Talk me down! Since when are auto workers the fat cats?

The whole bailout thing seems to be running out of control. What is needed is a set of published rules and criteria that qualifies any one for a bailout - whatever the company. I dont plan to create a half complete one here but shouldnt some principles such as below make a transparent set any one should be able to check against?

- Failure will impact the jobs of X millions
- Failure will create a cascade down to several companies and impact entire economy
- Chapter 11 can not save structure and obviate the destructive cascade and job losses
- Buyouts or merger can not save the structure ...

And consequences and regulations:
- All executives bailed out be limited to government rates and salaries for some time
- There be some restructuring and plan presented to ensure same situation does not recur
- Regulations introduced to ensure same does not recur, crafter carefully such that innovation is not stifled or risk taking completely eliminated
- Some common sense labor policies and safeguards put in place (120 days vacation might indeed be excessive, while workers should continue to be fairly treated).
- Bailed out entities be required to reasonably preferentially create jobs and invest here (otherwise we are back to Bush cuts to the wealthy that flew out to better investments offshore).

It is appreciated that crafting such may not be easy but if we can have such a policy document for these times (no matter how many pages long), we are willing to do the due diligence to follow up, understand how/if this is good for all, work hard and appreciate the sacrifice for the hole we are all already in. Afterall it is our taxes, labor and our future.

This is tough.... Any decent person has to have the same gut reaction: Big-Banker Paulson is quick to save Big-Bankers, but Joe Six-pack gets screwed. (Oh... That may be mixing a metaphor...)

But...... there is a very big, very obvious difference between the bankng industry and the auto industry. (This is REALLY hard for me -- I am left-of-left in Euro-speak, so just the words "banking industry" make me somewhat ill...)

Within the given ground rules of cut-throat capitalist society, America's banking industry has been relatively successful until now, while the auto industry has been in constant decline for decades. There is reason to imagine that the bankers will rebuild. There is absolutely no reason to imagine that the auto companies will ever climb out of their hole.

I remember when "Honda" meant "small and tinny, but really, really cheap", while "Oldsmobile" meant "a cut above your neighbor's Chevrolet"... *sigh*

The current credit crunch is not the cause of the *cough, cough* Big Three's demise. The true cause is their own incompetence.

There's an article in today's NYT about what Morgan Stanley is trying to do to change itself since its bail-out.

The last big GM "Change the game" strategy was... ... Saturn... ouch

The last big Ford "Change the game" strategy was... ... Bill Ford... ouch

The last big Chrysler "Change the game" strategy was... ... Daimler... ouch

Oh, wow! I just watched the podcast.

Rachel asked the president of the UAW if the union was in agreement with management over whatever programs were proposed in Washington. She drew one of the biggest blanks in television history -- clearly the idea that management and union might have conferred had never occurred to this guy. The man then tried to hide his consternation with a horribly blatant dodge and switch which closed with a Chevrolet Tahoe as GM's idea of "Green Car of the Year".

If the bail-out had been in doubt, this interview probably killed it!

This is a big subject, and I'd love to say more about it frankly; yet I'm forced to summarize: where's the innovation? If you want to look at a successful auto maker, look at Toyota. Their methods of "Jidoka" (loosely translated from their Japanese website: automation with a human touch) which embodies quality control at every level as well as "Just-In-Time" operations management has left them with a large surplus of cash and the reputation of nothing less than an automotive juggernaut. If GM is to reinforce their position given ANY amount of money, they need to innovate on their processes if by nothing other than borrowing from the industry leader. Pride doesn't sell cars.

First let me say I have never been a member of a union so my comments are not personally motivated.

The fact is the unions have been under heavy pressure by Republicans since Nixon, as we know Reagan dismantled the air traffic controller's union ties. Bush, well what you can say he's completed the dismantling of the entire manufacturing sector in the interest of cheap labor and cheap goods.

There is continued comparison of the big 3 with Toyota, who hires lots of part time and contract employees avoiding the payment of any benefits. Thirty years from now these folks are likely to be on welfare to survive and will feel the contempt of the same Republican party who now sing their praise, since entitlements are also on the Republican hit list.

