I think Kahuna's point is that the taxpayers should not be required to subsidize this industry. If they can pay their workers 500 dollars an hour and run a profitable company... great. It doesn't look like "business as usual" will work much longer. The taxpayers will surely revolt if asked to cough up much more.

I understand, Rshoffer, and I'm thinking we should not subsidize the bailout or the bankruptcy of automakers. CNBC did a piece today that Toyota is taking a big hit in this economy and they are now concerned also. I'm trying to glean perspective as to how this will effect the autoworkers if wages and benefits are cut, (Kahuna has indicated his son works for Ford).

I sense from Kahuna's post that his son feels Ford needs to make these cuts and I am wondering how his son and other workers plan to deal with these cuts. Will they leave their jobs, will they stay, will they need to change homes, schools for their children, medical care, etc. or is there such a huge cushion in their wages that these changes will only cut out the European vacations, exclusive Ivy League schools, Country Clubs and so forth? I have never met a wealthy autoworker but that doesn't mean they're not out there. I'm finding myself very adverse to bailouts, particularly of the investment/banking industry but then I also realize that if we are quickly becoming the very rich and the lower class, there will be problems in the streets.

On the other hand, we may all have to deal with deflation worldwide and that is another realm of havoc. I am trying to watch less of CNBC. :sad:

Then let's make sure we truly remember this debacle when the polls open in November 2010. Out with everyone who votes YEA for the Great bailout of 2008/9.

Not Even Close To Reality, Peachie
 

Peach, don't have the wrong impression of those who work for the auto industry, particularly those in middle management. No, there aren't any European vacations and Ivy League schools.

If I had to describe my son's situation it would be "highly stressful" with 12-hour days and six-day weeks. The population of his department has been cut several times in the last 18 months and is now down about 40% from where it was. But the work, the reports, etc. continue to be the same. Everyone just has to work harder and worry about the next cutback. There have been no raises or bonuses for two years now. For a couple of years they got stock options, but the option price is so far above the current market that they're worthless.

The kids aren't in fancy, private schools, but they are in parochial schools (that aren't cheap these days). My son lives in a nice suburb where the homes sold in the $400,000 range 3-4 years ago. He mows his own lawn, shovels the snow, is the leader of a Cub Scout pack and ran the Pinewood Derby (model races for the Scouts) for the whole metropolitan area. Most of his neighbors work in the auto industry in middle management or professional jobs (engineers, designers, sales, etc.). From his front door he now looks at six homes that have been foreclosed on. Just to keep the neighborhood looking nice, the neighbors have begun mowing the lawns that the banks now owning the houses refuse to maintain. My son says that based on the few recent sales in his subdivision, he'd take a $150,000 loss from what he paid for his house, not including the improvements he's made. Business with the local newspapers is so bad that they've stopped daily delivery, dropping papers at houses only 3 days a week now. About a third of the kids in the local Catholic school have dropped out during this school year as one or both of their parents were laid off.

I can't imagine that the situation with the UAW hourly factory workers is as bad as it is for the middle managers and professional employees. Their average hourly rate is just a little shy of $30 an hour (a little more than $60,000 a year without any overtime, with many older workers earning much more than that), with health insurance almost completely paid for and a generous non-contributory pension plan that permits retirement with full benefits after 25 years of employment. There are a lot of people in their late 40's in Detroit that are enjoying the good life with a full pension and no-cost health insurance, having gone to work in an auto plant right out of high school in their late teens, retiring after 25 years, and then finding another job to supplant their pension payments, often to a six-figure level. The UAW workers don't fear layoffs or temporary plant shutdowns as the UAW contract provides that they be paid 95% of their hourly pay, even if they are laid off and stay at home with the kids, or until they are recalled to fill a job very closely defined as the one they were laid off from. As I understand it, that benefit applies with no time limit unless or until the factory where they worked is permanently closed and shut down. That is the "job bank" benefit that the UAW says it will agree to give up. But their "give-up" only applies to new, yet-to-be hired employees, not any union member currently on the payroll. The same is true of the new, somewhat lower wage scale that they've agreed to--it only applies to yet-to-be hired workers. But the UAW leadership wails, "Look what we've given up."

So, Peach, if you are left with any impression of "living large" by people employed in the auto industry--the middle management types anyway--remember this story when your hear the spin from the president of the UAW saying, "...we're being taken advantage of...we've already given enough...President Bush placed too much of the responsibility of the auto re-structuring on our members." Do you think this is "reality" in today's work-a-day world? The UAW thinks so. And they think all those taxpayers out here that are working for little more than the minimum wage, getting paid only when work is available, with no heath insurance and no pension plan ought to have some of their tax dollars used to maintain the UAW lifestyle.

