Bailing Out Detroit

Jeff Alworth

Few issues seem to confound ideologues more than bailing out the American automakers.  On the left, you've got labor types who are totally in favor of it while the anti-corporate wing wag their fingers and say nuh-uh.  On the right, you've got business types paralyzed with fear over a wholesale economic collapse, while market fundamentalists (and anti-union purists) say let them die off.  But I don't care what the ideologues say--there are some reality-based questions to consider.  Since I am profoundly ignorant about complex relationships in market economics, I'm going to pose them as questions.  Maybe some of our insightful, educated readers can clue the rest of us in.

All right brains, do tell.

Comments

  • Admiral Naismith (unverified)
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    Would the car czar's last name have to be Binks?

  • Bill Holmer (unverified)
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    Good questions, Jeff, and I don't pretend to have the answers, although I have to say the UAW's refusal to match the labor costs of the transplants is only part of the problem.

    The front page of today's Wall Street Journal is a classic. The lead story is a $50 billion Ponzi scheme that makes our own Wes Rhodes look like a piker. The private sector at its worst.

    Next is a picture of Governor Blagoyevich. The public sector at its worst.

    Are there any honest people left?

    The best, though, is in the lower right hand corner, where Cadillac is advertising its 2009 CTS as the winner of the Best Resale Value Award. In 2008??? Are people that anxious to get rid of them???

  • George Anonymuncule Seldes (unverified)
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    Why should we assume that a "healthy, competitive automobile sector" for the next few decades is a worthy objective?

    The people who actually do useful work for Detroit -- the much-slandered UAW -- would be insanely happy to have jobs with a future, where they can use their skills to build things of enduring value that help solve national problems (rather than create them).

    Let the companies fold; give the workers real work building a world-class heavy rail network for freight, an electrified passenger rail system and interurban electric rail network, and intraurban streetcar system.

    There will be plenty of people still offering cars with gas engines for the rural folks, who will enjoy lower prices for the fuel and for the vehicles themselves as demand goes way down once the people in the populous areas stop using it all to create traffic problems.

    We need to start focusing on the ends to be attained (a country that isn't bankrupting itself for oil and fighting wars to get it) rather than on continuing the status quo (which is bankrupt and violent, all over oil).

  • Dave Lister (unverified)
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    The automakers aren't really asking for a "bailout"... at lost not in the sense of the Wall Streeters. They want a loan. When the feds loaned Lee Iacocca money it got paid back with interest.

    I think it's ironic that they gave billions to financial institutions, outfits that don't really produce anything but just shuffle money around... outfits that are responsible for the meltdown in the first place, with virtually no strings attached. And yet these companies that provide millions of good jobs (not just autoworkers but component manufacturers, raw materials producers, etc.) are being taken to the matt.

  • DanOregon (unverified)
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    An underplayed card by Detroit has been its support of NASCAR programs. Laugh if you want, but the head of NASCAR has been lobbying on behalf of the Big Three bailout in DC. If the Big Three go down, it not only affects the UAW (the chief target of the GOP) but will cripple the stock racing series, likely resulting in losses from races, merchandise and team operations far beyond the cost of the killed deal. This is really a case of the GOP trying to cut its nose off to spite its face.

  • Greg D. (unverified)
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    Lots of good questions.

    If the Big 3 (or perhaps we should exclude Ford for now) have a product and a business plan that makes sense, they can and will survive under either a Chapter 11 or a federal bailout that looks like a Chapter 11 under a different name. If they don't have a product and/or business model that makes sense, they will die and we are probably just postponing the funeral by all this bailout nonsense.

    The larger question in my mind is how we deal with the fallout. The shareholders are likely to get clipped no matter what, and it is hard to feel sorry for them. Same with the bond holders, although perhaps they won't lose 100 percent of their stake. Retirees are not looking very good either, although between the Pension Benefit Guaranty Corporation, Social Security and Medicare, most of them will survive, although at a much lower standard of living than they were promised by the Big 3 and the UAW. Local dealers may be the wild card in all this. We need a LOT fewer local dealers. Chapter 11 would allow Big 3 to terminate dealerships with little or no compensation. Without Chapter 11, state and local franchisee protection laws entitle terminated dealerships to some significant compensation, which the Big 3 probably can't afford to pay.

