The UAW says that troubles in the car industry are not its fault. According to the union, it was not a series of bad decisions by management either.
"This industry is in a crisis situation not of its own making," Ron Gettelfinger said in an interview Saturday afternoon with The Wall Street Journal (subscription required).
The statement is worth a bit of examination.
Gas prices have been historically low, well under $2 a gallon. The real spike is only a year old and the price per gallon is now back to $2 in many regions of the country. So, did a price pop which lasted three quarters of a year bring down The Big Three?
The other culprit Gettelfinger points to is the problems in the credit markets. Most consumers did not have trouble getting car loans as recent as this summer. Auto companies were offering zero percent financing and thousands of dollars in cash back Buying a car on credit was as easy as getting a subprime loan was three years ago.
The UAW did not ask for exorbitant wages and benefits over the last four decades. Management at the car companies did not rely on SUVs and pick-ups for profits even though they had seen the tremendous damage that the Arab Oil Embargo did to their finances in the 1970s.
In other words, no one involved in the car industry is to blame.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 2)
11-16-2008 @ 7:59AM
Virgil Bierschwale said...
Guys, ya'll keep missing the point.
200 million working age Americans.
If you believe our government, 6% unemployment is 12 million people and if you figure an average wage of 50,000 you are losing 600 MILLION from the American economy
If you believe unemployment is 10%, then you have 20 million people and you are losing 1 TRILLION from the American economy.
If you believe as I do that it is 20% then you have 40 MILLION out of work and you are losing 2 TRILLION from the American economy.
Then you add to that the fact that we are sending 700 BILLION offshore to purchase oil and we are sending 500 BILLION or more offshore to purchase labor and at the same time putting our people out of work, well hell if you can't understand that, there is no hope.
We have to stop and reverse the offshoring of our labor which will put our people back to work and they will start buying again.
We have to stop the transferring of our companies assets offshore so that they don't have to pay their fair share of taxes because the American consumer has no more to give and our country needs that tax revenue to survive.
We have to stop sending 700 BILLION offshore to purchase energy when the countries we buy it from are using our money to purchase our assets.
If we don't stop these things, there will be no more America because you know in your heart that if you ran your business or your home that way you would be broke.
Give me the names of the companies and CEO's that are doing this so that I can add them to the "Wall of Shame" at http://www.KeepAmericaAtWork.com so that you as a retailer, manufacturer, raw material producer or a consumer will know who to blame when you run into them at the country club or anywhere else.
Virgil
http://www.KeepAmericaAtWork.com
11-16-2008 @ 8:32AM
Chuck said...
Virgil,
You're right. This is a consumer based economy and when people stop buying the economy begins to stall.
11-16-2008 @ 8:43AM
Uhohchongo said...
I believe the car industry needs to be bailed in some way.
But, you do not hand them billions of dollars because their business model is broken. The money will just get squandered and they'll asking for another handout in 6 months.
They need to streamline and become efficient again. That most likely means downsizing and breaking the union.
11-17-2008 @ 8:53PM
lumberrand said...
if you think this is bad wait till the union thugs get to park on peoples doorstep because they did not vote for it. then they will be able to tank the rest of the economy thru the same process used on the auto industry in michigan. last one out turn out the lights!
11-16-2008 @ 9:20AM
gram said...
Union workers want to keep your job? renegociate your contract and tie wage increases to profitability.
Management change or get out no golden parachutes.
unemployment 12million
"undocumented" aliens 12 million.
11-16-2008 @ 9:59AM
codeyh82 said...
Did the auto industry in the U.S. forget that they make sub-par vehicles, and that's why nobody is buying them?
Made in the USA doesn't give the warm and fuzzies, it pushes people away.
11-16-2008 @ 10:09AM
Art said...
The American auto industry is complete denial of its failures. Toyota makes cars in the US efficiently, with style and with out a union. Why? Because they do it with good management, excellant engineering and design,and without a union. The solution...chapter 11, reorganize and correct past mistakes. Stop fueling a worn out machine. Learn from those who are doing it right. I can't believe the union is blaming the price of gas and consumer consumption as the reason for Detriots failures. Nancy please don't throw our hard earned tax dollars. away.
11-16-2008 @ 10:39AM
3018c133 said...
The american auto industry is critical to our economic health and it needs ro be bailed out with LOANS but the top management and Board of Directors at GM need to be replaced.These guys have made one blunder after another and should have been shedding car divisions years ago and getting serious about quality instead of just lip service.I would also like to see a law passed to prevent the CEO of a company from being Chairman of the Board its not good for the shareholders or the company.
11-16-2008 @ 11:10AM
David J Wilson said...
It is interesting how I just read about an article on how the Chrysler bailout worked in 1979. Am I dillusional, but it seems to me it did not work because here we are again, asking for another bailout.