IMHO (please remember this is just my opinion) the American people could go a long way towards helping the American car companies (and at the same time help themselves and quite possible their relatives) by buying an American car. I purchased foreign cars many years ago (about 20 -25 years ago) when our cars couldn't match up with foreign cars from a quality stand point. In the last 20 years I have bought American exclusively because I felt the quality was as good or better than the foreign cars and I wanted to support our country/workers. We are currently on our 6th Chrysler minivan (and will buy another one when needed) and also own a PT Cruiser and a Chevrolet Camaro.. OK you all are now free to pile on....GN

Thank you, Kahuna, for your thoughtful insight of what is occurring in your son's life at this point. It must be extremely stressful for him and his family and I hope there is a resolution to this mess. I misunderstood and thought your son worked the line and didn't realize he was a middle management employee.

After the description you have provided regarding the difficult working conditions, I am more convinced a bailout or government backed bankruptcy probably would not work. The husband, in a couple I know, has worked the line for one of the big three for about 10 years and provides the health insurance. His wife was laid off, found a part time job, they have downsized their house and their three children were removed from parochial, (Catholic), school and placed in the public school system to help make ends meet since her job loss. They don't take fancy vacations, live in bars or live life largely. How much financial loss will they be able to absorb at this point?

And today, Toyota announces they have lost money. It appears deflation is the only correction that is going to happen and that will hit all of us, as you well know. I don't think we'll see the American auto industry in a few years.

I hope your son is able to maintain employment and his sanity, it's difficult to watch our children struggle so much, no matter how old they are.

No piling on needed on your post. While I think that you are noble in wanting to support American auto industry, the purchase of American made cars is what allowed the auto industry to keep manufacturing the same old inferior products. While overall the American auto has improved in quality, this improvement has been reluctant on the manufacturers part because of the "Buy American" purchasers giving them a pass on quality for so many years. Should we all shift to buying Ford, Chrysler, GM from now on, the auto makers will find no need to improve their product.

Competition buy foreign manufacturers is what will give us the best selection of autos at the best price. When Ford, Chrysler, and GM start showing all those green dots in the "Consumer Reports Car Buying Guide" I'll consider their products. My next auto will be one of the leaders, Honda or Toyota.

Lee Iacocca was supporting free trade when he said, "If you can find a better car, buy it".

He also said at one time during a down turn
 

when unemployment was what we have today..."if you have no job and are hungry go eat your import..."

BTK

Thanks Kahuna, for the perspective that the UAW, Industry Management and the Biased Media will never reveal!

One big question comes to mind: Why is the govenrment taking from our pockets to try to save this, or any other, industry? I cannot see where this is going, beyond giving every troubled business out there reason to ask for the same.

It just isn't right to tag us with righting the ship they (UAW & Management) put in harms way!

My latest car purchase is a Ford product - a Volvo C30.
Before that, another Ford product - a Land Rover Freelander.

It's amazing that the British and European "Ford" products are doing well, and the domestic is having such a hard time. Perhaps there's a lesson there.

I'm somewhat of a "petrol-head" in that I love cars - and motorcycles - and never miss a car show. I enjoy seeing all the new models and test-driving every one I can. As with most consumers, I like getting my money's worth.

Eventually, the domestic manufacturing is either going to get better, or go the way of the Yugo, the Renault Dauphine, and most Fiats.

As with any competitive product, you can either give the consumer what they want, or you can go the way of the Hudson and the Nash Metropolitan. Manufacturing products that are not marketable is utterly stupid and arrogant, and yet we encourage the Big-3 to do just that.

If Hewlett-Packard kept making 386 and 486 computers, would we bail them out as well?

Two points:

1) I second SteveZ 's comment about folks buying cars. Any workout plan must be predicated on the assumption that people will be buying cars. They're not. I work in Baltimore Harbor frequently and the car lots where autos are stored after offloading from the incoming car carriers are chock-a-block full. They are putting cars in every spare lot available. This means they are NOT moving them to dealers, which means.....and so on. Until the consumer is more confident and has credit to buy at his disposal the car biz will remain on the skids, or worse.

2) The UAW (itself) needs the car companies more than the car companies need them. Their intransigence in this matter is puzzling.

In any event, we are in the midst of a massive sea change in our economy. 5 years from now it will not look like what we knew 10 years ago. There is going to plenty of pain to go around and a lot of casualties.

Even if everyone started buying only gm cars, the problem remains they lose money on every car they sell. Fox and friends had a segment on this morning.... A contractual arrangement with uaw retirees resulted in "christmas bonus" payments up to 700 dollars! So, john q taxpayer is funding the bailout and some retirees are allegedly getting a "christmas bonus"... Note, these are not current active employees.... Talk about "legacy costs". Anyone else heard about this?