    Capitalism and free trade and competition are great in the abstract, but for every winner there has to be a "loser". Will the losers be the stakeholders, or the US Govt. and its taxpayers. I think that is the real debate going on right now, and I have no idea how it will end.

  • mp97303 (unverified)
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    I heard yesterday that GM and Toyota sell about the same number of cars worldwide, yet Toyota has a profit of $11B vs. a loss of $26B +/- for GM.

    NPR has a great comparison of Toyota & GM. Of note, look at how many production workers GM needs to make 3X the # of cars Toyota does..... 5 TIMES. Toyota could produce the same number of cars GM does with 40,000 fewer production workers.

  • Lani (unverified)
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    The UAW already cut their wages in half in 2007.
    Funny the Republicans blocking the LOAN don't mention that. They also ignore that wages & benefits are less than 10% of the auto maker's costs.

    These Republicans have the gall to demand more concessions and a timeline from the union without ordering the same thing from the management or executive staff. These Republicans are scum and their constituents are idiots for continuing to vote them in.

    They want to destroy the unions and worker health and safety protections. Everything else these slimeballs say is a lie.

  • mp97303 (unverified)
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    BTW, don't the airlines declare bankruptcy twice annually? They seem to survive. No one makes the "class warfare" claims there. There is a difference between reorg and liquidation that many seem to be ignoring.

  • SCB (unverified)
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    I follow this stuff fairly closely. Close enough to know that the current financial situation that is blamed on poor risk mortgage borrowers is more accurately blamed upon high-risk traders in mortgage derivatives.

    I think we have to place the pending auto makers bail out into a context. In the big picture, too many fundamental issues are wrong right now, and in the long run, we can't avoid big trouble and probably a depression. There is a spiral forming in which confidence in our economic system is reducing risk taking, which means less spending, less new businesses, and less retail sales. That in turn means less business, layoffs, and less confidence in the economy. Which brings in another round down the spiral.

    So, a short-term bail out of the auto makers keeps around 3 million people employed for awhile. It might even mean that some part of our auto industry will survive, restructured, down-sized, and hopefully putting out better products that work in the 21st Century, not the 20th Century. But even if that doesn’t happen, and these companies fail, we at least buy some time.

    And more than anything, that is what we need – time. The pace of the spiral is the issue. If the economy more slowly contracts, there will be less fundamental damage than if it crashes.

    I have high hopes that a thoughtful and pragmatic Federal Administration that is not so hung up on their dogma as the out-going Administration will be able to work on the underlying problems while dealing with the current crisis. It will take time to gear up to new projects with green/alternative power, and a new/updated electrical grid to ship that power around. It will take some time to get public works/infrastructure upgrades from idea to jobs on the ground. It will take some time to formulate new regulations to govern the financial sector so that the problems we are having now don’t happen again. It will take time to regain some confidence that we have a workable economic system.

    In the meantime, it’s worth keeping 3 million people employed. During the last great depression, my grandfather worked for what was then called THE phone company. During the depression, they didn’t layoff anyone. When they had to, they reduced hours. People had to take transfers. My Grandfather had to work a year in Astoria, and then a year in Salem, before he could get back to Portland. This time around, AT&T has already laid off 10,000’s of workers. Jobs is a key issue. The more layoffs we can avoid, the less the government will be limited in its resources paying out unemployment and pensions.

    So, if the auto makers only make 70 cents on the dollar compared to the bail-out, that is 70 cents on the dollar we don’t have to pay out for a bankrupt pension plan, we don’t have to pay out unemployment, and we don’t have a host of other problems that cost governments money. Keep these companies making some money – even if its not break even, and we all come ahead.

    So, yes, spend money now to keep them open!

  • (Show?)

    The simplest way to anayze this is that economic term; "The markets reach equilibrium in the long term", and Keynes' answer, but we are all dead in the long term. Bankruptcy is highly wasteful and disruptive. Many parties will fight over the carcasses and some disputes last for years making only attorneys happy. Keeping the entities alive while the restructuring takes place is much less costly in both the short term and the long term.

