Tag: Auto Industry

Is UAW Betraying Its Members?

The Detroit Free Press reported Friday that the United Auto Workers union (UAW) is secretly negotiating with the Big Three US automakers to revise current contracts in accordance with demands from both Democratic and Republican leaders that major concessions be imposed on auto workers in return for any government loan to avert bankruptcy by one or more of the companies.

The Free Press said that the UAW was offering to end the jobs bank program that allows laid-off union workers to receive 95 percent of their wages and benefits, and is considering other concessions.

That the UAW is working behind the backs of its members to impose a new round of give-backs to the auto companies should come as no surprise to those who follow the actions and policies of the union bureaucracy.

From the outset of the effort by General Motors, Ford and Chrysler to obtain emergency funding from the government that the collapse in auto sales and profits would be used to slash wages and jobs and gut pensions and health benefits for both active and retired workers, and that the UAW would agree to whatever concessions were demanded to protect the interests of the union bureaucracy.

The elimination of the jobs bank will result in the impoverishment of tens of thousands of auto workers whose jobs will be wiped out as part of an imminent and drastic downsizing of the Big Three companies, whether it takes place under the auspices of bankruptcy courts or as a condition of an eventual government bailout package. As with the Chrysler bailout of 1979-80, but on a broader and more brutal scale, the assault on auto workers’ jobs and conditions will spearhead an attack on workers in every part of the country and every sector of the economy.

I was wondering how long it would be before the UAW caved to the automakers.

Why Bailout The American Autos?

The Repubs are saying that the US Auto industry should take a page out of the Japnese or Chinese play book, but would that really be wise?  Why do you ask?

China’s auto industry is quietly pressing Beijing for government help as it copes with a jarring slowdown, top Chinese auto executives said in interviews with the New York Times.

This autumn, after six years of 20 percent or more annual growth, vehicle sales were flat or slightly negative, a shock to an industry that has borrowed heavily to build ever more factories for a market that had once seemed insatiable.

Citing the $25 billion in loans that Congress has already approved to help American automakers increase green research, and the additional $25 billion in loans the American industry is seeking this week to cope with a hobbled economy, Chinese executives are now telling the government here that they also need emergency measures. They are seeking lower taxes on new cars, lower fuel prices and increased grants for research into hybrid cars and new technology.

The Chinese auto industry faces several threats simultaneously. Weakening economic growth, falling real estate prices and a yearlong plunge in the stock market have made consumers leery of spending money. Fuel prices in China are still high despite the recent decline in world oil prices. And Chinese auto exports, mostly to developing countries in Eastern Europe, Southeast Asia, Africa and Latin America, are starting to crumble.

China’s car industry is already bigger than Japan’s, and is approaching in sales the industries of the United States and all of Europe. China is on track to sell 10 million vehicles this year, while demand in the United States is dropping toward 14 million vehicles.

Automobiles have played a central role in Beijing’s recent plans to move up the manufacturing chain, from making cheap goods that require unskilled or low-skilled workers to more advanced products.

So maybe China would not be a good role model.  Plus the CEOs of the US Auto companies said that it was all about the world economic crisis….could they be right?

What about the European auto makers?

The meeting in Berlin comes as carmakers

in Europe and the US clamour for aid to help offset what GM has called the worst auto market since 1945. In the US, plans supported by President-elect Barack Obama are being drawn up to provide at least $25 billion in loans to GM, Ford Motor and Chrysler. European automakers are meanwhile lobbying the European Union for 40 billion euros in low-interest loans and incentives to scrap older cars.

Meawnhile, automakers in the UK will also ask the government for ‘a package of measures to stimulate demand,’ including assistance for their loan divisions, the Society of Motor Manufacturers & Traders said. The group, representing global carmakers including GM and Toyota, will send a letter asking for “access to special liquidity vehicles” as have been provided to banks, SMMT chief executive officer Paul Everitt said on Monday.

Holy crap!  Automakers worldwide are in trouble….ALL need a bailout one way or another.

Do They Really Want To Save The Auto Industry?

There is a way, whether you like it or not, maybe the only way.  The foolowing is from an article written by John Case for Political Affairs magazine.
A raging debate is underway across the country, in Congress, and between the incoming Obama and outgoing Bush administrations on the fate of the US auto industry. Today CEOs of GM, Ford and Chrysler will face tough questioning in Congress. GM comes to Washington to beg for a $25 billion bailout to keep it and its ailing Detroit counterparts going next year. But nobody seems too thrilled about the prospect.

