SRR: The demise of the auto industry....

just seeing how the bailout money has been handled so far, and the blatant stance on secrecy in which Kashkari and Paulson are taking with where much of it is going, i'm starting to feel my gut feeling about the bailout is true. they're bailing out their banking buddies while inflating the money that's in our (the working class) savings.

what's the point in handing that much money over to banks that are tanking, so that in theory, they can loan it out to people and get them in debt, somehow "stimulating" our economy. though i don't agree with any kind of bailout at all, why don't they give that money straight to the homeowners to bail them out of their mortgage they can't pay because they lost their job. that money would then go back to the bank, where they can loan it back out. they should also be bailing out our ma and pops shops that are suffering right now.

i personally feel the auto industry needs to be bailed out before the banks though. i feel that they have been doing a very, very poor job at making vehicles for the last few decades and need to pay for it, but bailing out that industry would have a better effect on the economy (at least in the short term) than bailing out banks. but in the grand scheme of things, their cars can't compete on just about any level with imports in any category, especially reliability and cosmetics, and I believe in letting a free market work.

i guess all i'm trying to say is that i really don't think the intention of this bailout (as far as paulson, bernancke and kashkari are concerned) is meant to help the working class out in any way.
Some body needs to confront the myth that auto workers make 75.oo per hour. IT IS NOT TRUE!!!
Because of old pension and medical insurance issues for retirees GM has to figure its labor force costs them around 75.00 per hour. The new funding of the old retirement and medical plans is nearly done and a trust is set up to pay them. The average amount going to wages and benefits will reduce to $50. per hour in late 2009 or early 2010. Toyota motor currently figures 47. per hour for it average. New hires at the big three are making under 15. per hour the same as Toyota and Honda. The union has made huge concessions in the last ten years.
GM is making progress the labor force in the last decade has gone from 180,000 to 93,000 plants have closed all over. The union had to agree to these closures.
There is a lot of blame to go around but we need to work with facts not the myths that surround this debacle. Auto workers do not make $150.000 per year it is just simply not true.
The costs of a worker to an employer is not what he is taking home on his check. I am a PM at a union construction company a Carpenter here make $25.01 per hour and they will average about 1700-1800 hours per year. No vacation pay, no sick pay, no personal days so they make about $45,000. per year BUT when I figure the labor on a project I have to add 67% to that number to cover insurance, pension. state and federal taxes. This worker now has a "wage" of 42.00 per hour. This does not figure in any overhead and profit. So when I tell a client that my workman is going to cost him $$55. to 60. per hour he says wow I did not know that carpenters MADE 60.00 PER HOUR!!![/B]:beathead::beathead:When you are trying to spin this auto crisis the union worker will often come out the bad guy.
The union has cetainly been too strong and has contributed to this problem in the past but those days are over for all unions. Busting the union will not help the economy or this nation.
I think they need to get the CEO's of the big three and the head of the UAW in the room with the new Treasury Secretary and the President Elect and not let them out until a new business plan is approved. If all three come out great if there is only two left and a merger is in the works that works for me too.
I am all for bad businesses being acccountable but I don't think that allowing any of these three manufacturers to go bankrupt is an option.
Just my 4 cents worth (that the union wage:rofl:)
jesse clark

Kent Lufkin

Remember when you could remember everything?
I think they need to get the CEO's of the big three and the head of the UAW in the room with the new Treasury Secretary and the President Elect and not let them out until a new business plan is approved.
Good input Jesse. I don't know squat about the UAWs contract but have recently read that the document is over 1-1/2" thick and covers just about how much time a worker needs to take a leak.

Labor costs aside though, the other issue that's hamstringing the Big 3 is pensions and health care costs for retirees. I'm sure you've also heard that adds $2,000 to the cost of every single vehicle they produce.

I have no idea what concessions will ultimately be made, but I have a growing suspicion that they'll be made in front of a bankruptcy judge instead of the new Treasury Secretary.

The old retiree's pension and medical is killing all three auto makers. The concession in the 2007 contract had all of the manufacturers contribute to a fund that will make all of these payments. The retiree's are having to pay for some care and having some benefits reduced but it had to happen. This fund will be fully funded by 2010. This is a huge deal, for GM especially, it will lower their costs by approx $2000. per car like you said.
It is hard to say "lets give them another chance" or "give them time" but I really think they have made big strides in the last 5 years to lower costs.
Companies the size of these three just don't change quickly.
For the sake of all the wage earners that depend on these manufacturers I hope it works out.

