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Originally Posted by Aramike
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Originally Posted by AVGWarhawk
Yes, probably a canned response for anyone who writes his/her congressperson. But this congressman is correct. Throwing good money after bad is not a good practice. As a free market, these automakers should be allowed to fail. Under most circumstances, a better company replaces the defunct company. As this person has written, the auto industry is addicted to the taxpayers money. Although Iaacoca had a business plan,giving Chrysler the money started a bad trend. Why bail them out because they suck? Makes no sense. But the automakers are pulling a fast one by stating all of these workers will be without jobs and the subsidiaries that supply the factories will shut down. That is a shame but not my problem nor the governments problem. Management slept at the helm, the UAW strong armed more money far better then what the job called for. Let the factories close and the UAW leaders can figure out how to dispurse the unemployment checks to the union workers. When that is exhausted and the workers are still out of work perhaps they will realize that some concession should have been made to save a company and save their jobs. Just my opinion on the matter.
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Exactly.
And anyone who feels bad for the workers, THEY are the problem (or more specifically, their union).
The reason these companies are in trouble are due to a thing called "legacy costs". Primarily, this refers to pension packages. So what happens is that these companies are paying 2 workforces - 1 productive and 1 not productive. That puts them at a distinct disadvantage against foreign automakers who can produce cars for far less.
The bigger problem with legacy costs is that they don't get smaller. They are always increasing, far outpacing inflation.
The ONLY bailout I would consider is this: the automakers abandon all current pension plans in favor of retirement savings (401K, IRA, etc). Leave them on the hook for current pension dollars as they would decrease as there would be no more costs incurred.
Finally (here's the bailout part), allow the government to supplement the auto worker's retirement accounts with an amount calculated based upon a national average of employee retirement savings via tenure. That way, workers depending on a pension won't be completely up the proverbial creek.
Going this route, surely there would still be struggles. But, those would be limited if the companies develop a solvent business model. If they don't, they go out of business. |
:hmm: :hmm: :hmm:
I'd be the first to admit that the Unions are partialy at fault here. Having been a member of both the United Transportation Union and the Brotherhood of Locomotive Engineers, I can attest to the fact that they are often not as productive as employees who have to be productive to avoid being fired.
However, I think the impact of pension funds or retirement packages or what have you is pretty negligible in a well-managed company. Company plans, be they for insurance, retirement, disability, or whatever, have the distinct advantage of having a lengthy period of time to develop. As long as employees pay into their retirement fund or insurance plan, the money can be invested elsewhere, be it in bonds, mutual funds, commodities, whatever.
The example I am most familiar with, Railroad Retirement, actually
generates income for the major railroads. Even better, it exempts us from social security tax so we have the money to spare. The only time this system has ever failed, to my knowledge, was when the Government "borrowed" the collected capital and then never payed it back. Now I have to pay twice, once for me, and once for those whose money was lost.
U.S. automakers failed, and have been failing for a number of reasons. First amongst these is simply the inability to provide a desireable product. Ford's questionable marketing strategy when gas prices surged upwards was to keep doing what they had been doing. Predictably, sales dropped sharply and now they need money.
Expensive and ultimately fruitless (in terms of financial success) programs to develop and manufacture Hybrid cars were also a big mistake. Yeah, there are hybrids, but how many do you see in any given commute to work? I'll bet anything that ICE vehicles far outstrip them. The market was not ready for the concept, it's too expensive, and it failed.
Increasing regulation in vehicle safety and emissions standards not only increases costs, but undermines the reliability of the vehicle. Vehicles do not
need airbags. They do not
need "crunch zones" They do not
need catalytic converters, computerized fuel control systems, fault sensors, or ethanol-diluted fuels.
But, all these implementations, all of which are mandatory in virtually every state, are expensive to manufacture and/or maintain. Simple supply and demand. All other things being equal, when your stuff is expensive, you sell less of it.
I'm always amazed at how the state so easily imposes its' will upon industry for reasons of safety, but does relatively little itself, and no one seems to care. Many of the manufacturing safety regulations we have would be uneccesary if getting a driver's license involved more than a ridiculously simple written test and perhaps an examination where you need only prove that you can get a car from point A to point B without violating about 2 dozen requirements. IMO, a license should require the ability to maneuver a vehicle forwards and backwards through an obstacle course with a time limit, at night, while staying in your lane and using turn indicators when neccesary, as well as at least 100 hours of road-time under an instructor. The state doesn't even need to provide this. Abolish every part of the DMV besides licensure and let all driving schools be privately operated. Let them pay a tax that goes toward paying for whichever private oversight agency is selected by local election as needed. BAM! Suddenly, you don't need excessive safety regulation because people aren't crappy drivers.
Well, that's a bit of a utopian view, but practically anything has got to be better than what we have now. Drive down the freeway during rush hour and then come back and tell me if you don't agree.
American automakers, and their unions have certainly proven themselves deserving of the failure they are headed for, but the state has played its' part in that as well.
Only the market can determine how succesful and profitable a product is. The state simply cannot, and it has demonstrated this on many, many occasions. Solution to the American Industrial and Financial crisis; let the market work.
Predictably, I have a lot more to say about this, but for the sake of mousewheels everywhere, I'll stop now.
