...should Congress help bailout the autos?

quitlittering wrote:....



...at first glance no.

But they say the autos have $20 bill unencumerd assets. Front them the $$$$ but secure the $$
w/ these assets.

Unions need to go. Unions are a real problem in the USA expense cost structure, I'd say.

Let Detroit Go Bankrupt

By MITT ROMNEY
Published: November 18, 2008
Boston

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

Mitt Romney, the former governor of Massachusetts, was a candidate for this year’s Republican presidential nomination.

Jobs bank programs -- 12,000 paid not to work

Big 3 and suppliers pay billions to keep downsized UAW members on payroll in decades-long deal.


By Bryce G. Hoffman / The Detroit News

<table cellSpacing=0 cellPadding=0 width=250 border=0><tr><td vAlign=top> Morris Richardson II / The Detroit News Laid-off GM worker Socorro Tijerina sorts donated clothes as part of a community service effort organized by the UAW. </TD></TR></TABLE> Close out jobs bank? With thousands of laid off autoworkers costing the auto industry hundreds of millions of dollars for their jobs banks, is it time the auto industry shed itself of this program? <table width=150 border=0> <tr><td class=sans-2 align=right></TD> <td class=sans-2 align=left>Yes</TD></TR> <tr><td class=sans-2 align=right></TD> <td class=sans-2 align=left>No</TD></TR> <tr><td class=sans-2 colSpan=2> Get results and comments </TD></TR></TABLE> Previous coverageDelphi: GM, UAW deal soon -- or else Miller says Delphi can no longer afford jobs banks, some plants UAW says Delphi asks too much GM to hire 900 at Orion plant GM may close more factories <table cellSpacing=0 cellPadding=0 width=212 border=0><tr><td vAlign=top> </TD></TR></TABLE> Comment on this story Send this story to a friend Get Home Delivery

WAYNE -- Ken Pool is making good money. On weekdays, he shows up at 7 a.m. at Ford Motor Co.'s Michigan Truck Plant in Wayne, signs in, and then starts working -- on a crossword puzzle. Pool hates the monotony, but the pay is good: more than $31 an hour, plus benefits.
"We just go in and play crossword puzzles, watch videos that someone brings in or read the newspaper," he says. "Otherwise, I've just sat."
Pool is one of more than 12,000 American autoworkers who, instead of installing windshields or bending sheet metal, spend their days counting the hours in a jobs bank set up by Detroit automakers and Delphi Corp. as part of an extraordinary job security agreement with the United Auto Workers union.
The jobs bank programs were the price the industry paid in the 1980s to win UAW support for controversial efforts to boost productivity through increased automation and more flexible manufacturing.
As part of its restructuring under bankruptcy, Delphi is actively pressing the union to give up the program.
With Wall Street wondering how automakers can afford to pay thousands of workers to do nothing as their market share withers, the union is likely to hear a similar message from the Big Three when their contracts with the UAW expire in 2007 -- if not sooner.
"It's an albatross around their necks," said Steven Szakaly, an economist with the Center for Automotive Research in Ann Arbor. "It's a huge number of workers doing nothing. That has a very large effect on their future earnings outlook."
General Motors Corp. has roughly 5,000 workers in its jobs bank. Delphi has about 4,000 in its version of the same program. Some 2,100 workers are in DaimlerChrysler AG's Chrysler Group's job security program. Ford had 1,275 in its jobs bank as of Sept. 25. The pending closure of Ford's assembly plant in Loraine, Ohio, could add significantly to that total. Those numbers could swell in coming years as GM and Ford prepare to close more plants.
Detroit automakers declined to discuss the programs in detail or say exactly how much they are spending, but the four-year labor contracts they signed with the UAW in 2003 established contribution caps that give a good idea of the size of the expense.
According to those documents, GM agreed to contribute up to $2.1 billion over four years. DaimlerChrysler set aside $451 million for its program, along with another $50 million for salaried employees covered under the contract. Ford, which also maintained responsibility for Visteon Corp.'s UAW employees, agreed to contribute $944 million.
Delphi pledged to contribute $630 million. In August, however, Delphi Chairman and Chief Executive Officer Robert S. "Steve" Miller said the company spent more than $100 million on its jobs bank program in the second quarter alone.
"Can we keep losing $400 million a year paying for workers in the jobs bank and $400 million a year on operations? No, we cannot deal with that indefinitely," Miller said in a recent interview with The Detroit News. "We can't wait until 2007."