Ed Call

Well-Known Member
History shows us that unions were great for improving hours, work conditions and wages. Then they got greedy and focused mostly on repeating improved wages. Then they got greedy and focused mostly on repeating improved wages. Then they got greedy and focused mostly on repeating improved wages.

Now they are having trouble competing because they pay too much overhead for staff who make more money than most of us would imagine. I hate to see them struggle as I believe they are part of the core of our country, but they need to reform. I truly feel bad for the men and women who try to earn a living selling these vehicles built by overvalued factory workers with under quality products.

I think that drastic change must result for any forward progress to be made.


Active Member
Thanks for the good insights, Jesse. As workers you and I have both worked awfully hard over the years to make a good life for ourselves and family. During that time we have both encountered bad management at some point but never 'deserved to fail' because of it. The 'Let them fail' contingent hasn't yet grasped the significance of said failure. If you are in a business that somehow involves steel, glass, plastics, fabric, electronics, fabrication, paint or rubber and somehow find yourself being downsized in a few months the 'Let them fail' solution will not be so appealing. Over the past 8 years we have endured an incompetent government that has greatly diminished us as a nation. We don't 'deserve to fail' because of poor leadership, we need to correct course and move on. Or if you are on an airliner and the pilot has had a few drinks you don't 'deserve to crash'. The co-pilot should take over and land you safely. I would like to see some co-piloting in this auto crisis and fewer decisions based on sound bites and gross exaggerations. The guys at the top-like the bankers-will get theirs no matter what. Like the bankers they have made millions making either bad decisions or no decisions at all. They are set for life.

The people I am concerned about are the regular folks like us that work hard but are always the first to take it in the ass when something goes awry at the top. We can't sell a private jet or a yacht or a vacation home in Aspen to make ends meet. We have no choice but to trust these greedy bastards to provide us with a viable work environment and whatever bad decisions they make we simply have to endure.

Right now the auto workers are in a bad place. They need stellar management-something they haven't had. They need to get a UAW boss that is more rational and less strident than Ron Gettlefinger. And they need a hug-not being blamed for the sins of their bosses.

Had John Dingell not been a protectionist twit for Detroit all those years and had instead been a visionary that held feet to the fire on issues of mileage and emissions none of this would be an issue. He enabled Detroit to whine and threaten doom anytime someone suggested that they clean up their act and produce responsible cars. After 55 years of pimping for the automakers he was completely out of touch with reality. Another compelling reason for term limits.

I hope the doomsters don't win this one. Throwing out the baby with the bathwater is a move we will live to regret.


Kent Lufkin

Remember when you could remember everything?
Ive, while your post seemed to be addressing Jesse by name, since you also mentioned 'doomsters' I hope you don't mind if I chime in.

While I understand and respect your thoughts about Detroit not deserving to fail, shouldn't the market play some role in determining which companies succeed and which fail? After all, this country is predicated on a capitalistic economic model.

Seems to me the car-buying public has voted with their wallet and is either not buying at all or buying high-quality 'imports' instead. The fact that Detroit feels compelled to offer incentives a 'bribes' to people to buy their products should sound alarm bells.

Companies that produced celluloid collars, buggy whips, wooden airplane propellers and fiberglass fly rods have all fallen by the wayside as demand for the products fell when newer, more competitive products replaced them.

Why shouldn't we allow the market to send the same message to Detroit: it's time to update your offerings and the process by which you design and build them. If you're unwilling or unable to do so, why should you be propped up at taxpayer expense? We sure didn't do that when your infant auto industry replaced the horse and buggy.

In reality, the Big 3 aren't going to disappear. But it's likely and even preferable that they re-invent themselves as the Big 2 with appropriate design and manufacturing facilities and a labor force that's appropriately compensated and motivated to produce vehicles that are both competitive and compelling.