The union has no right to blame the economy on all the auto industry woes. Let us start with bad management, no long term planning, union atrocities and inferior products to name but a few.
A government bailout of the automotive sector and I might add the financial sector is and always will be unwarranted!
These are companies/institutions that thrived on greed, power and deception of the public. They are responsible and as such should be held solely accountable. Small business still is the backbone of this country and to my knowledge there has never been any bailout of that sector that I am aware of. As an example when Walmart grew to a size that it displaced main stream business there was no bailout. Why should there be one for the auto industry or Financial/Investment America.
The American steel industry was in the same plight not too long ago and we seemed to weather that storm without our economy going into a depression. In fact Mittal steel is now doing quite well in an industry that we Americans failed at.
I do have compassion for displaced workers but now is the time for us to be held accountable and look to be more creative.
As to the financial industry I am really irate with our government and its bailout ideology. Assuming ther is a need to assist them to stabalize our economy( which I do not believe) then attach strict covenants and restrictions on the monies we loan/ invest in these venerable financial institutions. Just let you or any other average citizen try and borrow money today or even before this mess and witness all of the legal documents, covenants, and restrictions you would have had to adhere to in order to borrow money.
I am sick and disgusted with our monetary system. It plain and simple no longer works! We are an economy of have and have nots. It rankels me when I hear politicians speak of a middle class, there is none nor has there been one for many years.
Government intervention is not the answer! We as citizens must assume responsibility and react accordingly.
11-16-2008 @ 11:48AM
pops said...
Im from downriver detroit and if you think ist not the unions fault think again.25% of the price of an auto is retirement.health care was cheap before the unions gave mass health care.workers dont have to work and still get paid.they shut the plants down for retooling they get 95% of their pay.free schooling.free law services. give that to a worker at mcdonalds and a burger would cost $20.00. dont get me wrong my pops retired from chrysler motor and the retirement took care of mom after dad passed but the conditions up till the 70s were bad.the union had its place but has overstepped its bounds.when a union will pickett a job done by a mom and pop companys. and try to strong arm them.like if your not union you shouldnt work.thank you union bosses for screwing it up hey
11-16-2008 @ 1:36PM
ali bama said...
No the UAW just bled the Auto Co.s white for the last 60 yrs, not to mention the criminal acts that have been laid at the UAW's door step I.E.: Murder, Extortion, etc etc
11-16-2008 @ 1:41PM
Phil said...
First to all the Toyota lovers . Their plants are stalled, and sales is down 30% or more here in the good ole USA ! Rant quality ? rant this or that ? Shut up ! Why ? This is a 2/3rds consumer economy ! Consumers are NOT CONSUMING ! In a 2/3rds consumer economy in a recession to boot ! With banks leading the way by NOT lending money ? Thats why we rushed to give wall street a welfare socialized bailout for ??? To get banks to do their job ? And thats lend money ! Well folks ! Banks are not lending !!!! HELLO !! ,the 2/3rds consumer economy is not buying !HELLO !!Americans are not and will not start buying until they feel safe in their jobs ! HELLO !!! OH YA THATS GOOD PAYING JOBS ! you know $15-20 dollar an hr jobs !So in this 2/3rds consumer economy in the good ole USA i think saving good paying jobs and creating good paying jobs so the consumer can get out and consume in this 2/3rds consumer economy AND RECESSION is the only way out !! And by doing this you will collect more taxes for cities towns counties and so on without raising taxes ! IN THIS 2/3RDS CONSUMER ECONOMY !!So to all the anal-yst of the economy ? The US economy is a 2/3rds consumer economy Daaa...
11-16-2008 @ 2:02PM
Phil said...
And to all the union haters ? before unions companies had child labor , sweat shops, 12 hr days no overtime pay, no medical ,dental,opical,benefits , No unemployment ,no social sec,no workers comp, no OSHA , no paid days off ,low wages with company stores! Company towns. Where the boss would go to your house and rape your wife in fear of losing your job ! Companies polluting people who work their and the water and towns !LOL LOL and you people bitch about unions ? LOL The U.S. workforce is only 7% union today in 2008 ! My how far we have come ? And with WALMART being the largest employer in 21 of the 50 states I see where we are going to ?? $7.00 pt time jobs with no benefits ! LOL cool ... Just what america needs.. in a 2/3 rds consumer economy ! lol lol ...
11-16-2008 @ 2:50PM
Sheldon L said...
The fact is that ALL CAR COMPANIES are losing money and sales are down drastically for all.
They have been, and will continue to be affected by the global economy.
The problem for GM, F & Chrysler is they simply are less prepared to weather the storm.
Legacy union contracts, pensions, poor planning and decades of less competitive designs all have taken their toll.
11-16-2008 @ 2:48PM
Sol said...
