Tuesday, November 18, 2008

Don't Bail Out the United Auto Workers

Just a smattering of newsbits on the threats by the Big 3 and the UAW thugs against the rest of the country if we dare not prop their sorry backsides up anymore... Let them dangle...

...GM's statement comes as the mendicant company is threatening to collapse and make a mess unless Washington, which has already voted $25 billion for GM, Ford and Chrysler, provides up to $50 billion more -- the last subsidy until the next one.

Best suggestions over at the WSJ:
General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.

and IBD:
Filing for Chapter 11 protection under bankruptcy law is the normal way a company stays in business when facing an unmanageable financial situation. It keeps creditors at bay while the company reorganizes under court supervision and settles its debts. In recent years it has served as a refuge for major airlines (Delta and United) which, you may notice, continued to fly while in Chapter 11 and, post-bankruptcy, fly today.
Bankruptcy protection also frees companies from union contracts. Could this be why it seems to have been taken off the table as an option, at least among Democrats? We can only surmise, but it's clear that a bankruptcy process would be rough going for the United Auto Workers.
The Big Three's high labor expenses would no doubt need a trim. During the last round of contract talks in 2007, the average hourly costs were over $70 at all three of the domestic automakers, compared to about $48 for Toyota.


Jason said...

The UAW needs a little tough love. It derailed the Cerberus deal at Delphi. Today GM suffers a loss of about $2,000 per vehicle sold. On the other hand Toyota whose employees are not part of the UAW earns a profit of about $1,200 per vehicle sold. If GM was able to operate with labor prices near Toyota’s it would have pocketed an additional $29,715,200,000.

GM bailout nonsense

eutychus said...

Thanks for your comment Jason. Spot on, of course. Health benefits alone add $1,500 onto the price of the car. With worker's being paid $70+ an hour you'd think they could scale back on one or the other