I'm really impressed that there seems to be so many world class economists on this board....................... just commenting.....................
nobody has claimed to be world class or experts on the subject. we're stating how we see it, and having a civil discussion about it.
Seems to me the car-buying public has voted with their wallet and is either not buying at all or buying high-quality 'imports' instead. The fact that Detroit feels compelled to offer incentives a 'bribes' to people to buy their products should sound alarm bells.
I don't get that. I'd put my "low quality" Ford small truck against any competing import in both price and quality. I think the quality issue is mostly a holdover from gm and ford products in the late 70s to very early 90s. The last 3 Fords I've owned were all pretty much bullet proof and priced less than the overseas competition.
As a Michigan transplant (1974) I've had family thats been in the car business since there has been a car business. It's not been a lot of fun for those still in the business for a lot of years now. The US auto industry started to crumble in the mid 70's and has not been a growth industry since then. Yes there has been greed, arrogance, and stupidity from the boardroom down to the union hall. The US auto industry, like nearly all others, is a slave to investors, stock analysts, and the next quarters reports. Long range planning anymore is 1 to 3 years and planning is revised so often that short cuts and book cooking is the name of the game just to make the numbers look good for the analysts. "New" influences analysts so there is way too much capitol and energy put into creating new. When things get tight they cut corners on quality to make the quarterly numbers. Whenever bean counters get control of a company quality always suffers. My personal opinion is that all bean counters outside of the finance department and in the executive ranks and the boardroom should be burned at the stake.
Detroit will survive but will be much smaller and the government will be the major stockholder. The industry and the jobs that it supports is far too important to let go away. Sure the Asian car makers have plants in the US but remember that the profits from these plants is going back to Korea and Japan, not being available for investment in the US. Our national standard of living has been declining for a couple of generations due to our loss of "smoke stack" industries. Not everyone in the US needs to be "white collar". We need a solid manufacturing base and its well paid "blue collar" jobs if we want to maintain our world position and standard of living.


New Member
Good thoughts all Ive. However, I must disagree.

Here's why. The basic problem with Detroit is not only that they just don't get it - they continually don't get it.

If they can't seem to produce dependable, reliable cars that Americans want to buy, then they deserve to fail.

Given their current burn rate, the proposed $25B 'bridge loan' will last about 8-10 weeks. Then what? Another loan? But this time with the execs arriving in DC after flying Southwest?

My solution: let Detroit declare bankruptcy and reorganize under chapter 11.
As for the rumored 2.4M in lost jobs? Don't believe it for a minute. That's just Detroit's PR machine running the fear card up the flagpole (to mix metaphors!) The Big 3 aren't gonna go away, they're just gonna have to change. And we all know how scary change is, even if it's for the better

I really hate to say this......but I think I agree with Kent on this one and I don't think I have ever had that thought before!!!

Here are the cars I have owned:

65 Dodge Dart.......great car 26MPG. Did not steer worth a damn, but what the hell.
68 Valiant.............great car 25MPG...did 80 mph average speed Seattle to Berkeley, 1973.
73 Datsun Pickup...great truck 25MPG....Why did I sell it after only 15 years!!!
82 Chevy S-10......last time I buy a car because I feel sorry for US auto workers. Half the car was metric, half English. Chevy mechanic asks me at 100,000 miles. "Is that the original engine?? Wow, you know it most did not make it past 70,000 miles".
87 Honda Accord...I want it back. Great cruise car. Trips to Montana were just comfortable.
92 Lumina.........Inherited. Don't ask. It ran and ran. The interior just melted away. Chevy wanted 2000 dollars for dash plastic. Everything but the engine and transmission just wore out in six years.
96 Dodge Ram.....Dodge dealer thought it funny that windshield wipers quit working twice. Ever drive in pouring rain without windshield wipers? It is not funny.
98 Saturn.....32 MPG...and a great little death trap. Still running....don't hit me because I will die!!
2004 Honda Pilot....cannot turn down the dashboard lighting low enough so it doesn't affect night vision.
Mice crawl into the ventilation system and die. Otherwise pretty good rig.

Do you see a trend here?? I think there is room for ONE American auto company making big assed trucks and suv's for people that need them. I will own one. The other rig will probably be a HONDA.


New Member
Almost forgot....more info on those rigs.

65 Dodge Dart.......made in the USA
68 Valiant.............made in the USA
73 Datsun Pickup...made in Japan
82 Chevy S-10......made in the USA
87 Honda Accord...made in the USA (80% or so)
92 Lumina.............made in the USA
96 Dodge Ram.......made in Mexico
98 Saturn.............made in Tennessee ( is that America??)
2004 Honda Pilot....made in Canada