Tag: Auto Industry

The Bush Auto Plan

The package announced by Mr Bush on Friday does not need Congressional approval, as it is part of the existing $700bn financial bail-out programme.

All car firms have announced production cuts as the economic slowdown has slashed car sales.

Detroi’s Big Three carmakers, Chrysler, Ford and GM, have repeatedly warned that millions of jobs could be lost if the government does not agree to a package of loans to support the industry.

“These loans were desperately needed before the end of December, because the situation for the automakers is so critical,” said Dennis Virag at Automotive Consulting Group.

Meanwhile, US Treasury Secretary Henry Paulson urged Congress to authorise the use of the second half of the $700bn Wall Street bail-out, as the first $350bn had already been committed.

President George W Bush said allowing the US car industry to fail would not be “a responsible course of action”.

General Motors will get $9.4 billion and Chrysler $4 billion before the end of the year. A further $4bn will be provided later.

Why Economic Nationalism?

This is a perspective written by Jerry White.

The naked class character of the proposals for a so-called “bailout” of the US auto makers has become increasingly clear. The crisis of the Big Three companies is being seized upon as an opportunity to drive auto workers back to conditions of poverty and exploitation not seen since the Great Depression.

As a condition for federal loans to avert the imminent bankruptcy of GM and Chrysler, politicians of both big business parties—who handed over trillions of dollars, with no strings attached, to Wall Street—are demanding that auto workers accept mass layoffs and a cut in pay that would lower their wages, in real terms, to less than half that earned by their fathers and grandfathers forty years ago. The United Auto Workers union is fully collaborating in this attack on rank-and-file workers.

With anger among auto workers against the politicians, the companies and the UAW leadership growing by the day, both the Democratic Party and the union are attempting to whip up economic nationalism as a reactionary diversion to pit workers at the Big Three plants against their fellow workers at foreign-owned, non-union plants in the US as well as against auto workers in other countries. The aim is to politically disarm the workers, line them up behind their “own” employers and pre-empt any struggle in defense of jobs and living standards.

Auto workers have a long and bitter experience with the snake oil of America-first chauvinism peddled by the UAW bureaucracy and the Democratic Party. It has been nearly 30 years since the UAW, in league with CEO Lee Iacocca, initiated its flag-waving “Buy American” campaign during the 1979-80 Chrysler bailout, which marked the beginning of three decades of wage and benefit concessions.

Economic nationalism went hand-in-hand with corporatism and the claim by the UAW that workers had no independent interests separate and apart from those of the auto bosses. In the name of “labor-management partnership” the union suppressed all resistance to plant closures and demands for lower wages and speed-up. To oppose concessions, the UAW argued, was to undermine the “competitiveness” of the American auto companies and give the advantage to foreign companies.

The economic nationalism of the UAW has produced nothing but a disaster for auto workers, who have seen the destruction of more than 600,000 jobs at General Motors, Ford and Chrysler since 1979 and unending demands for concessions.

For the union bureaucracy, it has been a different story. It has profited from union-management slush funds and joint investment schemes. Although the union has lost two-thirds of its membership, the UAW officialdom has managed to increase its income. Last year it was handed control of a multi-billion-dollar retiree healthcare trust fund and large amounts of company stock in exchange for its agreement to cut new-hires’ wages in half.

It is an historic fact that the last global economic depression led to the outbreak of world war and the deaths of tens of millions of people, as the various imperialist powers fought for control of markets, raw materials and access to cheap labor. Something even more terrible is being prepared today behind the nationalist demagogy of big business politicians and their allies in the union bureaucracy.

As events in the US and all over the world are demonstrating, the fundamental division in society is not nation, race or religion, but class. Auto workers in the US face the same basic conditions and the same attacks as their brothers and sisters all over the world. In every country, the corporate-financial elite is seeking to impose the full burden of the failure of its economic system on the backs of the working class.

Senators Crap On Detroit

The U.S. Senate took on the role of Christmas Grinch for autoworkers when it failed on Thursday to pass a $14 billion rescue package for Detroit’s three major car manufacturers.

Attention now turns to the Bush administration’s Treasury Department, who Reid and other supporters of a bailout said should dip into the $700 billion fund Congress created to help Wall Street firms and banks, and lend automakers the money they need to avoid bankruptcy and save millions of jobs.

The Senate late on Thursday came only a few “yes” votes short of the 60 needed to block a filibuster on the bailout bill, effectively killing any chance of Congress providing a lifeline to the financially drowning automakers this year.

