Why Toyota Wants GM to be Saved

JohnA,

Here's what I'm talking about.

Run some spreadsheet 'what-ifs' on this one mega-swindle. Plusaf can show you how. Calculate cumulative potential earnings the way a bank does - future values [plus compounded Interest from recirculation] .

Put that total loss to the economy, plus the negative Multiplier Effect nationwide, up alongside the combined employee costs to ALL of Detroit's automakers - remembering that Detroit actually MAKES something tangible, it doesn't just eat income.

Look over the losses, then tell me who costs this country more. Clerks, assembly people, or slick whitecollar felons with special friends who look the other way?

This country is never getting out of this hole as long as trivial blue collar earnings are a greater scandal to conservatives than trillions looted in flatout fraud and theft. There is no point in raving over peanuts, not when moneys already stolen during Deregulation Mania Daze, could have stopped this entire meltdown cold..

http://www.iht.com/articles/2008/12/16/business/secure.php?page=1

$52K is good money in Mississippi. Before they get $15 Billion of my tax dollars, they'd better all make concessions, the airheaded executives, and their ass-kissing flunkies included.

plusaf,

When you can justify to me, and millions of others, why airheaded executives, and their ass-kissing flunkies, take enormous bonuses and somehow qualify for extravagant golden parachutes - while fully aware they are tanking their companies and swindling their investors out of billions, thus embezzling the life savings of millions of Americans - maybe then I'll seriously consider getting choked up about guys bringing down only $52K.

Everybody can grouse all they want about the government "giving away" money, and more power to you that you think that this is far worse than being swindled at almost every level of commerce. But in the final analysis your investment in hammering the employee accomplishes what? Other than you get your blood pressure up and you can vent repetitively?

For you this is obviously way past rationality, it's heart attack turf. It is entangled in emotion. To me it is not worth the expenditure even of that.

This impasse identifies the extent of corruption common in our times. You know as well as I do when you've got a gripe with Management it makes zero sense and it's a waste of time to beat up the clerks who work for the felons.

You've advised corporations - I've worked in banking..

Do we both not recognize that we are in the midst of a white collar crime wave where trillions have been sucked out of everybody's future? Do we disagree that business criminality is on a scale unseen before in human history - that it has all but crippled this country?

Result?

The last numbers I ever look at are the trivial salaries of auto workers.

Well apparantly they've had more "expenses" than they can handle. Do you get the benefits they get? Or the pensions they get? I don't. But my tax dollars are going to go to pay for their benefits and pensions? Oh hell no. Those are labor costs, direct labor costs, and that is what I am talking about. How do you think we are going to get universal health care when we are bailing out Wall Street to the tune of $700 billion. Obama is not even in favor of universal health care anyway, he wants to expand private coverage. Obama says we all must sacrifice, does that mean everyone except the UAW?

JohnA,

"Benefits" and pensions aren't wages.

http://www.usatoday.com/money/autos/2008-12-01-automakers-bailout_N.htm

1: Overpaid workers

The United Auto Workers union is taking much of the public blame for the automakers' woes. People see UAW members as overpaid and underworked compared with other U.S. workers.

The average hourly wage the Detroit 3 pay union workers is not a lot more than the $26 average for the non-union workers at Toyota's U.S. plants and $24 at Honda's, CAR says.

But including benefits for the workers and retirees, the Detroit 3's total hourly labor costs still average more than $70 vs. less than $45 at the foreign-owned plants.

The new UAW contract signed in 2007 will bring those costs more in line — but not fully until 2011 and after payments by the companies to a benefit fund for which the union has agreed to be responsible."

Kick in health care as in Canada and the benefits side comes down still further.

BTW, benefits and pensions are "expenses" and expenses are write offs.

There should be concessions all around to ask for a bailout, white collar and blue collar. No one should be immune. The labor and legacy costs of the big three far outweigh the labor of southern workers for foriegn owned manufacturers. Do you really believe the auto workers in Michigan only get $2 more in wages and benefits than the auto workers in Mississippi? And the auto workers here are making cars people actually want, we have a Prius plant opening in 2010. Let them fail and re-organize under Chapter 11, a real re-organization, not a bureaucratic driven prop up until they need another $15 billion of our tax dollars.

JohnA!

Any bets there's a lot more concessions being demanded than parity with non-union guys working for Asian manufacturers in the South? Two bucks an hour less or no deal AND no job??

Whatever side of the political fence seems comfortable, one thing you can be sure of - the press never tells you everything you need to know.

It's either from media editorial bias, left or right, or total ignorance of the details.

"Look the unions said no to wage cuts! Print it on the front page!"

For the Left 'they're standing firm!'

For the right 'they're suicidally crazy!'

What if it isn't either? But just a sloppy way to sell a story?

As one who lives in a southern state with foreign-owned car manufacturers, I am definately against any kind of bailout, loan, etc.. What do the auto workers in my state have to gain from this except an increased tax burden? What reason would there be for my state to support a bailout they have nothing to gain from. The UAW keeps it's wages, health care, and pensions with a bailout, but it does nothing for the auto workers in my state. Call it Union busting if you want, but until the UAW agrees to drop labor costs to on par with the workers of my state, I see no reason for a bailout of the big three. If they can't make it, so be it. That does not affect the auto workers in my state working for companies that can make it.

Human nature being as it is, and the psychology of economic rivalry being what it is, the generosity of Toyota et al, might just be as much corporate PR as anything else. While foreign-owned car manufacturers in the south are being Good Samaritans, their home state politicians are not singing the same tune.

Recognizing this kcfoxie raises some nutsandbolts issues. Here's another. If GM, etc, tank, it leaves a huge vacuum.

What little experience I've had with Asian manufacturers is that they don't like surprises which radically depart from existing plans. Worse, Japan has been in a slump for a decade, and seen from offshore, America is expected to be down for years.

Put it all together it looks something like this.

Assuming car demand stayed stable, to meet it would require massive new investment (for new plants, new equipment, new personnel, new training) at a time when car purchases are expected to shrink and the global banking system has become decidedly risk-averse if not an 80 year old virgin turned paranoid about losing her virtue..

And let's be honest, if there is any market Asians care to dominate it is Asia's - a billion Chinese plus a billion Indians. Compare that market to 300 million Americans and as an Asian enterprise - where would you want to invest?

If Detroit can be kept on life-support perhaps the other manufacturers will expand in the hope that when the US rebounds.the payback will compensate.

But do the other countries looking at the irrationality of US Politics have good reason to trust that homegrown politicians are determined enough and competent enough to get the economy off the disabled list?

Of course they want them to stay open. This keeps the Asian and German automakers stifled as far as what the US market gets. Face it, there have been 40-50MPG cars STANDARD in most other parts of the world since the 70s.

If the big three collapse, Toyota will have to actually invest in more non-hybrid as well as hybrid vehicles in order to surpass their own goals. As it stands their waiting to see what Ford and co and do to compete.

The prius did more to screw us over with it's "50mpg" rating, in reality it's 45-47, and that's great until you look at my dad's 23 year old Volkswagen Golf that gets 56 on the highway with the same HP and more torque from it's non-hybrid diesel engine. My 2006 diesel, 43 city 53 highway and more passenger room than the Prius to boot.

It will be interesting times to say the least.