A city in ruins…
04
January
1/4/2010:
Leftists destroying America?
One Hoboken411 reader sent this great YouTube clip in – showcasing how “leftists” have destroyed the “model city” of Detroit – with state intervention as well as union bullying – and how if the government involvement in private industry continues, America is on a dangerous slippery slope.
He adds: “Let’s see what the dopey liberals have to say about this…”
Fun Stuff
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January 5th 2010 - 18:44:09 |
You seem to think the UAW pushed the big 3 to offshore their jobs. That is so rich! Without the UAW every one of those jobs would have gone out of the US decades ago.
I’m not saying the UAW is blameless, just that they are not SOLELY to blame. Why excuse the executives for a litany of failures? Rick Wagoner’s salary jumped from $9.57 million in 06 to $15.7 million in ‘07. Can you seriously call that merit-based? It was hardly the hey-day of GM… but there was Rick, making hay. Kind of like Harvey Hospital. Whatever.
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January 6th 2010 - 23:16:32 |
I sympathized moreso with the union in the MTA case, but that doesn’t mean I completely support them. I mean, honestly, asking for a benefits package with an acceptable retirement age of 50? Yeah, OK, that’s really working meaningfully with the business you support to provide a reasonable solution.
I’m just saying that if I had to pick a union I hated less, it would have been the TWU re: the ‘05 MTA Strike. In fact, that will be just about the only union support you’ll ever see from me.
Just figured I’d clarify that.
In response to matt_72 who said:
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January 7th 2010 - 10:09:28 |
I agree totally with this. It is not just the unions, not by a long shot.
Was it the union’s fault that I when I was looking to buy a domestic car, the only options for me were SUVs or fuddy-duddy sedans? There was nothing in the line-up to suit my demographic, so I had to (very reluctantly) buy foreign (not Japanese). It’s not the union’s fault that the Big 2 or 3 or whatever couldn’t come up with a product that people wanted to buy.
In response to KenOn10 who said:
I’m not saying the UAW is blameless, just that they are not SOLELY to blame. Why excuse the executives for a litany of failures? Rick Wagoner’s salary jumped from $9.57 million in 06 to $15.7 million in ‘07. Can you seriously call that merit-based? It was hardly the hey-day of GM… but there was Rick, making hay. Kind of like Harvey Hospital. Whatever.
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January 7th 2010 - 17:10:45 |
Ken, if you were right then Toyota & all the other non-US companies that have built factories in this country never would have built their factories here. They never would have brought all their suppliers with them and had them build entire complexes of factories to supply those auto plants. Plenty of companies have moved their production TO the US and built NON-UNION plants to supply the US market with millions of cars. The only companies losing auto related jobs in a wholesale manner in this country are UNIONIZED. Trust me, you are dead wrong. Even GM, Chrysler, Ford, Visteon, Delphi, Dura, JCI, TRW, etc….. disagree with you. Even the UAW disagrees with you. And you know why you are wrong? Between lead times, shipping costs, JIT inventory & other factors, it makes next to no sense for any company to move most auto production outside the US. Only a few types of parts like wire harnesses are almost universally made outside of the US. But the car itself, the engine, the interiors, the seats, the frame, axle, in fact most of the car is almost entirely made in the US no matter who makes the car. No, those jobs never were all going to leave. Even most of the transplants make the majority of their cars in the US (google it if you don’t believe me). Some of the cars with the highest level of US content are made by Toyota & Honda. Those UAW jobs only disappeared b/c nobody was buying cars built by the UAW. Instead folks bought cars from Toyota who makes great cars here in the US for far cheaper and far more efficiently than an UAW plant can. And Toyota pays their workers well, so well that they I believe no Toyota owned plant has ever been unionized.
I never said the unions were solely to blame – just mostly to blame and entirely the beneficiary of the “financial obligations” that led to the insolvency of so many auto companies. Management made some absolutely horrible decisions but it isn’t their pay, their benefits & their retiree obligations that bankrupted GM or Chrysler. That $15.7mm Wagoner made is chump change compared to the tens of billions the UAW is getting. Go ahead and keep making a mountain out of a mole-hill if it makes it easier for you to pretend the mountain isn’t there.
