How exactly is Obama "abandoning" the auto workers?

[liberalpragmatist]

GM and Chrysler are about to go under. If Obama were intent on screwing over the auto companies he'd cut off the funds right now and let them fail. That's what Corker, Shelby, and their ilk want done.

But the alternative that many DU'ers seem to have is of Obama propping up GM and Chrysler without any strings attached. These companies have been horribly run. And yes, the problem was management, not, for the most part, the workers. For the matter, I agree with those who point out that the UAW has made enormous concessions over the past two decades and that the fundamental problems with GM and Chrysler have nothing to do with the workers - they have to do with the fact that GM and Chrysler made terrible cars that nobody wanted to buy for a long time - something that was the fault of management.

That being said, there is a need for a strong domestic auto industry. It's just that as currently structured, the US auto industry is far too large, with way too many marquees, far too many dealers, and too many gas-guzzlers and SUVs. The industry probably needs to shrink - but better it shrink in a managed, structured way than blowing up and costing millions of more jobs than it otherwise would. Moreover, for all the problems GM has had, there is potential there. New GM models have come close to or equalled Toyota and Honda in reliability and a lean, Chevy+Cadillac GM could probably do quite well. Chrysler, on the other hand, has virtually no brand value, except for Jeep. It has already shrunk dramatically and has no promising models in the pipeline.

The easy thing for Obama to do would be to let both companies fail. That's the position of over 70% of Americans and it's what the GOP wants. It would also screw over the industrial Midwest and cost several million more jobs.

Obama is doing the responsible thing here: he's giving both companies short-term funding and more time to come up with restructuring plans. Essentially, he's committing to saving GM, letting Chrysler find a partner or go under and help the industry restructure rather than completely disappear.

How this is "screwing over American workers" escapes me: the alternative is no jobs for GM or Chrysler workers at all. And for the life of me I can't understand why any DU'ers should be shedding any tears over Rick Wagoner's departure.

Let me make one final point: for those of you who argue that Obama is being harsher on the auto companies than on the banks, I agree with you. The solution isn't that both industries - the autos and the banks - should be coddled; the solution is that BOTH should face tough love. The banks ought to be getting the same medicine Obama's dishing out to the automakers.

[Captain Hilts]

1. It's the treatment of the auto industry relative to the financial industry. nt

[liberalpragmatist]

4. See my last paragraph - nt

[scarletwoman]

6. Seriously. Which Wall Street CEOs have been *commanded* to step down?

How many Golden Parachutes has Wall Street been forced to give up?

What has Obama offered to the workers to keep them whole?

I did NOT vote for another neoliberal Wall Street coddling administration. I'm absolutely furious that that's what it turns out we got!

[liberalpragmatist]

10. Again, see my last paragraph

He should be tough with *BOTH* the auto companies and Wall Street.

Also, to answer your question, AIG's CEO was replaced. Citi's CEO was also replaced. So some people did lose their jobs over this. Granted, it isn't enough - the banks ought to be put into receivership and their management replaced en masse.

[Occam Bandage]

7. I'm glad they're moving in the right direction when it comes to holding corporations accountable.

They've learned some lessons.

[MannyGoldstein]

18. And The Financial Folks Have Gotten HUNDREDS Of Times More Cash

As soon as they ask.

Very disturbing.

[ogneopasno]

2. When a company declares bankruptcy, all of its contracts are thrown out, including those that were

bargained collectively. This will completely undo all of the hard work generations of union autoworkers have done and will suppress wages for them -- and, frankly, their nonunion counterparts. That's a screwing.

[girl gone mad]

3. Two things off of the top of my head.

1. The dichotomy between the way the WS bailouts have been handled and the way the auto bailouts have been handled has left many shaking their heads in disbelief. It just looks bad, particularly in light of the huge difference in political contributions.

2. Bankruptcy for GM is probably not the best solution. It's going to be long and protracted and there is a legitimate threat that it will kill the company by driving away customers.

[liberalpragmatist]

9. Answers

1. I agree about the financial bailouts - see my last paragraph.

2. Regarding bankruptcy - I'm aware that Chapter 11 for GM will probably lead to Chapter 7. But it seemed pretty clear to me that's not what Obama sees happening. They have 60 days to come up with a restructuring plan and then if need be, an expedited "prepackaged" bankruptcy by the government.

