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Criticising car corporation charity

Written By: - Date published: 11:35 am, April 2nd, 2009 - 19 comments
Categories: economy, employment, International - Tags: , ,

Here’s why Fickle Cycle is rapidly becoming the best New Zealand blog focussed on international issues:

I wasn’t impressed with December’s car industry bail-outs in the US and I’m not any happier with the latest round. I have a fundamental issue with giving money to these corporations whose primary interest is collecting profit. The US Government may say they’re closely watching these companies but for what exactly? The Government isn’t going to be ensuring the money is spent on the workers (the people that are most vulnerable during this recession), they’ll just make sure there’s no more embarrassing CEO bonuses and that the ‘restructuring’ puts the car businesses back in profit.

I don’t have enough faith in GM and Chrysler, or the US government, to restructure their business in a way that benefits all involved and not just the top 20%. Investing billions of dollars into a company just so people can keep their jobs is simply pathetic. Restructuring towards a better future should mean change that involves higher pay for workers and major cuts for the higher ups that get far too much for what they do. A system where problems hit the people that didn’t create it the hardest and the people who created it the least is unjust and not how businesses should be run. The ‘restructuring’ that will take place is just going to restore this fragile relationship that will lead to more problems in the future. At least 400,000 people have already been laid off in the car industry because of the recession and I fear not enough is being done for them. This will only lead to future problems.

Where are the major Obama announcements declaring new social structure investments, new job initiatives, more protection for redundant and vulnerable workers, and help to individual people struggling to keep their homes (or to have a home at all)? This question goes not just to the US Government but to New Zealand’s and most other countries too. I’m tired of seeing all this money given to corporations with the expectation that the cash will trickle down and I’m tired of corporations being treated with higher priority than the people.

We don’t cover international enough and Fickle is happy for us to re-post his stuff occasionally, so look forward to seeing more of it here. Or I guess you could just cut out the middle man.

19 comments on “Criticising car corporation charity”

  1. justthefacts 1

    $75 an hour is not enough for an assembly line worker?

    Lets face facts, the American auto industry is in trouble for a whole raft of reasons however the major problem they face is caused by excessive and outrageous union demands.

    I hope that Ford, GM and Chrysler do go into bankruptcy, only then will the management be able to do away with the high wages and ridiculously generous pension schemes that cripple an industry already facing competition from Japan.

    • Matthew Pilott 1.1

      $75 an hour is not enough for an assembly line worker?

      Depends. Is a few million each enough for several dozen upper and middle management? That’s probably $75 every three minutes.

      Lets face facts, the American auto industry is in trouble for a whole raft of reasons however the major problem they face is caused by excessive and outrageous union demands.

      Facts? Not your forte. The US auto-industry was doing alright, not great, but it was surviving, until demand fell through the floor due to higher fuel proces that made the Ford Exxon Valdez unsaleable, an international credit crisis centred on the US and a recessionary cycle.

      It’s not paying workers well that caused the problems.

      I hope that Ford, GM and Chrysler do go into bankruptcy, only then will the management be able to do away with the high wages and ridiculously generous pension schemes that cripple an industry already facing competition from Japan.

      What, the ex-“management’ of a few bankrupt companies? They’ll do heaps, sure JTF. I like your logic.

      By the way, any idea what a comparable wage for Toyota Japan or Hyundai is? I don’t know, but I’m willing to bet it stacks up with the US automaker equivalent.

  2. justthefacts 2

    Pilott

    “By the way, any idea what a comparable wage for Toyota Japan or Hyundai is? I don’t know, but I’m willing to bet it stacks up with the US automaker equivalent.”

    Yep, $45 an hour.

    Again you cherry pick the parts of my post that suit your argument, I did not say that union demands were the ONLY reason the automakers are in trouble, the management are also to blame for giving in to the unions and just as importantly designing cars that are inferior to their Japanese counterparts.

    The US automakers face a $2000 per unit disadvantage, this cost difference is entirely down to the difference in wages and benefits.
    The survival of the US automakers relies on getting costs down, unless they can match what the Japanese and Korean’s pay their workers then they deserve to go out of business.

    • Matthew Pilott 2.1

      It’s not cherry-picking when I address the whole argument, JTF. You make a token point to ‘a whole raft of other issues’ which you then didn’t explain, define or address, and said that to stay in business they need to pay less.

      You need to work on your terminology, you can’t invent meanings for well-used phrases.