BTW – I don’t think I said the UAW pushed the big 3 to offshore all their jobs, I said they bankrupted the industry. I also said they had done it to many other companies/industries. You want me to provide you a list of companies & industries? You will find that if you READ their bankruptcy petitions filed with the court, almost all of them cite the union contracts and related obligations as one of the main reason they filed for bankruptcy (just like w/ Ford, Chrysler, Dura, Delphi, Visteon, etc………..)
In response to KenOn10 who said:
I’m not saying the UAW is blameless, just that they are not SOLELY to blame. Why excuse the executives for a litany of failures? Rick Wagoner’s salary jumped from $9.57 million in 06 to $15.7 million in ‘07. Can you seriously call that merit-based? It was hardly the hey-day of GM… but there was Rick, making hay. Kind of like Harvey Hospital. Whatever.
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January 8th 2010 - 12:05:08 |
#24 “..I never said the unions were solely to blame – just mostly to blame… “.
Huh? Did I misread #4? “… you don’t get that the entire reason Detroit is in decline is that the unions have crippled the US Auto Industry…”
Also, “…their bankruptcy petitions …cite the union contracts … as one of the main reason they filed for bankruptcy”
Surprise, surprise. Were you expecting executive management to man up and take any shred of responsibility? The buck stops far away from my well-deserved Learjet!
In response to matt_72 who said:
I never said the unions were solely to blame – just mostly to blame and entirely the beneficiary of the “financial obligations” that led to the insolvency of so many auto companies. Management made some absolutely horrible decisions but it isn’t their pay, their benefits & their retiree obligations that bankrupted GM or Chrysler. That $15.7mm Wagoner made is chump change compared to the tens of billions the UAW is getting. Go ahead and keep making a mountain out of a mole-hill if it makes it easier for you to pretend the mountain isn’t there.
BTW – I don’t think I said the UAW pushed the big 3 to offshore all their jobs, I said they bankrupted the industry. I also said they had done it to many other companies/industries. You want me to provide you a list of companies & industries? You will find that if you READ their bankruptcy petitions filed with the court, almost all of them cite the union contracts and related obligations as one of the main reason they filed for bankruptcy (just like w/ Ford, Chrysler, Dura, Delphi, Visteon, etc………..)
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January 8th 2010 - 15:35:41 |
Let me guess – you are another IT guy who has never read a 10K or 10Q in your life. I am not a management guy, I am a finance guy. I actually cover companies like the ones that have and have not filed for bankruptcy. I have actually read those bankruptcy filings. I have actually met w/ some of these management teams (and that of competitors). I have walked around on the shop floor of some of these factories. And I can tell you with absolute certainty that everyone, even the unions and the US Gvmnt agree that the UNIONS & their union contract bankrupted Chrysler, GM, Delphi, Visteon & dozens of others. The only people who disagree even the slightest is the union and they only disagree in the context that they think that despite the fact that they bankrupted these companies, they should still be paid in full what they feel they are owed (at the expense of all other creditors). But even they know it is their pay & benefits that bankupted those companies. They know it is the cost of labor that made Big 3 cars too expensive relative to transplants for US consumers that led to the massive loss of market share by the Big 3. That is why in the last couple years the unions gave up the jobs bank, transitioned to a VEBA, agreed to a 2 tiered wage structure for new hires, agreed to allow further outsourcing of jobs, agreed plant closures, etc….. And despite these changes, what happened? How many dozens of auto suppliers have filed for CH-11 in the last few years? How many more will file this year? How many tens of thousands of jobs have been lost to plant closures? And didn’t 2 of the Big 3 file for bankruptcy? Oh yeah, they did.
But thanks for playing “tell the auto analyst wtf is going on in the auto sector”.
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January 11th 2010 - 11:18:56 |
So now the UAW is the evil empire again? All this flip-flopping is making me dizzy.
“…it is the cost of labor that made Big 3 cars too expensive relative to transplants for US consumers that led to the massive loss of market share by the Big 3.”
