Big Three Bailout

[Jacko]

Originally Posted by NiceTom

I'd have more respect for these guys if they's actually proposed a realistic wage for themselves-say $500,000.

This $1 is just a wink, wink, nudge, nudge. Sure, $1-as long as we ignore that these guys are going to go right back to $10-$20 million when the attention wears off.

I hear you..but it is shareholders who will have to do what you intend for the longer term (executive compensation restrictions) and they do it at their own peril....most of these folks are likely "whatever the market will bear" types of folks....so for now...the market ain't bearing much salary for unsuccessful executives....


Symbolism matters in my opinion especially in matters of leadership in times of crisis...and beyond that, millions saved in executive compensation, if even for a short time,m IS still millions saved.

[melliedee]

Originally Posted by Bumper

Talk about "knee jerk" reactions? In no way could anything I put forward in the opinion I expressed be construed as union bashing. As I've said on numerous occasions, within this very thread, by the way, there's plenty of blame to go around. The unions get a part of it for some of the demands they made, but the corporate side must shoulder an even larger share for their spineless, irresponsible and short-sighted approach to their organization's management. Being defensive serves no purpose. Reduction in executive remuneration amounts to chump change, and is largely window dressing, much like the well-publicized leaving the executive jets parked and driving hybrid cars to their latest round of talks. Pretty, and provides photo ops, but purely symbolic. I completely agree that the market isn't going to pull this one out. Massive effort on the part of all the stakeholders, and co-operation at an unprecedented level is required.

And of course, Mel, your father, and everybody else's father is entitled to reasonable recognition for a job well done. No sensible person is advocating a return to the dark ages of confrontational labour/management strife.

I was quoting you because you were quoting me on the steel union comment. I don't think YOU are union bashing; the knee-jerk reaction I refer to is mainly the right talking heads distortion of the issue in their attempt to dump the lionshare of the blame at the feet of workers, as if they are overpaid fatcats sitting on goldmine 401Ks when nothing, at least in my corner of the industrial midwest, could be further from the truth.

I'm defensive because I think everyone's lost their minds if they don't blink at a 700 billion bailout (without the strong strings the auto industry should and will get) to the financial industry, yet seem so cavalier about the prospect of an industry which impacts so many blue collar workers folding.

[sctx]

Originally Posted by melliedee

If you have a UAW example of an unreasonable benefit I'd like to hear it.

I don't know if "unreasonable" is the issue. I think the issue is average labor hour cost per worker. Toyota pays about $47 per hour while GM pays about $72. So, lets say Toyota has 5000 production workers, their labor cost is $125,000 PER HOUR lower than GM. That's one million dollars per day or 1/4 billion per year. I can't exactly say that Toyota is cheaping out on their labor because in comparison, for managing 2.5 million in construction, controlling over 2 million in expenses, and being responsible for the safety of 22 workers, my compensation, including profitability bonus, is in the neighborhood of $40 per hour. I know most, if not all, of Toyota's plant are now under UAW so it seems there is a point where you price yourself out of the market. But, I could see justification for the large pay discrepancy if GM produced a higher quality vehicle and produced it more efficiently than Toyota or Honda, but that is far from the case, and that falls squarely in the area of operations management and the labor force. Pay scales in management and labor will have to evaluated and adjusted to survive. Productivity issues and maximizing use of labor will have to be evaluated for the companies to survive. Streamlining management will have to take place for the company to survive (read: layoffs). Target markets will have to be evaluated and redefined for the company to survive. The company has no obligation whatsoever to stay in business while billions of dollars are being lost.

[melliedee]

Originally Posted by sctx

I don't know if "unreasonable" is the issue. I think the issue is average labor hour cost per worker. Toyota pays about $47 per hour while GM pays about $72. So, lets say Toyota has 5000 production workers, their labor cost is $125,000 PER HOUR lower than GM. That's one million dollars per day or 1/4 billion per year. I can't exactly say that Toyota is cheaping out on their labor because in comparison, for managing 2.5 million in construction, controlling over 2 million in expenses, and being responsible for the safety of 22 workers, my compensation, including profitability bonus, is in the neighborhood of $40 per hour. I know most, if not all, of Toyota's plant are now under UAW so it seems there is a point where you price yourself out of the market. But, I could see justification for the large pay discrepancy if GM produced a higher quality vehicle and produced it more efficiently than Toyota or Honda, but that is far from the case, and that falls squarely in the area of operations management and the labor force. Pay scales in management and labor will have to evaluated and adjusted to survive. Productivity issues and maximizing use of labor will have to be evaluated for the companies to survive. Streamlining management will have to take place for the company to survive (read: layoffs). Target markets will have to be evaluated and redefined for the company to survive. The company has no obligation whatsoever to stay in business while billions of dollars are being lost.

And I think one of those strings will be to lower that labor hour cost per worker. I've never said the unions should not be willing to negotiate on their end. It is just the "let them fail" attitude which bothers me.

You cannot send your kids to college on an auto worker's salary, but you can pay your mortgage and maybe have enough to go to the lake for a week every summer. Maybe those days will be over and the middle class will shrink. I don't know the answer.

[kirbyfan]

Originally Posted by roni

Yeah, screw the unions

We're going into negotiations. I filled out a survey yesterday. My priorities were adding another step to the salary schedule (I just hit the top one), and improving early retirement benefits.

But then I don't make cars or steel.

I hit the top of the payscale here at 10 years and a Masters ....just get a yearly percentage now.