Some dwell on the companies’ gas-guzzling sport-utility vehicles. The right-wing obsesses over all the well-paid union members with alleged gold-plated benefits. (You would think it a crime to fight for full medical coverage for workers and their families!) Not just conservatives pile on the unions but the New York Times and Washington Post – also feel free to falsely double the average wage and benefit costs of US automakers by folding in all legacy retiree obligations in their reporting on what a UAW covered auto worker is paid. “The downfall of the American auto industry is indeed a tragedy,” the Washington Post editorial board sermonized recently, “but the automakers and the United Auto Workers have only themselves to blame for much of it.”
The essential argument for letting GM fail is the assumption that bankruptcy would be no big deal: But, while bankruptcy has worked OK for reorganizing airlines, among others, it’s very unlikely a GM failure would have the same result. In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can’t build cars without parts, and it can’t get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.

Nationalization is the only appropriate form in which the necessary re-organization and re-tooling of the US auto industry to meet the requirements of the high-tech and fuel efficient future can succeed.

Only nationalization provides an opportunity to show how a concentrated effort can renew a great industrial city like Detroit.

Only nationalization provides the framework in which collective bargaining over the pay and working conditions of workers in the automobile industry can result in a fair agreement that ends the destructive two-tier arrangements of the recent past, and grants auto workers with a sustainable, long-term stake in the industry.

The US auto industry, like the major financial institutions, is “too big to fail” in the words of Federal Reserve Chair Bernanke. But its executives cannot be trusted with public funds.

Once retooled and re-focused, it’s possible the government could resell the industry in whole or in part back to private producers if that proved to be more efficient. This writer would hope that the government – UAW partnership in rebuilding auto could create a sustainable, profitable, public enterprise. But regardless, for now, nationalization is the only practical course with any reasonable chance of success for the foreseeable future.

I know…I know…nationalization is a socialist idea….but we need an idea that will save million of jobs.  This economy cannot afford all those displaced workers.  If anyone has a better idea, please shout out.

Is Detroit Out Of Gas?

This is an article written by Peter Colcanis for the Progress Report:

The Big Three automakers (GM, Ford and Chrysler) have cut more than 100,000 jobs in the United States alone since 2005. Yet together they are still losing about $2 billion a month. GM’s share price has fallen 78 percent this year, Ford’s is at its lowest level since 1985, and Chrysler, now private, is by its own admission on the verge of collapse.

For much of the 20th century Ford and GM (founded in 1908) and Chrysler (founded in 1925) were the largest automobile makers not just in the US but in the world. Over the course of the past 40 years, though, the top management of the Big Three, in cahoots with their counterparts in the UAW (AKA “Big Labor”) have succeeded brilliantly in destroying the Detroit-centered auto-industrial complex, and, in so doing, large parts of the upper Midwest as well.

However, the crisis is not general but specific to some companies and to some parts of the United States. One part of the industry, dominated by the Big Three and the UAW, is located in the Rust Belt. The other component, foreign-owned and nonunionized, is centered in the Sun Belt and in nonmetropolitan (and often anti-union) parts of the Rust Belt. The former is sounding its death rattle, while the latter — dominated by Toyota, Nissan, BMW, Mercedes-Benz, Honda, and Hyundai — is quite dynamic.

The “US” auto industry until recently has been doing well. Total car and truck sales between 1996 and 2006 were at record levels, and the industry as a whole employed almost as many workers in 2006 as it had in 1990. The output came from non-union plants in places such as Vance, Ala. (Mercedes-Benz), Lincoln, Ala. (Honda), Greenville, S.C. (BMW), Georgetown, Ky. (Toyota), etc, while unionized auto plants in places such as Flint, Mich.; St. Louis; Kokomo, Ind.; and Lansing and Hamtramck, Mich., closed their doors.

How and why did the Big Three get in the position they are in today? For starters, corporate smugness, complacency — the Big Three, by and large, stopped innovating in the 1950s — and insularity. As automotive journalist Brock Yates noted long ago, the “Detroit mind,” as he called it, is as rigid and conformist as any in corporate America. Big Three execs have never felt comfortable with small, fuel-efficient cars, preferring instead vehicles like the Chevy “Subdivision.”

Under Detroit pressure, the federal government caved in on tariffs and quotas on imports in the 1980s and set the bar low on fleet fuel standards and in recent years offered tax advantages for super-size SUVs. Today various members of the Michigan congressional delegation are promoting sundry bailout measures, trying desperately at the 11th hour to reward a halfcentury of ineptitude and greed.

The unions did not help the situation when they opposed shop-floor innovations and resisted flexible work rules. Enjoying protective tariffs, they were confident, as were the “suits” in management, that they could just pass on the costs of high wages and exorbitant “benes” to American consumers who’d remain loyal to inferior products.