America is in big trouble and it seems to me that everyone is pointing the finger at everyone else; unfortunately pointing the finger at one another never solved anything. I think that it is important to come to the assistance of the auto industry but not until they acknowledge that the reason they are in this mess is because they have ignored the laws of capitalism. If you think that you can beat a competitor paying twice per worker than what your competitor is paying you are only fooling yourself. The Unions must acknowledge that their labor contracts must be modified. The Bosses must be forced to resign and new innovative bosses must be put in their place. There are hundreds of great CEO's in America who I am sure can be convinced to turn around these companies. Lets get moving.
11-16-2008 @ 3:02PM
jim said...
Wow, that union guy has a lot of pride. This is in part of the problem. When a worker makes 100 time the average of the buyer. We have a problem. When the union guy sits in front of 20 thousand dollars worth of electroincs in his living room and tells us he cant live without his 75 dollars an hour. We have ruined America. Let the GMs of the world go under or into reoraganize. So the judge can bring the wages in line with the product they build. High wages for a product that you hope wasn't built on friday sucks!!
11-16-2008 @ 5:37PM
Prisms said...
Well, we should bail out the car companies. My family is three generations....now four. But we worked. Some there do not. The UNION protects the duds and this has to stop! The union has to get realistic and it is to no matter what Ron says. He needs to retire! He's still in the 70's. The US car industry has created new cars and addressed quality! They use Ethanol and there's no Ethanol in 30 miles of my house! I'm waiting for the Electric next year...if GM is still around. Read the reports for all the 30 plus mileage cars! Obviously, some of you are ten years behing the times when you say that quality is not there! GM has been winning award after award for quality. Warranty costs are down. They give 100,000 mile warranties because the cars are reliable. The Union has to give up benefits and pay. Plants have to close. Its better to cut back than to be totally without! As a retiree now with a son-in-law working, with a family this is personal. Bankrupcty is not the answer. GM has sold off all profitable assets and would sell more if they could find buyers. Everything is on the block. The cars are top quality. We've worked on electric for twenty years...no one would buy! Sure retire the current managment, who cares?? The replacements can't do any differently. They can not sell assets quicker or modify contracts with the UAW without the cooperation of the UAW. As long as the union is claiming its not us, then there is little hope. Toyota's market is down 30% and they are surviving only because they aren't carrying the retirees that GM is. But guess what? GM is dumping the benefits of its retirees in January! Will it be too late? They need a bail out and the economy to smooth out. They need American's to buy American. Not Chinese. Not Japanese! Not Korean! But American! They need the UAW to come to the table.
11-16-2008 @ 5:56PM
Walter said...
The fact is that the big three blew it due to lack of foresight and mismanagement. Why does Toyota offer three hybrids and Ford only one and GM offers gas-guzzlers that are now hybrid such igenuity. Does Chrysler offer any??? Detroit built the most enviormentaly and gas friendly cars, trucks, and suvs for years now its time to pay the price.
11-16-2008 @ 6:13PM
D York said...
I hope they all go belly up, The unions have put the auto makers in a bad situatio and now they want the Joe plumbers of the USA to bail them out Bullshit If I owned business whould they bail me ot?? hell NO. Back in the early 60,s the unios seen to it that hubcap pounders got $ 14.00 plus benifits and it went up from there. I personally know some retirees that brag about what they did in a normal shift, maybe an hour and half of productive work rest of the time they were doing drugs, drinking etc and if they got caught there company would send them to rehab at our expense and give them disability pay. No wonder their broke. I was raised on a productive dairy farm I will survive if I have to be self reliant on food and shelter. I have a twin brother that drove truck for a union company and I called him one January in Ohio from fla He didn t have to work that day because his a/c didnt work so the union says he was to be payed until repaired N.E. Ohio in January Then he had a wreck and he got reprimanded and suspended w/o pay and was borrowing money for groceries, good thing he didn t come to me Id told him to go see his UNION STWERT. The union was designed for safty of the coal miners and got ouy of hand shouldn t have any business in a companies pay plan or benifit pkg Sorry about that you union guys thats the way I feel maybe you ll have to go out and get a real job
11-16-2008 @ 6:34PM
Gary said...
Well, the unions couldn't put the big 3 out of business. Neither could management; nor the Japanese. But put them all together, boy they're doing one hell of a job. The management created a business model right out of the Flintstones, and then abandoned it to become a credit facility to lend money to customers to buy cars that they didn't want and paid themselves bonuses for being clever. The unions threatened to stop production unless 5 guys were there to shove one bolt in a hole and all got medical care and 6 weeks vacation. When robots came in, then the robot did the work and the 5 guys just got paid. And the Japanese...they just built a superior product for a good price. How unfair of them. Everyone knows what's up in Detroit. Watching it unwind is painful, but we survived American Motors, Studebaker, Hudson, etc. We'll survive this.