The Auto Industry / UAW Bailout

The Auto Industry / UAW Bailout

of 2008

The Auto Industry / UAW Bailout is merely a political payback for the United Auto Workers union which has spent a lot of its members' money on politicians over the years. The members of the UAW have priced themselves into oblivion by paying people too much to do menial assembly line work.

The automobile industry would thrive if the manufacturers built good cars at an affordable price. They would also have more customers if the dealerships dealt with their customers honestly. Have you tried to buy a new car lately? The salesmen, by and large, are all a bunch of fast-talking crooks. The not-so-friendly service department charges $80 per hour for labor. If ever there was an industry that deserved to go bankrupt, this is it.

Unfortunately our government nannies are bent on "bailing out" the auto industry, which will only postpone the inevitable (bankruptcy) and, depending on where they get the money, will cost the taxpayers a lot of money, sooner or later. Probably sooner.

This page is a spinoff from the page about The Wall Street Bailout.

Obama's Progressive Goose and Our Conservative Gander: When two-thirds of the U.S. auto industry, for years encumbered by unreasonable union demands, finally went belly up, President Obama put GM and Chrysler under direct government control. Big Labor is one of the president's most important and valuable allies deserving a handsome payoff. So he gave a piece of the action to the UAW in spite of its prominent role in steering both auto companies into the ditch.

Labor Unions and the News Media. Union ownership of a company is no guarantee that the unions won't bankrupt it. The United Airlines employee stock ownership plan meant that UAL was eventually owned by its unions, but that didn't stop them from driving it into Chapter 11. ... Having run General Motors and Chrysler into the ground, the United Auto Workers now owns a sizable chunk of both companies — after President Obama bailed them out and made sure the UAW was taken care of first. Does this mean that the union will now look out for the profitability of those companies? Don't count on it.

Unions, Lenin, and the American Way (Part III). [Scroll down] Next is the American auto industry, which has become a gigantic union-run welfare agency whose byproduct happens to be automobiles. An article by Brent Littlefield in Pajamas Media describes the reasons: "An unbelievable $1,500 of the cost of each domestic vehicle pays for UAW (United Auto Workers) health insurance. That's more than was spent on the steel. As a result, Americans shop elsewhere: U.S. automakers produce less than 50 percent of the vehicles Americans now buy."

Bread and Circuses and Obamacare. We've come full circle from the automakers' bailout. As I wrote last November, these bailouts were not to benefit the companies but to preserve from the effects of bankruptcy the gold-plated retirement and health care programs that had driven the automakers to fail. Now two key labor leaders — Gerald McEntee of AFSCME and Richard Trumka of the AFL-CIO — have said that they will oppose the Baucus bill because it taxes the "Cadillac" healthcare plans.

UAW Has Reason to Celebrate This Labor Day. The United Auto Workers (UAW), which donated more than 99 percent of its $25.4 million to Democratic federal candidates in the past 20 years, had a particularly good year, at least compared to other stakeholders as General Motors and Chrysler struggled and were forced into a government-managed bankruptcy by the White House.

Tincture of Lawlessness. The administration proposes that Chrysler's secured creditors get 28 cents per dollar on the $7 billion owed to them, but that the United Auto Workers union get 43 cents per dollar on its $11 billion in claims — and 55 percent of the company. This, even though the secured creditors' contracts supposedly guaranteed them better standing than the union.

Labor in the Driver's Seat. How does the Obama administration love organized labor? Let us count the ways it uses power to repay unions for helping to put it in power. It has given the United Auto Workers majority ownership of Chrysler. It has sent $135 billion of supposed stimulus money to state governments to protect unionized public-sector employees from layoffs and other sacrifices that private sector workers are making. It has sedated the Labor Department's Office of Labor-Management Standards, which protects workers against misbehavior by union leaders.

Obama's Jalopy Co. The problems began last December when the Bush administration, rather than risking taking GM into Chapter 11 and streamlining its bloated union and corporate structure, blinked in a high-stakes game of chicken with the United Auto Workers union and loaned the company $14 billion. ... Well, seven months and a Democratic president later, GM has entered bankruptcy. Guess what? It's on UAW terms and at even greater cost to taxpayers.

Who Drove the Chevy Off the Levy? How on earth did this happen? General Motors, the 100-year-old car company that once employed more than 500,000 workers and had a 50 percent market share, just crumbled into bankruptcy. The government now runs it. ... [Years ago,] Under pressure from American lawmakers, the Japanese built plants on American soil, where they used American workers to produce high-quality cars at a lower cost. If it wasn't clear and unmistakable before, it should have become clear and unmistakable then.

Obama-UAW theft, payoff. President Obama and his advisers are determined to turn control of Chrysler Corp. over to the United Auto Workers in spite of the fact that concessions to the union are largely responsible for the automaker's inability to make a profit. Still, the UAW and other unions were among Obama's biggest supporters and are ready to collect.

