A fundamental part of the process for the success of capitalism is that failed companies go away. Keeping brain-dead management and benefit-saturated unions on life support is not a good use of anyone's money. If there is no private capital that will to come forward then we should take as a hint that there has yet to emerge a viable plan.
Terry thought it was harsh to say, "Life is hard, get a helmet." I spent a career in manufacturing. I have laid off many, many people and created profitable businesses out of bankrupt situations. In one case we went from 2,100 people to 1,100 people and went from losing $2 million a month to profitability in just 9 months time. Small potatoes compared to Detroit, but enough of an experience to learn a few lessons. I have negotiated wage and benefits cuts with unions after having first taken a larger cut in my compensation than I was asking of the troops. I have faced tears and screams, and, later, heart-felt handshakes when we became profitable and SAVED THE JOBS WE COULD.
Manufacturing in America has been a bitch for about 40 years, but the folks at the Big 3 have barely participated in the pain. $70+ per hour AVERAGE pay (that's well over $140,00 per year) to put a car together is simply dumb. It cannot compete. Job banks (approximately 9,500 persons?) where "laid off" workers collect 95% of their pay is non-competitive and dumb. These workers are not victims. They have lived off the fat of the land because they could and because management struck an unholy alliance with the unions.
Management lacked the courage to call bullshit. They spent 30 years to get to leadership positions, and then they struck deals to keep the game going until they got their bonuses and retirement packages. They suck and they must be replaced.
Americans will stand in line to buy a competitive American-designed and American-built car. There will be an American auto industry. Do not fear the change necessary to create a viable industry, and, in my view, the best path to follow is BK.
Hags
4 comments:
Hags -
I'd agree with you in a normal economic environment. Congrats on what you have done - it is genuinely impressive and I understand how the economics work. I'm actually amazed that we've been able to retain any manufacturing in the face of far cheaper labor. I think we actually produce the same as in years past - it just takes a lot less people.
If B3 go BK, it'll have to be pre-packaged. Right now it would be devastating for any of them to enter Chapter 11 without a crystal clear path to continued operations. We cannot afford a collapse right now. I really feel that we are looking down the abyss.
Not going to happen. The Democratic party is too invested in the UAW to let the Union suffer. Obama already said he would sign a bailout package. One the new Senate is seated this will pass. This will become a bottomless sinkhole due to the power of the special interests involved.
Mark -
Does GM have the resources to make it to the inauguration without help? I don't think so.
The markets have indicated in the past couple of days that they do not expect a bailout and they don't like it.
If there isn't a "grand plan", I'm afraid Mark + Hags are right about the "bottomless sinkhole" nature of the problem. So - lets make a plan. The workers, management and shareholders all have to bite the bullet so that the patient may live!
FWIW, I think UAW's overreaching has done more harm to unions than anything else. They gave unions a black eye. Unions, more than anything else, helped create America's great middle class. We take it for granted today and have no regard for organized labor. It's a shame.
We hate unions for the same reason we hate management and for the same reasons we hate Paris Hilton. Who writes up the good stuff about any of them. OK, OK, I should have said NFL players instead of Paris Hilton, about whom there is no good news, but you get the point.
There are a lot of outstanding CEOs, and there has been a real need for unions, mostly because of capitalist greed.
No doubt UAW overreach is harmful, as is 4 GM execs flying in on 4 different private jets. Both groups have lost perspective, but we don't have to do so.
Manufacturing can work and does work in the USA.
But let's not get stuck in an argument over the Detroit 3. Cars will get built and Americans will work with or without GM, Ford and Chrysler in their present form. The American auto industry, meaning management and labor, want us to preserve the status quo. Excuse my french, but f*** em.
Life only has a forward gear. There is no neutral, There is no reverse. There is only forward. Let's go forward.
We are the most innovative country. We are the hardest working and the most productive country. These aren't patriot claims. These are statistical facts. We don't need to defend bloated, inefficient organizations.
All you Obamians voted for change. Don't let these Detroiters suck you in. Hold them accountable. Make them face the music. Don't let them con you into thinking change won't work.
In fact, change is the only think that will work.
Hags
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