It will be interesting to see how low the UAW will go in their salaries to prop up Chrysler

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The Detroit auto industry is facing bankruptcy if something doesn’t change soon. As a life-long businessman, I can tell you that adding cash cannot save a business unless it can be re-positioned to make money. Doing so just delays the collapse or becomes a regular handout.

Currently, the cost of labor per car for Honda and Toyota in their American plants is 00 to 00 lower than the Detroit (and UAW) labor cost. GM labor amounts to almost per man hour, and some worker have as much as 120 days of vacation per year. The book value of GM stock is now Negative (thats red ink, in the hole) 2 per share.
Ford is also negative; Chrysler is private but is said to be in similar shape.

Due to the terms of federal labor laws. once the union has an agreement, they can shut down a company that won’t offer them what they want. This literally keeps the business from doing business, blocking deliveries and alternate choices while overhead costs eat them alive. That tactic would be illegal if done under any other conditions except a labor strike, and that ability is how the unions have forced automakers into the agreements that created this competitive handicap. Under the current conditions, Detroit will never be able to be profitable, but continued bailouts could keep them running and thus keep union paychecks coming. At your expense, of course.

In the alternative, if the companies declare bankruptcy the union agreements will be voided. New competitive conditions would be negotiated, and the companies could be re-organized in a competitive and profitable form.

Your politicians are discussing bailouts, but none of them are willing to discuss changing the labor laws to prevent the use of extortion tactics. The unions control a huge vote base and a lot of contribution dollars, and it is dangerous to offend them, so- they just don’t go there.

IF we don’t position the auto industry where profitability is possible, aren’t we just bailing out the UAW?

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Does the UAW have that much wealth? Or is this a childish bluff, like cutting off your nose to spite your face?

Technorati Tags: cutting off your nose to spite your face, spite your face, uaw