Are you a part of The WOKV Insider? Sign in or join now. Why join?
Text size: A A A
Jamie Dupree

Auto Bailout Angst

By
Jamie Dupree
@ November 13, 2008 12:00 AM
Permalink | Comments (0) | TrackBacks (0)
You didn't have to go very far on Wednesday in the Congress to hear concerns about the idea of extending special Wall Street Bailout funds to the Big Three US Automakers.

While Democrats endorsed the idea of action and set hearings for next week on the idea to use money from the Wall Street bailout plan approved in October, some Republicans were raising red flags.

"Why are you going to take my tax dollars and give it to a company that pays their employees $75 an hour?" asked Rep. Spencer Bachus of Alabama at a House hearing.

"I think people that are going to be more hostile is the saw mill worker in my district who is only making $15 an hour," Bachus added.

Over at the White House, pesky reporters were trying to zero in on what the Bush White House will or won't do when it comes to possibly having a company like General Motors go into bankruptcy.

White House Press Secretary Dana Perino was trying to answer, but trying not to say too much to questions like, "Will you allow one of the automakers to fail, or will you step in?"

"Hopefully the companies will be able to figure out a way to survive and it won't ever come to that. But it's just too early to say, and I shouldn't speculate on it," Perino said at a briefing.

The Treasury Secretary wasn't much more forthcoming at his own briefing, where his reaction to the idea of using bailout money for US automakers was much like the reaction of a kid who just bit into some food they don't really want to eat.

Paulson told a news conference that "any solution has to be one leading to long term viability."

In other words, he doesn't want to sink money into a company that doesn't have a business model which returns a profit.

Talk radio meanwhile focused on the fact that the General Motors health plan is world's leading buyer of Viagra, at a cool $17 million per year.

Yep, you read that right.

That's one of those statistics that can be devastating in a debate like this. Overall, GM spends over $5 billion on health care each year.

Note to the United Auto Workers union: If you think you're going to get a cash infusion easily from the Congress - even with larger Democratic majorities in January - you might want to take a deep breath first.

Ironically, it's the Republicans that are probably more ready to abandon GM, Ford and Chrysler, after years of protecting them from higher gas mileage standards, tougher safety standards and more.

Now it's the Democrats who might get to preside over the breaking of the UAW union contracts, because if you are going to save GM - or watch it go through bankruptcy - then there will have to be some major changes in pay and benefits.

One other note - if GM goes bankrupt - just think of the pension costs that will likely be dumped on the federal government.

Just another thought.

Your taxpayer money at work.



0 TrackBacks

Listed below are links to blogs that reference this entry: Auto Bailout Angst.

TrackBack URL for this entry: http://wsbradio.com/blogging/mt-tb.cgi/12386


Avg. rating: N/A

What others are saying

  • Auto workers & Execitives
    I think that ALL employees should take a 25% decrease in pay across the board.
  • Overpaid Autoworkers
    Do not punishjust the autoworkers, make sure the executives get hit to. Autoworkers should voluntarily have their pay cut at by $10 - $15 an hour. Executives should lose an average of 15% to 20% of base pay with no incentives. Then focus on making vehicles people can afford. Who needs power windows and doorlocks and fancy seats? And to heck with Chrysler since they are privately held anyway. Make me a truck with auto, ac, and cruise and I am happy.

    If that does not work, let em go bankrupt then.
  • Labor vs. Wages vs. Profit
    It doesn't take a genius to understand the difference between labor costs, wages and profit. Clearly, Saxby is a long way from genius territory.

    When we talk about labor costs, we're talking about all costs of labor divided by man hours. Let's take a manufacturer who has been in business for sixty years, and pays a lot of money for retiree benefits and pensions. Next door there's another manufacturer who just opened. They both pay wages of $10/hour, but the retiree costs raise the established company's labor cost to $14/hour.

    Or consider a manufacturer opening a plant in Detroit, and another opening across the river in Windsor, Ontario. They both pay $10/hour, but the Canadian workers are covered by national health plan and the Detroit workers get employer-provided insurance at $1.50/hour. Wages are the same, but the Detroit company's labor costs are higher.