“It’s going to be a very, very bad Christmas for a lot of people based on what takes place here tonight,” Senate Majority Leader Harry Reid told his colleagues before the vote. “It’s over with.”

Looks like a new War Between The States is developing and the low paid South is winning.

Auto Bailout Moves To Senate

A proposal to bail out the big three U.S. automakers passed the House of Representatives but its prospects looked grim in the Senate where supporters faced an uphill struggle on Thursday to keep it alive.

But prospects for passage in the Senate were grim. Democrats were short the 60 votes necessary to overcome procedural hurdles. Without the support of a dozen or more Republicans the bill would fail, a Democratic aide said.

Let us be real….the Repubs have been trying for years to break unions and this is an opportunity to break one of the biggest.  The sad part is they will sacrifice the economy and jobs for Americans to do it.

Sen. Shelby of Alabama is the leading opponent to the auto bailout, ask him how much in incentives and tax breaks and cuts did his state throw at Toyota to get them to locate in the state.  It would be a godsend to Toyota and Alabama if the Big 3 were to fail.  Bet the total would be close to the amount of the first installment to the Big 3.  The insincere crap about wanting to help the auto industry and save jobs is just a lie.

This assault on the American auto industry will have lasting effects and has all the earmarks of coming back to bite them in the ass.

Should Automakers Get Their Cash?

Sorry to say, that I feel they should not and for several reasons.

First they are asking the workers to give up even more than they have in the past….in other words they are trying to blame the workers for the failure of the industry and so far the UAW is going along with it.  Why? You may ask.  The UAW is not working in the best interest of the workers and neither is the Congress.

The concern of the UAW is not the defense of its members’ jobs and living standards, but the continued existence of the union apparatus and the lucrative salaries and perks it provides for the union bureaucracy. Gettelfinger is well aware that the collapse of GM would spell the end of the UAW. That is why the union is willing to do whatever is necessary to keep the companies afloat, including imposing poverty wages and conditions on its members.

The Senate hearing made clear that the government, the corporations and the UAW bureaucracy are using the threat of mass unemployment to blackmail autoworkers into accepting the destruction of all the gains won over generations of struggle. This reactionary operation will be the beginning of a new offensive against the working class as a whole.

Is there an answer?  You bet your butt there is!

This entire framework of the so-called “bailout” must be rejected. The only way to defend the interests of autoworkers and the working class as a whole is through the nationalization of the auto industry and its transformation into a public utility democratically controlled by working people. This must be part of a social reorganization of the entire economy, including the banking system, to guarantee jobs and decent living standards for all.

To Break A Union

Many critics of the auto industry argue that bankruptcy is the best choice for the Big Three. A bankruptcy judge has broad powers to let the automakers shed their debts and other obligations, as well as get out of labor contracts that they can no longer afford.

Other industries, including steel and airlines, have used bankruptcies to emerge financially healthy.

There are also questions about whether the automakers could get the financing they need to operate under bankruptcy court. Many lenders that have loaned to bankrupt companies in the past have exited the field in the wake of the credit crunch. And experts question whether the crucial source of funds needed to emerge from bankruptcy would be available to the automakers

Let us be realistic…..the debate on whether to save Detroit or not, is more about breaking the UAW than it is anything else.  The Repubs and their talking heads have for years blamed everything  that has gone wrong on the union and that  thinking has not changed, even after the massive concessions that were given in the last couple of contracts that have been signed.

For decades the Repubs have tried to break all unions as best as they could, look at Reagan and his destruction opf PATCO.  That is why they are firmly behind the bankruptcy thing, it would neutralize the unions and make it easier to br4eak it completely.

The Conserv talking heads refuse to call it what it is–class warfare.  Just look at the bailout of Wall St., did those guys get put thruough the grinder like the auto companies?  I will give you a moment for thought.  The answer is NO!  In case you missed it.

This , if it is successful will give the Repubs the tools for the breaking of ALL unions.  And that will truly be class warfare….corporations will profit, workers will struggle.

An Investment, Not A Bailout

This is a policy memo from the Economic Policy Institute:

With the U.S. Senate prepared to take up the question of a $25 billion rescue package for automakers as early as Monday (Nov. 17), partisans are loudly debating the merits of another bailout. But given current economic conditions, the answer should be clear. Government intervention in the form of a bridge loan will allow the industry to survive until the economy stabilizes, new fuel efficient models are introduced, and recently negotiated changes to United Auto Worker (UAW) contracts kick in. That means saving millions jobs—not only in auto factories, but also at component suppliers, dealers, and elsewhere—when employment is desperately needed.

