And another one after that?
First of all, we should stop using the term bailout; it paints a false picture. If you’re one of those glass is half empty’ types, consider these transactions as loans against assets — and there are LOTS of assets. For us ‘glass is half full’ types these transactions are investments that may garner large rewards.
The auto makers need these loans to stay in business for two reasons: 1) they are, by all indications, badly managed companies and 2) they are dealing with the UAW (United Auto Workers Union) one of the most corrupt unions in the country. Now there is the perfect picture of a troubled company: bad management AND the UAW. But even with good management, dealing with the UAW would eventually bankrupt any company.
UnionFacts.com has documented the UAWs unethical practices and how much these practices have cost automakers. Read it — its a real eye opener. Following as an excerpt from UnionFacts.com’s profile of the UAW; this excerpt discusses “job banks”:
Thousands of UAW members are being paid between $70,000 to $85,000 per year not to work. (By some accounts, the expense is even larger, costing the “Big Three” up to $130,000 for each job banker). For 4,200 of these union members, their 8 hour “work day” consists of filling out crossword puzzles, watching World War II movies and even taking naps. These job bankers have drawn nearly full pay and all benefits, often for years, no matter the companies’ health. As shown by the $4.5 billion the Big Three earmarked to fund job banks, this practice is costing the companies billions of dollars at a time that they are losing billions.
(NOTE: This post is not intended to be an anti-union rant. There are many companies that work well with unions and many unions that actually help companies increase productivity and profits — my point is, the UAW is not one of these unions.)
An editorial in the Orlando Sentinel titled: “We think: Taxpayers shouldn’t bail out the auto industry without big changes” has it, in my opinion, just right. They say:
“The United Auto Workers union needs to step up with significant concessions on salaries and benefits for its members working at the Big Three. That would help bring compensation at American car companies more in line with the nonunion, foreign-based competitors that have set up shop in the United States and (have) steadily gained market share. The union faces a choice between jobs with less-generous benefits at the U.S. companies or no jobs if they go under.”
Its possible that UAW members have starting realizing the damage their union is doing; the UAW has, since the 1970s, lost more than half of its membership.
President Bush or Congress should jump on the Orlando Sentinel’s idea and insist that no loans be made to auto makers unless they get considerable concessions from the UAW and come up with a profitable business plan. Essentially, the Big Three are looking for Venture Capital and that should be the minimum requirement from any lender — including the U.S. Government.
Failing some positive steps on the part of the auto makers and the UAW millions of workers will be unemployed and the U.S. Government would loose lots of revenue. Its a pretty bleak picture and it suggests that there WILL be a “bailout,” without many conditions, and perhaps another one after that.
One other note: Radio Broadcaster Neil Bortz was on CNN yesterday making many of these same points. Bortz said on his radio show this morning that, before he was even off the air, he had received numerous death threats through CNNs switchboard and via e-mail. Draw your own conclusions about that!