One can only speculate as to why the Republican Party clearly hates Americans higher wages and benefits, but I do know this. It was unions who created the middle class in America not Republicans, and the Republicans continue a literal war on that middle class. Even if the failure of the big 3 were to result in the 2.3 million unemployed that is predicted should it occur, Republicans would declare it a victory over the price of American labor.

Any auto worker that makes 3 - 4 times more than the an average person in America is crazy to think they can be productive or deserve any breaks.  The amount of money the auto workers make is outrageous.  I heard that the auto workers union will be making sure that the pay is cut for NEW employees.  This does nothing for the ones making upwards to $73 in pay and compensation per hour.  The labor unions bought the presidency in return for special treatment.  However, this does not change the fact that the UAW employers (Ford, Chrysler and GM) make horrible cars and worse business decisions.  There is a reason Toyota is number one.  They make cheap, reliable cars that hold their value.  I am considering my first domestic car purchase in ten years.  The only reason I am doing that is because it is a European designed vehicle, modified for the US.  The government needs to be looking at companies like, Fisker Automotive.  Companies with ideas like this should take over the outdated companies of today.  They are fast, efficient and they do not have legacy costs.  Yes, we need to produce vehicles in the US, but it does not have to be the big three.  Let someone else rise up that is willing to embrace change and look for new ideas.  If the big three can make it through bankruptcy great if not then they do not deserve to be a drain on our economy.  By the way I like your show mainly because it gets me fired up and forces me to investigate the issues.  Keep up the good work of spouting off liberal idealogy.  Hopefully it will inspire more people like me.

Although I understand Rachel's gut reaction that banks don't "make" anything and car companies do, I think she's way off base. You can't build a car without steel. You can't build a car without auto workers. You can't build a car without the money to buy the steel and pay the auto workers. (She said so herself last night, when she announced that GM is extending the holiday break in order to hang onto their cash.) So if we think that steelmakers "make" something - even if steel is only valuable as an input into other industries - we can argue that banks also "make" something, by gathering savings and channeling them into productive endeavors. 

The fact is that nothing of importance can be built without finance, which is why the financial bailout seems to take precedence over the breadmakers bailout.

This doesn't mean that criticism of the financial bailout is not justified. There should be a plan regarding what banks want to do with the capital they receive, and what government wants them to do with it. There should be transparency and disclosure of what is being given to whom, what other government loans they are using, what their activities are. But demonizing Wall Street or underestimating their importance because they don't "make" anything is unnecessary.

Last thing: it doesn't seem honest to think that a UAW member will talk Rachel down when she's holding a distinctly pro - auto industry view. I admire her intellect and honesty, and was a bit disappointed by this choice. She should have called someone in the financial industry, that could have shown the opposite point of view.

Hey Rachel,

I loved this story when you did it last night, and it was a follow up on a great piece from the night before.

But I was just wondering if you came up with that great line yourself, or if you were quoting someone, cuz I want to use it myself.

Lessee if I can pull it out from memory:

It was something about comparing how it seems to be more important to bail out an industry where people take their showers before going to work than it is to bail out an industry where people have to take showers after getting home from work.

I wish I could remember exactly how you phrased it. As the daughter of a union electrician (who used to come home from work pretty stinky and dirty), the example just struck me as epitomizing the primary issue facing the economy right now.

I mean, Obama says he's going to stimulate the economy with public works projects, bridges, roads, etc., right?

Who's going to take those jobs? I mean yes, there will be people who will take those jobs, but those folks aren't the ones being laid off. The folks being laid off, many do labor for a living, but what happens when the millions without work are from the class of folks who shower BEFORE work, rather than after?

Will white collar people facing foreclosure suddenly show an aptitude to drive a forklift? Pull wire through conduit? Lay down rebar and cement forms? Or will they be the ones holding the "Stop" and "Slow" signs on the highway construction projects?