You Break It, You Buy It. Now that it's getting majority control of Chrysler, will the United Auto Workers union be willing to enact the kind of genuine workplace reforms that will allow the giant automaker — in President Obama's words — not only to "survive, but to thrive"? We'll see — because that would mean repealing the crippling excesses that helped bring the Detroit giant to bankruptcy. Excesses like mandating overtime pay after just five or six hours of work a day.

Gangster government gives Chrysler to UAW. Give President Barack Obama credit — he at least made the proverbial offer Chrysler's secured creditors couldn't refuse. The way Obama strong-armed creditors who rightfully expected to be treated justly under the law was right out of Juan Peron's playbook. Like the Argentinian strong man, Obama muscled the owners and creditors out of a productive private company and gave it to union leaders, who will then fill his campaign coffers in gratitude for his generosity.

UAW Trust To Get 17.5% Of GM Shares. General Motors Corp. will give the United Auto Workers union 17.5 percent of its common stock, $6.5 billion of preferred shares and a $2.5 billion note to fund a trust that will take over retiree health care costs starting next year. The funding for the trust was outlined in a summary of concessions that the company and union have agreed to as GM tries to restructure outside of bankruptcy.

UAW Fades as Union Shrinks in Size, Power. The United Auto Workers could emerge from the government-led restructurings of General Motors Corp. and Chrysler LLC in a relatively solid financial position: The trust funds for retired union members' health care will own big stakes in both car makers, and veteran workers will continue to make an average of $28 an hour. But from a political standpoint, the union will be left with dramatically reduced clout, and a limited ability to resist future job and benefits cuts.

Geithner: The Fox Guarding the Henhouse? What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they're getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they're getting 40 percent of the stock.

Taxpayers may bail out fat UAW benefits. Bankruptcy is normally capitalism's most effective engine of creative destruction, a necessary cleansing mechanism to free up capital and labor for more productive application. But with Obama administration intervention to package a Chapter 11 filing for Chrysler (and maybe GM soon enough), money from taxpayers who enjoy nothing comparable to the lifetime health care benefits, layoff protection, and retirement pay of the UAW, will be funneled to the UAW's labor aristocrats.

GM Bankruptcy Probable as Obama Shields UAW Benefits. General Motors Corp. may be more likely to end up in bankruptcy based on the Obama administration's willingness to place Chrysler LLC into court protection to safeguard union health-care benefits. With GM and its biggest bondholders at odds over resolving $27 billion in unsecured claims by a June 1 deadline, the Chrysler model indicates that President Barack Obama may resort to bankruptcy to end any impasse over that debt...

UAW Said to Get 55% Chrysler Ownership, Board Seats. The United Auto Workers union's retiree health-care fund will own 55 percent of Chrysler LLC in exchange for cutting in half the automaker's $10.6 billion cash obligation to the trust, people familiar with the matter said. Under the terms of the contract, the trust would get representation on the company's board of directors, said two people briefed on the deal, who asked not to be named because the matter is private.

Sunbeams from Cucumbers. At the Academy of Obama, professors and others devise plans for extracting a new and improved automobile industry from a semi-sort-of-bankruptcy arrangement that — if it survives judicial scrutiny; that is not certain — will give the United Auto Workers 39 percent of General Motors, with the government owning 50 percent. During future contract negotiations, will the union's adversary be an administration that the union helped to put in power? The UAW will own 55 percent of Chrysler, so perhaps the union will sit on both sides of the table in negotiations.

Congressman Urges Obama to Remove UAW's President. A Florida congressman is urging President Obama to be "even-handed" and ask United Auto Workers (UAW) President Ron Gettelfinger to relinquish his job — just as Obama forced the General Motors CEO to resign. Rep. Connie Mack (R-Fla.) said both auto industry bosses "share equal blame" for GM's financial woes.

GM Bankruptcy? Tell Me Another. President Obama rightly says "sacrifices" must be made if GM is to emerge as a viable company. But there's one sacrifice he won't make: his re-election chances, by leaving the fate of the UAW truly up to a bankruptcy judge.

Pulling the Plug On GM Would Help Both Auto Industry And Michigan. Many will of course blanch at the presumed loss of jobs that would result from GM's death, but judging by the high level of unemployment in Michigan, it would be more realistic to say that GM's continued existence under weak management has served as a capital repellant such that capital and jobs will continue to flee the state if GM is saved with the money of others. Worse, business history, from ships to farming to mining, shows that sectors reliant on government help are invariably weakened as opposed to strengthened.

UAW deal limits overtime, raises, bonuses. Concessions with the union are a condition of the $17.4-billion in government loans that the auto makers have received so far. Base wages for UAW workers will remain the same, but the deal limits supplemental pay that laid-off workers receive while they collect unemployment benefits, said the people, who spoke on condition of anonymity because union members have not been told about the terms.

