Well yesterday's operative word was "might" as in the congress might pass a bill to support the auto industry and prevent the potential bankruptcy of General Motors (NYSE: GM), Ford (NYSE: F) and privately held Chrysler. Things have changed and for now might has become won't -- as in nothing doing!
Republicans in the Senate clashed with the UAW, Democrats and the White House over a thinly viable plan to provide a $14 billion aid package to forestall industry collapse and give all sides the opportunity to improve a bad situation in the first quarter of 2009 under certain conditions.
The breaking point was the UAW's refusal to agree to immediate wage cuts. While headlines pronounce the deal dead, I say let's wait and see. After all this is Washington, DC, where any reasonable facsimile of the truth has a high probability of being posturing and pretending.
I have been following this saga all week and three days ago I posted Auto industry bailout: A bloated government to lead a bloated industry, when I did not see an easy solution for such institutionalized problems - on all sides. This was followed by Auto industry bailout: Oil companies should take over!, a very provocative suggestion that brought a multitude of comments from our readers, taking the bait. In a more congenial mood I continued with Auto industry bailout: Can't we all just get along? yesterday hopeful some good might come out of intense negotiations in the Capital. Intense yes, successful no, or at least not yet.
Unless things turn around sometime Friday and a compromise is reached I fear the worst for the US stock market. World markets are already down over night expressing great disappointment that Congress failed to act. Although I would like to see the auto industry right itself with the least pain -- and pain there will be, for all.
In the mean time, the market may provide an opportunity to pick up some bargains. I will let you know if I find anything interesting.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of GM or Ford.











Reader Comments (Page 1 of 1)
12-12-2008 @ 10:54AM
Diamond Jim said...
HA!! The UAW depends on GW BUSH to bail them out?? What a turn around. AND BUSH would have to be dumb as hell to do it, as themoney won't help the car makers just the UNION PENSIONS!! Wait, BUSH is DUMB AS HELL!!!
This is more of postponing the enevitable at the cost of my childrens' future. IT SUX!!! DON'T DO IT PAULSEN.. Don't take the UAW death threats literally please.
12-12-2008 @ 11:16AM
Ken said...
Last night at about 11pm, I realized that we have been incredible wrong about greatest President Bush over the past eight years. We are lucky to have such a handsome, concise, witty, and even-handed President. Thank you, George Bush, for your brilliant leadership. We love you, and, for some reason, we are just realizing today how wrong we have been.
http://WeAreOfMichigan.blogspot.com/
12-12-2008 @ 11:36AM
Sheldon L said...
Did I mention anything about Bush?
12-12-2008 @ 11:44AM
Jim Nyhan said...
Not a union man at all. Just a small business owner with 42 employees. Diamond Jim read up on economics 101 and you will find if Bush gives them the money our economy will strengthen a bit. I agree this is a short term fix for operating and they will have to go back for more if our economy stays in the shape we are in now. It all comes down to the banks freeing up some money so people can buy the cars. You sound lke a Clinton fan.... Remember he let the economy go nuts without any chacks and balances which created a large majority of this mess. Do not know much about the union pensions but I do know the Unions better open their books and help out. As far as these workers wanting a raise and more benefits they are crazy take a two year contract and be happy with what they get. The company is broke.
12-12-2008 @ 12:19PM
Ken said...
No, you didn't mention anything specifically about Bush. I'm just gently trying to convince the good Bush and pleasant folks at the Treasury to break through the ice and send some free money our way. Free money!!!!!!! At this point, Congress seems to be more than a little bit stalled, and we can only depend on our handsome fearless leader. My understanding is that a compromise, if the money comes from TARP, almost has to be no compromise at all.
12-12-2008 @ 3:33PM
Paul B.inTN said...
As an auto worker with 32 years seniority I am tired of the false info that abounds. When laid off you receive a gross pay of 95% of your working net pay minus travel pay. That works out differently for everyone depending upon their dependants and between 60 and 70 percent of your working pay. This is not 95% of your pay
The UAW has given concessions the last two contracts.
The Japanese government a few years back helped Nissan through troubled times so quit arguing about capitalism taking its course when the foreign manufacturers suppliment the industry.
We do not operate on an even playing field with 15 countries that have a VAT or value added tax that taxes vehicles built and sold in their countries but refunds that money if the vehicle is exported(Germany is one). Then if we sell a US made vehicle in their country it is taxed on entry.
Most of what irks me are stories often told by a friend of a friend or a "friend of my cousin" about the lazy auto workers.
9 of the 10 most productive US auto plants are union plants. This is because people are willing to work very hard for good pay. Our plant had about a 50% drop-out rate when it hired temporary workers. It was quite common for new hires to walk off the job after a few hours telling people they were nuts for working as hard as they did.
I have what is considered a preffered job repairing any problems a vehicle has as it comes off the line. I am an ASE certified Master Technician, work whistle to whistle, am expected to work every minute of the day and do.
Were there abuses in the past? Yes, definetly. But auto workers and the UAW recognized years ago that in order to survive things needed to change and they have.
I recently went back to college at night to finish my degree and would sit through proffessor after proffessor putting down the union, relating the friend of a friend stories. Some of our assignments were group presentations and I was always amazed that most of my white collar classmates would email and leave messages for me from work. They would relate how they spent three hours on the job working on the powerpoint presentation for class. I'd have been disciplined with a week off no pay and if repeated my job.
