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Wednesday, December 24, 2008

And it's about damn time, too
Posted by Jill | 6:38 AM
I simply don't understand the kind of vitriol that's being directed at auto workers in the UAW, simply because they've been able to earn a living wage. It's astounding to me that hardly a peep was uttered when AIG spent a chunk of it's bailout money on a fancy resort junket for its executives, or when financial company execs walked away with tens of millions of dollars in golden parachutes, but let auto workers try to hang onto their pay and health insurance and pensions, and everyone screams bloody murder. It's sort of like the outrage directed at teachers. Instead of demanding that ALL workers get the kind of benefits that used to be standard as part of the employer/worker compact, too many Americans subscribe to the "misery loves company" doctrine, demanding that their fellow workers join them in the race to the bottom of the socioeconomic ladder.

It's not the fault of the workers that Detroit continued to crank out gas-guzzling SUVs, marketing them as a kind of hybrid of macho terrorist-thwart and child protectant against rampaging tree-huggers driving Corollas. And it's not the fault of the workers that Detroit once again, having learned nothing from the oil crunch of the 1970s, found itself caught with its gas-guzzling pants down when gas rose to $4/gallon last summer, unable and unwilling to retool for the future.

But as someone who now drives to work on New Jersey highways, and has noticed since the storms of last weekend that NOT ONE FUCKING SUV DRIVER IN THE STATE has made even the slightest effort to clear the snow off the roof of his/her behemoth, thereby putting everyone who drives behind them at risk from the massive flying shards of ice that fly off their vehicle roofs at 70 miles per hour, I say about the end of the line for SUVs in Ohio and Wisconsin "Good riddance." Not to the workers, but to the vehicles which their management made them continue to crank out long after the market for them collapsed.

It's appalling that these people have been thrown out of work right before Christmas. It's appalling that once again, they are the casualties of short-sighted management that refused to look beyond trying to get through the next quarter. It's appalling that Rick Wagoner still has a job while the people who just did what they were told have no idea where they go from here. It's appalling that the government is giving Rick Wagoner another few billion dollars to squander in his collusion with the oil companies to perpetuate the internal combustion engine, instead of helping those who are going to be displaced by the inevitable collapse of the Big Three to prepare for other kinds of work so that they are not simply just tossed on the scrap heap of history while Rick Wagoner leaves with a taxpayer-paid golden parachute.

I want these workers helped to prepare for new jobs. But as for the vehicles they were building, well, I'm not shedding any tears. The roads here in New Jersey will be safer without them.

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8 Comments:
Anonymous Anonymous said...
What, though, about the fact that the SUVs, minivans & trucks were solely responsible for US automaker profits, and that their profits supported the losses at which they sold their small cars? It's not that the company didn't want to build this car or the other, they only naturally push what the people want - and the people wanted SUVs. So my question is about what other rational choice the car companies could have made? The contract system plus federal policies created the system where popular SUVs turned a profit while GM had to subsidize the production of these system-mandated small cars by running them at a loss.
12/24/08, 9:05 AM  
Anonymous Anonymous said...
It is apalling that Barnie Frank the master of this latest disaster still has a job.
12/24/08, 9:23 AM  
Anonymous Anonymous said...
Frankly my dear the UAW holds the auto industry hostage. They are domestic terrorists. Wonder why all the jap car makers seem to thrive hmm... oh yeh no union. and as far as the ice falling from those big bad SUV's grow up. Move south. change lanes. stop crying. get your own SUV.
12/24/08, 9:50 AM  
Blogger D. said...
Jill: If nothing else, this should put paid to the idea that rationality has anything to do with economics, at least for this generation. (The lesson probably will have to be repeated two generations down, because people just don't learn except by direct example. See also recycled fashions.)

Hope your holiday season is pleasant and that you won't have to drive anywhere before the thaw.
12/24/08, 12:48 PM  
Blogger Bob said...
Because Paul Mulshine at the Star-Ledger has been preaching against SUVs for years - & he's hardly a UAW kind of guy - it's hard to accept other conservative rationales for them. American automakers have always been largely responsible for creating the demand for their most monster vehicles & then claiming they're what the public demanded. SUVs were a stroke of marketing genius because they practically a brainless design & way of not having to compete with Japanese automakers. The only reason nonunion autoworkers earn a decent wage is because the UAW set the standard & Japanese have to keep their American factory wages high enough to prevent the workers voting in unions.
12/24/08, 1:12 PM  
Blogger D. said...
Bob: "The only reason nonunion autoworkers earn a decent wage is because the UAW set the standard & Japanese have to keep their American factory wages high enough to prevent the workers voting in unions."

Thank you for that reminder.

