Union balks and $14B auto bailout dies in Senate
12-11-08, 10:09 PM
#1
Union balks and $14B auto bailout dies in Senate
WASHINGTON – A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.
The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.
"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.
Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.
Reid called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."
GM said in a statement is was "deeply disappointed" that the bipartisan agreement faltered. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said.
The White House said it was evaluating its options in light of the breakdown.
"It's disappointing that Congress failed to act tonight," a White House statement said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."
The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 required — after the talks fell apart.
The implosion followed an unprecedented marathon negotiations at the Capitol among labor, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout at a time of soaring job losses and widespread economic turmoil.
The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans, in turn, balked at giving the automakers federal aid.
"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.
Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson.
Aid the automakers gained urgency last week when the government reported the economy had lost more than a half-million jobs in November, the most in any month for more than 30 years.
The stunning disintegration was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.
It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued postelection Congress, with Bush's influence at a low ebb.
Democratic House Speaker Nancy Pelosi called Senate Republicans' refusal to support the White House-negotiated bill irresponsible and also urged the Bush administration and the Federal Reserve to provide short-term relief for the automakers. "That is the only viable option available at this time," she said.
Congressional Republicans were already in open revolt against Bush over an auto bailout deal the White House negotiated with congressional Democrats, passed by the House passed on Wednesday.
The developments unfolded after Senate Republican leader Mitch McConnell of Kentucky joined other GOP lawmakers in announcing his opposition to the White House-backed rescue bill passed by the House on Wednesday.
He and other Republicans said wages and benefits for employees of Detroit's Big Three should be renegotiated to bring them in line with those paid by Japanese carmakers Toyota, Honda and Nissan in the United States.
Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.
GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.
Republicans also bitterly opposed tougher environmental rules carmakers would have to meet as part of the House-passed version of the rescue package and the Senate dropped them from its package.
Some Senate Democrats joined Republicans in turning against the House-passed bill — despite increasingly urgent expressions of support from the White House and President-elect Barack Obama for quick action to spare the economy the added pain of a potential automaker collapse.
The House-passed bill would have created a Bush-appointed overseer to dole out the money. At the same time, carmakers would be compelled to return the aid if the "car czar" decided the carmakers hadn't done enough to restructure by spring.
McConnell said that measure "isn't nearly tough enough."
Supporters had an uphill battle pressing the rescue package on a bailout-fatigued Congress — particularly a measure designed to span the administrations of a lame-duck president and his successor. Before the late-day negotiations, patience had begun wearing thin at the Capitol as lawmakers looked ahead to adjourning for the holidays.
The House approved its plan late Wednesday on a vote of 237-170. Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks.
A pair of polls released Thursday indicated that the public is dubious about the rescue plan.
Just 39 percent said it would be right to spend billions in loans to keep GM, Ford and Chrysler in business, according to a poll by the nonpartisan Pew Research Center. Just 45 percent of Democrats and 31 percent of Republicans supported the idea.
In a separate Marist College poll, 48 percent said they oppose federal loans for the struggling automakers while 41 percent approved.
The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.
"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.
Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.
Reid called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."
GM said in a statement is was "deeply disappointed" that the bipartisan agreement faltered. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said.
The White House said it was evaluating its options in light of the breakdown.
"It's disappointing that Congress failed to act tonight," a White House statement said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."
The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 required — after the talks fell apart.
The implosion followed an unprecedented marathon negotiations at the Capitol among labor, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout at a time of soaring job losses and widespread economic turmoil.
The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans, in turn, balked at giving the automakers federal aid.
"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.
Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson.
Aid the automakers gained urgency last week when the government reported the economy had lost more than a half-million jobs in November, the most in any month for more than 30 years.
The stunning disintegration was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.
It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued postelection Congress, with Bush's influence at a low ebb.
Democratic House Speaker Nancy Pelosi called Senate Republicans' refusal to support the White House-negotiated bill irresponsible and also urged the Bush administration and the Federal Reserve to provide short-term relief for the automakers. "That is the only viable option available at this time," she said.
Congressional Republicans were already in open revolt against Bush over an auto bailout deal the White House negotiated with congressional Democrats, passed by the House passed on Wednesday.
