Tag Archives: gm

GM + UAW: Not a winning combination


Big Three Bailout? Not So Fast, Declan McCullagh Says A Better Solution Is To Let The Automakers Declare Bankruptcy – CBS News
One of the best reasons why Detroit automakers should not receive a bailout can be found in a General Motors “Jobs Bank” program that, bizarrely, pays employees not to work.

A beneficiary of that program was someone named Jerry Mellon, who worked for GM until his division merged with another in 2000 and he was no longer needed. Except for a brief period in 2001, Mellon received his full salary for not working, which reached $64,500 a year by 2006. Include benefits, and the annual cost to GM exceeds $100,000.

To earn his pay, Mellon was given the formidable task of showing up in a windowless shed, sitting at a table, and doing nothing for eight hours a day for six years, according to a profile in the Wall Street Journal. Jobs Bank employees have the option of attending classes teaching such important manufacturing skills as dealing blackjack and poker. Mellon spent part of his time reading Reader’s Digest, learning how to play Trivial Pursuit, napping on a makeshift bed of chairs pushed together, or simply staring at the wall for hours at a time.

We can’t afford to have companies like GM around, or unions like the UAW.

Socializing General Motors for the Public Good

The news that Deutsche Bank considers GM shares to be worthless helps us understand the Detroit bailout talks that are underway.

If GM shares are expected to be worth nothing regardless wehther or not there is a bailout, then the choice is not between rewarding shareholders or punishing them: the choice is between whether we should process the bankruptcy of General Motors through the exeuctive or judicial systems.

Thus, the question becomes more technical, and the ranges of possible answers less troublesome.

Still, some things are clear. GM has attracted workers through a system of unsustainable benefits, and those who “gambled” on a company being able to pull it off are in the same boat as those who gambled on housing pricies always going up. From this disaster we need to build a national health care system that business can love.

It also means that we should use this opportunity, where the corporate structure of GM is dependent on federal generosity and shareholders are going ot be wiped out anyway, to optimize the American auto industry for hydrocarbon efficiency. Cars like the Saturn Vue plug-in hybrid should not be delayed. Likewise, any support for GM must work alongside a geogreen stimulus to get us off foreign hydrocarbons and help protect us from Gap states like Russia,

I have said before that Russian leader Vladimir Putin is notable incompetent. Tom even calls him “stupid.” He is a Saddam Hussein with nuclear weapons and an economy the size of Portugal. Putin and leaders like him are nothing to fight a “new Cold War” over — but we need to think hard about every dollar we send to Putin and buddies.

Fixing Medicine (dailyKos is Right)

GM loss, Wal-Mart, and universal health care,” by kos, Daily Kos, 20 April 2005, http://www.dailykos.com/story/2005/4/20/11223/3967.

Daily “Screw ‘Em” Kos correctly identifies a serious drag on the American economy

GM and Wal-Mart can be potent allies in a new (and this time successful) push for universal health care. It would be the ultimate corporate welfare, instantly adding billions to the bottom line of American businesses, yet at the same time helping insure the entire nation.

The instincts of the American left is to fight Wal-Mart and demand it cover its workers, when we have an opportunity to perform political jujitsu with the fiercely Republican Waltons and turn the battle for universal health care into a lopsided fight with Big and Small Business, Labor, and the progressive alliance, versus the American Taliban (who in all their supposed compassion would fight this to the end).

I can’t, for the life of me, understand why a coalition hasn’t formed around the issue yet. It’s a no-brainer.

Earlier in the post, kos linked to a story describing GM’s health-care driven troubles. But it’s not just big companies that suffer.

One of my greatest professors is locked into a job against his will. He is a former Consultant and generally a mover-and-shaker. However, it is basically impossible for him to find different work than what he has because of a serious medical condition. His current work insurance pays it, but it is unlikely any other would. This is a broken price system which does not allocate labor efficiently.

We need to fix medicine in the United States. There is a crisis. Hopefully Democrats and the left can be a constructive part of the solution. Sadly, their recent childishness is not a good sign.

Update: Professor Bainbridge calls it a “terrible idea.” But it’s not a terrible opening for a better world.

Pension Health

“Raw Nerves in Motown: Making money remains tough for America’s big three carmakers,” The Economist, ppg 58-59, 15 January 2005.

It’s hard to find a more apt example of the Social Security crisis than what is happening to pensions in the car industry. Huge greying behemoths, tied down by increasing unaffordable pensions, are becoming a shadow of their former selves. New competitors, relying on 401ks and more modern retirement vehicles, are winning market share hand-over-fist. Perhaps not coincidentally, the inflexible 1930-era dinosaurs are based in a blue state (Michigan), while the nimble new entrants are in red states.

One reason for the (belated) success of Japanese firms in light trucks is their effort to promote themselves as “domestic.” Last year, Nissan sold 985,000 vehicles in America — and built 950,000 of them in Tennessee and Mississippi. Toyota’s TV ads stress the billions of dollars it has invested in America and the size of its American payroll.

Faced with this, it was hardly surprising that GM’s chairman, Rick Wagoner, could manage only a strained smile when he posed in front of the Sequel, a prototype fuel-cell vehicle. The hydrogen-powered car, he said, would put GM at the forefront of automotive technology. But few expect the technology to be ready for mass production soon. Meanwhile, GM must content with the crushing burden of health-care costs for current and retired workers: $4 billion a year, roughly $2,000 for each vehicle it makes in America.

Pensions aren’t the only mess. America’s wildly unaffordable health care system are also dragging workers down

Without its health-care costs, GM would show decent profits in its North American business