'Car Czar' Could Dictate Models and Prices of U.S. Automakers. The House-passed $14-billion bailout bill for U.S. automakers would give a presidential "designee" the potential power to tell the automakers what cars they could make and the price at which they could sell them. The bill — formally titled the Auto Industry Financing and Restructuring Act — passed the House Wednesday, but appeared stalled in the Senate yesterday. The act would grant sweeping powers to a federal "Car Czar" — an individual the bill merely refers to as "the President's Designee."

No More Bailouts. If our government's economic experts really knew what they were doing, they wouldn't be frenetically experimenting with the people's money, treating billions like nickels. ... The auto bailout and future proposed gargantuan government interventions must be rejected.

Small Business to Get Short Shrift from Obama Administration. As the Ford Motor Company prepares to cash its first multi-billion dollar corporate welfare check and hand part of it over to the union, it's easy to forget that almost exactly a century ago, this multi-billion dollar behemoth with 240,000 employees was just another young small business with big dreams about to launch its next product.

Obama's Auto Industry Repair Dream Team. No reasonably intelligent politician wants to become the Obama administration's car czar. That's because if one or more of our venerable Detroit automakers bite the dust under a czar's watch, it's his or her fault. Since the new president has appointed key administration and cabinet officials to press his aggressive green agenda, there are few advocates for good business judgment to pick from. And probably fewer who have spent time in the driver's seat of a car.

Remember the DeSoto? Interestingly enough, when one looks at where German, Japanese and Korean carmakers have located their factories in the United States, it's clear that they have avoided the "big labor" Democratic states. This aspect of the latest Detroit bailout — that it will have to continue many of the higher labor costs and inefficiencies — may cause it to fail, and the U.S. auto industry along with it.

The UAW's Money-Squandering Corruptocracy. Nero fiddled while Rome burned. The UAW golfed. While carmakers soak up $17 billion in taxpayer bailout funds and demand more for their ailing industry, United Auto Workers bosses have wasted tens of millions of their workers' dues on gold-plated resorts and rotten investments. The labor organization's money-losing golf compound is just the tip of the iceberg.

United Auto Workers Union Worth $1.5 Billion in 2007. The United Autoworkers Union (UAW) had a total net worth of $1.5 billion for fiscal year 2007, according to financial disclosure forms on file with the U.S. Department of Labor. The vast majority of the that (sic) net worth — $1.2 billion — was reported by the national UAW headquartered in Detroit. The remaining $300 [million] belongs to over 200 local UAW chapters spread across the country, several of which are worth upwards of $1 million.

Treasury to Ford: Drop Dead. When the Bush Treasury decided to bail out Detroit, GM and Chrysler quickly said yes to the taxpayer cash, but Ford Motor Co. said it didn't need the money and declined. Ford's reward for this show of self-reliance? Treasury is now helping GM again by giving it a credit pricing advantage against Ford in the marketplace.

Domestic Automakers in ICU. The three domestic automakers employ 150,000 factory workers in the U.S. That's about 30 to 36 thousand more than really needed. Current wage rates and benefits, including pension costs for all current and future retirees, add $1600 to the manufacturing cost of each vehicle. Those are facts, and core problems.

UAW Vows to Fight Salary Concessions. The nation's automakers are preparing to ask for wage and benefits concessions from their workers in early January to meet the conditions of a $17.4 billion federal aid package, but labor officials say they will seek to renegotiate the terms of the bailout rather than make those sacrifices. The remarks by union leaders have set up yet another contentious battle in the auto industry.

Bush Bailout Plan For Automakers Will Test Obama's Union Loyalties. Given the depressed auto market, a positive cash flow cannot be accomplished soon, and GM and Chrysler will be asking for more federal loans when they table their plans by March 31. If the auto market stays depressed into 2010, Ford will likely seek assistance. Given the likely duration of the recession, loans of well over $100 billion will be needed. Much of those could prove gifts, with the loans never truly repaid.

Why not just file for bankruptcy? President-elect Barack Obama and Democrats are facing the first important test of their promise of change, and they are about to land heavily on the side of the status quo in the most embarrassing and contemptible way. In their hyperventilated drive to "save" General Motors (read: the United Auto Workers union), they are deploying our wallets to save a failed business, when real "change" would be bankruptcy, from which would emerge a better and more competitive enterprise.

Hank's Deals on Wheels. Hurry to your local GM dealer, because Hank Paulson has a deal for you. Within hours of receiving a $5 billion lifeline from the U.S. Treasury on Monday, GMAC — the financing arm of General Motors — slashed its car-loan rates and lowered its lending standards to help GM sell, sell, sell. As of Tuesday, GMAC was offering 0% financing on several models — hey, if 0% is good enough for Ben Bernanke, it's good enough for you — and said it would extend credit to buyers with credit scores as low as 621 — right on the edge of subprime territory. The median credit rating is 723.

