do not want to put their franchise out of
business and end the competition -- as the Japanese did to our TV industry
by dumping Sonys here until they killed it.
While we think the Global Economy is about what is best for the
consumer, they think about what is best for the nation.
Like Alexander Hamilton, they understand that manufacturing is the key
to national power. And they manipulate currencies, grant tax rebates to
their exporters and thieve our technology to win. Last year, as trade expert
Bill Hawkins writes, South Korea exported 700,000 cars to us, while
importing 5,000 cars from us.
Yep, Blame the Union & Management for everything. Yep they made all the laws, forced Companies to hire by the number game.
Who killed the U.S. auto industry?
To hear the media tell it, arrogant corporate chiefs failed to foresee
the demand for small, fuel-efficient cars and made gas-guzzling road-hog
SUVs no one wanted, while the clever, far-sighted Japanese, Germans and
Koreans prepared and built for the future.
I dissent. What killed Detroit was Washington, the government of the
United States, politicians, journalists and muckrakers who have long
harbored a deep animus against the manufacturing class that ran the
smokestack industries that won World War II.
As far back as the 1950s, an intellectual elite that produces mostly
methane had its knives out for the auto industry of which Ike's treasury
secretary, ex-GM chief Charles Wilson, had boasted, "What's good for America
is good for General Motors, and vice versa."
"Engine Charlie" was relentlessly mocked, even in Al Capp's L'il Abner
cartoon strip, where a bloviating "General Bullmoose" had as his motto,
"What's good for Bullmoose is good for America!"
How did Big Government do in the U.S. auto industry?
Washington imposed a minimum wage higher than the average wage in
war-devastated Germany and Japan. The Feds ordered that U.S. plants be made
the healthiest and safest worksites in the world, creating OSHA to see to
it. It enacted civil rights laws to ensure the labor force reflected our
diversity. Environmental laws came next, to ensure U.S. factories became the
most pollution-free on earth.
It then clamped fuel efficiency standards on the entire U.S. car
Next, Washington imposed a corporate tax rate of 35 percent, raking
off another 15 percent of autoworkers' wages in Social Security payroll
State governments imposed income and sales taxes, and local
governments property taxes to subsidize services and schools.
The United Auto Workers struck repeatedly to win the highest wages and
most generous benefits on earth -- vacations, holidays, work breaks, health
care, pensions -- for workers and their families, and retirees.
Facts instead of Bull Crap.
Detroit 3 Salaried Labor Costs to Overtake UAW Hourly Costs, Researcher Says
November 29, 2011
by David Barkholz and Christina Rogers
For the first time in modern history, overall salaried labor costs next year
at the Detroit 3 are expected to exceed those of all UAW-represented factory
workers, says Sean McAlinden, chief economist for the Center for Automotive
The center estimates that the Detroit 3's 66,000 salaried U.S. employees
next year, earning on average at least $122,500 in cash compensation, will
bring in slightly more total income than the carmakers' estimated 115,000
hourly workers earning about $69,000 each, McAlinden says.
Until 2009, hourly employment vastly exceeded salaried employment at the
Detroit 3, said McAlinden, speaking on the sidelines of a CAR conference
today on automotive labor in suburban Detroit. But plant closings and hourly
attrition now has salaried employment accounting for about 37 percent of
total U.S. employment at the Detroit 3, he said.
McAlinden said a recent pledge by General Motors CEO Dan Akerson to cut
vehicle platforms by half and consolidate advertising with fewer agencies
recognized that salaried labor costs are mounting.
<<<<The company had the choice of settling or facing a strike and watching the other two companies take all their business.>>>>
....and, losing their bonuses for the quarter/year, or whatever.
I believe auto mfr executive compensation metrics were precisely the reason past GM execs took the route of offering lifetime health care in lieu of wage hikes.
It was more profitable for them, personally, to make lifetime healthcare promises to the UAW than to give instant wage hikes or accept a lengthy strike; so they did what was in their best interest.
In their defense, I believe they had no idea health costs would skyrocket as they have, and eventually bankrupt the company.
Nice post web, I knew you could do it! I don't mind anybody advising against investing in GM if they do so rationally.
I agree that GM management is responsible for the ruinous contracts they agreed to starting in the 60's but don't forget the complicity of our government in this. They gave the UAW a virtual monopoly on labor at the Big Three which allowed them to extort these agreements from the target company. The company had the choice of settling or facing a strike and watching the other two companies take all their business. Since the Big 3 had no other significant competition at that time, they settled knowing the other two would be forced to match and they'd all be equal. Of course, this all changed with the introduction of high quality, low cost Japanese cars but the die was cast.
<<<<This is a fair point. I have said in other posts that the job was only partly done regarding legacy costs. At one point prior to the bankruptcy, GM was giving serious consideration to changing health care coverage unilaterally. It was not clear from a legal perspective that it would have flown, but at the 11th hour, the union agreed to the VEBA. As you point out, a lot of the cost was paid off presumably by bailout money.>>>>
Yes. As I've long said:
-- GM went broke because of legacy labor costs, primarily health care, but also pension.
-- This was, first and foremost, GM management's fault -- they were the ones who caved in to union demands
-- None of the other so called 'causes' of the bankruptcy ("too many dealers" "poor styling" "bad reliability" "bad gas mileage" "betting on cheap oil") were as meaningful.
And this is still only partially fixed by the VEBA. They will still owe tons of money to an unfunded pension plan.
When they first got bailed out, it was clear that without further bailing out they could not make it. Then they quietly got another $42B in tax offsets from the IRS, which was also patently unjust to every other corporation in America. That depends on them making a profit before it's worth anything, of course.
So now the only two big factors left are:
-- Big share sales looming (US govt, Canadians, UAW)
-- UAW infestation
Given these two factors, I suggest avoiding the stock. I don't know what the price will do from one day/week to the next and don't claim to. You may get a break, but there is just no reason to risk buying this when there are far better bets out there.
I know what he would have done - which is why, even though I'm a Republican, he WON'T get my vote.
He simply fails to see that it's been a success and that it would have been disastrous any other way.