Huh? Was anyone dumb enough to invest in any of those three companies in the past decade?

I think the ideological root to the issue is workers. Republicans ultimately oppose the bailout because of unions. They're blaming unions for the problem so they see the failure of the Big 3 as a way of union-busting. Democrats ultimately will support it for the opposite reason. They see the workers as victims of corporate mismanagement and failure to adapt to the market.

I think they will bail them out eventually, so I hope they can get some concessions from the execs. Pelosi demanded a business plan from them about how they plan to spend the money, we'll see if that has any teeth. I think it should go deeper than that. The government should demand a restructuring, not just of their finances but of their business model.

why can't republicans and democrats see both sides are fault.

The management wants to make products no one buys and do not want to spend money and time changing things.

The workers think the govt should help these companies who make obsolete products so they get good paying jobs.

the fact is both factions are to blame. The Big 3 were morons for continuing to produce countless amount of cars and svus that nobody wanted while sticking with things they've done for 40 years and not updating their business plans.

UAW is also to blame. The average worker at plants makes $68 an hour when benefits are included add about $45 when they are taken out. While foreign companies pay their employees about $28 dollars an hour with benefits added in.

So say that the average plant worker works 50 hour weeks at $45 and works for 50 weeks. That's about 112,500 a year for the person. These are the people that build the cars. Then when you look at benefits, which they receive from the moment they retire until death. The companies are simply overpaying their workers and the UAW is a major reason for this.

I say fuck 'em.

This is the downside of capitalism. Big business doesn't want the government intervening when it comes to taxes, so why should they intervene when it comes to saving their asses?

This is not accurate at all. The average UAW worker makes about $28/hr, not $45. The average cost of that worker to the company goes up to $70/hr when you factor in health care and retirement benefits, but that figure includes workers who are ALREADY retired, or so-called legacy benefits. None of these factory guys is taking home hundreds of thousands of dollars in salary. Gimme a break. Workers for foreign companies cost about $48/hr total, not $28, mostly due to health care and legacy costs. The take-home pay for GM vs Toyota workers is comparable.

The idea painted by the right-wing that these blue-collar workers are rolling around in heaps of money like big shot executives is risible. Just think about what they're trying to do there for a second.

The costs associated with benefits adds about $2000 to the sticker price of the Big 3 vehicles. But we're talking about Escalades and SUVs here, which can run from $30K to $60K. The worker-associated costs are NOT the major issue. The major issue is that no one wants these cars...period.

I for one favor getting ALL companies out of the health care business and reducing that cost to them, which is significant. That alone would make the costs per worker more competitive. But really the Big 3 need a major business overhaul, starting with their product line.

By that, of course, you mean getting all the taxpayers into the healthcare business.

Your point about an average UAW worker is somewhat mystifying. UAW is more than just the Big 3 workers; PhD students at NYU are members of the UAW also, for instance, and they make around $20K per year. There is a lot of misinformation about these numbers from both sides; I'd like to actually see real data that backs it all up.

I agree with your overall point, though. It's not the labor contracts that are killing GM (at least not the compensation piece of it - I have heard horror stories about inefficiency of labor in those plants, though). It's simply a case of a company that's not run well.

I'm referring specifically to auto workers, from the numbers I've seen. And I'm going by numbers that I see consistently from report to report, ie. an average hourly wage of $28 and an average cost to the company of $70/hr per worker, all of which adds about $2K to the cost of each vehicle.

Solid numbers are hard to come by, but I've not seen anyone claiming $45/hr, and I do see many right-wing blogs claiming the $70/hr as if that's the hourly wage rate, which it isn't.

But the bottom line here, like you said, is the business itself. $2K on the sticker price is not a compelling reason for the absolute collapse of the Big 3, not when they're saddled with unwanted SUVs costing $60K.

The market will heal itself... in 30 years.

So here's a little more clarity on the numbers:

http://mjperry.blogspot.com/2008/11/gm- ... costs.html (they cite GM's benefits site)


So, I think we can settle once and for all, that an average GM manufacturing employee (if we consider all hourly employees to be involved in manufacturing) earned around $40/hr in 2006. That is before benefits are taken into consideration.

So how does the cash compensation compare to foreign cars that are manufactured in the US?

I think American Car CEOs have made bad choices since the Clinton days.

$25bn under the same management won't be enough. These guys run their operations like train tycoons in the 1800s. Replace them ASAP.