I really think WPA-type stimulus aimed at "workers" of this world will help immigrants and day laborers more than anything, cuz Roman citizens of our time aren't used to actually "laboring" for their wages. Even when they are facing the poorhouse.

And a good way to think about it is in terms of when we take our showers.

BTW, blaming workers and unions is a diversionary tactic to take attention off overpaid CEOs, their private jets, and a massively overpaid management layer.

Which, to my mind, is just another variation of Reagan blaming "welfare queens" for problems with social programs (and all the code words it brought), and using it as an excuse for doing actual harm to poor people who depended on those programs to survive.

The bigger question we need to be asking (in light of the history of race riots in the 70s) is this:

Will Michigan be turned into a permanent "ghetto state"? Can an entire state become a version of what blighted inner cities were in the 1970s: desperately poor, ready to explode?

Rachel,

My simplistic point of view is that the banking bailout was a mistake in the way that it was implemented.  A lot of people were so afraid that the sky was falling that no one bothered to think about the implications of having 'no-strings attached'.   (Don't ask me about Citigroup I'm still trying to figure out that one)

Now with the auto makers there is a chance to, minus all of the fluster and blustering from the opposing sides, keep the money flowing to where it needs to go to keep the 'Big 3' afloat.  While I do not agree with the statement that the workers are fat cats, sacrifices must be made to keep this economy (and not just the auto industry) from taking a permanent nose dive.  The strings needed should be down the line and not just the CEO's (though they should sacrifice the most out of this deal) should pay for the insurance that the Auto Industry stays afloat.

The UAW and the CEO's should come to Congress, together, with a plan that will sustain the Auto Industry for years to come while the economy recovers.  Whether its the reduction in vacation for workers to the reduction in pay for the CEO's, a plan must be made before our government can hand them a check.

My two cents

Auto workers make the cars, they don't design them.  That is managements role (R & D , the engineers etc).  So to say they need to make better cars is what we need to achieve, however it's not possible to do any time soon.

It can take years for a car to go from concept to production.  Should the big 3 speed up that process?  Yes.  However if they rush too much safety, quality etc would most likely suffer.  What's the point of a fuel efficient car if it is a death trap?

The auto workers are WELL paid.  One of the concessions gained was for new workers to begin..yes BEGIN paying part of their health insurance costs.  I bring up this example of how the union was slow..if in denial of what really is happening in the real world, not the one they create.  Most of us in the real world have been paying health costs for over 10 year..and contributing to 401k's ikn place of a pension etc).

Lee Iococca said it best the last time Chyrsler was in deep do do.  I have a lot of jobs at $15 an hour and none at $27 (said back in the 80's).

My last thought- any bank, financial institution, business that gets bailed out- the stockholders need to sacrifice dividends, the CEO and other higher ups get NO bonus's period for however long they need to be stabilzed..or once the loans are paid back. 

I agree with Alex, everyone..and I mean everyone has to come to the table and work this out.  Pain will go all around. 

How does a bailout of the auto industry affect trade? Because it seems as far as our trade agreements go, the US auto industry gets screwed.

Isn't the reason why foreign car companies have plants here is because of tarrifs? It's cheaper for them to make it here than pay tarrifs. It's not because of unions.

I've only ever owned Chevys because they run a long time and I know how to fix them, so it's just practical for me. (When my partner had a Mitsubishi I couldn't even figure out how to change the oil.)

This year was the first time I could actually buy a new one instead of used. It's a Chevy Aveo, cheap and while not #1 in fuel effeciency it is in the top 10. But it was made at a GM plant in Korea. Why? Because Korea's tarrifs are three times higher than the US. If the US is to be competitive in foriegn countries they have to have plants in foreign countries because it's too expensive to export.

We need fair trade agreements. Blaming unions is a distraction. Unions are at the bottom of the list of blame if they're on it at all.

Jim DeMint is... whatever. I live in SC, and our economy isn't exactly booming as a result of "right-to-work" laws.

Financial institutions need to be put under the same microscope. And I wonder if they haven't simply because not enough people in Congress understand how they work. They understand how the auto industry works better than the banks.