Early retirement? I'm done at 57 and wife at 56. I'm not gonna work till I'm 65, retire and die at 67, no thanks.

[jwp0077]

I read the GM “Restructuring Plan for Long-Term Viability” – it reads more like a PR brochure than a business plan. Nowhere doe the document state exactly how they plan on making a profit on increasing their market share. The document just assumes that will all occur as if by magic. They spend a lot of ink on atoning for past wrongs and promising to do better with an $18 BILLION dollar loan. Any banker getting a loan request like this would have them evicted from the building.

The problem with the auto companies is not outmoded technology or labor costs – the problem is the credit gravy train has stopped and people with a FICA score of less than 700 cannot get loans to buy cars. Loaning $34 Billion to the big 3 will not address the root problem.

[melliedee]

Originally Posted by MikeW

I agree with this. However, the top level executives have to be the example and take the largest pay cuts.

The American automakers are not going to make this work until they and their workers learn to get along. They have to make it a place where the autoworkers want to come to work, not because of union benefits, but because it is a good place to work, they are treated well by those they work for and they have reasonable benefits in line with the rest of us in this country.

If they can't get there, then let them fail.

Have you ever considered that some of those benefits might just compensate for the fact that factories can be pretty crappy places to work? They are loud, dirty and dangerous.

Same goes for many blue collar jobs. If someone is willing to travel down a dark, tiny shaft of a coal mine or breath in glass dust for eight hours every day, then I don't begrudge them their fabulous dental plan and a salary which allows them to move to a middle class burb.

[Bumper]

Originally Posted by melliedee

And I think one of those strings will be to lower that labor hour cost per worker. I've never said the unions should not be willing to negotiate on their end. It is just the "let them fail" attitude which bothers me.

You cannot send your kids to college on an auto worker's salary, but you can pay your mortgage and maybe have enough to go to the lake for a week every summer. Maybe those days will be over and the middle class will shrink. I don't know the answer.

I don't know what the "middle class" is anymore. Please don't take this as an attack, since it's certainly not intended as one, but the last figures I could find showed GM production worker's median wage rate at $28-$32 an hour. Hardly small change. And that's not to say they don't deserve a good wage, as most undoubtedly do, but I hardly think that puts them at the poverty line. And don't bother throwing up executive compensation as a comparison. We all know that's just obscene.

[kirbyfan]

Originally Posted by melliedee

And I think one of those strings will be to lower that labor hour cost per worker. I've never said the unions should not be willing to negotiate on their end. It is just the "let them fail" attitude which bothers me.

You cannot send your kids to college on an auto worker's salary, but you can pay your mortgage and maybe have enough to go to the lake for a week every summer. Maybe those days will be over and the middle class will shrink. I don't know the answer.

I wouldnt be of the "let them fail" mindset except I think its the only way that they will ever become responsible or the industry for that matter. What incentive do they have to make the necessary changes? These guys are so out of touch that they take expensive private jets to lobby for money cause they are broke...have you ever heard of anything that ridiculous?

[kirbyfan]

I'm not sure letting the big 3 fail and go under would be all that damning for long. Wouldnt this create an excellent opportunity for others to GET INTO that industry and maybe do it right? I think the void would be filled and the unemployed auto workers would be back to work. Of course there would be a rough period of unemployment until that void was filled but thats how life goes.

[melliedee]

Originally Posted by kirbyfan

I'm not sure letting the big 3 fail and go under would be all that damning for long. Wouldnt this create an excellent opportunity for others to GET INTO that industry and maybe do it right? I think the void would be filled and the unemployed auto workers would be back to work. Of course there would be a rough period of unemployment until that void was filled but thats how life goes.

And retirees pensions and benefits?

[Jacko]

Originally Posted by jwp0077

I read the GM “Restructuring Plan for Long-Term Viability” – it reads more like a PR brochure than a business plan. Nowhere doe the document state exactly how they plan on making a profit on increasing their market share. The document just assumes that will all occur as if by magic. They spend a lot of ink on atoning for past wrongs and promising to do better with an $18 BILLION dollar loan. Any banker getting a loan request like this would have them evicted from the building.

The problem with the auto companies is not outmoded technology or labor costs – the problem is the credit gravy train has stopped and people with a FICA score of less than 700 cannot get loans to buy cars. Loaning $34 Billion to the big 3 will not address the root problem.

That is not what I am hearing in our business community...the bigger problem is that folks are not "pulling the trigger" on this "semi-discretionary" spending due to fears about the economy and their jobs.

[kirbyfan]

Originally Posted by melliedee

And retirees pensions and benefits?

Dont they have all that stuff in a separate fund so that it wouldnt matter? If they dont, why not??

[kirbyfan]

Originally Posted by Jacko

That is not what I am hearing in our business community...the bigger problem is that folks are not "pulling the trigger" on this "semi-discretionary" spending due to fears about the economy and their jobs.

We are buying a new vehicle come summer...can they wait?

[melliedee]

Originally Posted by kirbyfan

Dont they have all that stuff in a separate fund so that it wouldnt matter? If they dont, why not??

They do. It just doesn't work propery if they are bankrupt.

The U.S. government’s Pension Benefit Guarantee Corporation (PBGC) is jittery that it might eventually have to take over parts of auto industry pension plans if restructuring is not successful. PBGC is already heavily in the red so such a “pension bailout” would ultimately have to come from taxpayers. When the PBGC steps in, promised pension benefits are often reduced -- as they have been for airline workers.