    Now this assumes that restructuring will take place. Where the opponents to government action are correct is if the bailout is used to avoid taking the restructuring necessary to have a viable industry in the long term. This will be painful even if done right. The industry has to shrink, close factories, and workers will lose jobs. The issue is how to manage the process in a way that minimizes the pain, not eliminate it. The capital markets are broken now. Their are no banks that can help re-finance the companies as would be done normally. The Republicans are acting as if the capital markets were working. They are not.

  • Dave Porter (unverified)
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    Without a substantial gas tax (revenue neutral is best, $1 or more per gallon or a floor of $4.50 per gallon) there will not be enough market demand for Detroit to make a profit making hybird, electric, natural gas, or hydrogen cars. So, if we want to bailout Detroit because of the larger consequences to our economy and we want for Detroit to make cleaner cars, we need a substantial gas. Otherwise, Detroit will have to make the same old gas guzzlers or have no viable business plan at all.

    See the post "Gas Tax: Dilemma for Democrats" on my blog here.

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    I'm not entirely sure how I feel about the bailout...but I do think its noteworthy that this is one of the very rare times that I agree with Dave Lister.

    Weird.

  • Holly Queeg Z (unverified)
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    Well put post. Don't have any answers, just an opinion. This has happened to countless US industries in the past and will no doubt happen in the future. Any rescue plan should be systemic, addressing why does this happen and how are we changing the system to deal with it. Lister I think comes closest to the questions the current model would ask. I take the current model to be a Darwinian one where you would say Detroit isn't making it because they're not making it profitable, competitively.

  • Zarathustra (unverified)
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    Shudder. That was me, which means I'm agreeing with Carla and Dave simultaneously!

  • Jeff Alworth (unverified)
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    As I expected, good comments. Keep 'em coming--

  • TomK (unverified)
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    It is a LOT harder to run a profitable car company than the pro-bailout people would have us to believe. It's very unlikely that a "car czar" can just parachute in and just by knocking enough heads together make it all right. There are supply chains, dealer turf wars, perception issues, and huge, huge, management cultural issues where Detroit lags severely behind the Japanese. None of this can be cured by fiat.

    It would be cheaper to just send checks to the unemployed workers for a couple years and save the steel.

  • Matt (unverified)
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    What bothers me is that no one is talking about how the Democrats are letting themselves be pushed around by the Republicans. The Dems have gutted their own proposals to do away with the environmental changes to the auto industry. The Dems originally wanted the executive-branch auto overlord to approve any expenditures by the auto industry over $25 million; now it's $100 million.

    Why the heck are the Dems placating to the Republicans? The Republicans act as though they don't want to help help the auto companies, but by gutting the environmental and oversight provisions, they're really giving the auto makers much more than the Democrats originally wanted to.

    The polls I've seen recently show that Americans are more supportive of the auto-industry bailout than they are of the financial-sector bailout. So why aren't the Dems calling the Republicans' bluff? Why don't Nancy Pelosi and Harry Reid go on TV and say that the Republicans are lying about their intentions and hurting the middle class?

    Thanks to the Democrats, there's not much left in this bill other than the money and a wink-wink to let the auto industry continue to do business as usual.

  • Ed Bickford (unverified)
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    Whatever the level of difficulty to make the Big 3 profitable, the mere fact of having a domestically-based manufacturing base is well worth preserving, and we are down to a frightfully small one now overall. What are we going to use to generate enough living-wage jobs to exit the recession if we trash this industry sector now? Service sector jobs obviously can't support an economy alone.

  • Jodi Heatherington (unverified)
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    This is an idea about saving the people, ie auto industry workers, but maybe not the CEO's. When the big three ask for union pay and benefit concessions as part of the handout, they cite "legacy" costs ( pension and health care for retired workers and their surviving spuoses) as accounting for 2/3 of their expenditure. I suggest the congress take a step toward universal health care and save GM and Mopar by TAKING OVER THE LEGACY HEALTH CARE COSTS. Not cut back on current pay. Give the bail out money almost directly to workers, and then watch how well the big three prosper without those pesky worker benefits. As if their management decisions had no effect on the current state of going under.
    Otherwise, the federal gimmee will most likely go to executive benefits for the very doofuses who fought tooth and nail, and mega dollars ,against any and every proposed form of increased fuel efficiency standards. Rather than be given money, maybe those people should more rightfully be tried for treason, if that can be defined as undermining the strength and well-being of the United States. Any holes in my argument?
    Jodi Heatherington