Guaranteed employment

The jobs bank was established during 1984 labor contract talks between the UAW and the Big Three. The union, still reeling from the loss of 500,000 jobs during the recession of the late 1970s and early 1980s, was determined to protect those who were left. Detroit automakers were eager to win union support to boost productivity through increased automation and more production flexibility.
The result was a plan to guarantee pay and benefits for union members whose jobs fell victim to technological progress or plant restructurings. In most cases, workers end up in the jobs bank only after they have exhausted their government unemployment benefits, which are also supplemented by the companies through a related program. In some cases, workers go directly into the program and the benefits can last until they are eligible to retire or return to the factory floor.
By making it so expensive to keep paying idled workers, the UAW thought Detroit automakers would avoid layoffs. By discouraging layoffs, the union thought it could prevent outsourcing.
That strategy has worked but at the expense of the domestic auto industry's long-term viability.
American automakers have produced cars and trucks even when there is little market demand for them, forcing manufacturers to offer big rebates and discounts.
"Sometimes they just push product on us," said Bill Holden Jr., general manager of Holden Dodge Inc. in Dover, Del., who said this does not go over well with the dealers. "But they've got these contracts with the union."
In Detroit's battle against Asian and European competitors that are unencumbered by such labor costs, the job banks have become a major competitive disadvantage.

Breaking the banks

Analysts say the jobs bank could be a bigger issue than health care in the 2007 contract negotiations, particularly at Ford. It has a younger work force than GM, meaning any workers Ford sends to the bench are likely to stay there for a while.
"Ford is under pressure from investors to cut costs," said Roland Zullo, a research scientist at the University of Michigan's Institute of Labor and Industrial Relations. "At the same time, the unions are going to be under pressure to protect jobs."
Given that, he expects a compromise that allows for the jobs bank to continue but not on the scale of the current programs. "There's going to be a lot of give and take," he said.
But does the jobs bank make any sense in a climate of shrinking profits and declining market share?
"Labor wants the (jobs bank) because they want protection for their members," Zullo said. But he added that the jobs bank was also designed to help the companies by ensuring that skilled workers did not take their talents elsewhere.
"Companies invest in training," he said. "It protects that investment."
The investment only makes sense when viewed from a long-term perspective, a vantage point Wall Street is not known to favor.
"If they're going after the job banks, that would signal to me that the folks at the top have lost faith in their ability to recoup market share," Zullo said. "That would suggest to me that they really don't see a turnaround."
Analysts and labor experts believe some sort of compromise is inevitable as pressure builds on Detroit automakers to lower operating costs.
"The union probably realizes the money to pay for these programs probably doesn't exist," Szakaly said. "There's going to have to be some give on the jobs bank."
While the job banks may exemplify the sort of excesses that give unions a bad name, experts say it is wrong to cast all the blame in the direction of Solidarity House. He said the leaders of GM, Ford and Chrysler also bear some responsibility for the current problems.
"If these guys built cars people wanted, this wouldn't even be an issue," Szakaly said.

'Put out to pasture'

That view was echoed by Dan Cisco, another member of the jobs bank at Michigan Truck, as he drained a cup of coffee with Pool and other idled workers at Rex's restaurant in Wayne last week.
Ten members of UAW Local 900 are currently assigned to the jobs bank at Michigan Truck. They are all gun-welder repairmen -- or "gunnies." It is a classification each says they earned through decades of hard work.
And none of them is ready to give it up.
While some might envy their life of leisure, workers like Cisco, 56, feel humiliated by the program.
"I felt like I was useless -- like I was put out to pasture," he said. "It's just like how they treated the veterans. During the war, we were heroes. When we came back ... "
Cisco adjusts his cap, emblazoned with the familiar silhouette of a captive American POW, and sighs.
Michigan Truck, which builds the Ford Expedition and Lincoln Navigator full-size SUVs, used to be one of Ford's most profitable plants. Today, the nation is turning away from the big trucks and sport utility vehicles it builds.
Cisco, Pool and eight other gunnies from Michigan Truck have been in the jobs bank program since their positions were eliminated in July. They all have more than 36 years with Ford and are among the highest-paid workers in the plant. They say the company is asking them to accept one of the $35,000 retirement packages it is offering to trim its blue-collar headcount.
Most say they have no interest in retiring -- or spending the rest of their careers doing crossword puzzles.
"We want training," Dale Hall said.
Classes are available, the workers said. They have been invited to take courses on bicycle repair, home wiring and poker. Silk-flower arranging is also available.
"They might as well just give us a basket-weaving class, set us in the corner and let us feed the pigeons," Cisco said.

