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PIÑATA-CAR (AKA Auto Bailout)

Posted by FactReal on December 12, 2008

Why the U.S. Automakers Failed?



The United Auto Workers (UAW) labor union has handcuffed Detroit’s Big 3 (GM, Ford, and Chrysler)
with unreasonable, unrealistic burdens and inflexible, anti-competitive work rules.
Wages $75 per hour. While Toyota pays $48.00
Union contracts force the Big 3 to pay UAW workers approx. $30 more per hour than competitors like Toyota…more
Union workers earn $75 an hour in wages and benefits – almost triple the earnings of the average private sector worker…more

source: Heritage.org

● Health care adds $1,200 to the cost of each vehicle. But only $215 for Toyota.
Union autoworkers have substantially more health, retirement, and paid time off benefits than most Americans.The UAW’s lavish and comprehensive health benefits added $1,200 to the cost of each vehicle produced in the United States.
The Japanese automakers provide standard health benefits to their American employees. So, health care for active workers cost Toyota $215 per vehicle in 2006.
● Retire after 30 years of service
UAW employees work under a 30-and-Out contract that allows them to retire with generous pension benefits after 30 years on the job, irrespective of age.
● Seven weeks’ vacation
A Chrysler worker with 15 years’ tenure was entitled to 34.5 paid holidays and vacation days in 2006 — seven weeks in paid time off.  This is three weeks more paid vacation than the average private sector worker with similar tenure.
● More Retirees Than Active Workers
GM support three times more retirees than active workers. They also pay other contractual obligations such as health coverage for union retirees.
● 22-Pounds of Union Rules and Regulations
or 2,215 pages for Ford’s 2007 master contract. If you want to read the contracts for Ford, GM, Chrysler visit:
“22 Pounds of UAW Rules and Regulations”, LaborPains.org (Hat tip: MichelleMalkin.com)


UAW’s “Jobs Bank” program guarantees that UAW workers are paid nearly full wages to NOT work. Under UAW contracts, workers whom the automakers let go when plants close are not laid off. Instead, after exhausting regular unemployment payments from the automakers and the government, they are transferred to a JOBS bank where they are paid nearly full wages to not work…more


Government is forcing them to make cars that Americans won’t buy. Federal mileage standards are forcing car manufacturers to produce small cars that make little or no profit at plants organized by the United Auto Workers (UAW)…more


● Automakers have to pay for facilities they will probably never use again to support revenue bonds for municipalities
GM owns or leases enormous amounts of property for facilities it’s not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities…more
● State Laws Protect Dealers from Termination
The Big 3 have to keep 15,710 independent dealerships happy nationwide, compared to only 4,000 for all their Japanese competitors…more
GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive…more
● Antiquated dealership structures
These prevent the Big 3 from instituting modern and more flexible inven­tory-management practices and selling cars over the Internet.
● Protectionism
Years of protectionism, such as import restrictions, complex fleet requirements, and regulations that raise costs for foreign produc­ers, shielded the Big 3 from competition in vital markets. Since the Big 3 felt unchallenged, their creativity evaporated…more
● No Incentive. No Vision.
Fat years and government interference allowed the automakers, the union and their workers to put off restructuring their labor agree­ments even as foreign competitors opened U.S. plants that could produce cars of higher quality with fewer workers and at less cost…more
If GM and the others have done so much to raise productivity and improve their products, they would attract private capital. Investors are always looking for profitable ventures.
Why should we “trust the same management and union officials who got the Big Three into this mess to get them out.”
“If no private investors believe the Big Three restructuring plans are realistic enough to support with their own money, why should we put up taxpayer money?”…more 


● A bailout will hurt the overall economy by misallocating resources.
● A bailout will encourage other industries to seek taxpayer handouts.
● A bailout is a perverse transfer from middle-class to top earners…more
Fascism: politicians deciding who gets those resources? Congressmen will make their decisions on the basis of political considerations, such as who gave them contributions or might finance a get-out-the-vote drive in the next election. Having Congress tell auto companies how to make cars and what to pay executives is offensive…more
Bailouts keep the companies dependent on government aid.


Reorganization under Chapter 11 of the bankruptcy code will allow for:
● State protection for dealers to disappear.
● Labor contracts to be renegotiated.
● Pension plans to be terminated or transferred.
● Health benefits to be renegotiated.
● Mortgaged assets to be abandoned, so plants could be closed…more

The companies need to cleanse themselves of bad investments born of years of policy errors and managerial blunders.


See how your Representatives voted: (great work from MichelleMalkin.com)
What’s next?

They will not stop until they socialize the whole country.  Mr. Bush, you are wrong, too.   When have you seen liberals happily working with President Bush?  Only when the goal is to destroy America.
Bush May Tap $700B Bailout For Big Three
No TARP money for UAW bailout: It’s illegal

4 Responses to “PIÑATA-CAR (AKA Auto Bailout)”

  1. […] « PIÑATA-CAR (AKA Auto Bailout) […]

  2. […] ● HR1: Legislation Text of Stimulus II (Obama)“ ● HR5140: Stimulus I (Bush) (CBO) ● Car Bailout: Why they failed (FactReal) ● TARP Analysis (CBO) ● AIG: Dodd Bonus Amendment ● AIG Restructuring Plan(Federal […]

  3. […] CAR BAILOUT – WHY AUTOMAKERS FAILED 1) Union Workers were paid to NOT work 2) Abusive labor union requirements ● Wages $75 per hour. While Toyota pays $48 ● Health care adds $1,200 to the cost of each vehicle. But only $215 for Toyota. ● Retire after 30 years of service, irrespective of age ● Seven weeks vacation ● Supporting More Retirees Than Active Workers 3) Idiotic government standards ● Making cars that Americans won’t buy 4) Excessive government interference ● Automakers have to pay for facilities they don’t use to support revenue bonds for municipalities ● State laws protect dealers from termination BANKRUPTCY WILL ALLOW FOR: ● Labor contracts & pension plans to be renegotiated […]

  4. […] Auto Bailout: Why the Automakers failed Possibly related posts: (automatically generated)Obama denies reports of rivalryFOX NEWS […]

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