Fiddling While the City Burns

Nero is best known for playing his fiddle while Rome burned -- or at least that's what legend records. You could say that the US Senate is fiddling while the U.S. auto industry struggles to survive. What is most astounding is that all of this happening under the cover of the arrest of the Illinois Governor, and attempts by the GOP to use it to taint the presidency of Barack Obama even before it starts.
But in an effort to essentially destroy the unions, GOP senators are undermining a bill that will keep the US auto industry alive so that they can make the necessary adjustments to thrive in a new economy. Of course, many of these Senators think they stand to gain from all of this, believing that if the Big 3 fold then they can land lucrative foreign owned auto makers to their states. The foreign auto makers have headed south because those states are less friendly to the unions. The President has agreed to terms with the Democratic leadership to pass an emergency life-line, with lots of strings attached. The GOP Senate seems ready to derail this. Now come January the Democrats will have the votes to get this done, but GM needs to pay bills now, not then.
If the GOP senators continue to stonewall, then the Hank Paulson should make use of the money he has available to make this possible. If the Feds can hand out billions to the banks, with few if any stipulations, why can't they do the same for an auto industry that has been decimated by the credit freeze.
Now, I know all of the arguments about $73 an hour jobs and all. Consider that the Unions have already agreed to much lower wages, taken on the insurance for retirees, and have given up the Jobs bank. Most new employees will come in at much lower wages. With all of the recent concessions the Big 3 has come pretty close to the Foreign Automakers, most of whom (at least on the home turf) can benefit from state supplied health insurance. Note too that this $73 amount includes the costs of providing health insurance for retirees. I have a number of members who are now facing the prospect of losing their insurance in a very unfriendly market.
So, stop fiddling and get this done. Otherwise you'll be seeing a huge increase in the jobless rate in the nation and a much higher cost to the government than if they provide this support.

Comments

Anonymous said…
Just numbers for today..

Industry veteran told me he puts a 99.9% chance of Chrysler failing.

Toyota and GM have the same US market share.. GM has 5,000 dealerships, Toyota 1,300.

Avg unit sales in the US was 17 million, now its expected to be 10 million.

-Chuck
Gene said…
This comment has been removed by the author.
Robert Cornwall said…
There is a strong anti-labor sentiment, especially within the GOP. But the facts are, that workers aren't making $73 an hour. That number includes retiree pensions and health insurance as an add in.

If you look at where things are right now, the transplants are little more than $4 less per hour than Detroit -- without the legacy costs.

Chrysler probably won't continue to exist as it is now, but it's important to give it a chance to transform/split up. It has valuable assets.

If you look at the plans drafted, the companies are planning for something much lower than 17 million cars sold. That 10 million number is worst case. Who knows what 2 years will bring? Who would have thought that gas prices would head toward $1. Remember that Sarah Palin was hailed as America's most popular governor, but her popularity was built on riding high oil prices, which she was able to turn into tax rebates. Those days are now over.
Anonymous said…
Chrysler has Jeep.. its cars are essentially worthless. Is Eagle or Plymoth even around?

The oil issue is a double edged sword.. remember the famous Obama windfall tax? Politicians need to stay out of market issues. I think both sides failed and thank the Lord it corrected before either party could take over and do anything.

My great fear is politicians will dictate which cars we make vs the market. So we sell hybrids when the price of gas is $1.50... when trucks, with high margins, sell better.

-Chuck

Popular Posts