I also think any bailout has to be connected to the creation of a viable, alternative energy system for cars. It is already late: Gas-burning cars should not be relevant in twenty years. If these companies continue promoting any fully gasoline based vehicle (not just SUVs: a Cavalier is almost as bad), the CEOs will be in the same exact place, twenty years, begging Congress for even more $$.

I unfortunately do have money tied up in GM. We always reinvested our dividends, too.

I agree. I'm sick of Republicans shifting blame for all of these massive failures to the middle and lower class. They blamed the credit crisis on black people, and now they're blaming this mess on the unions.

All of these companies are rotting from the top. Wage expenses aren't the explanation to everything. AIG didn't have union employees. And bad loans to black people didn't destroy the American automotive industry.

But these failures DO have the common problem of bad management and over-compensated executives. And that's where we need to start looking for blame and for solutions.

Bad management? Yes. Over-compensated executives? Probably not.

GM's net loss for last year was $22 billion. It would take 22,000 executives earning on average $1 million per year to account for that loss. Hardly likely.

As for Toyota's number - the number commonly thrown around is $48/hr (including benefits). If you assume that about 1/3 of the compensation is benefits, then cash compensation is $32/hr.

I'm not saying that their salaries account for dollar amount of their net losses. I'm saying that if any executive got paid at all after a $22 billion net loss year, then they were over-compensated. As it is, the CEO of GM total compensation for 2007 was $14.4 million. That's a $4 million INCREASE over his compensation in 2006. The vice chairman's compensation was $7.6 million, up from $5 million the year before. Add up all of the execs, and you're talking about real money.

How many union workers does that pay for?



The bulk of the overhead for companies like GM in the benefits estimate is from legacy employees. For GM that dates back many more decades than it does for Toyota in terms of American workers. And the base hourly wage between the two is roughly comparable. I'd expect, but I'm not sure, that the numbers would be a little closer.

In any case, I think we're on the same page that the $8/hr difference, assuming your estimate is roughly accurate, does not account for the $22 billion loss either.

So, by my calculations, the $8/hr difference would account for roughly $1.5 billion in extra labor costs. Not a small chunk of change.

Let's assume your assumptions are correct. That would mean that TOTAL worker compensation, INCLUDING all retired workers and benefits, would be about $13 billion, based on this mythical $73/hr.

Forget minimum wage for a second. If every auto worker worked for FREE, GM would still have lost $8 billion last year.

So I still fail to see how any of this has anything to do with unions or workers.

Well, the point is that there are many things to blame.

1. Bad market decisions - you can't escape from that.
2. Higher than average hourly worker compensation
3. Bad management (past or present - doesn't really matter)

And, of course, poor productivity - you can't really measure that, but I'm betting that UAW is not (or was not) encouraging its members to, shall we say, put it all on the line for the company.

I agree with that, and there's certainly room for concessions from the unions. But whatever they are, they don't really have anything to do with the state of the Big 3. What they pay workers has nothing to do with bad products, bad management, and a bad economic situation. The hole they are in simply dwarfs the wage issue. Might as well blame the money spent on paper towels.

Now, if the workers were turning out bad products DESPITE management and the unions stood in the way of replacing them, you could start to pointing to unions. But I haven't really heard any such case made. The blame to unions is all about wages. That's merely an economic component of GM's bottom line. You can reduce it, but it doesn't come even close to solving their problems.

15 billions? Well .....though at the end it will be a total of 100 to help the 3 to get through the next year. or even more.

15 billion? wow this holds them until January. Wow this is so fucking stupid. It's putting a band-aid on a gun shot wound.

And since congress and the senate are so worried about these private jets, when is pelosi and the rest of them going to get rid of their jets.

And i'm tired of hearing this bullshit about how we can't allow them to fail. Bankruptcy is not failure.

Ok my prediciton. Until the end of the next year they will need 100B USD. (15 now and another 85)

What if they go Chapter 7 and get bought out by China, which could happen. China is waiting for that and will eat up our companies to begin a take over. Also if they fail the market will drop 1000-2000 points in less than a week.

If Chrysler, Ford, GM fail, its not as if the car market will shrivel up and die if they go completely under or die if they simply reform under Chapter 11. The demand for cars will shift to other suppliers like Toyota, Nissan, Volkswagen, Honda, etc.