UAW fails to give serious concessions to the 'Big Three'

The UAW has failed to give serious concessions to the Big Three as part of a deal to satisfy the terms of the automotive bailout. They have only offered token reductions that will mean very little to Detroit's bottom line. According to the Associated Press the UAW agreed to limit overtime, reduce cash bonuses, forgo cost of living pay increases and limit supplemental pay for laid-off workers. Are they serious? Who in the automotive manufacturing sector is working overtime now? Auto production is down almost 40% this year. Also, they are going to reduce their cash bonuses? How do you get a cash bonus when you have helped drive your company bankrupt? Who do they think they are? Bank executives? No one I know gets supplemental pay from their former employer when they are laid-off. When a company can not afford to pay their current employees, they should not be giving money to laid-off employees. The UAW have refused to take a cut in their base wages. The retiree health care cost issue is still not resolved. The 'Big Three' want the UAW to take half of their 20 billion dollar payment as stock. The UAW only wants to delay the payment, but this issue is still not settled. The CEO's of GM and Chrysler LLC should be embarrassed to beg for another 17 billion in taxpayer dollars. There is something unjust about taking money from a worker struggling by on 20 or 30 thousand dollars a year and using it to save the job of someone with a $70,000 wage and benefit package. The UAW will declare this deal a major concession. The leaders of the 'Big Three" will stay silent because they need more bailout money. The Obama Administration will look the other way and hand over more of our tax dollars.

AP: UAW, Big Three Reach Deal On Concessions
By Tom Krisher and Kimberly S. Johnson, AP Auto Writers
Manufacturing.Net - February 18, 2009

DETROIT (AP) -- The United Auto Workers' deal with Detroit's three automakers limits overtime, changes work rules, cuts lump-sum cash bonuses and gets rid of cost-of-living pay raises to help reduce the companies' labor costs, people briefed on the agreement said Wednesday.

The UAW announced Tuesday that it reached the tentative agreement with General Motors Corp., Chrysler LLC and Ford Motor Co. over contract concessions, as GM and Chrysler sent plans to the Treasury Department asking for a total of $39 billion in government financing to help them survive.

Concessions with the union are a condition of the $17.4 billion in government loans that the automakers have received so far.

Base wages for UAW workers will remain the same, but the deal limits supplemental pay that laid-off workers receive while they collect unemployment benefits, said the people, who spoke on condition of anonymity because union members have not been told about the terms.(excerpted) read more at manufacturing.net

Obama throws 'car czar" idea under the bus

Barack Obama has dropped the 'car czar' idea for saving the U.S. auto industry. He plans to replace the car czar with a government task force. This sounds like another bureaucratic committee. It has been said a camel is a horse designed by committee. This is another step backwards for saving the American auto industry. They need a strong powerful overseer who can step in and force a deal. If GM and Chrysler can not get the UAW and their creditors to give major concessions, they are headed towards bankruptcy.

Obama drops "car czar" idea
By Matt Spetalnick
February 16, 2009

CHICAGO (Reuters) - President Barack Obama has decided to launch a government task force for restructuring the struggling U.S. auto industry instead of naming a "car czar" with sweeping powers, a senior administration official said on Sunday.

Obama is appointing Treasury Secretary Timothy Geithner as his "designee" for overseeing auto bailout loans and as co-head of the new high-level panel together with White House economic adviser Lawrence Summers, the official said.

But Obama, who took office on January 20 and last week won congressional approval of a $787 billion economic stimulus program, has dropped the idea of having a single appointee empowered to handle the politically sensitive task of revamping America's once-mighty auto sector.

"There is no 'car czar,'" the official said, speaking on condition of anonymity. (excerpted) read more at boston.com

UAW throws GM under the bus

Update: Sources say negotiations will resume Sunday afternoon. Let's hope the UAW have come to their senses.

The UAW walked out on concession negotiations, according to an AP news source. They are willing to throw GM under the bus to protect their bloated benefit and pay packages. UAW wages and benefits are almost $30 per hour higher than the Japanese transplants. Unless the UAW realizes the gravity of the situation, GM and Chrysler will be forced into bankruptcy. That is a better alternative for the taxpayers. Then, the bloated UAW contract can be reduced by a judge. Have you ever seen a UAW contract? See a UAW contract here. It weighs 22 pounds. The UAW is not known for reason. A UAW organized plant(Magna New Process Gear plant) recently refused concessions even though the plant would be closed without them. They preferred unemployment to working under a reduced contract. The vote wasn't even close. The UAW rejected the concessions with 76% voting no.