Oversimplification. The Big 3 also lost market share because the vast majority of their products are crappy. Did you ever drive a Ford Tempo or look at the ratings in Consumer Reports? Is this not part of analyzing the auto sector? Your argument suggests that if only the Big 3 could sell their crappy products for X% less, everything would be okay. How about designing a better car? How about some innovation?
Furthermore, Big 3 management signed off on every single UAW contract for the cost of labor. If that drove them bankrupt then Big 3 management sucks, too, despite paying themselves very well and apparently producing a hell of a 10K.
Keep bashing the UAW (they deserve it)… but you are giving management a free pass to continue their culture of something for nothing at the expense of the shareholder. Kind of like welfare, you know?
In response to matt_72 who said:
But thanks for playing “tell the auto analyst wtf is going on in the auto sector”.
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January 11th 2010 - 12:47:24 |
No Ken – it is you who oversimplify. The Big 3 made fine cars, but when you toss in the cost of labor and all the FIXED costs of those retirees, Toyota could make a better car for the SAME PRICE. It isn’t that the Tempo was a crappy car, it is that US built cars like that tend to be overpriced b/c fixed costs that have to be built into the price of the car that have nothing to do with actual cost of making the car. I am sure that most folks would have loved to buy a Tempo if they could have gotten it for a few hundred or so less b/c the cost of UAW legacy liabilities wasn’t built into the price. Then everyone would have just thought it was just such a bargain. And let’s not even go into how the Big 3 cut corners to shave costs so they could cover union related costs (don’t want to confuse you too much – you seem to be the type who probably might get confused easily). Hard to make a good product that is comparable to your competitors when you spend more on retiree healthcare/pension per car than you do on steel and your competitor has none of those costs to deal with. And that is exactly the situation the Big 3 was in.
BTW – Ford has innovated fine, fine enough that they managed to not file for CH-11, have the top selling vehicle for most of the last couple decades or so & just this year sweep the best car & truck award at the Detroit Auto Show. And while you may not like the Ford Tempo, apparently 2.7mm Americans liked that car enough to go out and buy one. It only was one of the top 10 selling cars for the entire time it was in production (thanks wikipedia). (who the frack cares what a bunch of wonkers over at consumer report thinks and only looks at that? who the frack cares what they said over a decade ago? the answer would be NOBODY but some tool grasping at straws b/c he can’t refute squat)
But you are right on one thing, the management teams did sign those contracts (with a gun to their heads) and they got fired for it (oh yeah – they got fired, what part of that did you not understand?????? how much more responsibility can they be? do you even know how many white collar workers have been fired in Detroit at all levels of management? probably not b/c you get confused so easily by 1 guy’s pay – a guy who also got fired). Did the UAW, the organization holding the gun to the head of management get fired? Nope, they got a massive tens of billions of dollar taxpayer funded bailout that will never be repaid. Did management get a bailout? That would be a “no”. Did the shareholders? That also would be “no”. Did even the creditors (many of whom were structurally senior to the UAW and entitled by law to get paid first)? Were the creditors even treated equally? That would also be a “no”.
So yeah, the UAW is the evil empire. From my perspective, if you are going to bankrupt an organization, you shouldn’t get rewarded for it and be given preferential treatment just b/c you tossed some campaign dollars towards the Democratic party. These companies should have gone through the normal bankruptcy process and Obama should have treated the UAW as no different than any other creditor in any other bankruptcy. That is how the unions got dealt with (and all other creditors on an EQUAL BASIS) in the case of the airlines, the trucking companies, some retailers, the auto suppliers, the mining companies, etc…… That is how those companies got cleaned up and restructured, that is how the remnants of those companies became competitive again. I absolutely detest how the law was twisted to effectively hand those companies over to the very organization that destroyed them. And you know why I don’t really care how much management might be responsible for what they did? The responsible parties GOT FIRED and aren’t working at Government Motors on my dime. I care more about who is doing what now than who did what way back when. And right now we are letting Government Motors pay a fortune of our tax dollars to the very people that bankrupted GM (and I don’t mean their fired CEO who was paid far less than 1/10th of 1% of what we handed over to the UAW to flush down the toilet). So go ahead and keep fixating on your mole hill while the mountain falls on top of you.
