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WWOD: What Would Obama Do?

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It's no secret that G. W. Bush left Barack Obama holding the bag on several things, including the fate of the American auto industry. Perhaps most notably, Bush left the Big 3 with a bailout package that wasn't really to anyone's liking, full of stipulations--some vague, some not--and compliance deadlines that will fall within mere weeks of Obama's inauguration. (That's today, in case you weren't paying attention.)

Ford, GM, and Chrysler have put up a fairly brave front, soldiering through the Detroit auto show with a modest selection of concept and production vehicles that implied the Big 3 are indeed thinking about the future of their industry. The UAW, on the other hand...well, let's just say they need some work on their poker face.

Yesterday, UAW president Ron Gettelfinger came out and said, "Honestly, most people that have looked at this from a realistic standpoint would say [the February 17 restructuring deadline] is almost unattainable.... I said myself that I hope this wasn't set up to intentionally fail. ... People have no idea of the magnitude of what they were asking these companies to do." Does he sound a little nervous to you?

Of course, what Bush & Co. were "asking these companies to do" included wage and benefit reductions for union workers--you know, much like the reductions that Canadian government has demanded GM and Chrysler institute before their subsidiaries to the north receive $3 billion (Canadian) in bailout funds. Obama is pushing in a similar direction, calling for all parties involved to "give something up". Surely, none of that sits very well with the UAW.

Given how messy and convoluted this situation is, we're turning to the most savvy folks we know for answers: you, our readers. What's the solution to the auto industry dilemma? Is it simply a matter of scaling back labor costs? Surely not, since even non-UAW companies are having trouble in the U.S. Is the answer innovation in the marketplace? Is it the switch to electric cars? If so, it seems like the Big 3 might ask for even more support. (Although their pals in Canada have opted to leave that in the hands of private companies.) Is it a federal gas tax, to keep gas prices steady and help automakers plan? Send help in the comments section below!

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Comments (2)
  1. "The U.S. auto industry needs:"

    I don't think it's fair to cast labor as the reason why the U.S. auto industry is in trouble. That's just labeling them as a scapegoat; probably because they are the easiest to target.
    The Big 3's problems are more complex than just labor.
    The biggest problem is a perception problem with the American public. The Big 3's quality is PERCEIVED to be worse than the foreign nameplates. But several quality indices would prove otherwise. The Big 3's workers are PERCEIVED to be worse (or even lazy) than those at the foreign automakers. While every industry and company has it's share of bad apples, most of the American autoworkers are hard working people who want nothing more than to build a great product. The Big 3's products are PERCEIVED to be gas guzzlers. While it is true that the Big 3 built a lot of truck based vehicles over the past 10 years, it is consumers who demanded these products. They built what people wanted. Their one fault was that they didn't move fast enough when gasoline went up in price. But more importantly, the Big 3's mileage is as good or better than any of the foreign vehicles being sold here.
    It's a perception issue at this point. The Big 3 have to prove to Americans that their products are as good or better than the foreign cars, which they truly are.
    It is true than the Big 3 have to address some other issues. One is legacy costs. I saw a graphic once that showed the labor cost breakdowns between foreign manufacturers and U.S. manufacturers. Costs were pretty close to each other, except for one area, legacy costs. The Big 3 have VERY high legacy costs. That needs to be reduced.
    Those legacy costs are broken into two areas. Pension and health care. The Big 3's pension funds are fully funded. I don't believe they have to put money into those funds. Being that the pensions are self supported, there is no need to touch those.
    That leaves retiree health care. THIS is where the Big 3 are getting murdered. The transplants don't pay this. But you cannot just cut off millions of retirees. There is no way for the Big 3 to be able to pay for the level of retiree healthcare at the level of market share that they currently have. At this point, it's clear to me that some sort of national healthcare system HAS to be put in place to serve retirees. All other industrialized nations have nationalized healthcare. We just HAVE to figure out a plan that works best for the U.S.
    Taking away the retiree healthcare obligations from the Big 3 would help them ENORMOUSLY.
    The Jobs Bank and SUB provisions are fully funded. It's not costing the Big 3 anything to have these plans. As a matter of fact, the foreign manufacturers have a similar system in place for their plants. There is no reason to alter those plans.
    I could see an adjustment to wages. It would probably be just a slight adjustment as several of the transplant plants make almost as much as a UAW plant (with one Toyota plant actually making more).
    And finally, the U.S. government should give generous tax incentives to those people who buy an American made, American branded car. It's about time Americans supported the home team.
    Post Reply
    Bad stuff?

  2. "Typical."

    Above post sounds like something right out of a UAW propaganda session. UAW is going to have to give something up. They gave up wages for new hires, how noble for them..... (Considering it doesn't effect current employees AT ALL)
    It's the beginning of the end for the UAW.
    Post Reply
    Bad stuff?


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