AP source: GM concession talks with UAW break down
Feb 14 06:58 PM US/Eastern
By TOM KRISHER
AP Auto Writer

DETROIT (AP) - Negotiators for the United Auto Workers walked out of concession talks with General Motors Corp. Friday night in a dispute over payments to a union-administered retiree health care fund, a person briefed on the talks said Saturday.

The breakdown comes at a critical time as GM races against a Tuesday deadline to submit a plan to the government showing how it can become viable.

The Detroit-based auto giant is living on $9.4 billion in government loans, and the Treasury Department must approve its viability plan for GM to get $4 billion more. Chrysler LLC, which has received $4 billion in government loans and wants an additional $3 billion, faces the same deadline.

At GM, UAW negotiators walked away because the company made demands that were "detrimental to retirees and the ability to provide health care," according to the person, who asked not to be identified because the talks are private. breitbart.com

China tops USA in car sales for the 1st time ever

China sold more vehicles in January than the United States. The US auto market is sinking into a deeper gloom. Manufacturers are trimming back their sales forecasts to suppliers and adding additional shutdown or idle times to their lines. Sales in the US are predicted to be less than 10 million units. This is a 26 year low. Unfortunately, this may be an optimistic estimate. Meanwhile, the Obama Administration is taking moves to make cars and trucks more expensive in the US. He is adding a hidden fuel mileage and pollution "tax" by government regulation. GM and Chrysler LLC are teetering on the edge of bankruptcy. They may go bankrupt in spite of a bailout. Also, many of the major parts suppliers are near bankrupt. There are dark days for the US auto market. There is a little something in the Senate version of the stimulus bill to help car sales. You will be able to deduct some interest on a new car loan. I seriously doubt that will be the determining factor in anyone buying a new car. You won't recoup any of that reduced tax liability until you file your return a year later. The Obama Administration has no viable plan to save the US auto market. They will keep throwing tax dollars at the big three in order to keep the UAW alive.

China monthly auto sales overtake US for 1st time
Feb 10 05:41 AM US/Eastern
By ELAINE KURTENBACH
AP Business Writer

SHANGHAI (AP) - China's monthly vehicle sales surpassed those in the United States for the first time in January, moving this country closer to becoming the world's biggest auto market, data released Tuesday showed.

With its growing middle class and vast potential as a consumer market, China is vital for global automakers such as General Motors, Volkswagen and Toyota as they count on demand here to offset weakness in the U.S. and elsewhere.

Some 735,000 vehicles were sold in China in January, the China Association of Automobile Manufacturers said. That surpassed the 656,976 units that consultant Autodata Corp. said were sold in the United States in the same month.

But China's ascent has been hastened by the dramatic plunge in the U.S. auto market, where sales tumbled 37 percent in January to a 26-year low.

China's domestic auto market also has cooled, but less dramatically. Sales here fell 14.4 percent from a monthly record 860,000 in January 2008.

Mike DiGiovanni, General Motors Corp.'s executive director of global market and industry analysis, said last week he expected Chinese auto sales could hit 10.7 million units in 2009, more than his estimate of 9.8 million unit sales in the U.S. this year. Autodata forecasts 2009 U.S. sales at 9.57 million. (excerpted) read more at breitbart.com

GM sends TARP money to Brazil

After getting a bailout of TARP funds by President Bush, GM decides to use the money to upgrade a factory in Brazil. This is a ripoff of the US taxpayers. GM's CEO Wagner should be recalled before Congress to explain this outrage.

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program

By Russ Dallen
Latin American Herald Tribune staff

SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012." (excerpted) read more at laht.com