Your Tax Dollars at Work in GMAC. There are 34 bowl games, which is why you might not have noticed Tuesday's Bailout Bowl (Ball State vs. Tulsa, by the way), in which you could have seen your tax dollars at work. Or at play. The game's real name was the GMAC Bowl. GMAC is known as the "financing affiliate" of General Motors.

GMAC Bailout Highlights Bush Administration's Lawlessness. Last week, the Treasury Department bought a $5 billion stake in GMAC as part of a plan to transform the lender, formerly the financial arm of General Motors, into a bank holding company. The New York Times reported that GMAC wanted to become a bank mainly so it could be considered a "financial institution" and thereby qualify for money from the $700 billion Troubled Asset Relief Program. Yet the Treasury used TARP funds to invest in GMAC. In other words, if the Times has the story right, GMAC received TARP money so it could be eligible for TARP money.

Corporate Jets and Congress. Most of us seem to hate the idea that our corporate executives are able to fly without the normal burdens of lines, delays and bureaucratic hassles. We resent the whole business and our politicians know that so they pile on. Corporations are so intimidated that no corporate jet carries any form of public identification. It is impossible to tell from looking at these planes who owns them.

Auto Bailout Won't Prevent Bankruptcy. This column is about the automobile industry. But I want to begin it with three numbers, because they define the environment in which the fate of the Big Three must be discussed. The first is $13.84 trillion. That's the estimated value of all the goods and services produced in the United States last year. The second is $7.6 trillion. That, according to the Bloomberg News Service, is the current amount for which taxpayers could be on the hook for the bailouts to date of financial institutions. It's more than half the value of the gross domestic product. The third is $4.6 trillion. That, according to Jim Bianco of Bianco Research, is the inflation-adjusted cost of World War II.

Nationalizing Detroit: In the Washington mind, there are two kinds of private companies. There are successful if "greedy" corporations, which can always afford to pay more taxes and tolerate more regulation. And then there are the corporate supplicants that need a handout. As the Detroit auto makers are proving, you can go from being the first to the second in the blink of an election.

Auto Industry to be all but nationalized if bailout goes through. There is nothing "temporary" about this attempt to bailout Detroit. This is as close to the permanent nationalization of an industry we have every gotten if Obama gets his way.

No UAW Bailout. Detroit is in a nose dive, no doubt about that. So is a $50 billion government bailout the answer? President-elect Barack Obama thinks so, and House Speaker Nancy Pelosi points in the same direction with her call for extending "emergency and limited financial assistance" under the $700 billion bailout plan enacted last month. Democrats clearly want something big and something soon for the Big Three.

The Voting Is Far From Over. What the political types in Washington are discussing right now is not really a bailout of the automakers. It's a bailout of the United Auto Workers. It's a union bailout. It's payback for the millions of dollars and thousands of hours union volunteers have poured into (almost exclusively Democrat) political campaigns. These politicians are trying to save union jobs at the current inflated rate ... nothing less.

Detroit Automakers a Relic of the Past. The issue is whether the federal government should bail out, with a capital injection the size of what would have been unthinkable four months ago, General Motors and perhaps the other two U.S.-based auto manufacturers, Ford and Chrysler. As one born and raised in Detroit and its suburbs, who once lived next door to Big Three factory workers and later went to school with the children of Big Three executives, I have mixed feelings about this proposal.

Union Workers at Big Three Automakers Average $73 an Hour. Economists in Michigan, the long-time home of the auto industry, say they don't support the proposed multi-billion dollar bailout of Big Three automakers Chrysler, GM and Ford. One reason why, they say, is the ultra-high labor costs for union workers employed by the Big Three. It costs over $73 per hour on average to employ a union auto worker, according to University of Michigan at Flint economist Mark J. Perry. "Is it right to tax the average worker making $28.50 to bailout workers whose labor cost is over $73 an hour?" Perry asked.

As GM Goes, So Goes the GOP. Are Republicans aware of what they are about to do? When workers, execs, engineers, dealers, salesmen and suppliers are all factored in, the Big Three employ 3 million people who contribute $21 billion a year to Social Security and Medicare, and $25 billion in federal income taxes. Add in all the businesses that depend on the auto industry, and we are talking about one-tenth of the U.S. labor force. As columnist Tom Piatak of Chronicles and Takimag.com writes, 850,000 retirees, and their families, depend for pensions and health care on the Big Three. If they go under, the burden falls on us.

The Editor says...
There will still be automobiles if the Big Three go belly-up, and more demand than ever for parts and service. (The Cubans are still using American cars from the 1950s.) And if some new company builds good affordable cars, they will reap the benefits.