Guess we do have to make these bailout (what's the word that's suppose to use again, tarp?) a bit punative and unappealing. The GOP is going to love using this bailout against Democrats (despite it coming from George W. Bush) so if it's as mishandled as the Iraq invasion, it could lose the Dem a lot of election. Sad on a war where American and other nation's troops as well as foreign aid workers, journalists, contractors, and more importantly Iraqi civilians have been killed by violence yet these bailout and the thought of misuse of tax-dollars get Americans attention within a heartbeat.

Rachel, 

This is such an important topic, but I feel like there's been something missing from the debate, and I'm surprised the President of the UAW didn't bring it up.  There's been a gross error made in the average wage of an American auto worker.  It's not $70/hr as many, including the New York Times and various news outlets, have claimed.  That number figures in healthcare costs, pensions, etc of retirees averaged over the total number of current workers.  The average auto worker in reality makes closer to $28/hr in actual wages.  Another thing to keep in mind is that foreign auto companies have fewer retirees to take care of because they are younger companies in the US - they don't have as many older retirees.  Fewer retirees means fewer benefits to average over the entire employee group at the foreign car makers in the US.  Also foreign auto company workers are often paid bonuses on top of their average salary, which would not be included in their average pay rate.  

This is not the worker's problem - they are not overpaid.  Even if they would be making an actual $70/hr in pay, is there something wrong with that.  Why is it a bad thing that hard working individuals make a living wage, with which they could send their children to college, afford to live in a decent neighborhood, and not live paycheck to paycheck.  From where has this mentality in America come that denigrates the blue collar worker?  Why should everyone have to work for abominable WalMart wages?

Anyway, enough ranting and raving.  Rachel thank you for doing a great job covering this story, but I do hope you'd cover the wage issue a bit more thoroughly.  I do understand that Keith has covered this issue earlier in the week, so I am glad it's getting out there.

If you're interested in the full article about the $70/hr myth, check out mediamatters . org / columns / 200811250012

As for the UAW wages, I don't think it matters whether they deserve them (I think manufacturing workers do), but whether they are out of balance with the rest of the system and therefore unsustainable. Whichever value you use for the amount those workers are paid is still in whole number multiples of what I've been paid in manufacturing.

As for whether a bailout is necessary to prevent a bankruptcy of a manufacturer vs. a bank? I think that if you pull up news footage of Lehman Bros. bankruptcy vs. one of the airlines, the difference becomes fairly obvious. People standing on a NY sidewalk with their personal possessions in a box argue for immediate action. A GM bankruptcy would be an inconvenience. The demand for parts for existing cars would remain--someone would fill it. They would still be able to sell cars, I'd buy one--I just wouldn't buy an extended waranty :) 

There is a sensible alternative to taxpayers fitting the bill in the bailout of the auto industry, let big oil do it.

Big oil has been the big winner quarter after quarter, I think a little sharing of that wealth is in order. Besides, they received much of this revenue from price gouging anyway.

Fairness is giving some back.

let's party

rachel let's party 2009

In this evening's broadcast, you shared a clip featuring comments by Jim Press of Chrysler inviting employees to "town hall" meetings to share their ideas with him.  This is not the first time he has done this...he held regular town hall meetings at Toyota when he was the top US executive at the company's North American Headquarters.  He is sincere in his request, he listens closely, and will champion good ideas. 

He empowers people to take ownership of those ideas and make them a reality for the company.  He made sure Toyota was always making the types of vehicles the market wanted to drive at a price poin they could afford.  He allowed new directions to take shape, like Genesis, gave it reasonable time to make it's mark, and when it didn't go as expected, he did not allow it to keep draining profits from the firm.  He brainstormed with other top execs, tweaked areas that needed tweaking....and Scion emerged. 

If the U.S. Big 3 had been doing some of the things Jim initiated and avocated at Toyota, maybe they wouldn't have had to hop in their private jets and head to Washington in the first place.  If President Bush had any clue what a great idea (or even a moderately good one) looked like, he'd create an oversight position to manage any bailout funds allocated to the auto industry...and he'd put Jim Press in it. 