The "Big Three" are sinking and Barack Obama fires a salvo of torpedoes

The "Big Three" are under bankruptcy watch and begging for more bailout money. President Barack Obama thinks this is a good time to appease his environmental base by weighing Detroit down with a new round of environmental regulations. This is horrible timing and it will severely damage the ability of the "Big Three" to return to profitability. The first increase in CAFE will take place by the 2011 model year. Detroit is now preparing to launch the 2010 model year in July. That is when they change their factories over and begin production of the next years model. They will have only a little over a year to prepare for this change. How will they do it? The easiest solution to raise the fleet millage averages would be if people bought more small and compact cars. That is unlikely unless gas returns to $4 per gallon. They will be forced to cut prices on compact cars to induce more of the public to buy them. The problem is they are already losing money on these cars and can not change that unless the UAW agrees to severe concessions. The UAW (see a UAW contract here) is resisting that solution. The other method is to increase the mileage on the same size car. That takes time and money. It takes expensive new technologies to improve engine mileage without sacrificing power. The "Big Three" are working on this, but no major breakthrough will occur in the next year. The other method is to make vehicles lighter. This requires higher tensile steels and stronger alloys. These materials cost more money and may require different manufacturing processes. All these things will make automobiles more expensive for consumers. Consumers are currently not buying cars and trucks. This isn't because they don't want them or need them. They simply can not afford them in today's economy. If they can not buy them now, they will not buy them when the price is increased by a few thousand per vehicle. The decision to let California decree the emission standards will have a similar effect of raising vehicle prices. Barack Obama may have good knowledge of politics, but he is ignorant of the realities of the automotive industry. The bailout of the "Big Three" will fail. We should stop calling it a bailout. Let's be honest. We will have to "subsidize" the "Big Three" for years under an Obama Administration.

Obama May Let States Set Emissions Standards

Monday, January 26, 2009

President Obama is continuing his reversal of Bush-era policies, issuing two memoranda on Monday that promote his clean-energy policy while having a far-reaching impact on the ailing U.S. auto industry.

The first memorandum will order the Transportation Department to work out rules for automakers to improve fuel economy. It will call for the department to notify automakers by March 2009 to increase their fuel efficiency for 2011 model year cars and trucks.

The second memorandum will order the Environmental Protection Agency to reconsider California's request for a waiver from the Clean Air Act -- a move that would allow California, the nation's most populous state, to set tougher tailpipe emission standards than apply nationally. Excerpted from FoxNews.com

Unions are throwing big money around and not to their members

Unions are spending large amounts of cash on lobbying. They have high hopes for getting every pet legislative project they can imagine through the new Democratic Congress. One of their favorites is the so called "Employee Free Choice Act" which would kill the right for secret ballot elections in unionization campaigns. That would be a disaster for employees and business owners. It also seems to be un-American.

Got Money To Burn Right Now? Big Labor Apparently Does

January 10, 2009
CFIF.org
During this difficult economic period, is pouring tens of millions into political lobbying the best way for union leaders to be spending members' hard-earned dues? Across the country and entire world, businesses and workers alike are struggling. Indeed, among those hit hardest are middle- and lower-income workers, the very people whose welfare Big Labor executives piously claim to represent.

But instead of applying union treasures toward direct assistance to hard-hit workers and their families, labor leaders are instead choosing to spend extravagantly on high-paid lobbyists pushing their self-serving political agenda.

This week, Service Employees International Union (SEIU) leaders approved a plan to spend some $150 million of its members' dollars on a lobbying campaign that will cover just the first one hundred days of the new administration. There's no telling, of course, how many more millions will follow that first 100 days.

Regardless, the SEIU's own website states that its executive board was unanimous in this curious decision. Although the site claims that the SEIU is fighting for "working people," its announcement reveals executives' true motivation: Full article here.

The Automotive industry is in meltdown

Chrysler LLC announced yesterday that they were shutting all their plants for a month. Ford announced they were extending their shutdown times. The slow sales are also affecting the Japanese transplants. They are cutting production too. GM and Chrysler LLC are facing possible bankruptcy. Many auto parts suppliers are on the verge of their own bankruptcy. Automotive sales look to be down 30~50 percent next year compared to the already low sales volume of this year. While this auto company pile up is taking place, the Bush administration is reading a bailout for GM and Chrysler. Will this work? An infusion of cash will not save the American auto industry. It will only postpone the time before they go bankrupt. Two things are needed to restart Detroit's engines. Car sales must improve and the cost of production must be reduced. How can this be done? Instead of directly bailing out the big three, we should place tax rebates of $3000~5000 on every vehicle sold in 2009 with 75% or more US content. This would cost around 20~35 billion dollars. The money would go to consumers and start a trickle up effect in the auto industry. Also, this would have a very good environmental impact. Newer, less polluting, gas efficient cars would replace the older models still on the road. Idled factories would be restarted and laid off UAW members would be recalled to their jobs. There would be a strong incentive to increase US content in vehicles to meet the 75% threshold. This would revitalize the US auto parts industry.