Obama Hears a Giant Sucking Sound. His friends advise Barack Obama to launch a "New" New Deal. Maybe that's because the old New Deal is sinking fast. Fannie Mae was a New Deal creation, subsidizing the securitization of mortgage debt. FDR's successors piled on the subsidies for housing debt and incentives directed at low-income borrowers. Kaboom. Then there's the UAW, born in 1935. For decades the UAW steadily traded away domestic auto market-share to imports and transplants to keep its aging membership toiling away toward their golden pensions and collecting wages and benefits twice those of their competitors.

Chrysler sales drop 53 percent; others not much better. Chrysler said Monday its December sales dropped 53 percent because of the recession and fewer fleet sales, while Toyota Motor Corp. reported a 37 percent slide and Honda Motor Co. said its sales tumbled 35 percent. Ford Motor Co.'s U.S. sales fell 32 percent in December. General Motors Corp. and Nissan Motor Co. both posted 31 percent declines.

In Detroit, Failure's a Done Deal. "Nothing," said a General Motors spokesman last week, "has changed relative to the GM board's support for the GM management team during this historically difficult economic period for the U.S. auto industry." Nothing? Not even the evaporation of almost all shareholder value? ... The statement uses the 11 words after "team" to suggest that the company's parlous condition has been caused by events since mid-September. That is as ludicrous as the mantra that GM is "too big to fail." It has failed; the question is what to do about that.

Auto Bailouts Will Give Us Detroitsky. He hasn't even been sworn in yet, and Barack Obama is starting to reveal what his mantra about "change" really means. It means that we will reject the discredited old model of free-market capitalism and embrace the very promising, progressive new model of Soviet-style central planning. That is the upshot of Obama's proposal for a $50 billion bailout of the Detroit automakers. It is actually a plan for de facto nationalization which will turn the Big Three into permanent wards of the state whose purpose is not to make a profit but to serve the "social goals" set by government.

Who Killed Detroit? To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted, while the clever, far-sighted Japanese, Germans and Koreans prepared and built for the future. I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II.

Automakers Forced to Pay 85- to 95-Percent of Wages to Union Members Who Are Not Working. The Big Three automakers are forced to pay 85- to 95-percent of union wages and benefits to members of the United Auto Workers union who aren't working -- even if their plants have been closed. Industry analysts say union labor agreements that obligate the Big Three to pay millions of dollars to workers who are no longer working are a major reason why the automakers are in trouble -- a problem that no short-term bailout can fix.

GM Downsizing Jet Fleet, CEO Still Flies High. General Motors said today that it is putting two of its five corporate jets out of service because the planes are not being used enough. The top three executives at GM, however, will continue to use the private luxurious jets for all of their business and personal travel, despite a flurry of criticism over the perk following an ABC News report this week.

Should Taxpayers Bail Out GM's Retirees? General Motors' recent 10Q financial report, filed with the Securities Exchange Commission, details the company's slide towards insolvency, indicating GM had only $16.9 billion in ready cash reserve in place as of September 30. But buried in the same voluminous report is another note, indicating that GM has tucked away another $13.5 billion, in trust, to pay for health care for current and future blue-collar retirees, covered by the United Auto Workers labor contracts with the automakers.

The Big Three: Assigning Blame. The Big Three are terminal because their labor costs are too high. Toyota, Honda, or Volkswagen can manufacture automobiles profitably in the United States because their labor costs are lower. The difference is 100 percent due to the United Auto Workers union and the above-market compensation packages that its monopoly bargaining power has extracted from the Big Three for years.

Let the automakers crash. Former House Majority Leader Dick Armey wanted everyone to know: The U.S. government should not bail out the ailing auto industry. They "have failed to keep up in the competitive auto industry," said Armey, who for years represented North Texas in Congress. "High labor costs and inflexible work rules, as well as a failure to overcome negative consumer sentiments, have combined to bring the Detroit-based auto manufacturers to their knees."

No Detroit Bailout. That the Big Three CEOs flew into Washington, D.C., on sleek company jets to beg for a $25 billion taxpayer bailout should not be surprising. After all, these are the same companies infamous for spending half a billion dollars a year to maintain a "jobs bank" for thousands of unneeded UAW employees to sit around and watch television or play cards. ... But America is in no mood to reward a legacy of poor management and unrealistic, inflexible union contracts.

Recent Musings: I know even less about cars than I do about economics, so I have no way of knowing if American cars are as good as those produced by the Germans and the Japanese. But I did hear recently that when pensions and benefits are factored in, a UAW union member makes about $78-an-hour. That works out to about $156,000-a-year. I'm not suggesting that an American factory worker isn't worth it, but how can the company paying out that kind of money possibly sell a car at a competitive price?

Mean Street: Why GM Is Doomed. you're a U.S. taxpayer you ought to read GM's "Restructuring Plan for Long-Term Viability." By the end of next year, you'll own a good chunk of this company, so you might as well familiarize yourself with what's going on there. On first read, you'll think that's too rash a judgment. The document is well-reasoned and thoughtfully crafted. There are lots of numbers "proving" GM's commitment to restructuring. But at its core, it's propaganda aimed directly at warming the hearts of Congress. It is not a viable business plan.

