To the People

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Wednesday, December 03, 2008

Detroit, We Have A Problem

In the latest government bailout news, the United Auto Workers conceded today they'll have to make some concessions to help the Big Three automakers become economically competitive again. Or at least competitive after they've burned through the $34 billion in loans they are begging the government to give them. Wait, wasn't it $25 billion? Oh, wait that was last week.

Oh, and another thing: Why would the UAW's sacrifice be necessary? The Detroit News offers a clue :
The union has lost more than 119,000 auto workers since 2006 and now represents 139,000 active workers. It agreed last year to a contract that reduced total hourly pay and benefits for new hires to about $26 from about $78, and new hires also wouldn't be eligible for pensions. The contract also called for creating union-managed trusts that will take over retiree health-care obligations starting in 2010.

UAW Local 600 delegate Gary Walkowicz, who works at the massive Ford Rouge facility in Dearborn, said he was opposed to reopening the contract.

"We've already given enough," he said. But many other delegates said they understood Detroit automakers were facing collapse.
Whip out your calculator. The UAW had negotiated a deal that until last year got new hires over a $160 grand a year. That's salary and benefits, but still, holy fucking shit. I wonder what the 20-year vets are getting. With labor costs like that it's no fucking wonder the car makers cannot compete anymore.

And the unions are still hanging on to those absurd salaries even as their own industry faces bankruptcy. The last renegotiation had the UAW simply cut off the guys who haven't even been hired yet while preserving the salaries for the existing guys. Some sacrifice. The current deal is only slightly better, per the Times:
The U.A.W. president, Ron Gettelfinger, said the union would suspend its jobs bank, which requires carmakers to keep paying laid-off employees, and would consider changes to its labor contracts. The union has also agreed, Mr. Gettelfinger said, to delay the payments that the automakers must make to a new retiree health care fund called a Voluntary Employee Beneficiary Association, or VEBA.
Or to put it another way, they're giving up two of the scams they use to bilk the industry out of even more money. Wow, how selfless. Let's break out the Springsteen ballads, shall we?

Shikha Dalmia is right. Let the automakers go bankrupt. It is the only way to reform this mess.

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