Other circumstances strengthen the argument for this loan:

  • Although domestic automakers made strategic blunders in the past, they have recently made tremendous strides in restructuring. But many of those changes won’t kick in until 2010, when new models such as GM’s plug-in hybrid, the Chevy Volt, and a new model getting 45 mpg are introduced. New union contracts will also take effect in 2010, which will greatly reduce automakers’ many legacy costs.
  • The current industry collapse is a direct result of the financial crisis rather than past industry decisions. Nervous consumers are delaying large purchases, sending vehicle sales in the United States to their lowest level in decades. More than 16 million light vehicles were sold in 2006 and 2007. Sales fell to 10.6 million units in October, a 35% decline from 2007 and the lowest absolute level since February 1983. The collapse in light vehicle sales has hit both import and domestic companies. GM sales fell 47% in October, but Suzuki (-48%) and Isuzu (-49%) were equally hard hit. While Chrysler sales fell 38%, Kia’s fell 40%. Ford’s sales were off 33%, but Nissan’s fell 36%. Overall, domestic sales fell 41%, and Asian producers dropped 29%. Every company experienced a sharp drop in sales last month. These declines are particularly troubling because the auto industry is one of the most capital-intensive sectors of the U.S. economy.
  • Unionized U.S. automakers are highly productive. The top two most productive auto assembly plants in the United States in 2005 were UAW plants (in terms of hours per vehicle assembled). In fact, six of the top 10 plants were UAW shops (Harbour 2006, as cited by Shaiken 2007). Product reliability for U.S. manufacturers is now approaching that of Japanese producers in some cases (Cohn 2008). This high productivity has allowed domestic manufacturers to compete with foreign companies that benefit from government subsidies, including manipulated currencies in Korea and Japan that reduce costs by 10% to 20%, and national health insurance systems in most competitive countries that remove the burden of covering costs for existing workers and retirees. Such high-productivity industries are exactly what is needed to ensure future economic growth.
  • Union auto workers have already taken substantial hits on pay and benefits. For example, contracts negotiated in 2007 slashed wages for new workers by 50%. In addition, new workers will not be guaranteed any retiree health care benefits, and will not participate in the traditional defined-benefit pension plan. On top of that, the UAW agreed that the responsibility for health care benefits for existing retirees would be transferred from the auto companies to an independent trust, called a Voluntary Employee Benefits Association. Analysts now believe that the labor cost gap between the Detroit-based auto companies and the foreign transplants will be largely or completely eliminated by the end of the current contracts.
  • A collapse of the Detroit-based auto manufacturers would result in the loss of 2.5 to 3 million jobs, according to a 2008 study by the Center for Automotive Research (CAR). There would also be a ripple effect throughout the local economies of auto communities across the United States. Furthermore, liquidation of the auto companies would put at risk the pension and health benefits of 1 million retirees and dependents, and could saddle the federal pension guarantee program with enormous liabilities. Under current law, the federal government would also be required to pay for part of the retiree health care costs for pre-65 retirees from the auto companies.

The automotive industry represents almost 4% of U.S. gross domestic product and 10% of U.S. industrial production by value. The failure of the Detroit-based auto companies would severely aggravate the current economic downturn, compounding the difficulties facing working families and businesses. Revenues to the federal, state, and local governments would drop, forcing cuts in vital social services at a time when they are most needed.

An airline-style (Chapter 11) bankruptcy re-organization is not an option for U.S.-based automakers. They have already extensively restructured product lines and labor contracts. They would be unable to get debtor-in-possession refinancing to continue operations, and consumers would be unwilling to buy cars from bankrupt companies. Hence, a Chapter 7 bankruptcy liquidation is the only alternative for domestic automakers. The bankruptcy of one or more of the “Big-3” automakers would endanger thousands of large and small parts and services suppliers. Massive job loss and community disruption would result. Increased government payments and tax losses alone would exceed $150 billion in the first three years following bankruptcy of all three domestic auto companies, according to the CAR report. The $25 billion rescue plan is a bargain by comparison.

As the debate rages about whether to help the auto industry or not…all sides must be considered and evaluated.

Auto CEO’s Blow Smoke

Ford Motor Co. will tell Congress that it plans to return to a pretax profit or break even in 2011 when the Detroit Three automakers’ CEOs appear before lawmakers this week to request $25 billion in government loans. Ford CEO Alan Mulally said he’ll work for $1 per year if the company has to take any government loan money.  STOP!  May I see a show of hands of those who believe this BS?