Union-Caving Doesn't Merit Taxpayer Help. With the Big Three facing serious financial troubles and General Motors on the verge of bankruptcy, the American taxpayers, via Congress, are being asked for a bailout. Instead, maybe it's time that GM faces reorganization through bankruptcy court, just like the thousands of other failing businesses that seek protection through Chapter 11.

Bailout Mania Screeches To A Halt. It seems that the alternative mode of transportation taken by the Big Three CEO's to Washington D.C. didn't deliver a different result. At least not now. It appears that the public has had it and Congress is intensely "skeptical" — the new favorite term for "not going to explain to the folks back home why taxpayers should throw more money down a rathole" — about a bailout.

Get Back in Your Jets and Go Away. GM is an absolute basket case and no one seems to want to ask the guy in charge how he let his company get into a situation where it needs an $18 billion dollar hand-out from the taxpayers to stay in business. What about the GM Board of Directors. Where have they been. Taking turns flying around on the corporate jets?

Prepackaged Failure. Congressional Democrats are desperate to bail out the Big Three — but even more desperate to bail out the automakers' unions. After all,the UAW spent more than $11 million in the last election cycle to elect Democrats. They're owed. In recent days, talk of a "prepackaged" bankruptcy has come to the fore. ... It's not the worst idea. But it doesn't stand a chance because the unions reject it out of hand. As UAW President Ron Gettelfinger put it, prepackaged bankruptcy is "not a viable option." Translation: Unions would have to make big, and permanent, concessions.

Bridge Loan to Nowhere. This week, the Detroit Three were back, plans in hand and determined to show that they were appropriately chastened. In the interim, their need for taxpayer cash grew to $34 billion from $25 billion — and GM said it needs $4 billion just to make it to Christmas. But instead of viability, what they've come up with is green political correctness. ... All three restructuring plans are heavy on promises to build the "green" cars that a Democratic Congress wants built.

Let Ford Save Ford. With the Motor City Meltdown entering its third week as Washington's leading melodrama, it occurred to us that not all sources of bailout money have been tapped to jack up Detroit. What about the Ford Foundation? The foundation has an astounding $13 billion in assets.

27 Reasons to Say 'No Bailout!' Senate Republicans in Washington won't have to look far for reason to torpedo the $14 billion auto bailout reportedly all but inked between President Bush and congressional Democrats. In fact, here are 27 good ones — plus change.

Auto Bailout Bill Lists Environmental Goals above Boosting U.S. Auto Sales. The draft legislation that would enshrine in federal law the agreement that President Bush and the Democratic Congress have made to bailout U.S. automakers lists the environmental purposes of the bill above the purpose of increasing sales of American-made automobiles.

$73 an Hour: Adding It Up. The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation. So the number isn't made up. But it is the combination of three very different categories.

Bankrupt Bailout. As the Big Three get closer to securing billions in aid from Congress, what was once called a "bailout" has turned into a plan to nationalize the car companies. Bankruptcy is still the better idea.

$14 billion auto bailout dies in Senate. A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night [12/11/2008] after the United Auto Workers refused to accede to Republican demands for swift wage cuts. The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.

Big Three Automakers Hand Keys to the Government. A burst of bailouts that has led to increasing federal control and ownership of big businesses has set off alarm bells among free-market critics who fear that it's putting America on a slippery slope to a government-run economy. The recent bailout bill to rescue U.S. automakers from insolvency — which proposed giving a government "car czar" unprecedented powers over the companies — was the latest move that had critics sounding the alarm.

United Auto Workers Lash Out at GOP Senators Over Bailout Collapse. The head of the United Auto Workers union lashed out Friday at Senate Republicans — Tennessee Sen. Bob Corker, in particular — blaming them for scuttling the $14 billion auto bailout package approved earlier in the week by the House. GOP objections stalled the measure in the Senate Thursday night [12/11/2008]. Republicans put pressure on the powerful autoworkers union as they tried to squeeze out concessions in exchange for their support.

UAW Is Driving Detroit Off a Cliff. Senate Republicans — led by Bob Corker of Tennessee — had proposed a bipartisan, compromise bill that would not only have saved the bailout, but put the Big Three on the road to long-term recovery. As of 8 pm Thursday [12/11/2008], the Senate buzzed with anticipation that a deal was imminent. And then the United Auto Workers snuffed it. Corker's amendment demanded concessions from the UAW as tangible evidence that the industry was willing to make fundamental structural reforms before risking taxpayer money on loans to failing businesses. But the UAW refused to accept pay parity with non-union foreign automakers by the end of 2009.

