In spite of the 'Big 3' automakers attempting to scare the public into thinking that unless they get our tax dollars they will 'go under,' a gov't bailout of the auto industry would be a big mistake.
Declaring bankruptcy under corporate restructuring laws would actually be a good thing for the Big 3. In fact, this would be much more preferable than a government bailout.
For one, the automakers would stay in business while they restructure under the supervision of the court.
Two, the Big 3 would be required to restructure everything from top to bottom, meaning management, labor, union contracts, all of it. This would be a good thing.
Currently the greatest burden on American automakers is labor costs as dictated by powerful unions. In robust economic times, the corporations can survive such extravagance. But in hard economic times, the costs of labor and benefits can become a lethal albatross hanging around the necks of the corporations.
Unions such as the UAW have made sure that autoworkers are some of the highest paid blue-collar positions in the nation. While no one wishes to see the worker bees suffer from being overworked and underpaid, those particular positions need to be brought back into sync with the rest of the American economy.
If the automakers get a bailout from the government, it will amount to nothing more than a union payoff, and business will continue as usual.
That is entirely unacceptable.
Bankruptcy protection will allow the companies to do some pruning, which is long overdue. But in the long-run, everyone will benefit, and the Big 3 will continue to survive and do business in a much more efficient and cost-effective manner.
Tuesday, November 18, 2008
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7 comments:
"Currently the greatest burden on American automakers is labor costs as dictated by powerful unions".-d.
Sorry, I take exception to that statement as not true. I know it is easy to say and seems to be the case, but it is not. Unions don't actually get to dictate. They "negotiate". If managers don't negotiate intelligently and acquiesce to unreasonable union demands that does not equate to dictation.
In any company there are only management problems. Period. In the case of the Big Three, they thought, "Oh, what the Hell, we'll just pass the costs on to the consumer". Didn't work simply because they faced competition from more intelligently run companies.
Management had the option of not renewing union contracts if they would be destructive to the company. Hell, they had the obligation. They didn't fulfill that obligation.
Yes, it would have caused them some problems in the short run. Having to hire and train a new work force, defending in court their stance on not submitting to destructive demands. They would have taken a hit, for a short period of time.
But, they would have emerged financially stronger and more able to make decisions that would benefit the company and its shareholders. They chose not to take the hit when it was manageable, (managers, manageable, any connection there?) Instead they relied upon an ability they did not have, the ability to pass to the consumer the price of their bad decisions. I suspect their decisions over many decades had more to do with executive bonuses (bonusi? :)) than doing the job management is supposed to do.
There is no such thing as a labor problem in a successful company.
There are only management problems, that is why we call them managers, they are there to manage. If the workforce comes in the gate, it is all on management from then on. If they don't come in the gate, then it is up to management to hire people who will and train them if need be.
I have always held this position, even when in management. Was not popular, but never had an unsuccessful project, something that cannot be said of my detractors.
Sorry, but I simply disagree. While you make many valid points concerning management, when I pay for a new car, I am paying at least $5000 bucks PER VEHICLE for the labor costs alone.
The UAW (can you tell I am not too high on big labor unions?) has seen to it that auto workers are paid well above what other workers with similar qualifications and skills make.
This is unacceptable, and to the degree that management has been complicit in this madness, they too are partially to blame.
"Sorry, but I simply disagree. While you make many valid points concerning management, when I pay for a new car, I am paying at least $5000 bucks PER VEHICLE for the labor costs alone."-d.
Sorry, but you're not. You're paying $5000 bucks per vehicle for management's failure to do their jobs. That that $5000 bucks goes to labor costs is the fault of management.
You are correct in that that is where the $5000 bucks ends up, but it is because of mismanagement that it does.
I have never been a big fan of unions which are destructive of the workplace and the employer, either. But, they can't get the money if management doesn't sign the check.
Well, you make a good point, there, Strait. Now let's smoke a cigar before Paul comes around to get them. ;)
Just kidding, Paul.
Let's have a drink too, he's got that no alcohol thing going on too, you know.
I like Paul, but that's scar! :)
I will remain silent about that suggestion. I'm a Baptist, and if you drink you never admit it, except to the good Lord above!
I was raised Southern Baptist and realized early on that our idea of Heaven was being able to drink in front of each other. I'm just trying to spread the word.
I swear, well, I do, but that's another of my shortcomings. I meant that's my story and I'm.......is that thunder I hear?
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