  • Jim Hagar (unverified)
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    While a bailout (or loan) might seem like a bad idea - over the long term it might be viewed as a critical investment in keeping some of the key skillsets this country needs from being eliminated. For too long we have outsourced manufacturing to other countries losing the edge we had in manufacturing, R&D and technology to other "cheaper" nations.

    While I'm not fond of helping out three companies whose CEO's appear to be as clueless as the Bush administration - losing those skills would ultimately do the biggest damage to America and its ability to thrive in a global marketplace.

  • Bill R. (unverified)
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    Isn't it ironic and paradoxical, that even some on the left are opposed to an American auto industry that pays union salaries and benefits, that should be a model to all industries? Isn't it ironic that we make the industries that are directly responsible for producing 2.5 million jobs directly and millions more indirectly jump through hoops to get govt. assistance while the financial sector gets 700 billion and a free ride?

    You want to let American auto industry go down the toilet? Then look for the Great Depression 2.0, because we all go down with them. Isn't it ironic also that the Republicans are siding with foreign auto companies who get subsidies from their governments, using the logic that our own auto industries should get no subsidy? Some of the comments I see here tell me why so many blue collar union workers, and their families are so distrustful of the "tofu" thinking and ideology of some liberals.

    I am disgusted with liberals who seem to see themselves as so insulated from the meltdown of our base American industries that they can write off the millions of families who are immediately dependent on them. Well, we are all dependent on them, and we will go down with them, if they collapse. There isn't going to be a Chapt. 11 restructuring, they will go into Chapt. 7 liquidation, in part because 80 plus% of Americans won't buy a car from an auto company in bankruptcy, and I wouldn't either. So your flip and dismissive response to an American economic tragedy just doesn't fly.

  • Fair and Balanced (unverified)
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    Many good points. I have some too:

    I agree with Dave Porter that the carmakers don't have a path to success without a substantial gas tax (or better, carbon tax). We won't pay the required premium to make the green cars profitable without really expensive gas.

    And we won't buy cars from companies in Chapter 11. Too risky. We want to be sure our dealers are still servicing our cars well into the future.

    Maybe the only way to save the domestic industry is for the government to take 'em over completely, fire the current execs, cancel the union contracts and bring in a new team to figure out what to do. One element would need to be a comprehensive national health insurance program that would take the pressure off manufacturers and increase competition. Another would be a substantial carbon/gas tax that disincentivizes gas guzzlers.

    There is going to be pain under any scenario, because what we've been doing is just plain unsustainable. Many, many workers will face lower wages if not unemployment, until Obama's green jobs kick in. I just hope we figure out how to share the pain with the execs as well. Consumers will pay more for both cars and gas, as well as any consumer goods that need to be transported. (Of course, this will all boost economic adjustments we can cheer about, toward green and local.)

    Cars and banks are just the tip of the iceberg. Think about all the crap that passes for consumer goods, or that gets wrapped around consumer goods, in our economy. As all that gets more expensive, it will have to go, along with the jobs that produce it. Much of what passes for economic value is just garbage, and we need to learn to live without it. That's a gain, but it comes with pain.

    This is a classic dilemma pitting short-term pain against the big picture realities. Were it not for all those workers and the ripple effect, it would be easy for me to say let 'em go down. I think that's how I feel anyway, but it's not so easy.

  • Lani (unverified)
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    Japanese CEO's work an average of 27 years before promotion. In the U.S. it's 13 years. Japanese CEOs make 11x the worker's wage in compensation. In Germany, it's 13 times the worker wage--or the same as the U.S. in the 1950's.

    In the U.S. today, it's 433 times the average worker wage (2003).

    In the U.S. we have less qualified CEOs. We also see that U.S. companies spend more on executive compensation and advertising than on R&D. In Japan and Germany, that trend is reversed by many times.