Auto Industry Bailout?

With some Republicans now behaving, well, like Republicans, the Democrats are poised to take full political possession of the controversial $700 billion bailout of financial institutions and its aftermath.

The current issue is whether this lame-duck Congress will rescue the remaining three U. S. automakers with more billions instead of letting them go into bankruptcy like a million American families will this year. Will American Express be next in line for a handout?

The Big Three’s appeal came as Republican Gov. Mark Sanford of South Carolina warned that because of the rush of Congress “to do something” in October, “the American taxpayer is being gamed.”

“The bailout was an incredibly bad idea in the first place,” Sanford said, and “it’s being made worse by loose rules and oversight that are putting taxpayers on the hook for billions more.”

There are loud advocates with strong arguments on both sides.

Proponents of a bailout say that the industry is a victim of the global financial crisis. Wall Street has been bailed out, so why not Detroit?

They say millions of jobs could be lost and more than $100 billion in wages sliced out of an already-fragile U.S. economy.

On the other side are those who feel just as strongly that the automakers’ problems are their own doing, born of bad business decisions, uncompetitive labor agreements and vehicles that Americans have decided are second-rate.

They say a bailout will only postpone the inevitable, and that the failure of one or more of the companies is necessary if the economy is to work properly.

It is funny in a way, funny as amusing, not as Ha-Ha, that Repubs are so hard against this move.  Could it be that they are thinking that since the people in Michigan did not vote for them anyway–then screw ’em.

Beyond that, in my lifetime, about 30 years ago, I believe that the industry got a bailout amd promise to do better and to retooling to meet the new demand.  They crapped on all that once they got the money, so why should we believe them now?

I have not yet made up my mind to get behind the bailout.  I will continue my research and post as it is cllear what is to be done.

Japan’s Green Car Industry

Honda’s new FCX clarity feels like a perfectly ordinary car—which may well be the most shocking thing about it. It looks and drives like a run-of-the-mill four-seat sedan. Slip behind the wheel and press the pedal with your foot, and the car accelerates with satisfying punch. But after a few minutes of cruising, you’ll notice that something is missing. The only audible engine noise is a faint whir, so faint that you can actually hear the tires swishing along the asphalt.

That’s because the Clarity is a hydrogen-fuel-cell car, one of the most advanced in the world. The once bulky fuel-cell stack that supplies energy to the engine has been reduced in size by half over the past decade while increasing the power output by 50 percent. It’s the first to be certified by the U.S. Environmental Protection Agency, and the first to be delivered to retail customers (albeit on a leasing basis). As for CO2 emissions, the only exhaust it produces is a trickle of water. And perhaps most important of all is what stands behind it: A state-of-the-art factory that’s ready to produce thousands of the vehicles once the market’s ready. Most of Honda’s competitors, by contrast, are still bringing concept cars to the auto shows.

In large part, Japan’s lead in green-car technology is an outgrowth of its old austerity. Japan was obsessed with energy efficiency long before global warming made it a worldwide obsession. For decades Japanese companies have struggled to cope with their oil-poor country’s sky-high energy costs by placing a premium on energy-saving technologies, and it has paid off. Even old Japanese industries are cutting-edge in cutting energy costs. Japan continued to make batteries long after U.S. rivals quit, and now makes the most efficient batteries in the world. Japanese steelmakers have ceded ground to cheaper emerging-market rivals but are still unsurpassed in the fine niche art of making superlight steel for car bodies. The hidden strength of Japanese smokestack industries helped create its green cars, and now the success of those cars is pushing more and more Japanese industries—electronic-motor and control-unit producers, all sorts of material companies—to innovate faster.

The focus on green cars reveals the kind of industrial vision that Japan is often criticized for having lost decades ago. Toyota launched the G21 Project, which ultimately produced the Prius, back in the 1990s, when oil prices were low and America’s love of SUVs was still growing. The idea was to create a model car for the 21st century, and counter Toyota’s reputation for “boring” vehicles. Toyota simply saw the long view before others, assuming that the petroleum-based economy was becoming unviable for a variety of environmental and economic reasons, according to Noriyuki Matsushima, analyst at Nikko Citigroup in Tokyo.

As reported in Newsweek.

Here Is An Environmental Idea

Switzerland’s political system, like that of California and several other states and nations, allows for individuals to propose legislation upon the gathering of enough signatures to support the bill. One such proposition by the youth section of the Swiss Green Party would ban all vehicles weighing over 2.2 metric tons (4,820lbs) or emitting more than 250g/km of CO2, among other restrictions. The law would effectively eliminate the vast majority of the SUV and sports car market overnight.

