Alpine Trooper
AllCiv
UAW agrees to $1 per year; automakers still need cash
Here are seven alternatives to loans he suggests:
1. Federal monetary policy to stop strengthening the dollar and instead work on weakening it, to make imports more expensive and exports more lucrative. That would help nearly all sectors of the economy and could bring back some lost industry.
2. Federal legislation making it easier for automakers to drop brands, to help GM and Ford cut costs (bye-bye, Saturn and Mercury!).
3. Import tariffs on all Chinese auto-related imports, including those coming in as components in imported cars - equal to those the Chinese impose on our exports.
4. Assessing imported cars from companies owned by socialist nations with tariffs equal to the cost of health care for the employees to balance things out.
5. One-year tax deductions on domestic vehicles, up to $12,000, applying to vehicles made by companies headquartered in the U.S. and vehicles built within NAFTA countries.
6. Federal invalidation of all tax incentives to foreign automakers building plants in the U.S.
7. Start a huge pro-domestic-industry publicity campaign, sending out talking points liberally spiced with quotes from the Founding Fathers about the importance of a vibrant domestic industry. This would take a while to have an impact, but playing on patriotism could work, if it was made a priority - instead of taking a back seat to free market ideologies that would make Adam Smith cringe.
That’s a headline you could actually read.
The UAW workers’ wages aren’t that important, in the whole scheme of things. Really. That’s not the big issue, at least not for Chrysler.
Take a look at Chrysler’s estimated expenses for Quarter 1, 2009. Out of $11.6 billion, wages account for $900 million. That’s much less than 10%. Even with NO wages, Chrysler would have to bring in more money to survive.
Now, let’s be reasonable. There’s no reason to expect autoworkers to work for free when millionaires elected to Congress pay themselves handsome (though appropriate) salaries and give themselves lavish (and inappropriate) perks including the world’s second best health care system (the best goes to the President).
Mitch Albom wrote an interesting Freep column in which he noted that nobody in Congress seems to have asked AIG for a business plan before giving them $150 billion, points out that Senator Shelby’s state gave hundreds of millions of dollars to foreign automakers without his complaint, and that Shelby didn’t seem to object when investigators told Congress that $13 billion had been lost in the Iraq war due to “fraud, embezzlement, theft and waste”. But in this column, like so many others, he came to the wrong conclusion. He wrote:
“The car companies may be losing money, but they can explain it: They’re paying workers too much and selling cars for too little.”
That’s not quite true. The car companies never said that. They said one of their problems was legacy costs; many have pointed out that every other car-making country seems to have socialized medicine, so employers don’t have to worry about health care for current or past employees, until they’ve been making cars in the United States for, say, 30 years. (Even then, it really requires job losses for the problem to come to a head. Chrysler was doing fine with legacy costs in the mid-1990s, when they were expanding rather than shrinking.)
Most commentators seem to be happy to blame the problems either on the executives - and in one of three cases, that’s valid - or on the unions. But if you do the math, paying Toyota wages ($15 per hour plus some bennies) or even paying minimum wage would still leave Chrysler with terrible problems. That’s why I zeroed out salaries to see what would happen - and what would happen is that with NO wages AT ALL, nothing for engineers, lawyers, ad men, executives, UAW workers, janitors, or HR people, you’d still have a loss. Admittedly, a very, very small loss that they could deal with for many months to come.
But people don’t work for free. So let’s say we paid ‘em minimum wage. Then we’re back into big-losses again.
Blaming the executives is not very helpful in two out of three cases, either. Bob Nardelli has done a fine job of working on Chrysler’s shortfalls, as far as I can tell. So has Ford’s CEO, despite how hard it is to remember where there are two Ls and where there is only one. More to the point, neither was on the job long enough to have had an impact when matters got messy.
Rick Wagoner is the only real chump on the block. He’s been around forever, it seems, and has reacted more slowly than the others. In my opinion, he should go as a condition of any loans to GM. So should the board members who consistently decided that doing nothing was the best course of action.
But the union employees… should stop getting blamed for financial problems that can’t possibly be their fault.
Dr. David Zatz,
http://www.allpar.com/weblogs/2008/12/03/uaw-agrees-to-1-per-year-automakers-still-need-cash/
Here are seven alternatives to loans he suggests:
1. Federal monetary policy to stop strengthening the dollar and instead work on weakening it, to make imports more expensive and exports more lucrative. That would help nearly all sectors of the economy and could bring back some lost industry.
2. Federal legislation making it easier for automakers to drop brands, to help GM and Ford cut costs (bye-bye, Saturn and Mercury!).
3. Import tariffs on all Chinese auto-related imports, including those coming in as components in imported cars - equal to those the Chinese impose on our exports.
4. Assessing imported cars from companies owned by socialist nations with tariffs equal to the cost of health care for the employees to balance things out.
5. One-year tax deductions on domestic vehicles, up to $12,000, applying to vehicles made by companies headquartered in the U.S. and vehicles built within NAFTA countries.
6. Federal invalidation of all tax incentives to foreign automakers building plants in the U.S.
7. Start a huge pro-domestic-industry publicity campaign, sending out talking points liberally spiced with quotes from the Founding Fathers about the importance of a vibrant domestic industry. This would take a while to have an impact, but playing on patriotism could work, if it was made a priority - instead of taking a back seat to free market ideologies that would make Adam Smith cringe.