    Let's go back to that first plant. It's experienced workforce is very efficient, and it has invested in state-of-the-art equipment. The new factory next door has tried to open "on the cheap", has less experienced workers, and requires manual assembly for functions where the established factory uses robotics. As a result the established factory produces a widget in 20 labor hours, and the new company produces a widget in 28 labor hours. Despite the fact that the established factory has a higher labor cost, it has the same profit as the new factory. Now let's assume that its legacy costs are lower - $2/labor hour instead of $4. Despite paying $12/hour for labor as compared to the new factory's $10/hour, the established factory is considerably more profitable.

    Doesn't anybody read Thomas Sowell?
  • Bailout
    I recently, within the last 5 years, worked in the finance industry. My company, a non-automaker owned finance company, used to make loans to factory line workers, among other types of workers in the Michigan area. I was an underwriter and used to see their paychecks and W2 statements. It was not uncommon to have a 20-22 year old person with a high school education making $100K-$120K per year. Those wages did NOT include benefits as everyone in the auto industry wants us to think. Now keep in mind, that did include overtime. Still, $100K for a high school educated line worker. I don't blame the worker. It is the result of the unions fighting for these wages on the workers, but I do blame the US public for blindly allowing it by buying from these companies. As I see it, by supporting the problem and buying from these companies, the American public has asked for whatever they get in the way of higher taxes to bailout these companies. These wages that I used to see with my own eyes may not be applicable today with all of the cutbacks, but those wages 5 years ago have put us where we are today. In addition to that, Michigan has one of the highest foreclosure rates in the country, and when there was an initial tightening in the economy, the first thing these auto companies did was cut overtime, which then hurt the worker relying on that income to pay their bills, and has thus further increased the foreclosure market in Michigan. If the government decides to go through with the bailout for the automotive industry, I will NEVER again but an American made car. I am from Michigan and a veteran and I love America, but I think that we need a big wake up call. These trends have continued for far too long. The unions were originally helpful in insuring fair wages and working conditions, but they may be the demise of the auto industry.
  • auto bailout
    $75 hourly wage-incorrect and grossly misleading; perhaps the honorable Rep. Bachus was referring to the wages and benefits of the auto workers in Alabama; as infant mortality declined in 'Bama yet
  • poor?
    $75 an hour (even if it includes benefits) isn't poor (that is something like $100,000 a year after taxes). The reason senate democrats and B. Obama are supporting this bail out is because the UAW provided millions of dollars to B. Obama's presidential campaign. This is bail out is mostly about Senate Democrats paying back their special interests (UAW). If you are really convinced that the Democrats are pushing this bail out because they think it is going to help the economy, you are hopelessly mistaken. This is politics plain and simple and it is going to cost our children an increase in taxes (who may never see a $75 an hour job in their life). I actually agree with Clinton economist Robert Reich in demanding the first condition of this bail out would be to cut wages and benefits for UAW workers. I also believe it should stipulate a cut (as in zero) in benefits and bonuses to CEOs who dont perform. Other stipulations should be a shift to affordable alternative fuel vehicles and a reduction in vehicles with high fuel consumption.
  • poor?
    $75 an hour (even if it includes benefits) isn't poor (that is something like $100,000 a year after taxes). The reason senate democrats and B. Obama are supporting this bail out is because the UAW provided millions of dollars to B. Obama's presidential campaign. This is bail out is mostly about Senate Democrats paying back their special interests (UAW). If you are really convinced that the Democrats are pushing this bail out because they think it is going to help the economy, you are hopelessly mistaken. This is politics plain and simple and it is going to cost our children an increase in taxes (who may never see a $75 an hour job in their life). I actually agree with Clinton economist Robert Reich in demanding the first condition of this bail out would be to cut wages and benefits for UAW workers. I also believe it should stipulate a cut (as in zero) in benefits and bonuses to CEOs who dont perform. Other stipulations should be a shift to affordable alternative fuel vehicles and a reduction in vehicles with high fuel consumption.
  • $ 75 dollor wage
    Does poor old Joe the plumber know about this. Dosent he live up in that part of the world ?
  • auto workers pay
    If I look at my military pay as physician and a full colonel with over 30 years of military service, the average pay of a detroit auto worker multiplied by 40 hours and then by 4 weeks and then 12 months, their compensation is more than I received on active duty, even when in Afghanistan. Is that comparable worth? The US auto workers are overpaid and that is one reason I'll continue to buy foreign cars.
  • $75 / hour source (Salary and Benefits)
    I think that the source for those come from a 2006 Forbes article. It includes both Salary and Benefits for big 3 automakers. Workers for Honda and Toyota made a little over half the amount of Chevy Ford and Chrysler.
  • Total
    The $75 an hour figure is based upon total benefits. The issue is that auto workers receive full medical coverage during their retirement as well and other perks. Total cost of all benefits for US auto companies equals $75 an hour. In comparison Toyota pays in total around $40 an hour after benefits, still high, but not insane. This is according to a CNN report that was on last night, I assume CNN did its homework.
  • Don't blame GM or the UAW for the $17M, blame Pfizer!
    I did some math regarding the statement "GM spends 17 Million a year on Viagra alone". First, GM employs ~275,000 people. The average Viagra pill (100 mg) costs ~$17 per pill. Therefore, GM's health plan dispensed ~1 Million viagra pills last year or 3.6 pills for every employee. That doesn't seem to be too far out of line considering that they usually sell Viagra in 10 pill increments and the average person probably takes one pill a week. Divide 1 million pills by 10 pill increments (100000) and then divide that by 5 (the number of 10 pill bottles a person would get at 1 pill per week over a year) and you get 20,000 - the number of GM employees that are on Viagra. Only ~7.3% of GM's workforce is actually using the stuff.