    How about we spend 1.8 billion of the bailout to buy most of the GM stock, sell it to the workers over time, and start that company over?

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    What totally shocks me is that Bush and the Democratic Congress actually agree on something.

    This morning on CNN they were saying as many as 2.5 million jobs could be lost as a result of the failure of the US auto industry. Keep in mind it is not just the jobs that will be lose at Ford, Chrysler and GM, but the suppliers who make parts for them.

    I agree that the companies need to make significant changes and cut cost. What those changes are and how they are done are questions that need to be answered.

  • Anon (unverified)
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    I think supporting "Detroit" makes sense for the following reason:

    I recently read in "Der Spiegel", in German and in print, so no link, that no automaker has really been making profits in the US market for quite some time. However, "foreign" automakers charge significantly higher prices (>30% in the example below) in their homemarkets, thus being able to compete for marketshare in the US (see example below). Insofar, bailing out the big 3 would just level the playing field.

    Secondly, with regards to all the numbers floating around about the number of workers that Toyota uses to produce x cars as opposed to say Ford or GM: Without any further knowledge, I would suspect that these might be comparisons between apples and oranges. We just don't know which parts of automaking are done "in-house" and which ones are outsourced. For example: is payroll outsourced or administered by the company, does the company have its own IT unit or not?

    Finally, the example: VW Touareg starts at 42 k Euros in Germany however, in the US it is offered at 39 k USD.

    You can find the information on the prices at: http://www.autoprice.de/DE/volkswagen/touareg/ http://www.vw.com/

    This might not be a comparison of the exact same cars, however, one can guess, given the exchange rate, that the same car would cost at least 30% more in Germany than in the US.

    PS: Sorry, I am not sure that I would get the links right, so I just gave you the URLs

  • rw (unverified)
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    Well, for starters, the CEOs need to make half of the wages they have scarfed in, ALONGSIDE their workers who need to CUT NOW to save their damned jobs, not in 2011 when they think it will be nicer. NOW. But NOT just workers: across the board. CEO culture is still relying on that fucked up myth that if we don't pay them obscene wages, nobody competent will fill the post.

    Ummmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm. Show me competent, and I'll show these bastards the door. NOW.

    We thought the same stupid myth about IS programmers, and discovered that after American-born programmers were thrown out of work, losing homes and etc in the early 2000's, the Hindis were still working. And STILL ARE. At the wages they were given as lower-paid workers imported by MS, Intel, Dell, telecoms.. etc... US-born jerks refused to work for the really good wages the foreign-borns were getting. So they lost everything. Now they DO work for that APPROPRIATE wage, the market has adjusted. But not before a bunch of arrogant idiots who overvalued themselves and assisted in destroying their own market bubble refused to take what was real while insisting on what was a myth-driven phenomenon.

    I say PUSH American CEOs down the same drain. FORCE Them into reality. I believe it is a critical aspect of this drama. They do NOT get to create the delusion. We must insist upon reality.

    How's that for a fine proletarian-rage dream?

  • LT (unverified)
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    As a proud Michigander (born in Detroit) I notice the Southern Senators demanded the UAW agree to wage concessions "on a date certain in 2009" but no mention of executive compensation.

    Too many news outlets ask "but what about the UAW contract" as if that were the only item to consider.

    And it was interesting to see Paul Ingrassia as one of the guests on PBS Newshour as an "expert". He retired from the Wall Street Journal where he had once been their Detroit bureau chief. That makes him an "auto expert"? Iacocca or someone like him deserves that title, not a journalist.

    When CEO pay and other expenses are mentioned, only then should UAW pay be discussed. But then, I suspect there was union bashing going on--what else do Republicans have left after their great loss election night?

    Apparently there are some Republicans who think auto workers don't deserve the pay they have negotiated, but management (which signed the contracts) should never have their pay package questioned.

    Our family watched the Chrysler bailout closely. The legislation was written by a Congressman one of our relatives had watched grow up.

    Among other things, Iacocca became a $1 a year man, the unions made concessions, and Iacocca nominated Douglas Fraser, head of the UAW, to a seat on the Chrysler board. That way, there were no secrets between labor and management.