The overall strategy seems to be that Obama plans to save GM in some form and let Chrysler go. That to me is a fairly reasonable outcome.

[notadmblnd]

5. it's not about attaching strings to GM and Chrysler. It's about not attaching strings to Wall Stree

I haven't heard any express sympathy for Wagoner. Only for the American autoworker. Obama said autoworkers must give up more, while demanding Wall Street and the bankers give up nothing.

So the auto companies will be restructured, more workers will lose jobs, retirees will lose their benefits and you'll be happy because you've saved yourself 2 more tax dollars in your paycheck.

[Urban Prairie]

8. But the banks aren't

Are they?

And where do you get the idea that "nobody" wanted to buy GM or Chrysler vehicles? You don't speak for me or many people I know. I have owned domestic vehicles all of my adult life and never had trouble with any of them.

[Obamanaut]

11. I think here is where some of the problem lies. More than once

I've seen this, or similar phrases (copied from the OP) "...New GM models have come close to or equalled Toyota and Honda in reliability..." on teevee and in print.

The Big 3 seems to be having to play "catch-up" to foreign manufacturers who have been in business a much shorter time. Otherwise, they would not be using the "ours is as good as theirs" type advertising, because somewhere deep inside they may not really believe it.

[nonconformist]

12. 70% of Americans want the Big 3 to fail?

Do you have a link?

I'm glad that you at least acknowledge that there is a huge disparity on how the banks are being dealt with vs the US auto makers. Despite that, the banks aren't getting any "tough love", whether they should be or not, and it's a huge issue you can't just explain away by saying "well, they should be". They're getting HUNDREDS OF BILLIONS in bailouts, over and over again. GM and Chrysler together have only received 17 billion. Not to even mention all of the hoop jumping they've had to do for that.

And since Obama said that he is expecting concessions from the UAW, I would say that YES, the auto workers are going to get screwed, no matter what happens. If GM goes under, the entire state of Michigan is going to be screwed.

Also, re: nobody wanted to buy domestic cars, they're all SUVs, blah blah... that's horseshit.

[liberalpragmatist]

13. Thanks for the response...

Here's the relevant link regarding the poll: http://edition.cnn.com/2009/POLITICS/03/30/auto.ireporters/

To answer a couple of your points - "nobody" is an exaggeration, but it's not inaccurate to point out that Americans' opinion of American cars has suffered enormously over the past few decades. A lot of that thinking IS out of date - it's not 1982 anymore - but perceptions tend to lag. And, yes, most of GM and Chrysler's profits these past years came from gas-guzzling SUVs. Now, you could point out that they were responding to the market and that if Congress really wanted to improve fuel standards, they should have mandated them or set higher gas taxes. Fair point, except that Detroit always lobbied against those very measures.

To an extent I agree that the autoworkers are going to get screwed over no matter what. But what is the alternative? Simply pouring more and more money into unreformed car companies? I think the approach Obama is taking is responsible - it gives GM and Chrysler lifelines, while also (a) guaranteeing warrantees and implicitly guaranteeing GM's survival in some form, and (b) putting together a "cash for clunkers" rebate to spur sales. The choice is between several million jobs lost with no govt. intervention and a few hundred thousand jobs lost. I'll take the latter.

As for UAW concessions - I agree that the problem has not been the UAW. Insofar as UAW "concessions" are needed, it's not because labor costs are exorbitant (the additional labor costs of Detroit versus the foreign automakers adds only $800 to the cost of the car), but simply that the automakers have no cash left. Jon Cohn, who has written pretty extensively about the auto bailout, and who advocated one as opposed to bankrupty, has suggested that one concession would be for the UAW to take a larger ownership stake in GM coming out of restructuring, which would be a move towards the Nordic model of labor-management relations.

FWIW, here's the thoughts of someone with the Michigan Manufacturing Technology Center, which has been heavily pushing for a bailout:

"The auto task force got it right, except that they ignored my plea that they insist on the public getting equity, and with it control, in return for its loans/investments," said Dan Luria, a leading industry expert at the Michigan Manufacturing Technology Center.

I think equity stakes would be a good addition to the plan.

And again, yes, I agree that Wall Street needs to come under the same treatment. So I can understand why people are angry over the double standard. But I don't think it invalidates the approach to the auto industry.