Of course GM and Chrysler LLC would need a low or no interest loans to stave off bankruptcy until sales picked up.This would cost an estimated $15~25 billion. In order to qualify for this, their creditors should be required to take a 25% write down in their debt and the UAW should be required to take a 25% reduction in pay and benefits for the next three years. All Management should be forced to take a 25% cut in pay and benefits. No bonuses could be given for the three year period.

If we just throw money at the Big Three with out doing anything to stimulate sale or force them into cost controls, we are only postponing the inevitable. With out a sales increase,the Big Three can not survive without an extreme down sizing and the auto parts supply base will collapse in the next year.

UAW roadblock auto bailout

Senate Rejects Auto Bailout Despite Intense Negotiations
Democratic leaders and the White House made final pleas for the bill's passage on Thursday, but the two sides in the Senate failed to forge a compromise

FOXNews.com

Thursday, December 11, 2008


The White House said it was evaluating its options in light of the breakdown of a deal on $14 billion in aid to Detroit's Big Three automakers. The deal fell apart Thursday night in the Senate despite intense negotiations on Capitol Hill between lawmakers, union officials and representatives from the three companies.

"It's disappointing that Congress failed to act tonight," Deputy Press Secretary Tony Fratto said in a statement. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

The bailout died after failing 52-35 on a Senate procedural vote.

Earlier in the evening, the talks appeared to have produced a breakthrough, with Democratic leaders "hopeful" that an agreement had been reached that would be acceptable to Senate Republicans, who have resisted the aid package. But Senate Majority Leader Harry Reid came back later to report the effort had failed, adding he was "terribly disappointed."

Reid called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

House Speaker Nancy Pelosi released a statement after the bill was blocked, saying: "Senate Republicans' refusal to support the bipartisan legislation passed by the House and negotiated in good faith with the White House, the Senate and the automakers is irresponsible, especially at a time of economic hardship. The consequences of the Senate Republicans' failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry unless the president immediately directs Secretary Paulson to explore other short-term financial assistance options, including TARP and those available to the Federal Reserve....

Full story here.

UAW bailout faces rocky road in the Senate

This isn't a bailout of the auto companies. The best thing for GM and Chrysler is to enter chapter 11 bankruptcy. This bailout will save the UAW from making serious concessions, keep the same bad management team in place and protect the stockholders and bond holders from losses. There is no long term hope for the big three unless they can dump the UAW, get relief on their debt and change their leadership. Let's hope the Senate Republicans can block this giveaway of our tax dollars.

House Passes Auto Bailout Vote, Despite GOP Roadblocks
Democratic lawmakers and the White House strike a deal on an emergency $14 billion loan program for the auto industry, but Senate Republicans are not happy with the plan.

FOXNews.com

Wednesday, December 10, 2008

WASHINGTON -- A $14-billion rescue package for the imperiled U.S. auto industry sped to approval in the U.S. House of Representatives on Wednesday night, but the emergency bailout was still in jeopardy from Republicans who were setting out roadblocks in the Senate.

Democrats and the Bush White House hoped for a Senate vote as early as Thursday and enactment by week's end. They argued that the loans authorized by the measure were needed to stave off disaster for the auto industry -- and a crushing further blow to the reeling U.S. economy.
The legislation, approved 237-170 by the House, would provide money within days to cash-starved General Motors Corp. and Chrysler LLC. Ford Motor Co., which has said it has enough to stay afloat, would also be eligible for federal aid.

Republicans were preparing a strong fight against the aid plan in the Senate, not only taking on the Democrats but standing in open revolt against their party's lame-duck president on the measure.

The Republicans want to force the companies into bankruptcy or mandate hefty concessions from autoworkers and creditors as a condition of any federal aid. They also oppose an environmental mandate that House Democrats insisted on including in the measure.

Earlier Wednesday, auto state Republicans who have pushed hard for a bailout, said the measure needed work. Sen. Kit Bond, R-Mo., said he wanted to see changes. And Sen. George V. Voinovich, R-Ohio, said the measure didn't have the necessary Republican votes to pass Congress. Full story here.

The Big Three take a road trip

All three of the CEO's from GM, Ford and Chrysler drove hybrid cars to Washington to beg for bail out money. After getting criticized for flying into town in private jets last time, I guess they have learned something about public relations. I still think their chances of getting a bail out this year are slim. Polls show 61% of Americans oppose a bailout. Also, there do not seem to be enough votes in the Senate to pass a bailout at this time. I think a better option might be a prepackaged chapter 11 bankruptcy. GM and Chrysler are reportedly considering this as a last resort.

