I had thought about the prospect of a taxpayer-backed bailout for the auto industry in the same light as the one for AIG and other large financials. The bailout is actually the lesser of two evils, since these large manufacturers employ thousands of Americans who don't necessarily have any other skill base to rely upon (talk about legacy!); therefore, a larger number of the newly unemployed would not necessarily be able to find work again. Go down one tier, and you have all the suppliers to the manufacturers, which would lose a large portion of their daily business should the Big 3 go under. All their employees would then be subject to the unemployment rolls. One more tier, and you're talking about thousands of corner stores, gas stations, Red Lobsters, IHOPs and grocery stores, out of business, just like that. So. On one hand we have widespread unemployment and business closures. On the other hand we have a crushing tax bill, but at least we're still working and making things.
For those who don't know me, this by no means is an endorsement for the bailout plan. My 2 cents' worth...soon to be 2 cents' worthless. :)
MGD,
I worked for UAL in 2001 when 911 changed everything and rode it out for another 2 years into their bankrupsy... I don't think I spoke out publicly against the company or the reasons behind their bankrupsy until I parted with them in 2003.....Never bite the hand that feeds you eh? I just diddn't think it was ethical or wise to publicly criticize my employer in print. But the forum brushed on the subject.
http://www.aws.org/cgi-bin/mwf/topic_show.pl?pid=22938;hl=bankruptBut I was against the Airline bailouts in 2001-2002 My coworkers thought I was crazy... Ok maybe I am... One of the reasons that motivated me to leave the company was my disagreement with the Mgmt/Union pressure for a government bailout..... It is unethical in my opinion...
At least Iacoca and Chrysler payed back their bailout. (was against that one too)
GM is going to one shift at the LGR plant here in Lansing. This plant makes the Cadillac CTS & variants. One of their most profitable selling cars. Last I knew, the clear profit margin for a CTS was around $9000. The rest, as you pointed out, goes into "Legacy" benefits & overhead. There are aprox. 3 retirees to every one individual actually employed. This current situation will put over 800 locals out on the street. Sure, they will collect unenjoyment & SUB pay benefits, but it doesn't seem real likely they are going to get called back any time soon. Especially if the economy keeps going the way it is. Currently, there are aprox. 5200 total GM employees in town at three plants. 15 years ago, there were well over 11,000.
If the people don't get picked up by Area or Extended Area Hire, they might be better off looking for a job somewhere else. It's hard to say, but when GM had big layoffs here in the late '80's, some of those guys were laid off for over six years. The SUB pay ran out in a big hurry, insurance in 90 days as well. Some guys not even seeing SUB benefits for more than four to six months. After the unenjoyment ran out, that was it. A major slowdown or layoff here would devastate Lansing's economy. Like you also pointed out, MANY, MANY things are linked to the auto industry. If GM goes belly up, a lot of local & other businesses will fail subsequently. Not to mention, retirees losing their pensions. I personally see it coming. I just didn't think they could continue to pay heavy "Legacy" benefits forever, regardless of how much cash they have on hand or continue to make.
It's hard to say. Even though I don't work there any more, I know our local economy is heavily dependent on GM's success. Just look at Flint, MI if you want to see what happens when 80+% of a city's tax revenue & economic support structure disappears. I don't think things look good for GM either way. As far as a bailout, I really couldn't say one way or the other if it's going to fix anything long term. I do think a restructuring, much like the airlines is coming. After declaring bankruptcy, they can relieve themselves of any contractual responsibility to the UAW & offer workers their jobs back at half what they were making before, with a completely different benefits structure. I know a dude that was a mechanic for Northwest in Detroit & it essentially happened that way for them. Not a good situation. Too many GM employees are banking on that $30+ per hour paycheck & free health benefits until they retire. I wouldn't be counting on that a whole lot longer if I were them.
Michigan would tank for sure if the automotive industry went away completely here. Doubtful that is going to happen entirely, but it's not good either way.
FWIW S.W.
Lansing has been getting pounded for about 10 yrs now. My mom is thinking about selling her house there to move to an assisted living facility.