The developments unfolded after Senate Republican leader Mitch McConnell of Kentucky joined other GOP lawmakers in announcing his opposition to the White House-backed rescue bill passed by the House on Wednesday.
He and other Republicans said wages and benefits for employees of Detroit's Big Three should be renegotiated to bring them in line with those paid by Japanese carmakers Toyota, Honda and Nissan in the United States.
Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.
GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.
Republicans also bitterly opposed tougher environmental rules carmakers would have to meet as part of the House-passed version of the rescue package and the Senate dropped them from its package.
Some Senate Democrats joined Republicans in turning against the House-passed bill — despite increasingly urgent expressions of support from the White House and President-elect Barack Obama for quick action to spare the economy the added pain of a potential automaker collapse.
The House-passed bill would have created a Bush-appointed overseer to dole out the money. At the same time, carmakers would be compelled to return the aid if the "car czar" decided the carmakers hadn't done enough to restructure by spring.
McConnell said that measure "isn't nearly tough enough."
Supporters had an uphill battle pressing the rescue package on a bailout-fatigued Congress — particularly a measure designed to span the administrations of a lame-duck president and his successor. Before the late-day negotiations, patience had begun wearing thin at the Capitol as lawmakers looked ahead to adjourning for the holidays.
The House approved its plan late Wednesday on a vote of 237-170. Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks.
A pair of polls released Thursday indicated that the public is dubious about the rescue plan.
Just 39 percent said it would be right to spend billions in loans to keep GM, Ford and Chrysler in business, according to a poll by the nonpartisan Pew Research Center. Just 45 percent of Democrats and 31 percent of Republicans supported the idea.
In a separate Marist College poll, 48 percent said they oppose federal loans for the struggling automakers while 41 percent approved.
ffpower says: UAW, you have no one but yourselves to blame for Detroit 3's down fall.
12-11-08, 10:25 PM
#3
The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.
seriously, let them all fail!
12-11-08, 10:31 PM
#4
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i hate unions as much as the next guy, but if we let the big three fall, it will be the end as we know it for the american economy. i dont think we can take that chance.
12-11-08, 10:47 PM
#6
Lexus Champion
Wake up!! Democrats are paying back the Unions for supporting Obama, hence the very weak requirements that the UAW make any concessions. Union philosophy is to let a company fail before making big concessions. It's foolish, but it is in the Union genes. They can't help themselves. I do not agree that the economy will be in materially worse shape if the Big 3 fail. There is a huge demand for American cars and trucks, so they will reorganize and move on, minus the UAW and some brands. It won't be smooth, but in the end everyone will be better off.
And a bailout is not dead. Wait and see, on Friday Bush and Paulson will agree to use the TARP funds to give the Big 3 a fighting chance, with little or no oversight as to the use of the money. A complete waste of our taxpayer money. The car sales for December must be far lower than November's weak sales. There is talk that even with the bridge loan GM would not have enough money to see it through until Obama can push further legislation through.
And a bailout is not dead. Wait and see, on Friday Bush and Paulson will agree to use the TARP funds to give the Big 3 a fighting chance, with little or no oversight as to the use of the money. A complete waste of our taxpayer money. The car sales for December must be far lower than November's weak sales. There is talk that even with the bridge loan GM would not have enough money to see it through until Obama can push further legislation through.
12-11-08, 11:02 PM
#7
Lexus Champion
I've participated in many discussions on the future and potential bailout of GFC. But this latest stance by the UAW makes it explicitly clear exactly why GFC MUST choose bankruptcy.
If the union cannot or is unwilling to recognize the grave nature of their refusal to accept concessions, then GFC need to file for bankruptcy in order to get out of the ridiculous contracts they are bound to.
How does the UAW possibly think that their current position is what is actually best for their workers or the American auto industry?
This is perhaps the defining moment of the current auto crisis and quite possibly could signal the end of GM and Chrysler.
If the union cannot or is unwilling to recognize the grave nature of their refusal to accept concessions, then GFC need to file for bankruptcy in order to get out of the ridiculous contracts they are bound to.
How does the UAW possibly think that their current position is what is actually best for their workers or the American auto industry?
This is perhaps the defining moment of the current auto crisis and quite possibly could signal the end of GM and Chrysler.