After grilling the CEOs at hearings last month, Congressional leaders demanded plans from the automakers by Tuesday to show that they will survive if they get federal funds. The plan Ford submitted said the company will cancel all management employees’ 2009 bonuses and will not pay any merit increases for its North American salaried employees next year.

Do you really think that a man that makes $20 miilion in bonuses is gonna go quietly into the night?  I have an idea for them–fire ALL management and start over–eliminate the greed—If these guys remain, they will get their blood money somewhere, some how.

All three companies’ chief executives agreed to symbolic steps, including salaries of $1 a year and the elimination of corporate jets to make their case more palatable, and they were traveling to the capital in hybrid vehicles to underscore the point. It’s 520 miles from Detroit to Washington.

These guys are blowing smoke up Congress’ ass.

New UAW Concessions

United Auto Workers president Ron Gettelfinger gave his most open pledge yet Sunday that the union would work to impose further sharp concessions on US auto workers.

Speaking to CNN’s Wolf Blitzer on “Late Edition,” Gettelfinger said the union is “prepared to go back to the bargaining table” and reopen the four-year labor agreements signed in 2007.

The UAW president’s remarks came as Detroit’s Big Three automakers were readying proposals to present to Congress on Tuesday that will include outlines for further downsizing and cost-cutting in the attempt to return the companies to profitability. According to a report in the New York Times Monday, these plans include a “significant shrinking” of GM’s North American operations, including shutting more factories, eliminating brands and delaying or reneging on billions the company pledged to pay into a newly-established union-controlled fund for retiree health care benefits.

Both Democrats and Republicans have demanded concessions in return for any government loan to avert bankruptcy. The UAW bureaucracy completely accepts the consensus of the American political and media establishment, and is working behind the backs of its membership to negotiate cuts.

The contracts signed by the union last year imposed historic concessions on auto workers, including a fifty percent cut in wages for new-hires and so-called non-assembly workers, and the ending of employer-paid retiree health care benefits. But this was considered inadequate by the most powerful financial and political interests, which are using the crisis in the auto industry to destroy the conditions of auto workers and set a precedent for an attack on the entire working class.

Assault On The American Worker

The events of the past few days have made clear that a proposed $25 billion bailout of the US Big Three auto companies is being used to intensify the ruling class offensive against auto workers and the American working class as a whole.

In an entirely cynical manner, the media and politicians of both parties are issuing pseudo-populist denunciations of General Motors, Ford and Chrysler while seizing on the near-collapse of the companies as an opening to rip up union contracts and destroy workers’ pensions, health benefits, wages and working conditions. This is to be the centerpiece of a ruthless restructuring of the industry, involving the closure of more factories and the destruction of tens of thousands more jobs. The aim is to provide, in the form of a far smaller and more highly exploitative industry, a source of profitable investment for Wall Street bankers and speculators.

The destruction of auto jobs and gutting of all that remains of the gains won by generations of auto workers since the mass sit-down strikes of the 1930s will be used as a precedent for similar attacks on workers in every sector of the economy and every part of the country. As with the Chrysler bailout of 1979-80, but on a far broader and even more brutal scale, mass unemployment will be used as a weapon to bludgeon the working class.

Whether through the bankruptcy courts or a bailout bill conditioned on unprecedented concessions—which the United Auto Workers (UAW) will accept and help impose—the workers are to be forced to labor for near-poverty wages and be stripped of basic health and retirement benefits.

President-Elect Barack Obama, for his part, has solidarized himself with demands for sweeping contract concessions, declaring that any auto bailout be contingent on the industry’s future “viability.” Among his chief economic advisers is Paul Volcker, the former Wall Street banker who was appointed chairman of the Federal Reserve by Democratic President Jimmy Cater and engineered a massive rise in unemployment, which was used to break the power of the unions and undermine the resistance of the working class to layoffs and wage cuts. The Chrysler bailout was carried out during his tenure at the Fed.

There is only one way to save the workers from the assaults they are sure to face.  And that is?

There is only one policy that can defend the interests of auto workers and the working class as a whole. That is a socialist policy of nationalizing the auto industry and transforming it into a publicly owned enterprise under the democratic control of working people. This must be carried out in conjunction with the nationalization of the banks under public control, so that economic life can be based on the principle of production for human need, not private profit.

The design, engineering and manufacture of automobiles involve tens of millions of people around the world and vast natural, financial and human resources. The only way to guarantee decent living standards for all workers and to end destructive national competition is to unite auto workers internationally on the basis of a socialist program.

I know Irene…not what you want to hear, but put yourself in the place of an autoworker….what would you do to preserve your job?