The Case AGAINST Bailing Out GM/Chrysler

[captainslug]

They have been LOSING MONEY for years now because of a horribly outdated business model and product line. It is their own fault that they cannot keep up with the market.

[MazdaMatt]

Originally Posted by captainslug

They have been LOSING MONEY for years now because of a horribly outdated business model and product line. It is their own fault that they cannot keep up with the market.

Any business has inputs and outputs. Intput is labour, output is labour cost. What if the labour costs were suddenly divided by three (to NORMAL factory job wages)? They would probably not be losing any money, and they would have the ability to keep up with the market.

This is not workers VERSUS employer here... these sides need to work as a team. You can't be a blood sucking parasite then complain that the host doesn't have the energy to keep producing blood.

[captainslug]

Add to the following to "output cost"

+ gigantic expenses on concept cars that never get made
+ large advertising campaigns for product lines that are not receiving any noteworthy changes over the previous model year

You'd think a company that lost 6 TRILLION dollars in 2006 would be looking for ways to reduce their capital expenses.

[MazdaMatt]

I suppose my deep seeded hatred of all unions and the very concept thereof does not center on GM... yes, they are obviously doing a lot wrong. My beef is that the entire north american auto industry is dieing because of the union tieing the hands of the decision-makers.

I was just discussing this with a co-worker on my break. His friend used to make rims for 14/h. CAW (canadian auto workers union) kicked in the door and upped his wages to 32/hr. Now he's unemployed. He knew he would lose hise job as soon as CAW began to talk to the company. Now those rims are made in mexico... PROFITABLY.

[NeilBlanchard]

Hi Matt,

I'm not sure that you can blame the unions for the wage disparities across the world? Sure, the unions have been (somewhat) subverted, but the basic idea is gain leverage against the power of the people who control the capital. If the auto companies always did the right thing, there would be no need for the unions, and moving jobs to other countries would only happen when additional labor was needed.

[MazdaMatt]

Granted, but my point in that comment was not that the jobs were moved to mexico, its that the company here in Canada was profitable when the workers were being paid a fair 14/h. The employees knew that 32/h was rediculous, but the union forced the management into it with legal b.s. and the company went belly-up. They had no choice but to move to mexico. So did the union protect the workers against the evil giant of management, or did the union screw them out of their jobs and move a good portion of tax-base to another country?

You know how benefited from this? Union reps and union lawyers. The company lost money, the workers lost their jobs, the city lost its taxes.

[Matt Herring]

I read today the amount of money the Big 3 dishes out to retired employees, unions, etc. It's even more interesting to compare that cost to Toyota's (on a per employee basis).

I completely believe the Big 3 lived high on the hog for too long and were short-sighted believing they were bulletproof to any and all outside forces (the "it will never happen to us syndrome"). The Toyota's that didn't even used to be a blip on the Big 3's radar just blazed by them at light speed.

Take this for what it's worth...it's an editorial...link below...

Thomas: Unions the reason Big 3 automakers teetering | CARS AND SOCIALISM

[tasdrouille]

Around here the unions had a reason to exist in the 60s. Laws protecting workers rights changed since then and they are really not needed anymore. Nowadays they tip the balance of powers to their side way to much. You give them an inch, they'll want to take a foot. I don't think it is normal an hs dropout makes an higher salary working on an assembly line than a college graduate. Anyway, that's just my opinion.

If the net balance of the auto industry in the US is not profitable, I say let them die. Someone better adapted to the environment will come to fill the void.

[MazdaMatt]

I think i'd better drop out of this conversation before i get banned... i'm pretty thick-headed about hating unions. Day's pay for a day's work, I say. I shouldn't have to regret going to university for 5 years for a computer engineering degree because a couple of my highschool buddies didn't finish so they could go join the union and make absurd money for dead-simple mindles work. I wonder if they still have jobs...

[Duffman]

Everyone says its GMs fault because they did not adapt and build the right product line. Well GM doesnt make money on small cars because the labor costs on them are so high. Labor costs are largely fixed between small cars and big ones as both still have the same amount of wheels to install, dashes, doors, seats, hoods, trunks....

People are willing to pay $30,000+ on larger cars because they percieve they are getting more, but there isnt 2x the amount of materials over the $15,000 car, so that is where the profit is.