    One wonders if Sen. Corker and the other S. senators knew about that, or just didn't care.

    For those of you who have not followed the auto industry closely, 2 items of history would be interesting.

    Google BATTLE OF THE OVERPASS, esp. from the perspective of the newspaper covering the worker demonstration which turned into a famous incident. Ford's people tried (unsuccessfully) to confiscate the plates (yes, this was before rolls of film) the photographers had taken of the altercation.

    Michael Moore's first film was about the effect of GM closing a plant in Flint, MI. It is called Roger and Me.

  • Bill R. (unverified)
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    It turns out the Repugs decision to sink the American auto industry was all about payback to Labor movement and the UAW. Forget the American people and the economic health of the country. Keith Olberman releases an internal GOP memo: http://thenewshole.msnbc.msn.com/archive/2008/12/12/1713569.aspx These people are utter rats. They want a low wage economy where the middle class ceases to exist.

  • rw (unverified)
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    That is what I told my son last week when he asked the question with an ironic smile and only have a hit of curiousity. HE knew the answer already, but wanted his assessment confirmed in case he did not understand the connections.

    ON THE OTHER HAND: the sons of bitches think they can get over on us again? Like finance just did in its entirety?

    Fat f chance.

    Game over CHUMPS.

  • davidg (unverified)
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    Jeff,

    Very thought provoking questions! But I am afraid that from our perspective today, the answer to all of your questions is the same: nobody out there knows. Your questions are too "big" for anyone to know. Of course, some people may make accurate predictions, but that will be due more to luck than anything else. The more likely scenario is: bailout or not, no one will very accurately predict what happens. For those inclined to freak out, however, there certainly are enough doomsday scenarios available.

    How we should proceed is based upon your view, generally, of how the economy works. The free market approach is not to have the government intervene, expecting market forces to make the necessary adjustments. The government intervention approach assumes that there are experts who know what to do, and that we know how to pick them. Either approach requires a lot of faith. Advocates on both sides don't like to admit that.

    What kind of uncertainty are you willing to live with? The uncertainty of markets? Or the uncertainty of appointing someone to a job which no one knows how to do? I think those are our choices.

  • ws (unverified)
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    As others have noted, U.S. automakers produce good quality cars, but not the ones that lead the market. They're not making bad cars...they're making the wrong cars. I think U.S. automakers major defective part is its CEO's. As Lani suggests, (comment @ 5:40), maybe the wrong incentive is being given these people through the 'whatever the market will bear' concept of determining their salary amount.

    Rank and file auto workers aren't just going to go away if U.S. automakers go bankrupt. Somehow, U.S. citizens, together, are going to have keep those people housed, clothed and fed. Aren't the CEO's the employees hired to lead the effort to determine what product it is that people want to buy and that will compete successfully? If the CEO's can't or wont do this, someone needs to be hired that will. Meanwhile, the auto workers need to somehow continue being employed.

  • Kurt Chapman (unverified)
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    Great post and some very different ideas. As a student of the Labor Movement and brother-in-law to 2 retired UAW Ford workers I think the latest pitch by McConnel and his same thinking Republicans in the Senate are unrealistic. Why attach mandatory bargaining issue to a bailout bill? The collective bargaining agreement in the US is between managment and labor. Unlike Japan, it is not a 3-legged stool including government.

    Also, McConnel, somewhat cynically has multiple Ford and Toyota plants and suppliers in KY, not directly affected by this bill.

    Once we agreed to socialize risk by bailing out Wall Street and insurers, the die was cast. I agree with some previous posters who said time can be a great healing force. In that respect, $15BB is less than25% of the staggering sum already pledged to other business. Properly focused it could give GM and Chrysler the time that they need to get their house in order.

    There should be NO ties on the Unions in this bailout. The companies should negotiate in good faith with the UAW to help show a united front. What should be tied to help is strict increased CAFE standards that are meaningful, greener and more energy efficient factories, a dramatic decrease in waste products and different propulsion technologies.

    Ar Czar? Car Czar? That would be about as productive as the Energy Czar, Drug Czar and Healthcare Czar. Again, re-read Halberstam's book comparing the US and Japanesse auto industries, you can't have a Car Czar (government at the table) without really dramatically altering the focus of all US industry.