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January 11th 2010 - 13:36:41 |
Hell, even I think the unions caused a lot of this. A lot meaning roughly half of it. The other half thanks to the idiots who ran the company and chose the car designs to build.
GM for decades made an inferior product, their QA was terrible. Even though imports cost a little more, in the long run they lasted longer, performed better and needed less maintenance.
Unions aren’t always such a bad thing, but when they get big and bloated like the UAW, it seems it’s then that they go wrong.
In response to matt_72 who said:
BTW – Ford has innovated fine, fine enough that they managed to not file for CH-11, have the top selling vehicle for most of the last couple decades or so & just this year sweep the best car & truck award at the Detroit Auto Show. And while you may not like the Ford Tempo, apparently 2.7mm Americans liked that car enough to go out and buy one. It only was one of the top 10 selling cars for the entire time it was in production (thanks wikipedia). (who the frack cares what a bunch of wonkers over at consumer report thinks and only looks at that? who the frack cares what they said over a decade ago? the answer would be NOBODY but some tool grasping at straws b/c he can’t refute squat)
But you are right on one thing, the management teams did sign those contracts (with a gun to their heads) and they got fired for it (oh yeah – they got fired, what part of that did you not understand?????? how much more responsibility can they be? do you even know how many white collar workers have been fired in Detroit at all levels of management? probably not b/c you get confused so easily by 1 guy’s pay – a guy who also got fired). Did the UAW, the organization holding the gun to the head of management get fired? Nope, they got a massive tens of billions of dollar taxpayer funded bailout that will never be repaid. Did management get a bailout? That would be a “no”. Did the shareholders? That also would be “no”. Did even the creditors (many of whom were structurally senior to the UAW and entitled by law to get paid first)? Were the creditors even treated equally? That would also be a “no”.
So yeah, the UAW is the evil empire. From my perspective, if you are going to bankrupt an organization, you shouldn’t get rewarded for it and be given preferential treatment just b/c you tossed some campaign dollars towards the Democratic party. These companies should have gone through the normal bankruptcy process and Obama should have treated the UAW as no different than any other creditor in any other bankruptcy. That is how the unions got dealt with (and all other creditors on an EQUAL BASIS) in the case of the airlines, the trucking companies, some retailers, the auto suppliers, the mining companies, etc…… That is how those companies got cleaned up and restructured, that is how the remnants of those companies became competitive again. I absolutely detest how the law was twisted to effectively hand those companies over to the very organization that destroyed them. And you know why I don’t really care how much management might be responsible for what they did? The responsible parties GOT FIRED and aren’t working at Government Motors on my dime. I care more about who is doing what now than who did what way back when. And right now we are letting Government Motors pay a fortune of our tax dollars to the very people that bankrupted GM (and I don’t mean their fired CEO who was paid far less than 1/10th of 1% of what we handed over to the UAW to flush down the toilet). So go ahead and keep fixating on your mole hill while the mountain falls on top of you.
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January 11th 2010 - 16:11:47 |
2.7mm Americans bought a Tempo? Not hardly. Tempo was a mainstay of the rental fleet, augmenting weak sales in order to “beat” the imports.
You may make major purchases based solely on price, but most of us give a rat’s backside about quality. We don’t want a car that gets most of its miles on the back of a tow truck. Quality has been improving at the big 3, but still doesn’t match most imports.
As for the bailout, I agree it was handled badly by Uncle Sam. But much of the GM debt was bought on the cheap by speculators, and frankly, I’m not to torn up about it. And as for the money the union got, yup, it isn’t fair. But neither was the money dished out to AIG and Citi. Let’s move on.
We will see what happens to the Big 3. My guesses are:
1) with or without the unions, they will not prosper. maybe ford will do okay. maybe.
2) without the unions most (if not all) of the decent paying jobs will also be in China.
My opinion: America will be the poorer for it.