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12-11-08, 11:42 PM
#8
Lexus Fanatic
These union guys are out of control. The auto workers are people who do very simple manual tasks that a trained monkey or stoned teenager could do all day long. It does not require a $50-$71 per hour pay rate for a long term employee. Give me a break. Something is going to give and it needs to be them. They would rather see the entire company go down before they give in. Not to say the CEO's could take a 75% pay cut, but the unions and the employes need to realize that they are overpaid for such menial work.
I watched the saving GM segment and saw that they are drivign screw in door hinges, popping windshields in, and putting seats in. All of the work was done with automated equiment and was relatively fail proof unless you are a moron. I am blown away that these people are paid the way they are for the BS work they do. Both the CEOs and the people on the production lines.
I watched the saving GM segment and saw that they are drivign screw in door hinges, popping windshields in, and putting seats in. All of the work was done with automated equiment and was relatively fail proof unless you are a moron. I am blown away that these people are paid the way they are for the BS work they do. Both the CEOs and the people on the production lines.
Last edited by I8ABMR; 12-11-08 at 11:49 PM.
12-12-08, 01:13 AM
#9
Since when does a small group of senators know how best to run car companies? All these strings attached to 14 billion when they refused to limit executive compensation and bonuses on 700 billion, now they want to drive down wages? Go recover the bonuses just handed out to 162 managers at AIG, a company now 80% owned by the US government, this is a simple north vs south deal, south represents import plants and are against it, north reps detroit and are for it, they should all be thrown out on their ***.
12-12-08, 03:13 AM
#11
with benefits... average $30...
but yeah... I am republican on this one. What exactly would happen if they gave few billions to big 3? They would burn it in 3 months... what then? There are no magical wands here.
And in the worst case scenario, everything fails (Ford for instance will not, they have plenty of cash), US govt is better of by covering and retraining those workers who lost their jobs than giving more money to the business that will fail anyway without major changes (which are opposed), and then again having to retrain workers and help then since those two companies will die anyway.
but yeah... I am republican on this one. What exactly would happen if they gave few billions to big 3? They would burn it in 3 months... what then? There are no magical wands here.
And in the worst case scenario, everything fails (Ford for instance will not, they have plenty of cash), US govt is better of by covering and retraining those workers who lost their jobs than giving more money to the business that will fail anyway without major changes (which are opposed), and then again having to retrain workers and help then since those two companies will die anyway.
12-12-08, 06:26 AM
#13
Lexus Champion
my major concern is the potential loss of all the supporting jobs. parts suppliers, mechanics, sales people, etc. Those jobs being lost bother me personally because i work in a dealership. not a GFC dealer but still, that could be just the beginning of more losses.
the UAW has been overpaid for years, but still these are people who need those jobs as well. what if any previous poster's brother worked there and has no other job skills? how would you feel then? they should take a pay cut but it's not that easy. their lifestyle now depends on them earning nealry $30 an hour plus benefits. imagine if you had to take a significant paycut, whoud you be able to afford your house, car, gym, etc.?
it's easy to say "yeah just cut their pay in half" but there are a lot of things to consider before that can be done.
these are people who work hard every day that we're talking about, not the corporate morons who will be hurt the most. it's not hard to install a windshield 50 times a day if you look at it on a daily basis but over the long term almost everyone who does those jobs ends up with serious physical health issues. while it may not be worth$30/hr. these people are sacrificing their bodies to earn that money.
this is truly the fault of the corporate "smart people" who never looked at the long term big picture. they focused on building high qualtiy trucks, because that's where the profit was, but not on cars. We can build a good comparable small car but at a cost that still leaves the japanese at an advantage. they screwed up and made bad decisions but the people who will suffer the most are thsoe people who do the actual work, put in the sweat and back breaking labor. they had no choice as to what type and quality of vehicle they put together. they will be the ones wondering how to put food on the table while the executives will living off their millions of dollars worth of bonuses.
the UAW has been overpaid for years, but still these are people who need those jobs as well. what if any previous poster's brother worked there and has no other job skills? how would you feel then? they should take a pay cut but it's not that easy. their lifestyle now depends on them earning nealry $30 an hour plus benefits. imagine if you had to take a significant paycut, whoud you be able to afford your house, car, gym, etc.?
it's easy to say "yeah just cut their pay in half" but there are a lot of things to consider before that can be done.