I don't care what anyone wants to say about the top arogant, bumbling buffoons running the U.S. auto industry - who have continued to apply the same failing principles to the business and expecting different results - but Jim Press is a true "car guy" who deserves a great deal of respect because he walks the walk and knows what the hell he's talking about!  You can call him "folksy"if you like; I call him impressive and am proud to have had an opportunity to work with him.

BTW, when everyone talks about the U.S. Big 3, they should probably remember that the Toyotas we all drive are made right here in the U.S. and more of them than most of the U.S. Big 3 produce in this country!  Toyota employs thousands of associates and business partners right here in the U.S., contributing heavily to the tax base right here in the U.S.!  And Toyota associates pay for their health care coverage and other benefits just like everyone else here the U.S...contrary to what the president the steel workers union might think.  You might need to "talk me down"!   Absolutely love your show and the intelligent exchange that takes place every evening...giggle free! Thanks.

The auto industry will not be allowed to fail. In the short term, this almost certainly means a cash infusion and I expect even hard-line conservatives to fold on this score. In the long haul, though, there is room for win/win negotiation in the form of incentivized change that translates into better car companies producing better cars in better ways. I hear people talk about Toyota and other companies that make cars in the USA and I think that these companies should/would qualify for the same sort of incentives.

I think that we can all agree that a nationalized Big 3 is not what we want to see here, though at $3/share, the USA could afford to buy GM for far less than what it costs to make a single fully-loaded aircraft carrier. It might be that the whole Big 3 would cost less than one of those bad boys. I'm too lazy to do the research because it doesn't matter much as anything but a talking point, but back-of-the-envelope calculations make a nuclear carrier costlier than the Big 3. Operating costs for the carrier are probably higher than the operating costs for the Big 3, too, especially in active deployment like we have now. If we can budget to keep an aircraft carrier afloat, we can do the same for the Big 3.

The goal as I see it is to get better product to consumers made by well-compensated employees in the USA working for stable employers. This means we have to THINK about what we ask for.

Tying loan guarantees to specific performance guidelines and to the types of cars we, as a nation want our citizens to buy is part of such a strategy. Another key part would be to subsidize (or give tax credits) for producing particular vehicle models so that consumers have an incentive NOT to buy big gas-guzzlers (and so that people who cannot afford to buy new cars can). We did the same thing with windmill farms and that worked for a while.

I remember the "box car" rebellion of the late 70's early 80's where the auto industry decided to make junk. They designed and built many cars and had the audacity to put names on them, like the Nova, the Impala, and the worst transgression of them all the Mustang.

Oh sure they also made the other things, the Pinto, and the Gremlin. The only shining light had the producer not had his head in a pile of coke ( fact or fiction it just looks good ) was the Delorean, it was boxy like the rest but at least had a little style doing it.

At the time not even the Volvo was considered boxy, everything was, everything had such sharp edges you could have cut a finger. Even I had a Chevy Impala of the box car set. But it wasn't all that bad, just rusty sharp edges.

The cars that were spared the "box car" rebellion were the full size cars. This was the auto makers bread and butter. But in this shallow thinking they damn near killed American Muscle.

The full size yaghts, the Cadillacs, the Lincoln Town cars, the show cars was where they still put innovation even when gas was in high demand and yet the stations were sometimes empty.

But all that was then, but unlike now, people had jobs, maybe not the gas to get there but at least a job. Today we have a recession, and it isn't the notion of bailing out the big three it is the notion of how many times will we have to do it.

That is the bottom line here. Times are still tough for many people, October alone saw 260000 people lose jobs. Can any of those buy a new car? I have a job luckily but with the pay being dwindled a bit I can't even entertain the idea of buying a used car.

They can design affordable cars again I guess and dare to put names on them. But we're still stuck at the bottom line with the innability to pay.

Again I say let them bail themselves out. Liquidize the corporate jets and the money spent on lobbying. They can sit on their hands and ride this out with the rest of us.