In response to matt_72 who said:
BTW – Ford has innovated fine, fine enough that they managed to not file for CH-11, have the top selling vehicle for most of the last couple decades or so & just this year sweep the best car & truck award at the Detroit Auto Show. And while you may not like the Ford Tempo, apparently 2.7mm Americans liked that car enough to go out and buy one. It only was one of the top 10 selling cars for the entire time it was in production (thanks wikipedia). (who the frack cares what a bunch of wonkers over at consumer report thinks and only looks at that? who the frack cares what they said over a decade ago? the answer would be NOBODY but some tool grasping at straws b/c he can’t refute squat)
But you are right on one thing, the management teams did sign those contracts (with a gun to their heads) and they got fired for it (oh yeah – they got fired, what part of that did you not understand?????? how much more responsibility can they be? do you even know how many white collar workers have been fired in Detroit at all levels of management? probably not b/c you get confused so easily by 1 guy’s pay – a guy who also got fired). Did the UAW, the organization holding the gun to the head of management get fired? Nope, they got a massive tens of billions of dollar taxpayer funded bailout that will never be repaid. Did management get a bailout? That would be a “no”. Did the shareholders? That also would be “no”. Did even the creditors (many of whom were structurally senior to the UAW and entitled by law to get paid first)? Were the creditors even treated equally? That would also be a “no”.
So yeah, the UAW is the evil empire. From my perspective, if you are going to bankrupt an organization, you shouldn’t get rewarded for it and be given preferential treatment just b/c you tossed some campaign dollars towards the Democratic party. These companies should have gone through the normal bankruptcy process and Obama should have treated the UAW as no different than any other creditor in any other bankruptcy. That is how the unions got dealt with (and all other creditors on an EQUAL BASIS) in the case of the airlines, the trucking companies, some retailers, the auto suppliers, the mining companies, etc…… That is how those companies got cleaned up and restructured, that is how the remnants of those companies became competitive again. I absolutely detest how the law was twisted to effectively hand those companies over to the very organization that destroyed them. And you know why I don’t really care how much management might be responsible for what they did? The responsible parties GOT FIRED and aren’t working at Government Motors on my dime. I care more about who is doing what now than who did what way back when. And right now we are letting Government Motors pay a fortune of our tax dollars to the very people that bankrupted GM (and I don’t mean their fired CEO who was paid far less than 1/10th of 1% of what we handed over to the UAW to flush down the toilet). So go ahead and keep fixating on your mole hill while the mountain falls on top of you.
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January 11th 2010 - 16:24:43 |
E,
What about corporations that are big and bloated? As I see it, there needs to be a balance between corporations, labor and government. Without the union, who will blow the whistle? Who has the resources to stand up to “the man”?
Just thinking out loud.
In response to Easy-E who said:
GM for decades made an inferior product, their QA was terrible. Even though imports cost a little more, in the long run they lasted longer, performed better and needed less maintenance.
Unions aren’t always such a bad thing, but when they get big and bloated like the UAW, it seems it’s then that they go wrong.
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January 11th 2010 - 17:08:17 |
You don’t need a union to go on strike, to quit and find another job somewhere else if your employer is mistreating you or you want to get paid more or have better benefits.
Unions are antiquated. With the new technology available, it’s easier than ever to prove in court that your employer is up to no good. There are government agencies that are there to help. They once were needed, but now, I feel like they have too much power and artificially inflate the value of what people do.
Of course, I don’t think CEO’s or any executive should be getting paid huge salaries, bonuses and retirement packages regardless of how a company performs over the long term either.
Imagine how much better shape things would be in if all of these people had to rely on the performance of their company over the next 20-30 years as their bonuses and pensions were paid out?
In response to KenOn10 who said:
What about corporations that are big and bloated? As I see it, there needs to be a balance between corporations, labor and government. Without the union, who will blow the whistle? Who has the resources to stand up to “the man”?
Just thinking out loud.
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January 11th 2010 - 18:19:52 |
“You don’t need a union to go on strike, to quit and find another job somewhere else if your employer is mistreating you or you want to get paid more or have better benefits.”
Might be true in NY, where there are many other employment choices. People in smaller markets, particularly those people with families don’t have so many choices. I don’t have a lot of faith in government regulators and I’ve read the Grapes of Wrath a couple of times.
In response to Easy-E who said:
Unions are antiquated. With the new technology available, it’s easier than ever to prove in court that your employer is up to no good. There are government agencies that are there to help. They once were needed, but now, I feel like they have too much power and artificially inflate the value of what people do.