Other elements of the bill that would make it among the toughest in the world if enacted include a speed limit of 100km/h (62mph) on cars ‘grandfathered’ in by being registered before the law goes into effect, a complete ban on diesel-powered cars without particulate filters and cars with front fascias deemed dangerous to pedestrians, reports the Swiss site Asphalte.

Examples of the cars that would be affected by the proposed law include the complete ban from sale of all but the Boxster and Cayman 2.7 (pictured) from Porsche’s lineup, all of the high-performance arms of the German carmakers, as well as most Italian cars such as Ferrari and Lamborghini and the majority of American muscle cars and SUVs. Essentially the only cars that would be allowed for sale would be highly efficient six-cylinders and four-cylinder cars, with very few high-performance or opulent and large vehicles remaining

Automakers May Get Loans

Backers of a program that would lend up to $25 billion to automakers and auto parts suppliers said today they had garnered 71 U.S. House members to support their search for $3.75 billion in funding over the next couple of months.

The program, known as the Advanced Technology Vehicles Manufacturing Incentive Program, was meant to help automakers meet fuel economy standards of 35 miles per gallon by 2020. Created but not funded by Congress last year, the program would provide low-cost loans to cash-strapped automakers and their suppliers for engineering fuel-efficient vehicles or converting old plants.

The $3.75 billion would cover the government’s borrowing costs for up to $25 billion in loans, along with a small reserve for defaults.

While House and Senate Democrats have raised the idea of a second economic stimulus plan — the most likely carrier for such a proposal — the Bush administration has opposed it so far, and the prospects are murky. Congress won’t consider any such plan before leaving for August recess this week, and with no plans to convene after the election, the plan would need to be passed sometime in September.

My reaction is why?  These companies were aware of the coming crisis but yet did nothing to avoid it.  Their answer has been to fire or layoff workers.  I say screw them!

Electric Cars Will Be Profitable

McCain as part of his energy policy has suggested that the US would offer a bonus for the company that comes up with the proper battery for more electric ars. When he made that offer I said then, just mail it to Japan because they were at least 5 years ahead of the US in that technology.

The electric cars that Nissan Motor plans to start selling by 2010 will have varying capabilities depending on a given country’s driving patterns, but all will be priced competitively and will generate profits, company executives said Tuesday

Nissan’s chief executive, Carlos Ghosn, said that any electric car the company sold in the United States would need a range of at least 100 miles between charges to be practical, but that European drivers could make do with about half that range. Tolerance for the time it takes to recharge such a car may vary widely as well, he said

To help in its development of electric cars, Nissan said Tuesday that it would work with the state of Tennessee and its largest electric utility, the Tennessee Valley Authority, to study and perhaps install infrastructure like charging stations. The automaker has begun similar efforts in Denmark, Israel and Portugal, but the United States presents a far greater opportunity for Nissan to market electric cars.

Plug-In Hybrids

Gasoline-electric hybrids now, like Toyota’s popular Prius, don’t need to plug in—you just fill their tanks with gasoline and the battery keeps charged by the internal combustion engine and by energy generated from the wheels when braking (a feature known as “regenerative braking”). The battery then powers the electric motor when it is called into service during idling, backing-up, crawling in gridlock, maintaining speed while cruising, and for extra uphill power when needed. As such, the electric motor is essentially a back-up engine while the hybrid relies mainly on the gasoline engine.

Plug-in hybrids take the concept further by plugging into a regular electric outlet to enable the vehicle to operate solely on its electric motor for ranges of 40-50 miles or more on a single charge. This has profound implications for commuters who need only drive short distances to and from work every day and who may be able to do so solely on electric power. The gasoline engine then becomes the supplemental one for when the car needs to travel farther than the electric engine can take it.

U.S. automakers are also jumping onto the plug-in bandwagon. General Motors says that it will have mass-market plug-in hybrids—modifications of its Saturn Vue and Chevrolet Volt—on the road by 2010. Ford has also developed a small fleet of plug-ins, but is not yet ready to offer them to the public. Fisker, a U.S. start-up focusing on the creation of high performance, energy efficient vehicles, plans to sell an $80,000 plug-in hybrid sports car by late 2009. Chrysler’s Sprinter van was the first plug-in from a major U.S. manufacturer, but it is only presently available to a limited number of institutions as a fleet vehicle.

They are on the horizon, but they have ALWAYS been on the horizon.  The ayto Industry is just praying that the price of oil comes down and they can go back to making the models they are trying to sell now.