      If the US auto makers go out of business because they can’t make an advantage out of a highly-paid workforce, then I agree they deserve it. If they can’t adapt to the local market they only have themselves to blame.

      What, for example, do you think the assemblers of Chinese and Indian cars get paid? I’d imagine that the unit cost there is a whole lot cheaper again, yet that’s not putting the Japanese and Korean manufacturers out of business is it?

      So taking wages and salaries in isolation, and saying that it’s the main reason they’re struggling, is just plain wrong. The US still has import duties and tarriffs on vehicle imports, and there are much higher freight and other logistics costs to pay when making cars in another continent. They have advantages too. If they weren’t resolutely blind to world conditions they’d start making cars people want as well – that’s their real problem. Chrysler Crossfire says it all really.

      So if they go out of business purely because of what they pay their workers, then yes, deserved. Same with the Japanese and Korean manufacturers, in relation to other countries with even lower costs.

      A race to the bottom isn’t a solution, JTF.

      • Kelsey 2.1.1

        The US still has import duties and tarriffs on vehicle imports, and there are much higher freight and other logistics costs to pay when making cars in another continent

        How is that relevant? Toyota make more of their cars in the US than GM do…

  3. They could remain in business if they actually made cars that people wanted to buy and drive. But then I’ve never seen any European with taste drive an American car.

  4. “Privatising profit, socialising losses”

    BTW, It would be nice to know the how much of the $75 p/h (a figure which comes from the Employers, the car companies) is actually wages, and how much is pension plans, health funding etc.

    • Pascal's bookie 4.1

      Yeah, those sneaky euro’s and Jap’s with their high falutin public health systems, clear cut subsidisation I tells ya! Those costs should be paid by employers!

  5. They are in trouble because they don’t make cars that people want to buy.

    And if they didn’t want to have to pay their workers 75 dollars an hour they shouldn’t have signed the contracts, they should go and get workers somewhere else.

  6. Strathen 6

    I completely agree that companies should not be getting bail outs. Although my reasons are different.

  7. Mark M 7

    Well put JTF.

    Fickle Cycles notion that paying workers more is a better option when the bloated cost structure is one of the main reasons the company is in trouble.

    If they produce cars that people want with a cost structure that matches the Japanese competition ( and Korean , Chinese and Indians when they arrive) they will have a chance.

    If they continue with a cost structure that gives workers as mutch money when they stop working they have no chance.

    Your veiw that bankruptcy is the best option seems to be a veiw held by Obama

  8. Pascal's bookie 8

    Here’s a good post

    http://www.newshoggers.com/blog/2009/04/socialism-schmocialism.html

    It’s about what American taxpayers reckon. Short version: they want the bosses to take a fuckin haircut.

  9. rave 9

    Occupy under workers control we need a 21century electric Model A

  10. tommy onions 10

    “The US automakers face a $2000 per unit disadvantage, this cost difference is entirely down to the difference in wages and benefits.”:

    At what level of the workforce? Just the factory floor or across the board – pun intended.

  11. ripp0 11

    Bankruptcy – stated by Mark M above to be PBO’s view – has distinct problems, however, in modern American business practice.

    Ironically, and sinisterly more than cynically, for the same reason that “too big to fail” found widespread public currency. Yeah, in a populace laced with fear/s public knowledge has its uses. Like it (they) pays.

    And first in modern American bankruptcy business practice..

    ps — would suggest fickle get after this for a greater international (and influential) audience

  12. Tim 12

    Thanks for cross-posting this article guys. The $75 p/h is quite an interesting figure and I agree that it is hard to have sympathy for anyone to do with such polluting corporations.

  13. Pascal's bookie 13

    The $75 p/h is quite an interesting figure

    Isn’t it? It includes the hourly wage of around 28-30 dollars, all the benefits, like overtime (not always available), health insurance, etc. So it’s arguably ok up to here, but it’s really the labour cost to the company rather than the hourly rate recieved by the employee, who is not, surprise surprise, pulling in 150k plus a year, as implied.

    Where it gets downright dishonest is that it also includes the labour costs incurred by the company in retirement benefits to former employees. Why that should be included in a supposed hourly rate for current employees is probably a political question.

    http://www.politifact.com/truth-o-meter/statements/2009/jan/13/spencer-bachus/big-three-wages-inflated/

  14. ripp0 14

    PB,

    commend your preference to leave links ‘open’ per above.. sometimes _ short on time – I clip and go back to find ‘missing link’ when the html option has been taken.. so thanks again..

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