Yeah, I do believe in organized labor. The problem is, when is enough enough? In a lot of non union sweatshops, what you described is commonplace. Demmer is like that here. 12 hours a day, 6-7 days a week. A welder (NOT a weldor, just a MIG monkey) makes about $12 an hour. What would frustrate me at GM was when people would complain about money & say we didn't make enough, when we were getting about 30 per hour, plus benefits without any out of pocket cost for our entire family. They offered a buyout almost 3 years ago & they gave me $70,000 to leave with no return rights. A lot of people told me I was stupid, that I was throwing my pension away. I just thought to myself that there probably wouldn't BE a pension for me twenty years down the road when I wanted to retire.
The way things are looking now, I can only hope the guys I was working with get something when they decide to retire. It's a bad situation, bailout or no bailout. I personally don't see it doing anything but putting a band aid on the situation myself. A coperate restructuring is coming, I'll bet my XMT MIG runner on it. :-)
I didn't know you are from here! Nice to hear from someone formerly local. Metrinka on here is from Ann Arbor. See ya! Steve.
I never thought the "Bailout Phenomena" would get this out of hand. OK, banks. Then mortgage companies. Now Automakers. SOB when will it stop. I guess what any company could do now is start blowing money then once the books looked horrible, ask for a bailout. When WalMart as a pi** poor Christmas sales season, they will hit Uncle Sam up in the Spring just because their ROI is not that big.
The pond is getting too small for all the fish in it. Somebody is gonna have to go. Too bad its probably gonna be us crawdads. LOL
Yep. Not looking good for anyone really. I honestly don't think a bailout will help GM. Not for long at least. It's collapse has been coming for quite some time. It won't be pretty when it happens either. Lansing is the longest continuous manufacturer of automobiles in the history of them. More cars have been made here than anywhere else. When LCA was running seven years ago, we were pumping out over 1000 cars a shift times two shifts! Roughly 10,000 units a week. GM has had a stake here since it's beginning.
My, how things have changed. Us crawdads are screwed. Really screwed. S.W.
It's the same with the bums that bought houses they couldn't afford. Now they are going to get bailed out. It makes you want to stop paying your bills. I'm sorry, but if you are stupid enough to buy a house that you can't afford then you shouldn't be surprised when you lose it.
Edit: I forgot to add that if a person is stupid enough to buy a house they can't afford and then lose it, they've got no right to whine about it.
But in the same breath if someone was making good money a few years ago and lost their job to the current economic crisis, then there would be a good reason why they can no longer afford that house. There is, I am sure, more of those than just your average bum that got a "welfare" mortgage plan. Think about it. I wish I had some numbers but common sense and basic math should be enough. If you went from $20/hr to $10 then there will be reporcussions. I doubt any mortgage company would give out a 200k loan to a "chef" from McDonald's making minimum wage.
I know some people who are on the edge of foreclosure right now because they lost their jobs with no fault of their own. If one can't afford a $1000 house payment they won't be able to afford a $1000 rent payment either.
Bryon: Another factor is that many of these mortgages were variable interest rate. While they may have been able to [barely] make the payments initally, when the rate went up, so did the payment, and they were SOL.
Yep...Buy now, pay later. Those balloon mortgages got a lot of people into trouble. Not a real smart way to go about it IMHO. S.W.
the payment on the house we lost went up 3 times in 6 months cause of a variable intrest note i told my wife not to sign it but she did when we got the house the payment was 1100 in 6 months it went to 1900
F**K. That sucked. ARMs should be outlawed.
Bryon,
I think we can agree to some sympathy for those who have lost their house. I myself lost one when I was unemployed for an extended time. I didn't expect anyone to bail me out. I moved on. And even though the current economic difficulties may be responsible(though in the great majority of cases I do not accept this argument, but for now will do so for argument sake), its not like this is the first time ever for economic difficulties. Mine was the early 80's.
And the fact remains this government simply cannot afford to bail out all the unfortunates. If we try, then we all become unfortunates dependant upon the government.
JS,
There is no arguement here. I have read about some restructuring of mortgages as a requirement of the mortgage companies receiving bailout money. The plan that I read seems to be fair to the victims of foreclosure. A plan should help the homeowners and not kill the companies though.
MDG,
Thank you for your enlightening response. When it comes to "bailouts" I must admit, I have had my head in the sand, and I am in a learning mode right now.
jrw159