Finally, I have had two work related surgeries. As I cited earlier I have a preffered job, many of my coworkers have worked the line for 30+ years and endured multiple (10+) surgeries just to go on. I have seen many coworkers die of cancers most likely related to the many chemicals they were exposed to. In the area I started in 30+ years ago the welders didn't decide to retire. One day they would cough up enough blood(more than usual) and end up on medical retirement. What the american people are being fed is the republican retaliation for the UAW financially supporting the democrats and a dislike for the working class. When the labor pool shrunk it got an augmented with influx of illegals to drive labor costs down.
12-12-2008 @ 3:44PM
Jon said...
It seems that the UAW has no interest in hearing from the public electronically, but it's just as well. I WILL NOT purchase a UAW-built vehicle after this. My Chevy truck and Jeep Cherokee will be replaced within a few years. The idea of sending more money to the UAW or Detroit is appalling. I have no choice in paying taxes, but I do have a choice in where I spend my hard earned money. If Japan wishes to support their manufacturers, that's fine as it's their money. American tax dollars are mine, and I don't want my money wasted on an obese industry that refuses to make the concessions required to lose weight.
That's my take, and I don't really care what others think, though almost no one I know supports it.
12-12-2008 @ 5:04PM
Robert Moller said...
No one mention the $73.00/ hour UAW wage! Did not see that as a teacher.
12-12-2008 @ 5:23PM
Ken said...
It is pretty hard to get more closed-minded than the phrase "That's my take, and I don't really care what others think". Almost more than anything else, this may be the biggest problem in America today. Thanks for the limited worldview and send me a postcard from whatever utopia in which you currently live.
http://WeAreOfMichigan.blogspot.com
12-12-2008 @ 5:34PM
Sheldon L said...
Jon,
I wish I could see what you are willing to waste your tax dollars on. Nobody volunteers to waste their tax dollars. The $14 billion is only a door stop to hold open the door long enough to give everyone the time to develop realistic and appropriate strategies to keep the economy going.
However, in view of what Chapter 11 bankruptcy would mean in terms of management -- the court would appoint a receiver to play Auto Czar just like congress so in the end it might be very similar.
12-12-2008 @ 9:22PM
Jean Luc said...
I do not know what to think about this catastrophic ending (or close) of the US auto industry but I will always remember the thousands of GMC US Army trucks (Deuce and a half), jeeps and Dodge Command cars liberating Belgium in 1944/45.
For that, once again, I say "Thank you American Auto Industry".
12-12-2008 @ 10:27PM
Lucy said...
You people need to get real. You have so much hatred in your heart about American made cars. Im going to pray that God touches you tonight. The men and women of The Big Three work hard. Why don't you come in and see how many doors or hoods you can put on in one hour and breath the things they breath. They have taken a pay cut. New people make 14.00 a hr. How much does Toyota make $30.00 plus a $6,000.00 to $8,000 bonus. Where do you work so I can boycott what you do. Since your so against the American people. Don't buy are great cars, you are the one missing out. I talk to a guy the other day, his truck is on 200,000 miles. Whats that tell you. Get a life aniti- america people
12-12-2008 @ 11:05PM
RichinCA said...
If all the American Auto Companies go under, where will you get parts or service for AMERICAN CARS? The mexican body shop or the arabic transmission place?
12-12-2008 @ 11:14PM
ann, just ann said...
Bin Laden must be laughing his a__ off, Bush/Cheney have accomplished bringing our economy to its knees when he couldn't!
12-13-2008 @ 12:44AM
Marlyss said...
What do you think is going to happen if the American auto makers go under? Do you think there will be enough hondas or nissans to go around? No, the demand for cars will go through the roof, not to mention the price. It will take ages for new cars to be made that will be able to meet the demand. And then all that money will go where? Not to this country.
Washington had better be careful. It will not be a pretty sight to see what would happen to this country. Think things are bad now? Just watch.
12-13-2008 @ 11:06PM
AJA said...
CHAPTER 11 IS NOW, OR CHAPTER 7 (DESOLUTION) WILL IN THE FUTURE BE THE ONLY RESULT; LET THE JUDGE SUBROGATE THOSE PROBLAMATIC CONTRACTS; AND UNFUNDED RETIREE HEALTH & PENSIONS. TIME TO SUCK IT UP. BETTER THAN 60% OF US ARE TIRED OF THE WELFARE GRABBERS OF NM, LA, MS & AK, AND NOW MI. A HAND UP, NOT A HAND OUT! CHANGE YOUR WAYS..., THE REST OF US ARE WEARY OF YOUR SELF MADE PFLIGHT.
AJA
12-16-2008 @ 1:48PM
jeff said...
AMERICAN CARS?? I LOVE EM I BUY A USED ONE WHEN EVER I NEED ONE. BUT THERE IS NO WAY I WILL BUY A NEW ONE. I WAS A UAW MEMBER AT A NON BIG 3 FACTORY AND THE UAW DIDNT SUPPORT US ONE BIT. NOW IF WE MADE $30 A HOUR LIKE THE BIG 3 AND THE UNION GOT THERE $60 A MONTH OUT OF US IT MAY HAVE BEEN DIFFERENT. AND THEIR IS A WAY TO NOT PAY THEIR DUES IT IS THE BECK LAW BUT YA HAVE TO JUMP THROUGH HOOPS TO DO IT. ALL STATES SHOULD BE RIGHT TO WORK STATES. WHY HAVE THE NORTHERN STATES TAKEN AWAY THAT FREEDOM FROM THEIR CITIZENS