    Bailout is not the best way to insure an efficent and successful US auto industry. It is, however a start. Old 19th and 20th century ideas need to be reviewed, rethought and replaced with ideas aimed at a sustainable industry. Otherwise, the US auto industry will go the way of the US steel industry (for context, "The Wolf Finally Came" by Pittsburg Press)

    Detroit won't die, and it does not have to become non-union to survive. It does need to take a good look at market, sustainability, legacy costs, affordability and pricing to re-invent itself.

    Of course that's just one opinion!

  • joel dan walls (unverified)
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    Economic analyses I have read suggest strongly that the Big Three are short of capital to pursue the innovations that everyone on the outside is pushing. Geez Louise, they can't even handle current accounts right now. And with frozen capital markets, if they can pay the parts suppliers, the parts suppliers go bust and all the dominoes fall.

  • joel dan walls (unverified)
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    sorry, I obviously meant to write "if they CAN'T pay the parts suppliers...."

  • rw (unverified)
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    So: is America ready for Action? Oregon has been suffering for a decade now, nearly. Is America ready yet: for Action? For Struggle?

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    Keep in mind it is not just the jobs that will be lose at Ford, Chrysler and GM, but the suppliers who make parts for them.

    Not only them, but all the other businesses that are supported through the pay those workers earn. How many times have entire cities gone under after a manufacturing plant, mill, etc. closes? My parents were born and raised in Michigan. They know what it's like to watch cities around the state basically die when major cuts were made to the auto industry. It's why they ended up in Texas, where me and my younger sisters were born.

    I'm so tired of the bottom workers always being the first ones cut. Why is it that people making 30,000, 40,000, 50,000, etc. are expected to take huge hits to their salary and benefits, but not those making millions? My grandfather retired from GM, and I can assure you his salary and benefits weren't anything to brag about - and neither are his retirement benefits.

    Obviously, changes need to be made at the top of these companies. But I think we stand a much better chance of those changes being made if we're the one holding the purse strings rather than it going through bankruptcy. Too often, you see the cuts coming to the quality of the product, availability of product, and to the bottom workers, yet nothing at the top when companies go through bankruptcy.

    If only the financial industry would stop hoarding the money we've given them (and wasting it on multi-million dollar bonuses, expensive trips, etc.), companies like GM would be in a better position because they'd have access to their credit lines.

  • rw (unverified)
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    ... and I hear NOT A WORD from the vaunted socialites who now have been bit like WE were bit some weeks ago. Still and yet they do not ally themselves with us. When will they cross the human divide and stand with the workers they suck and drain to support themselves at the top of the pile? What will it take to bring human scale and compassionate experiencing to this nation?

    Not yet, I fear. Not yet.

  • George Anonymuncule Seldes (unverified)
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    A "manufacturing base" is only a national asset to the extent that it is geared to manufacturing things that are necessary at home or salable abroad. We desperately need to revive a manufacturing sector that produces things of value, rather than things that only work if we have a wildly lopsided balance of trade against us.

    People who think we need to somehow preserve the ability to turn out millions of oversized, overpowered, underefficient autos are simply wrong, and people who think we need to preserve this capacity because of a nostalgic memory of the industrial conversion to war production during WWII need to drop the nostalgia and realize that this equivalent in this era is the need for industrial conversion to making things needed for the green economy.

    There's an enormous opportunity here but it can only be grasped by letting go of the America = Cars paradigm. Clinging to it is like clinging to the Titanic after the collision -- it's going to take us down with it if we insist on holding on to the past.

    Real protection for our brothers and sisters in the UAW comes from axing the management that drove Detroit into the ground and setting up national ventures to build things that we need (a new smartgrid for electricity, smart appliances in the tens of millions that can communicate with that grid to manage power use, heavy electric rail lines for freight and transmission to go along the same rights of way, light rail and interurban railways, and in-city streetcars and rail networks).

    For the majority of urban/suburban people in the US, the future of mobility does not involve owning a personal auto outright. Rather, it means sharing access to trucks and autos for the occasional trips to places not served by rail. There's TONS of good, high-skill, high-pay work building the infrastructure we need to get off oil and leave ourselves better off for all spending. But it means worrying about the workers in the factories and in the supply chains, not the investors in car companies.