Rewarding Failure. A chart making the rounds on the Internet tells it all: Last year, Toyota made 9.37 million vehicles. GM, virtually the same number. Yet, Toyota made a profit of $38.7 billion on its global operations, or $1,874 per car, while GM lost $38.7 billion, or $4,055 a car, almost entirely due to its operations in the U.S. Even so, the UAW vowed to make no big changes unto 2011, when their current deal expires. That basically would lock in the Big Three's lack of competitiveness for at least three more years, requiring billions and billions more in bailouts or bankruptcy.

Bankruptcy Is the Perfect Remedy for Detroit. While Washington tries to arrange a bailout, the Detroit Three auto makers and their union, the United Auto Workers, keep insisting that bankruptcy would be the kiss of death. Not so: a Chapter 11 bankruptcy filing will likely result in a stronger domestic industry.

UAW Gave $1 Million+ to Pro-Bailout Congressmen. Over the past month, accusations have been flying against several Southern senators who oppose a $14 billion bailout for the beleaguered big three automakers and support the the alternative of Chapter 11 bankruptcy. These senators, critics say, are representing the interests of foreign automakers that donate heavily to their campaigns. But what has been largely ignored is the other side of the equation — the influence of the United Auto Workers (UAW) on the members of Congress that voted for the bailout.

Unions Fight to End American Capitalism. While Americas trade unions are hardly conspiring to bring capitalism down about our ears, trade union leadership couldn't care less about the current economic crisis. They're still pushing for their perks. The union leadership is no longer in business to create decent jobs — the union leadership is in business to boost its own power. Take the Big Three automakers, for example.

Next Under the Bus: UAW? Should we, the people, be tithed to save the grand old American auto manufacturers of Detroit, and the unknown number — the figure three million is being kicked around — of other jobs that depend on them in some secondary way? The generality of opinion among conservatives, which I share, is that we should not. For all our disagreements, there are come core issues we are unanimous about, and one of them is that government should not be running businesses. Amtrak and the Postal Service are quite enough socialism for us — too much, for most of us.

Union Workers at Big Three Automakers Average $73 an Hour. Economists in Michigan, the long-time home of the auto industry, say they don't support the proposed multi-billion dollar bailout of Big Three automakers Chrysler, GM and Ford. One reason why, they say, is the ultra-high labor costs for union workers employed by the Big Three. It costs over $73 per hour on average to employ a union auto worker, according to University of Michigan at Flint economist Mark J. Perry. "Is it right to tax the average worker making $28.50 to bailout workers whose labor cost is over $73 an hour?" Perry asked.

Give Unions a Bitter Pill to Cure the Big Three. The Big Three US auto makers need more than an injection of $25 billion from the federal government. Because of their ongoing losses, they would burn through that money in less than a year and would soon be back for more. General Motors, Ford and Chrysler can make excellent cars, but they cannot sell them at prices that are competitive with the prices of cars produced in the United States by Toyota and others or with the prices of cars imported from Europe and Asia. The basic reason is the labor costs imposed by union contracts.

In Detroit, Failure's a Done Deal. Congress could help the Detroit Three by allowing them, when meeting CAFE (corporate average fuel economy) standards imposed by Congress, to count fuel-efficient cars they import from their overseas factories. Congressional Democrats oppose that because those imports are not made by members of the United Auto Workers. Those Democrats, their rhetoric notwithstanding, really care most about the union. "Saving the planet" comes second and last comes the health of the auto companies.

The Big Three: Assigning Blame. The Big Three are terminal because their labor costs are too high. Toyota, Honda, or Volkswagen can manufacture automobiles profitably in the United States because their labor costs are lower. The difference is 100 percent due to the United Auto Workers union and the above-market compensation packages that its monopoly bargaining power has extracted from the Big Three for years.

Some autoworkers can get paid without leaving home. For more than two decades, many autoworkers who lose their jobs have been able to enjoy one of the best unemployment benefits in the nation: receiving nearly full paychecks without even leaving home. Since the 1980s, the industry's "jobs bank" has allowed thousands of laid-off workers to get paid for staying home or sitting in a union hall.

The Big Three's real union problem. Even if a deal for a $15-billion to $17-billion preliminary bailout comes together this weekend to keep carmakers afloat into 2009, they will continue to be dogged by their most significant competitive disadvantage: a high-priced, unionized workforce. After all, hasn't it always been the central goal of labor unions to maximize the per capita wage bill — including medical and retirement benefits — paid out to its membership? Maybe the UAW is simply too good at what it does.

Who's Losing the U.S. Car Business? Right after the UAW vetoed a compromise, bankruptcy-lite, Detroit-little-three rescue plan put together by Tennessee Republican Bob Corker, UAW president Ron Gettelfinger played the blame game by blasting Corker and the Republican party for "singling out" union workers to shoulder the burden of reviving the U.S. car business. In truth, the UAW is to blame.