Community service

Not everyone in the jobs bank is spending their time marking it.
Dan Costilla, a member of UAW Local 602 in Lansing, was a body shop worker at GM's Lansing car assembly plant until it was closed in May. Now, instead of grinding joints, he rides herd over 16 of his former plantmates, making sure they keep their appointments at the local thrift store or Head Start program.
"I'm making sure that everything's going smooth," he said.
In the five months since Costilla and his co-workers have been unemployed, they have been busy mowing lawns for the handicapped, patching roofs for senior citizens and chaperoning youngsters on field trips to the zoo. It is all part of a community service effort organized by the union, with the support of the company.
"They realized you could only sit so long at the job bank office," Costilla said. "Your bones, they get sore after a while sitting down."
Bob Bowen, former president of UAW Local 849 in Ypsilanti, said the original intent of the jobs bank program was that idled workers would be gainfully employed on community projects or learning new skills -- real ones that they could actually use on the assembly line.
"The idea was not to have people loafing," Bowen said. "But that was a concern."
The problem, he said, lies in the way the jobs bank is administered.
Instead of setting up a central authority to manage them, responsibility was largely left to union locals across the country. Some organized community projects and job training. Others passed out decks of cards and hooked up VCRs.
Ken Pool said he can only take so many more World War II documentaries and crossword puzzles.
He and the other members of Michigan Truck's jobs bank planned to meet with a lawyer. They have already filed numerous grievances, accusing the company of age discrimination, but have heard nothing from the union or the company.
Now they are going to see if the courts can help.
As for Costilla and his colleagues, they are getting ready to go back to work at GM's new Delta Township plant. Costilla acknowledges that many of the union members are not looking forward to going back to work at the factory.
"The majority of us would rather stay here doing what we're doing," he said.
"You're not on the line, chasing a car."

Detroit Automakers' Rescue Stalls in Senate

WASHINGTON — A plan to give troubled U.S. automakers billions of dollars in government-backed loans is on life support, leaving the fate of hundreds of thousands of workers and Detroit's once-venerable car companies hanging in the balance.
Senate Majority Leader Harry Reid canceled plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund. The Bush administration and congressional Republicans have rejected plan to dip into that pot of money.
Warning of economic disaster, a bipartisan group of senators from auto industry states are trying to reach a deal on an alternative package. If an agreement can be reached, Reid said still could vote on it as part of a measure to extend jobless benefits.
But Reid acknowledged that was "not going to be easy."
With all sides sensing doom for a Big Three automaker rescue, the fingerpointing began. Dana Perino said that if Congress "leaves for a two-month vacation without having addressed this important issue ... then the Congress will bear responsibility for anything that happens."
Congressional Democrats countered that the Treasury Department already had the power to grant emergency funds to the automakers, but opposed the approach.
The leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC painted a grim picture of their financial position during two days of congressional hearings, warning that the collapse of the auto industry could lead to the loss of 3 million jobs. Detroit's automakers, hurt by a sharp drop in sales and a nearly-frozen credit market, burned through nearly $18 billion in cash reserves during the last quarter, and GM and Chrysler both said they could collapse in weeks.
"I don't believe we have the luxury of a lot of time," GM CEO Rick Wagoner told a House hearing.
Alan Mulally, the CEO of Ford Motor Co., said the company had sufficient cash reserves to make it through 2009. But United Auto Workers union president Ron Gettelfinger said a bankruptcy could spawn others.
"If there's a Chapter 11 (for) one of the companies, it will drag at least one other with them, if not all of them. And I do not believe Chapter 11 is where it will end. It will go to liquidation," he said ominously.
Automakers ran into more resistance from House lawmakers, who chastised the executives for fighting tougher fuel-efficiency standards in the past and questioned their use of private jets while at the same time seeking government handouts.
"My fear is that you're going to take this money and continue the same stupid decisions you've made for 25 years," said Rep. Michael Capuano, a Massachusetts Democrat.