  • Zarathustra (unverified)
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    What will it take to bring human scale and compassionate experiencing to this nation?

    Suffering. Soon come.

  • ws (unverified)
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    Yeah, talking about the bottom workers...today's NYtimes story on the Republic Window factory worker sit-in was fascinating reading. The sit-in is finally resolved, and the workers will get their 60 days severance and health care plus wages for the last week they worked.

    One of the glaring insults of this whole sorry incident deal, was the arrogant, self serving demands of the factory owner, demands that threatened to hold up the settlement, until he finally relented. As part of the deal, he wanted the lease on his luxury cars covered, as well as 60 days payment of his $240,000/yr salary. CEO's... . The bank didn't feel obliged to cover his behind.

  • rw (unverified)
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    If heads do not pop out of asses soon, Zara, we shall be asking the elderlies how they will survive the desperate disappointment. They have seen too much.

    Suffering? How much suffering? For how long? And for whom? Ah, you are more hopeful than I. I do not believe in this nation, perhaps. I do not believe in human ability to SEE when it is time or even when it is too late.

    And yet, I utterly believe that should these uber privileged ones turn about face and look to see us here, ally with us and not turn away, and if we should turn willing faces to them rather than the abused faces of long rage, then all of the energies and constructs between us will be transformed by the energy interplay thus created. If they, at that pole should connect with us at this pole, reality will shift.

    We will shift.

    But I only believe in this dynamic principle - not the people who must engage for it to happen...

  • Ted (unverified)
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    For those asking how much of a vehicle is sourced from what country, the answer to that is provided by the American Automobile Labeling Act of 1992 and is adminstered by the National Highway Traffic & Safety Administration. All automakers who sell in the U.S. must comply and this information is presented in the stickers you see on the vehicles at the dealership. Vehicles must be (if I recall correctly) at least 45% domestically sourced for automakers to claim it to be "made in America."

    All "Tier One" suppliers of automotive components (Delphi, Arvin, etc.) must track and report the content of their parts to the OEM (order ending manufacturer). The OEM is then responsible for extrapolating this information against the entire vehicle bill of materials and reporting the content to the NHTSA for compliance. The NHTSA is also responsible for administering the Corporate Average Fuel Economy (CAFE)standards.

  • Kurt Chapman (unverified)
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    More to the political grandstanding. I have no data to back up this prediction; but IF the bailout passes it will mean the death knell of the EFCA as it presently is written. Again, just a prediction.

  • Harry Kershner (unverified)
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    Re: "What totally shocks me is that Bush and the Democratic Congress actually agree on something."

    You mean other than continuing occupation and slaughter, support for clients' crimes against humanity, bailouts of the financial industry, opposition to single-payer, non-pay-or-die health care, increases in military spending, nuclear weapons/power, oil drilling, pro-Taft-Hartley, pro-Patriot Act, pro-FISA amendments, re-defining of torture, no impeachment of war criminals, the ideal of the "free market", worship of everything military, the "centrism" of Gates/Emanuel/Albright et al, the "war on drugs", conspiracy to prevent alternative voices from being heard in national debates, etc.?

    Let's be clear: If Gore/Lieberman had been selected by the Supremes in 2000, Lieberman would have been the DP presidential candidate in 2008, and BO elites would have been calling him "progressive" while the RP would have been calling him "communist". That's their game, and we are their pawns.

    The emperors, new and old, are still naked, but the emperors' courts still see suits of finery.

  • Zarathustra (unverified)
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    Right on, Harry! From the Gulf War to politics, the debate doesn't seem to be any more sophisticated than the boob tube covering a footie match where everyone knows it's going to be a blow-out and they spend all their time with color commentary, and secrets why the favorite will get tripped-up, and how the underdog is actually quite good at xyz, which could be important, etc. All distractions to keep you from the fact that it's a one-sided game and you probably have something better to be doing.

    I wouldn't call BO elites as I agree with Rogers' adage about it not being "an organized party". They are members of the club, though, and having a debate can be like talking about hemp at a Tupperware party.

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