Comments on: Auto Company Bailout: Make it Hurt

By: Tom

Tom — Sat, 06 Dec 2008 17:52:30 +0000

Excellent commentary. Your blog just got bookmarked.

Rob N
Why would you not include the total cost of labor when comparing against competition? This is not fuzzy math, it is reality. The heavily unionized Big 3 use defined benefits (often underfunded) while their competition in the US uses contribution type pension plans like the most other companies.

By: Rob_N

Rob_N — Sat, 22 Nov 2008 05:04:07 +0000

Corrections: Average wage at Big Three of $28 and bennies of $10…. (typing while sleepy).

Still totals only $38 altogether.

By: Rob_N

Rob_N — Sat, 22 Nov 2008 04:59:58 +0000

Oh dear... Thoughtbasket, it turns your $80/hr figure for GM is just flat-out wrong... The average hourly wage for the Big 3 is only $24... Add in average "hourly" benefits package of about $11 and you get around $35/hour in salary and benefits... well under the $50 quoted for Toyota. (My hunch is that $50 rate used for Toyota is also quite inflated.) Why the disparity between quoted numbers and reality? Apparently some anti-union partisans were throwing the kitchen sink into the numbers by including the total costs for all benefits for all employees, present workers and (here's the kicker) retirees. Presto change-o, an average worker's hourly rate of around $35 salary + benefits turns into a (follow me here) total-salary-and-bennies-for-all-current-and-retired-workers-divided-by-only-the-number-of-current-workers of around $70 to 80.... As Yoda might say: Paint a sinister picture by numbers, that fuzzy math does. (c/p at Illinois Reason)

By: Rob_N

Rob_N — Wed, 19 Nov 2008 18:57:24 +0000

Point taken, mistake admitted. My full reply is at Illinois Reason.

By: thoughtbasket

thoughtbasket — Wed, 19 Nov 2008 18:45:06 +0000

Actually, very few of Toyota’s workers are unionized. In fact, the UAW has never unionized a factory wholly owned by a Japanese automaker. GM pays $80 per hour compared to $50 per hour at Toyota, including benefits. Both of those facts are from NY Times articles in Sep. 2007.

By: Rob_N

Rob_N — Wed, 19 Nov 2008 17:42:27 +0000

...The other automakers you cite (Toyota, etc) in your original post also have plants in the US and also employ UAW members. If the UAW is at all culpable here, you'd think those other car makers would be in worse straits too. Why is anyone blaming the UAW for the failings which lie solely at the hands of the Big 3's execs? It defies logic. (c/p at Illinois Reason)

By: fayeC

fayeC — Wed, 19 Nov 2008 03:38:06 +0000

The heads of the “Big 3″ went to DC today to ask for more taxpayer $$$. And how did they arrive? Each in their own private (corporate?) jets. Pretty gosh-darn cost effective. I agree – management removal post-haste and a mandated end to corporate greed whilst sucking on the tax-payer teat!

By: thoughtbasket

thoughtbasket — Tue, 18 Nov 2008 21:29:23 +0000

KL, I didn’t know you cared. To respond to your points: 1) smart people can’t go to Wall Street any more, so salaries everywhere will come down. Besides, big shot CEOs are in it for the ego. 2) Wiping out shareholders isn’t about saving money. In a normal bankruptcy, the debtholders become the new shareholders. The finance arms complicate things, but fundamentally, if you lent money to a car company, you deserve to lose it. 3) The dealer problem is a huge drain on the car companies. 4) Yes. Although I don’t see the UAW as a problem the way the WSJ does, they are going to have to accept concessions.

Added bonus — see the Onion’s metaphoric take on the issue: http://www.theonion.com/content/video/in_the_know_should_the_government

By: Kyle

Kyle — Tue, 18 Nov 2008 21:00:36 +0000

JC, nice to see a post on which you and I can agree in spirit. I did have a few thoughts on your 4 goals.

- Item 1 throws the current bums out; will compensation limits really induce good replacements to join?

- Item 2 totals $6B per your post, so it’s not going to have much impact. What would you propose to do about the ~$150B in debt?

- Item 4 runs against my “federalist” grain, but perhaps could be realized via a “restraint of trade”-type argument. I gather from other discussions that this dealer factor is more important than I realized.

- Item 4, in my mind, is the big kahuna. It would be interesting to see Obama, Nancy, and Harry screw the unions. Sadly, I don’t see it happening.

Cheers,
KL