Brother, have you got a dime?

Bail out the auto industry, you say??

$25B sounds like a lot of cash to normal people, but it’s barely a band-aid for the automakers’ troubles. If we do this, they’ll soon be back at the trough for more.

The problems with U.S. automakers are cost of labor, stupid supplier agreements, and way, way too many dealerships.

I say allow them to go into bankruptcy, use that as impetus for renegotiating labor agreements, changing inflated supplier contracts, and allowing many borderline, cash-driven dealerships to go away. If the government simply MUST provide bail-out cash, do so as a guarantee to whomever comes forward with post-bankruptcy DIP financing.

At least then it’s a better structured industry receiving a bail-out.

A problem here is perception. Many seem to think that “going into bankruptcy” necessarily means “going away,” and that millions of jobs will go away as soon as an automaker declares bankruptcy.

It doesn’t.

It means potentially allowing a renegotiation of debt, of decades of bad labor agreements, poor supplier relationships, and some reduction in the “dealer-on-every-corner” mentality.

…and just to be clear: the UAW President, when not fighting automaker mergers/consolidation, has said they will push to “use” bail-out money to fund current retiree health care.

We should consider driving those inefficient monoliths TOWARD bankruptcy, not helping them avoid it.But that’s just me…

KB

Kevin Berchelmann
http://www.triangleperformance.com/

Comments

  1. says

    Typical crock.

    Union supporters are fond of apples/oranges comparisons.

    In total compensation (e.g., costs) legacy autoworkers DO make $71+ per hour — pensions, healthcare, and retiree benefits on top of near-$30/hr for semi-skilled assembly labor.

    And only in BASE COMPENSATION do new hires make $14/hr. And these low rates that all supporters like to throw out have only existed for LESS THAN A YEAR.

    There are still way too few of these new, accurately-priced positions to make a difference in the costs of an auto.

    No, autoworkers’ greed caused this. As sure as union greed killed the steel industry, it is bludgeoning the auto industry.

    As certain as WorldComm executives let unbridled passion for money destroy a company, so will autoworkers destroy an industry.

    But that’s just me…

    KB

  2. says

    No union worker at GM makes $72.oo an hour. In fact, starting wages are less than $15 an hour.

    This is one more attemt at busting union solidarity and kicking the little guy. The union didn’t cause these issues at GM., managers did.

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