Not just another car ride for GM CEO Wagoner
Dec 3 09:22 PM US/Eastern
By JOE MILICIA
Associated Press Writer

SOMERSET, Pa. (AP) - The head of the nation's largest automaker took perhaps the most important car ride of his life Wednesday, traveling 500 miles, mostly over highway through four states, to Washington, D.C., where he will ask Congress for a second time to save his slumping company.

Two weeks ago Rick Wagoner flew to Washington on a corporate jet. This time the chief executive of General Motors Corp. made the trip in one of his company's black hybrid Chevrolet Malibus, driving part of the way. He periodically made calls on his cell phone while in the passenger seat and wore sunglasses to protect from the glare of a sunny day.

Wagoner will be back in the spotlight Thursday and Friday, along with fellow CEOs Alan Mulally of Ford Motor Co. and Robert Nardelli of Chrysler LLC, when they appear before the Senate Banking Committee and the House Financial Services Committee to appeal for financial aid totaling up to $34 billion. Wagoner's plea will be the most desperate. GM submitted a plan to Congress on Tuesday that called for $18 billion in loans and warned that the 100-year old iconic American company won't have enough money to run its business without an immediate cash infusion of $4 billion...

Full story here.

Why electric and hybrid cars won't save the Big Three

Congress wants to force Detroit to move heavily into electric and hybrid production.Should congress run the Big Three? They are doing such a good job running the country. I have nothing against being "green." However, having companies sell more of a product they are losing money on is not a recipe for success. Companies make money by selling a product the consumer wants at a profit. Congress has no clue what it takes to make a profit. If they run low on money, they can just raise taxes or authorize more borrowing.

Why electric and hybrid cars won’t save Detroit
The Buffalo News / The Washington Post ^ | November 30, 2008 | Steven Mufson

Posted on Monday, December 01, 2008 12:19:37 AM by 2ndDivisionVet

Many members of Congress believe they know what the car company of the future should look like. “A business model based on gas — a gas-guzzling past — is unacceptable,” Sen. Charles E. Schumer, D-N.Y., said recently. “We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car.”

But the car company Schumer and other lawmakers envision for the future could turn out to be a money-losing operation, not part of a “sustainable U. S. auto industry” that President-elect Barack Obama and most members of Congress say they want to create...

Link here.

Why Japanese auto companies are winning

GM and Japanese style on auto

Subject: An example of American management expertise.

It's nice when they use an analogy to show what's really going on - then we can understand it better. This should be sent to GM !!!
Toyota and GM decided to have a canoe race on the Missouri River.

Both teams practiced long and hard to reach their peak performance before the race.

BUT on the big day, the Japanese won by a mile.

The Americans, tired and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing. So American management hired a consulting company referred to them by the US Government and paid them a large amount of money for a second opinion.

The consultants advised that too many people were steering the boat, while not enough people were rowing. To prevent another loss to the Japanese, the rowing team's management structure was totally reorganized into 3 steering supervisors, 1 area steering superintendents, 1 publicity manager, 1 HR diversity coordinator, 1 union rep, and a rower.

They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the "Rowing Team Quality First Program", with a lunch and a free company pen for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and performance-tied bonuses but that decision was held up in committee.

BUT the next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment.

The money from all sales and all fore casted moneys saved from further competition was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.

Why a big three bail out will fail

Total Compensation Per Hour, 2007-2008 (includes wages and all benefits):
Big Three automakers — $73.08
Toyota — $48.00
All workers — $28.48

The UAW is unwilling to make any concessions to help the big three out. You can see that their workers make $40 more in wages and benefits than other American workers. The big three do not make money on small car sales. That is why they pushed the overpriced SUV's. Any plan to re-tool them to make small cars will fail because their cost structure is too high. It would be very unfair to take tax money from someone making $15 an hour and use it to bail out someone making $73 an hour in wages and benefits.

As an e-mailer said in a post at Michelle Malkin's blog earlier this morning:

"The Big 3 has a cancer that needs to be removed. It doesn’t take a rocket scientist to understand why they cannot compete profitability (sic). They have parity on supply costs, materials, and energy with Honda and Toyota. So why can’t they compete? It is clearly the cost of labor."

Read more here.

Looks like the current congress is too smart to waste our money on a big three bailout. I doubt the next one will be that bright.
UPDATE 1-U.S. automakers bailout outlook in doubt-senator