In Defense of Detroit

Here's where our money will go. Note that Detroit disregarded the lessons of the past.

http://www.detnews.com/2005/autosinsider/0510/17/A01-351179.htm

Jobs bank programs -- 12,000 paid not to work - 10/17/05

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.

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.

toyotaracer247

EVERYONE HAS MADE MISTAKES? WIPE THE BOARDS CLEAN?

I have lived well within my means, liiving in half the house I can afford, driving less of car as well. I (and my wife) put money away religiously (of course in State sanctioned accounts). We have two kids now and are paying for daycare and converting that money toward saving for college. We make very good money overall and live much less of alifestyle than we probably could. So "wiping to board clean" simply means taking MY savings and giving it over to someone else who lived MORE of lifestyle than I did while likely make less. So what's the brilliance behind this?

I can't believe how addle minded socialism has made people in this country. If wiping the board clean is attempted I can guarantee there will be revolution, because my sitting by while the government has ruined our money, our markets, and our economy is ONLY because I have something left to lose. If I have NOTHING left to lose I ain't going to be sitting idly by. Take it to mean whatever you think it means.

People who have made GOOD decisions are already being punished with the market going down. "Wiping the board clean" ruins them.

Its easy to say let the big 3 go under and everyone says its all their fault. Well what about the banks we are helping, It not my fualt the were lending to people that really couldnt afford those big houses. But we are helping them. Whats the difference. When banks go under and the cry for help everyone say oh ok lets help them even though they also did it themselves. Go ahead let the big 3 go under but it will be a domino effect and someday it will affect everyone of you that are not wanting to help. The mom and pop store they go eat lunch at, staples that supply the copy paper, gas stations that are used to fill up the new cars being shipped, the parts store that supplies the parts, NOW DO YOU GET IT? Its easy to say let them go under but somewhere down the line it will get each and everyone of you. Just wait and see. And for all of you that think auto workers make all the kinds of money you would be wrong. And I know for I am a wife of an auto worker that has been with the company for 36 years and I have been with my company for 6 years and I bring home just as much as he does. We pay full office visits for the docotrs, we dont have co-pays and have not ever had co-pays for office visits. So for everyone thinks they know what we get make sure you know the facts before you state we make $30,40 or $50 on hour not even close.

W.E Deming foresaw this in 1970; he wrote a book on why it was happening, and what to do about it. It was titled Out of the Crisis. Members should read it.

If there's a bailout, there need to be a lot of strings attached. Most importantly, the company has to CLEAN HOUSE of all the top managers. They were great at blaming everyone else and paying themselves high salaries, but they have demonstrated they don't have the skills and foresight to run the companies. It seems like throwing good money after bad if the same people are in charge. Fire them.

Congress also compounded the problem over the years by giving the auto industry what it asked for too many times, especially with regard to fuel standards. We had the SUV debacle because of a Republican Congress following the "market knows best" laissez-faire ideology and not demanding fuel economy when prices were down. Yes, some of the Michigan delegation that kowtowed to the auto industry were Democrats, but outside of that the support came from Republicans, and getting whipsawed was another failure-to-regulate that will cost us dearly.

And while we're on partisan politics, expect a lot of opposition to the auto-industry bailout from Republicans. Never mind that these same people gave a much, much bigger package to the banking industry (an industry that deserves less empathy than the auto industry).

GM's market capitalization today is about $1.9 billion. So the government could buy a controlling interest for about $1 billion, fire the top three layers of executives, and hire someone who knows what he's doing to run it. This seems like a better course of action than loaning $25 billion to a company run by idiots.

My heart goes out to families of all who will loose their livelihood because of the greed of the two organizations, management and unions... But the managers of big three AND the UAW have been arguing back and forth fwith their heads in the sand for more than 30 years while Honda, Toyota and Nissan grew their market share. They have had plenty of opportunities to take a look around for a reality check. Instead they whined about not getting fair treatment by consumers (Buy Ameridan), the government (OSHA and EPA) and each other. Massive greed is evident on both their parts. Well, whiners. It's time for the rest of us to wake you up and invite you into the real world. Financial bail-out of these greed-infested management and unions will only prolong the inevitible. I'm for letting them manage their companies now and do what they have to do to keep as many of their employees as possible.

I'm really starting to notice a trend in comment sections to articles like this - Big Government, Big Business Executives, and Big Media are all in favor of bailouts and the like, and individuals, you know those people who work at dead end jobs, busting their hump, trying to build some humble equity in this world and the ones ultimately soaked to pay for everything through taxes (direct and savings tax via inflation) are all against it. Pretty much shows that our "leaders" political, business, social, and "fourth estate" are dramatically out of touch.

The time has come to flush down interventionist government tactics that help those who bow to the government master at the expense of those who want to live free. As our markets and economy crumble living free isn't going to be some libertarian rhetoric or the battle cry of mountain men, it's going to be in every part of the "real" world, the one that exists outside the Beltway and NYC.

Let us all be honest with ourselves here and take a moment to look at things the way the are. Everyone, from big companies to individuals, has made mistakes to contribute to the current financial state of things. If you bought a house at a varible rate or you gave the loan at the varible rate...guess what? Your both to blame for the problem. Same thing here...if you made bad deals and decessions about labor costs and overhead, reguardless of what side of the table you were on, you're both still to blame. Now that things are completely destroied by greed everyone wants a handout to deal with their mistakes. If I piled on a mountain of debt and then couldn't repay it because I didn't have the money...I can't go to the government and ask for money to repay my debts. But the same rules don't apply to companies it seems. They don't have to file bankruptcy for their poor decessions, the government just gives away money to them when they ask. Basically saying, "Hey sorry you messed things up by being greedy. Here's some money to get you back on your feet. Try not to do it again, ok?" What kind of stupid plan is that...you messed things up but don't worry about it. We know your sorry so here try again, no harm no foul.

Here's a thought, why not just wipe everyone's slate clean. As of right now, everyone is debt free. Put a few laws in place to prevent the stuff that started all of this in the first place, like varible rate loans. Pass a few more laws to reform the credit card industry. Then let everyone know that the markets are back open. The second that everyone is debt free they'll go right back out there and by more stuff on their new credit and the ball will get rolling again. With the new laws in place people won't be able to get back into the same problems. Industires will sell more stuff, more capital will be gained, more jobs will be created and the world gets back going. Everyone will be happy and joyful again and it'll be like this never even happened.

Now you might ask what happened to the old debt, forget about it. Why dwell on the past debts that are so far down the hole in collections, forclosure, etc. that you'll never see a dime of it once it's finally collected. With all the debt gone, you can save on fees to collection agentcies, for a while. You'll be able to bankroll all of the profits without the bad debts holding your company down. And if everyone is smart with their busness practices, helped along by the new laws, the problem shouldn't repeat itself.

Basically, the economy for EVERY american...rich, poor, mid class, etc. is catistophically failed as of right now. The game has reached a deadend and too many wrong turns have been made to ever find a way back. Two choices remain, continue down the path we've made and try to patch things up with no guarentee of success, or hit the economic reset button and try again.

Your last sentence bothers me the most.
It's not the government,,, its the taxpayers that will have to bail them out once more.
Accept responcibilty for your failures and move on and learn from them.