these are people who work hard every day that we're talking about, not the corporate morons who will be hurt the most. it's not hard to install a windshield 50 times a day if you look at it on a daily basis but over the long term almost everyone who does those jobs ends up with serious physical health issues. while it may not be worth$30/hr. these people are sacrificing their bodies to earn that money.
this is truly the fault of the corporate "smart people" who never looked at the long term big picture. they focused on building high qualtiy trucks, because that's where the profit was, but not on cars. We can build a good comparable small car but at a cost that still leaves the japanese at an advantage. they screwed up and made bad decisions but the people who will suffer the most are thsoe people who do the actual work, put in the sweat and back breaking labor. they had no choice as to what type and quality of vehicle they put together. they will be the ones wondering how to put food on the table while the executives will living off their millions of dollars worth of bonuses.
Last edited by 19psi; 12-12-08 at 06:30 AM.
12-12-08, 07:18 AM
#14
my major concern is the potential loss of all the supporting jobs. parts suppliers, mechanics, sales people, etc. Those jobs being lost bother me personally because i work in a dealership. not a GFC dealer but still, that could be just the beginning of more losses.
the UAW has been overpaid for years, but still these are people who need those jobs as well. what if any previous poster's brother worked there and has no other job skills? how would you feel then? they should take a pay cut but it's not that easy. their lifestyle now depends on them earning nealry $30 an hour plus benefits. imagine if you had to take a significant paycut, whoud you be able to afford your house, car, gym, etc.?
it's easy to say "yeah just cut their pay in half" but there are a lot of things to consider before that can be done.
these are people who work hard every day that we're talking about, not the corporate morons who will be hurt the most. it's not hard to install a windshield 50 times a day if you look at it on a daily basis but over the long term almost everyone who does those jobs ends up with serious physical health issues. while it may not be worth$30/hr. these people are sacrificing their bodies to earn that money.
this is truly the fault of the corporate "smart people" who never looked at the long term big picture. they focused on building high qualtiy trucks, because that's where the profit was, but not on cars. We can build a good comparable small car but at a cost that still leaves the japanese at an advantage. they screwed up and made bad decisions but the people who will suffer the most are thsoe people who do the actual work, put in the sweat and back breaking labor. they had no choice as to what type and quality of vehicle they put together. they will be the ones wondering how to put food on the table while the executives will living off their millions of dollars worth of bonuses.
the UAW has been overpaid for years, but still these are people who need those jobs as well. what if any previous poster's brother worked there and has no other job skills? how would you feel then? they should take a pay cut but it's not that easy. their lifestyle now depends on them earning nealry $30 an hour plus benefits. imagine if you had to take a significant paycut, whoud you be able to afford your house, car, gym, etc.?
it's easy to say "yeah just cut their pay in half" but there are a lot of things to consider before that can be done.
these are people who work hard every day that we're talking about, not the corporate morons who will be hurt the most. it's not hard to install a windshield 50 times a day if you look at it on a daily basis but over the long term almost everyone who does those jobs ends up with serious physical health issues. while it may not be worth$30/hr. these people are sacrificing their bodies to earn that money.
this is truly the fault of the corporate "smart people" who never looked at the long term big picture. they focused on building high qualtiy trucks, because that's where the profit was, but not on cars. We can build a good comparable small car but at a cost that still leaves the japanese at an advantage. they screwed up and made bad decisions but the people who will suffer the most are thsoe people who do the actual work, put in the sweat and back breaking labor. they had no choice as to what type and quality of vehicle they put together. they will be the ones wondering how to put food on the table while the executives will living off their millions of dollars worth of bonuses.
Think for a second that if GM and Chrylser get their money they want. Let's say they stretch those funds long enough to survive another year. What then? GM and Chrylser probably don't have a survival plan. Do you know how long it would take to R&D small efficient vehicles, market and put the vehicles in the show room floors? It's going to take more than a bailout to get GM and Chrysler to survive, they need to do internal restructuring, they need to tell UAW who gives them the work to begin with and they need to market and create BETTER vehicles that people WANT to own.
12-12-08, 07:19 AM
#15
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Agreed, and agreed that there has been blatant and obvious mismanagement throughout the industry, but at this point, it's take a pay cut... or have no job, really. It's the choosing of the "I'd rather have no job" option that puzzles me.