Wednesday, December 03, 2008

Road Trip

Michigan is coming back to Congress, hat in hand, and they’re taking the family station wagon to get there. The suddenly chastened CEO’s of the big three automakers are driving to Washington from Detroit in an effort to show that they really, really need the bail-out money that Pelosi has been withholding. This cartoonish display of faux populism is almost comical, but for the fact that all three retrenchment plans on offer essentially rely on gutting the workforce, thus sacrificing the very jobs that Congress claims to be interested in saving.

The Times reports that, “G.M., the world’s largest automaker for decades, said Tuesday that it was in such dire straits that it would deeply cut jobs, factories, brands and executive pay as part of its plea to get $12 billion in federal loans and an additional $6 billion line of credit. G.M. also promised that it could be competitive on labor costs with Toyota by 2012… G.M. (also) said it would cut more than 20 percent of its remaining jobs, shut nine factories, seek to renegotiate the terms of $66 billion in debt, and push to reopen contract talks with the United Automobile Workers to reduce labor costs.” Excuse me, but what is the point of saving the American auto industry with taxpayer money if the end result is still the loss of thousands of American jobs? Who, exactly, is benefiting by this government subsidy? Principally shareholders, I suppose. If Congress really wants to benefit the American worker they should nationalize the auto industry and eliminate the executive officers whole cloth. Needless to say, this option isn’t being considered.

For its part, the UAW isn’t taking this obvious attempt to put the nail in the coffin of organized labor quietly. “The U.A.W. can’t be the low-hanging fruit,” said UAW chairman Ron Gettlefinger. “While we’re at the table, we’re asking that others come in and sacrifice as well.” The sacrifice presumably means more than a chauffeured drive to Washington in a SUV hybrid. If I were the UAW or in Congress I’d be looking to recoup some of that $22,000,000 in compensation that Ford CEO Alan Mulally was paid last year and which he haughtily claimed entitlement to in his Congressional testimony. Seriously folks, it’s easy to make a token concession like accepting $1 in compensation for 2009 when you were paid $22 million in 2008. That money should be seized by Congress and redistributed to the line workers.

30 year veteran GM line worker Doug Hanscomb pretty much summed it up the other day when he said, “I know one thing. If I lose my pension, I bet you Rick Wagoner” — the G.M. chief executive — “and all those guys won’t lose theirs.” Clearly, here in America, we take care of the top first and let the people who do the actual work fend for themselves. It has been ever thus.


Murphy said...

Here's something to think about.
Ford has spent the last thirty years moving factories out of the US, claiming they can't make money paying American wages. TOYOTA has spent the last thirty years building more than a dozen plants inside the US.

The last quarter's results:

TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.

I don't suppose Toyota is using Japanese auto workers.

Mark said...

Interestingly enough, the last few factories the Japanese have opened in the rural south are paying far less than the first few they opened. Toyota ties production wages and benefits to the surrounding region, instead of trying to keep up with the pay scale of the overall U.S. auto industry — one traditionally set by UAW contracts. Seemingly the Japanese, who take a long-term view of these things, waited for the downward pressure on wages in Detroit to reset the paradigm so that new auto workers wouldn't balk at being paid, say, $15 per hour for a job that used to pay $50 in Detroit. Once the UAW is completely broken, how much pressure will there be on Toyota to pay more than the chicken processing plant down the road?

Murphy said...

In reality, these assembly line jobs require not much more skill than a job in a chicken processing plant. Your neighborhood mechanic is a much more highly skilled technician than a UAW worker. The real paradigm shift is not in wages, rather it is in technology. An auto line needs to be in production for years pumping out autos with relatively few modificatons before it is profitable. It is not something that can be retooled on the fly as consumer tastes shift from gas guzzling SUVs to fuel efficient hybrids. This is one of the many areas where Detroit goofed. A lack of vision from a top heavy management coupled with the perception that the product is not a good value for consumers has made Detroit a shadow of what was once a great source of American pride.

I think we would both agree that workers losing their jobs is never a good thing. Regardless of whether the CEO accepts a symbolic dollar per year salary or whether the UAW makes needed concessions which are in line with current compensation for that particular job, Detroit as it stands is dead on its feet. At a certain point throwing good money after bad is just bad business, especially when it comes out of the hides of every man woman and child in the country. Ask an auto worker in Mississippi if he'd rather make 15 bucks an hour with bonuses,profit sharing, and health insurance or sit on the porch waiting for it to get dark so he can hunt raccoons for his supper. My guess is he's probably doing both.

Mark said...

LOL. My guess is if he's making $15 bucks an hour with healthcare that he has to contribute to, he's going to need to hunt raccoons just to keep the fridge full. I think the government still pays $5 per pelt, which is enough for a six-pack of bud.

I agree, Detroit is fucked, but the government isn't exhibiting any long-range thinking here. With an economy based some 70% on consumer spending, lowering everyone's wages is a foolish move. This is a great time for workers to advocate for higher wages and start getting it into the public consciousness that having a large number of employed Americans is better for the country than high executive compensation.

The American economy is fundamentally broken, in no small part because the vast wealth generated by the capitalist system is tied up in the hands of the most wealthy. It's time to redistribute.

Murphy said...

I would like to hear how wealth should be redistributed and who will be responsible for such redistribution. Would such redistribution fund innovation and provide incentive for the American worker to achieve? Would citizens who have worked hard, paid their bills and taxes in a timely manner, and done all the 'right' things have to redistribute their accumulated wealth, or just highly compensated executives at publicly traded companies? Would you take less that others could have more knowing how difficult it was to get to the point you are at in your life? Perhaps the Patriot would then change the name of his blog and call it the Bolshevik.

Mark said...

Obvious inequities should be rectified. People in this country like to think they are entitled to a high standard of living because they work hard. This is because we are bombarded with propaganda which equates the good life with material possessions. I'd imagine that the average coal miner works a lot harder than the insurance company guy, or the publishing guy, etc. The single mother working 3 minimum wage jobs is certainly entitled to a better life for her children, yet corporate profits demand a low wage. She pays her taxes and does all the right things too, works like a dog and still can't get ahead.

I'm no social constructionist but I believe the simplest solution is to go back to progressive taxation, up to the way it used to be-94% on high incomes, and the money used to create good-paying jobs, encourage the arts and so forth. Cap executive wages. Get rid of the economic elite. Or, you could just line 'em all up against a wall and shoot them.

Harold said...

why should you ever need to imagine when you've both a miner and an insurance man?

Harold said...

and what is so called real wealth anyway??