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11/3/2006 4:46:40 PM

Quote :

"I absolutely agree that the union isn't 100% of the problem, but if you look at their union-related costs, such as pension and in particular, healthcare for retired employees, you'll see that the majority of the bleeding comes from those wounds. Honda, Toyota, etc. have much less cost associated with their unions precisely because they don't have a HUGE number of retired workers whom they promised to take care of. If they make the same promises that Ford and GM made, they will be feeling the exact same pinch, they'll just be waiting for it because they haven't retired that many workers in the US. You guys have to look at where the losses are coming from, because it isn't current employees, it is retired ones. A fate similar to some other big disaster...Social Security anyone?"

But whose fault is it that the retired employees got those benefits in the first place? These were selling points that Ford and GM would use to get workers, to ensure that the best and brightest worked for the Bowtie and the Blue Oval. And those workers decided to work for Ford and GM instead of City Tire Company based on the premise that Ford and GM, long-term, would pay them more through salary and benefits.

The financial dynamics of now are completely different to the 1960s and 1970s, I know. I don't think many people back in that timeframe thought the majority of parts going onto a Chevy Malibu would be manufactured in Mexico 30 years in the future, or that they could have a part made by a person making less than $1/hour. But that is where the world went, and Ford and GM have to deal with the problems of the past they created by promising the world to get top talent and not thinking about future consequences. There's a saying for businesses that "the most catastrophic business decisions ever made are when times are good".

The health care and pensions of Ford and GM are going to get unloaded at some point. Do you know who pays for that? The American taxpayer. There's a government agency (the Pension Benefit Guaranty Corporation) setup to take on the costs of pensions that are dropped by corporations and pay out remaining obligations. So it is not like the pensions are not going to get paid. Unless they do what you and I think is going to happen to Social Security. I do not expect to see a nickel of my Social Security.

A Detroit automotive insider's article for this week, describing an upcoming meeting between the Big Three and President Bush, and why he doesn't think it will make a dime's difference to Detroit's ongoing legacy cost problems.

http://www.autoextremist.com/page2.shtml#Rant

Quote :

"The political establishment in Washington has demonstrated repeatedly that it is simply incapable of even remotely dealing with this country's burgeoning health care crisis or with the looming disaster facing company pension programs, so there's no need for the Detroit automakers to get their hopes up - it's simply notgonnahappen.com. Yes, I know, not exactly a news flash, but it needs to be said again anyway. And it's excruciatingly obvious that "Washington" (we should be able to refer to "Washington" in much the same way as the rest of the country refers to "Detroit") is also incapable of affecting any fundamental shifts in our nation's trade policies that won't further cripple our rapidly receding manufacturing sector either. It's simply not in the cards. So, where does that leave the Detroit automakers? How about right where they've been for the last five years? Yes, much of Detroit's current problems are largely self-induced, there's no disputing that fact. But there's also no disputing the fact that when it comes to our nation's health care crisis and pension issues, Detroit is the bellwether for the rest of the nation - and Washington steadfastly refuses to believe that it's true, or that it's even a problem. And there's also no disputing the fact that Washington has done its level best to downplay the trade policy-by-paralysis game it plays, whereupon it tries to appease current and future trading "partners" to the detriment of our own industrial manufacturing base. That's why the Detroit automakers will have to fight and claw their way out of this mess alone. The Washington political establishment continues to believe that the precarious fortunes of an industry that still either directly or indirectly is responsible for between 1 in 12 and 1 in 14 jobs in this country will not affect the rest of the country - and that's sheer lunacy. "

[Edited on November 3, 2006 at 5:33 PM. Reason : /]

11/3/2006 5:23:59 PM

Bottom Line: the folks at Ford and GM are absolute morons who deserve to lose their market share. They're gonna pay for making that god-awful Thunderbird remake

I'm excited that Renault is gonna buy a stake in GM. Hopefully we'll see some of their stuff over here soon.



OH YEAH!

[Edited on November 3, 2006 at 6:01 PM. Reason : .]

11/3/2006 5:55:11 PM

^ GM already decided against it.

Although something that is as distinctly American as GM being partly run by a French carmaker that doesn't even sell cars here would have been a definite loss of pride, wouldn't it?

11/3/2006 7:26:32 PM

It is simply comparative advantage, and resources will always flow to the most efficient outputs. It's really no more complicated than that.

11/3/2006 7:45:15 PM

Quote :

"The health care and pensions of Ford and GM are going to get unloaded at some point. Do you know who pays for that? The American taxpayer. There's a government agency (the Pension Benefit Guaranty Corporation) setup to take on the costs of pensions that are dropped by corporations and pay out remaining obligations. So it is not like the pensions are not going to get paid. Unless they do what you and I think is going to happen to Social Security. I do not expect to see a nickel of my Social Security."

I know all about Penny Benny, this isn't new. You're mostly right with everything you said, and it isn't right for the American taxpayer to bear the burden of business promises gone awry. But getting concessions in order to keep the business a going concern is MUCH easier when the labor doesn't have such a strong union like the UAW.

The bottom line is that defined benefit pensions will always fuck you in the end. They made a mistake that will most likely end in a reorganization or bankrupcy. I wish the American Government would catch on and do away with their defined benefit plans before they fuck the whole country.

11/3/2006 7:54:27 PM

Quote :

"Although something that is as distinctly American as GM being partly run by a French carmaker that doesn't even sell cars here would have been a definite loss of pride, wouldn't it? "

Hey, I'd love to see GM make the best cars in the world, but if theyre going to shoot themselves in the foot, then that's their problem, I'm not gonna cry over it when I can just go buy a US-assembled Toyota while they try to regroup.

I think that the fact that the European makers have been able to do well still with the presence of unions shows even more that it is primarily the fault of the horrible car designs coming out of Detroit. We are just now starting to try to develop in greater numbers efficient cars, and the Japanese and European makers have been doing that for years. Still doesn't mean the unions should not be collaborators and still try to push more out of the companies in times of struggle, thats just not smart.

11/4/2006 12:57:18 PM