Your union dues at work...
Autoworkers Union Keeps $6 Million Golf Course for Members. The United Auto Workers may be out of the hole now that President Bush has approved a $17 billion bailout of the U.S. auto industry, but the union isn't out of the bunker just yet. Even as the industry struggles with massive losses, the UAW brass continue to own and operate a $33 million lakeside retreat in Michigan, complete with a $6.4 million designer golf course. And it's costing them millions each year.

Make UAW Sell its Championship Golf Course Before a Bailout. Golf Digest named Black Lake as one of top "upscale public courses." And Michigan Golf described the course as a "classic" that includes "wide, well-groomed fairways [that] provide ample room for big hitters." But some big hitters get special privileges at Black Lake. Tee times can be reserved up to two weeks in advance by UAW execs, compared to only three days for non-UAW duffers. Cost to play Black Lake is $95 per round.

The 10 Republican Senators Who Voted for the UAW Bail Out:
Brownback (R-KS)
Bond (R-MO)
Collins (R-ME)
Dole (R-NC)
Domenici (R-NM)
Lugar (R-IN)
Snowe (R-ME)
Specter (R-PA)
Voinovich (R-OH)
Warner (R-VA)

News and commentary about the UAW before the bailout

Auto workers launch $3 million ad campaign for Obama. The United Auto Workers union launched a $3 million advertising campaign on Tuesday [10/7/2008] to spur Democrat Barack Obama's presidential campaign, with less than a month to the U.S. election on November 4. The ads, which feature UAW members talking about lost health care benefits and the loss of manufacturing jobs, will run on television, radio and Web sites in the key manufacturing states of Indiana, Michigan, Ohio and Pennsylvania.

As expected, UAW endorses Obama for president. The United Auto Workers union has given its expected endorsement to Democrat Barack Obama, while criticizing Republican John McCain as an heir to President Bush's policies.

UAW Membership Drops Below 500,000. United Auto Workers union membership has fallen below 500,000 for the first time since World War II, reflecting the massive restructuring undertaken by Detroit's automakers. The union reported Friday [3/28/2008] in a filing with the Labor Department that it had 464,910 members by the end of 2007, compared with 538,448 at the end of 2006.

They have to be told?
UAW tells workers to stop vandalizing non-Ford cars. A United Auto Workers official is warning workers to stop vandalizing non-Ford cars and trucks parked at the automaker's Kansas City Assembly plant, according to a leaflet posted online.

UAW boss: The worst is upon us. Since the last UAW convention four years ago, the three Detroit automakers have cut production of new cars and trucks by 1 million vehicles, while nonunion plants have increased production by more than 1.1 million.

The UAW's Slow Death: No longer can the UAW bring Detroit to its knees. In its heyday, the UAW had more than 1.5 million members; today, it claims only 640,000 active workers, and its major goal in negotiations with the big car companies is to keep that number from shrinking. But the battle ultimately may be a losing one — and the union is largely to blame.

Chrysler offers $100,000 buyouts to UAW plant workers in Metro Detroit. Chrysler employs about 12,000 United Auto Workers members at its 10 Metro Detroit manufacturing sites. Any worker with more than 1 year experience — and very few Chrysler factory workers are of that short tenure — is eligible to accept a $100,000 buyout.

Thanks to the Auto Workers Union. Thanks to the UAW, GM has so-called Monday-morning automobiles. That is, automobiles poorly made for no other reason than because they happened to be made on a day when too few workers showed up, or too few showed up sober, to do the jobs they were paid to do.

The tragedy that is General Motors: To compensate [for high labor costs and heavy bureaucracy], GM uses cheaper materials and specs down components. Consequently, GM vehicles are less attractive, and their five-year reliability records lag behind vehicles sold by Toyota and Honda. Check out the cheesy interiors of recent Chevy offerings, and the reliability data published in Consumer Reports. Only a fool would pay as much for a GM product as for a product from Toyota or Honda.

Clueless Labor Leaders: As a result of its United Auto Workers-brokered "job security" agreement, in 2005 Delphi paid around 4,000 workers (almost 10 percent of its U.S. workforce) not to work. The Detroit News reports that this arrangement is projected to cost Delphi $630 million over the next four years.

Automakers Forced to Pay 85- to 95-Percent of Wages to Union Members Who Are Not Working. The Big Three automakers are forced to pay 85- to 95-percent of union wages and benefits to members of the United Auto Workers union who aren't working -- even if their plants have been closed. Industry analysts say union labor agreements that obligate the Big Three to pay millions of dollars to workers who are no longer working are a major reason why the automakers are in trouble -- a problem that no short-term bailout can fix.

Freightliner Faces Federal Prosecution. The Regional Director for the National Labor Relations Board has filed a formal complaint and agreed to prosecute Freightliner LLC for federal unfair labor practices after an autoworker suffered retaliation for questioning a pattern of special treatment given to United Auto Workers union officials by the company.

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