    The point? Blame Pfizer for that $17M figure, not GM or the UAW. And no, I don't work in the Auto industry, I just think facts are relevant.
  • $75/ hr inclusive
    I don't have facts, but I heard that the $75/hr figure is not straight wages. It includes health care costs and other benefits.
  • It's not 75$ pure salery. That includes the benifits. http://chryslerlabortalks07.com/Economic_Data.rtf
  • wow wow wow $75/Hr ????!!!????!!!????!!!
    $75/Hr ????!!! is this real ?
    Source ?
  • Poor people getting paid?
    This is so sad, how could the rich people allow the government to allow those poor people a good livable? All the UAW does is rip off rich Ceo's like myself and give it to the stupid factory workers (even Chinese can do this crap @ 5 cents an hour) allow capitalism to work and gank the poor. I knew I should of voted for McCain. F the poor!
  • Total Distortion Here
    Note that the $75 figure has no details or references. That is an annual salary of $156,000. I don't know any line workers making that much.

    FWIW, I am against bailing them out -- but lets not lie to make a point.
  • Bwaaaaahahahahaha
    It is imperative that these companies be allowed to fail if that is what the market demands. You can't legislate a bad business into a good one. You can't pay obscene salaries to workers who don't deserve it. And you can't ever, in a million years, let unions get hold of your production lines.

    Lesson learned.
  • BAILOUT
    NO LOANS – BUT DON’T KILL THE HEARTLAND

    It depends on HOW a bailout is structured, but one should be attempted.

    BAILOUTS ARE COMPLEX BEASTS, but Try something outside the box like this to save the U.S. Auto Industry - - -

    http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html

    Toyota and Honda also depend on the same suppliers who feed GM and FORD. No need to let “Detroit” disappear.

    There is also much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW.
  • bailout
    This is so sad. What has happened to this country? I always thought that when a company mismanaged itself, they had to pay the consequences. This may be bankrupcy or just failing. This is exactly what should happen to the auto industry. The best thing that could happen would be for them to re-organize without the UAW. Let capitalism work!
send to a friend  view as printer-friendly  RSS feeds
advertisement

Jacksonville weather

Fog/Mist
63°F
5-day forecast
advertisement

Marketplace

WOKV Store
Books by Neal Boortz, Sean Hannity, and Clark Howard are now available in the WOKV store!
Experts

Our weekend experts are live and local,
and ready to answer your questions!
Travel Channel
Need to get away or planning a vacation? Let us, and our partners at Travel Channel, help. Click here to find out more.
Gas Prices

Before you fill up check out Jacksonville's lowest gas prices!
WJXT Partner

WOKV is a proud news partner of WJXT-TV 4
advertisement
Fox News Partner

WOKV is a proud news partner of Fox News
careerbuilder Whether you want a new job or a new career, you can find it in our Local Job Guide
Special Car Deals

Check out the great car deals in Jacksonville