I was always aware that my salary was as decent as it was because it was pegged to whatever the union won in collective bargaining (we were always told we didn't need to join the union. Heh).

Remember those bumper stickers? "From the people who brought you the weekend."? You better start mobilizing now.
12/24/08, 1:40 PM  
Anonymous Anonymous said...
To anonymous poster #3 (same as #1-2?), if you have proof that the UAW is a bunch of domestic terrorists, then the Department of Homeland Security may be interested in your story.

And it's "Japanese" car makers, not "jap". In case you missed it, Toyota just posted its first operating loss in three generations. It's considering trimming its U.S. workforce as well.
12/24/08, 2:45 PM  
Blogger markg8 said...
Let me post some figures for you.

GM alone pays legacy costs for over 400,000 retirees in the US, Toyota which has operated manufacturing plants here for only a couple of decades? About 700.

From Car and Driver:

Chrysler tied Toyota for productivity in car making as the best in North America, so say the results of the 2008 Harbour Report—the authority on automotive productivity—released June 5, 2008.

Once all the numbers were crunched—including the number of hours it takes for stamping, building transmissions, engines, and assembling vehicles—the two automakers finished in a dead heat at 30.37 hours per vehicle each.

In descending order, the rest of the pack are: Honda (31.33 hours), GM (32.29), Nissan (32.96), Ford (33.88), and Hyundai (35.10).

This near-parity is a far cry from a few years ago when the Japanese could out-produce the Big Three 2:1.

“But productivity doesn’t guarantee profitability,” Ron Harbour warns. The Japanese still make much more money on each car assembled and sold. The numbers are downright scary. Honda and Nissan make $1641 in pre-tax profit on every vehicle assembled, while the average profit on a Toyota is $922. Contrast that with $1467 lost by Ford per vehicle, a loss of $729 on average for GM, and $412 in the red on a Chrysler product.

So it's not a productivity problem or archaic work rules killing the Big Three. With those kind of numbers you can understand why all car manufacturers fought congress over CAFE standards (with full complicity from the Republican party and Democrats from MI) to keep building large high profit margin vehicles. It was a life and death matter for Detroit with those legacy costs.

And it's not high union wages. The difference at the top end of the factory floor pay scale is only about $3 and less experienced workers make about the same as at the transplants.

Detroit and the UAW have transformed themselves over the last decade and can compete on quality, productivity just about any metric you can mention but those legacy costs. The major component of those costs, healthcare, which has risen to crippling proportions for all US businesses in the last two decades has been strangling US manufacturing and our car companies for years. It's a big reason why GM builds more cars in Ontario than Michigan today. Congress must pass healthcare reform this year and take this burden off US businesses or the Big Three will just be the tip of the iceberg.

But that isn't what pushed them to the edge this year. Look at these sales numbers.

(all figures compare November 2008 US sales with November 2007)

Chrysler -47%
GM -41%
Ford -31%
Toyota -34%
Nissan -42%
Honda -32%
Mazda -31%
Hyundai/Kia -39%
Volkswagen Group -22%
BMW Group (including Mini) -27%
Mercedes-Benz (including Smart) -30%

The car business in general is in the toilet. And it's not just because all manufacturers kept building SUVs and pick ups.

Here's the 11/08 drop off from 11/07 of fuel efficient models:

Toyota Prius -48% (the gold standard stumbles)
Toyota Corolla/Matrix -13%
Toyota Yaris -17%
Scion (all) -45%
Honda Civic -30%
Honda Fit -8%
VW Rabbit -44%
Nissan Versa -18%
Nissan Sentra -39%
Ford Focus -38%
Chevrolet Aveo -36%
Chevrolet Cobalt -54%
Pontiac Vibe -14%
Kia Spectra -33%
Hyundai Accent -11%

Well we all know people are scared. Nobody wants to make a big expenditure like $20,000 or $40,000 for a new vehicle if they think they may not have a job in January. But I don't think that covers it either.

There are hundreds of thousands if not millions of people already under water in car loans for SUVs they still have years to pay off. Just as there are million of people who now own houses that that may take a decade (or more) to be worth the price they bought them at and are paying right now.

They can't sell those SUVs without taking a huge financial loss, the resale value has crumbled. They can't get anyone to finance a trade in on a new smaller efficient vehicle even if gas goes back to $4.00 a gallon by rolling the financial loss over into a new loan because nobody's going to lend them the money.

In the short term we're going to have to bail them out with what will probably be many more billions than just the $17 billion Bush has put up so far. In the medium term we have to federalize health care costs for all US businesses just like every other industrial nation on earth, if we want to remain a manufacturing country of any kind. Sure beats promoting financial chicanery on Wall St. as a way to build wealth if you ask me.
12/24/08, 5:22 PM  
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