[nonconformist]

19. I think that if more people were aware of the ramifications of a Big Three failure...

They'd be singing a different tune. It's unfortunate, but typical, of people to only consider what affects them DIRECTLY. It's a symptom of ignorance, and yet more dependence on foreign-made products - which may very well end up to be the death knell of the United States.

Have you taken a look at Toyota or Honda's websites? They have plenty of SUVs on the market, too, with comparable fuel economy. This is not to say that GM didn't make any mistakes - sure it did - but the meme that they made gas guzzlers of poor quality and that's why they failed is false. It's far more complex than that.

I'm testy today, because my parents are shaking in their boots over what will happen to their pension and health care. My stepfather just recently retired from GM.

I think it boils down to a lot of the anger is coming from the fact that all of this makes it seem that the administration feels that Wall Street is far more worthy of handouts than the hard working people in the auto industry. They told us that the banks were too big to fail. As anyone from Michigan can tell you, GM is too big and vital to fail.

[liberalpragmatist]

21. Fair enough

I can understand feeling there is a double standard. Like I said, the banks *should* get the same treatment.

I've been disappointed with Obama's moves on the banks so far. Hopefully, though, BoA's CEO will be forced out soon, as this article indicates may happen: http://www.reuters.com/article/newsOne/idUSTRE52T6DP20090330

Also, hopefully if the stress tests and auctions show that the major banks are insolvent, they'll be nationalized, their shareholders wiped out, and their operations restructured and broken up.

[The Traveler]

14. The message is clear, my friend

Auto workers and even their executives are not members of the sacrosanct elite. The class of financiers will be by and large protected from the consequences of their choices, as befits their status as masters of the universe. The rest of us will be dealt with on a distinctly different basis. Say what you will, but the message is clear. And it has been received and understood.

A lot of people are feeling the sting of bitter disappointment right at this moment. I'm one of them. Still, we have to recognize that in a mess of this magnitude there are few happy solutions in the short term. Dude has been in office for around 70 days ... I am in no rush to judge this administration as yet.

But I will not deceive you. This stings, the message transmitted today. Those of us actually engaged in the actual production of things have been reminded sharply of our place.

Trav

[Odin2005]

15. K&R

[geiger]

16. he could have asked the union leader to resign as well....

there is plenty of blame to go around.

[RB TexLa]

17. By not handing over every dime that GM demands, silly poster.

:)

[spag68]

20. Let me understand this,

You want the workers to give up their pensions and wages because foreign car companies, subsidized by their governments and the states that scrambled to have their non union plants built there. Skilled workers now must take jobs with Honda in Ohio at 14$ an hour to satisfy your theory. We are all supposed to just be enslaved by the corporations. What kind of kool-aid have you been drinking? Unions want nothing more then a livable wage and safe working conditions. Remember, we are the only industrialized nation without national health care, which makes up about 75% of the difference between the non-union and the union auto workers, so I guess that your opinion is let them suffer. I bought a Honda once many years ago, but never again, I believe in the america that gives me a retirement after 45 years of work, how about you?

[liberalpragmatist]

22. Where have I criticized the UAW?

They have made enormous concessions and they are NOT the problem with GM or Chrysler. Management is the problem.

But the companies are basically bankrupt. This is a lifeline. What do you propose the government do? Simply keep throwing money at an unrestructured GM and Chrysler? Leave the same management in place?

[flyarm]

23. I don't care how you try to paint this with cherries..it reminds me of Reagan and PATCO in many ways

Unions nationwide will be effected..it will create a downfall of Unions after years of struggle after Reagan killed PATCO..bullshit is bullshit..the banks and non banks Like AIG have gotten 700 billion and squandered it in months , while GM has lost alot 82 -84 billion in 4 years, nothing compared to the banks and AIG of our tax dollars..and what the fuck do we the workers and people have to show for the 700 billion..pissants!

I was with an Airline union when Reagan killed PATCO..and at the same time he killed us with the airlines..we went on differwnt levels of pay..hell my union went ..around 9 years without a contract..why you ask..because they had the leverage..and because they could!

I feel so sorry for the young people today..you cheer this shit on without knowing the screwing that is coming your way...and that you cheered for.

God help you!

You will need his help.