Of course, I don’t think CEO’s or any executive should be getting paid huge salaries, bonuses and retirement packages regardless of how a company performs over the long term either.
Imagine how much better shape things would be in if all of these people had to rely on the performance of their company over the next 20-30 years as their bonuses and pensions were paid out?
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January 11th 2010 - 22:00:15 |
Welcome to the modern world. It’s pretty much the same story for everyone else, in everyone industry in every part of the world.
If there’s no work, you move to where the work is or you do something else. This should be a familiar theme if you read Grapes of Wrath.
So what happened to Detroit? The jobs all moved away and either people moved to where they are or they did something else.
In response to KenOn10 who said:
Might be true in NY, where there are many other employment choices. People in smaller markets, particularly those people with families don’t have so many choices. I don’t have a lot of faith in government regulators and I’ve read the Grapes of Wrath a couple of times.
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January 12th 2010 - 10:28:50 |
I’m also familiar with the other familiar theme in the Grapes of Wrath – desperate people working for a sub-starvation wage. Thank god the corporate balance sheet is cleaned up… wouldn’t want my CEO, the board and all 62 vice presidents to miss their $3,000,000 bonuses.
In response to Easy-E who said:
If there’s no work, you move to where the work is or you do something else. This should be a familiar theme if you read Grapes of Wrath.
So what happened to Detroit? The jobs all moved away and either people moved to where they are or they did something else.
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January 12th 2010 - 12:02:53 |
GM debt bought on the cheap by speculators? Oh god, another one of those fools. For every person who bought GM debt on the cheap, there was another who lost a fortune b/c it dropped in value. The more you focus on distractions like this, the more you completely miss the boat. BTW – you know why that debt was so cheap? The company was broke. Bonds of troubled companies tend to be “cheap” because broke companies can’t repay all their creditors. Though I would argue GM bonds are rather overvalued and have been since they popped above 20.
In response to KenOn10 who said:
You may make major purchases based solely on price, but most of us give a rat’s backside about quality. We don’t want a car that gets most of its miles on the back of a tow truck. Quality has been improving at the big 3, but still doesn’t match most imports.
As for the bailout, I agree it was handled badly by Uncle Sam. But much of the GM debt was bought on the cheap by speculators, and frankly, I’m not to torn up about it. And as for the money the union got, yup, it isn’t fair. But neither was the money dished out to AIG and Citi. Let’s move on.
We will see what happens to the Big 3. My guesses are:
1) with or without the unions, they will not prosper. maybe ford will do okay. maybe.
2) without the unions most (if not all) of the decent paying jobs will also be in China.
My opinion: America will be the poorer for it.
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January 12th 2010 - 16:24:28 |
Both corporatism and unionism intervene the government’s favoritism and corruption to alter free market capitalism.
Charters of incorporation were originally designed to last for and expire at 10 years as per state’s granting of personhood to corporations – if they could show that they served the public good. They were intended to provide a means of raising funds for large projects beyond the ability of an individual, combing many shareholders’ power to advance construction, technology, and other pursuits, but all for the public good in the state in which they were granted such charter.
John D. Rockefeller was the first corporatist to contaminate the whole process by telling the states that he would pay a lot of taxes to them if they would eliminate the 10 year expiration of the charters, and allow his corporation to operate in its own interest even if at injury to the public good of that state. This began the government intervention into the markets which served as intrusion and contamination of free market capitalism to not what it truly is, but how it operates when artificial tampering with the system takes place. What people blame capitalism for is not capitalism, but the corruption of government systems to intrude upon it.
Add to that the intention of labor unions was to protect individual workers as a group against redistribution of rewards away from the profit producers and towards bloated bureaucracy. But just as Rockefeller did for corporations entanglement with government favoritism, union leaders did with government entanglement as well.
All this against the free and natural forces of true free market capitalism. I like to compare it to the natural world, where natural selection and survival propagates itself. Imagine if people tampered with species to try to make them “better”, imagine governments trying to tamper with species to redistribute resources away from producers and to parasites. Good way to destroy a jungle, or even a village, maybe a city, state and nation.
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