PIÑATA-CAR (AKA Auto Bailout)
Posted by FactReal on December 12, 2008
Why the U.S. Automakers Failed?
1) ABUSIVE LABOR UNION REQUIREMENTS
2) PAYING WORKERS TO NOT WORK
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
3) IDIOTIC GOVERNMENT STANDARDS
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
4) EXCESSIVE GOVERNMENT INTERFERENCE
● 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.
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
BAILOUT IS NOT THE ANSWER
● 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.
BANKRUPTCY IS THE ANSWER
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.
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