The automakers in your grill for a bailout

The automakers in your grill for a bailout

November 23, 2008 by Kevin Dayhoff

In the 1890s, William (Billy) C. Durant, a high school dropout and grandson of Michigan Governor Henry H. Crapo, manufactured horse drawn wagons in Flint, Michigan.

By September 16, 1908, 100 years ago, he had plowed headfirst into the horseless-carriage business and formed General Motors (GM) as a holding company on for Buick.

He subsequently took on overwhelming debt by purchasing the manufacturers of Oldsmobile, Cadillac, Elmore, and Oakland. Greatly overextended, after a dramatic drop in automobile sales, Mr. Durant lost control of the company in 1910 to one of the many powerful bankers’ trusts of the time.

Undaunted, Mr. Durant, went on to form the automobile manufacturer Chevrolet by forming a partnership with Louis Chevrolet and through a series of events involving intrigue and the force of his will; he regained control of GM - only to lose it again, for good after another downturn in the market.

A quarter of a century later, the United Auto Workers was founded in May 1935, during the depths of the Great Depression. Within two years, it gained recognition and clout by a series of strikes against GM and Chrysler. It would be six difficult years before it gained collective bargaining rights from Ford, in 1941.

A hundred years after the formation of the model of automobile manufacturing began in 1908, the management of the “Detroit Three,” Ford, GM and Chrysler, have essentially lost control of their destinies - and companies to the United Auto Workers (UAW.)

The day after the November 4th, presidential election which swept the Democrat Party’s nominee, Illinois Sen. Barack Obama into office and cemented a firm control over Congress, the Detroit Three and the UAW asked to be rewarded for their support by asking for a $25 billion bailout.

Various estimates run as high as $80 million to be the amount of money that the UAW alone raised for now President-elect Obama.

This comes as our nation’s taxpayers are still reeling from the passage of the $700 billion bank bailout in order to reward august financial leaders and conglomerates who behaved badly.

After decades of being blackmailed with the threat of crippling union strikes, the Detroit Three finds itself with uncompetitive work rules. It manufactures products which continue to languish with the perception that they lack the quality of its competitors. It offers vehicle models of which the American consumer has no interest. It makes these products with enormously uncompetitive salaries and benefits and now, the American taxpayers are being charged to bail them out.

No, I’m not making this up and this is not a script from “Saturday Night Live.” It’s real.

However, if you will recall, this is the same union that went on strike a year ago, in September 2007. According to a CBS news account: “While the strike may look like a test of wills, it is really a portrait of weakness, on both sides, reports CBS News correspondent Dean Reynolds.

“GM hasn't had a profit since 2004. It lost $12 billion over the last two years. And while it's making profits this year, they're coming from sales abroad, not here. For the UAW, it's lost 150,000 jobs at GM over the last 10 years amid repeated rounds of concessions, adds Reynolds.”

A year later, the Detroit Three expects the American taxpayer to reward this lunacy by bailing them out. Now that the Democrat Party is relishing being fully in charge of the Oval Office, a majority of the governorships, and both houses of congress, it did not take them long to put the election rhetoric aside.

Recently columnist Charles Krauthammer observed that saving “Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping shed fatally unsupportable obligations.

“For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations, and unworkable work rules such as ‘job banks,’ a euphemism for paying vast numbers of employees not to work.

To revisit what I wrote in another column in “The Tentacle” on November 19, 2008; according to a recent International Herald Tribune news account: “The big U.S. companies employ about 240,000 workers and their suppliers an additional 2.3 million, amounting to nearly 2 percent of the nation's work force.

“The outright failure of General Motors would eliminate the biggest auto employer and more than 100,000 manufacturing jobs. That is about the number of jobs already lost this year at U.S. automakers and their suppliers.

“But many industry experts say the big foreign makers are established enough to take control of the industry and its vast supplier network more quickly than is widely understood.”

Underreported in the last several weeks has been the fact that the auto manufacturers in right-to-work states in the south are not clamoring for a bailout.

According to Mr. Thomas: James Sherk of The Heritage Foundation reports that these Japanese car companies provide their employees with good jobs at good wages: “The typical hourly employee at a Toyota, Honda, or Nissan plant in America makes almost $100,000 a year in wages and benefits, before overtime.”

In the end, the $50 billion corporate welfare, that Congress is asking the American taxpayer to reward the union and corporate leadership for decades of failed leadership, would be better spent on providing support, training and educational benefits to be directed to the American workers affected by the reorganization of the Detroit Three.

Against the backdrop of the Detroit Three threatening the end of the financial and manufacturing world as we know it; the clamor in Washington to reward the bad behavior of the Detroit Three has resulted in the further deterioration of whatever confidence Americans had left in either the government or the corporate captains of finance and industry.

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