Wednesday, November 26, 2008

About this whole car bailout thing ... Don't Do It!

I was watching Monday Night Countdown the other night and I noticed a new feature Boomer and the gang do every week. I guess they had to take out Tom Jackson's 'Jacked Up' segment because of Fidel Goodell's crackdown on big hits. Now, it has been replaced with a Keyshawn Johnson-themed segment call 'C'mon man', where Key and everyone else show a highlight of a particularly boneheaded play made the previous Sunday. After the foolish mistake is made, whichever analyst introduces the highlight punctuates it with a loud 'C'mon man', I guess as an insult of some kind.

How does this relate to the auto industry looking for a gigantic bailout in light of what all these banks are getting from the federal government? Well, every time I hear some advocate of the car industry's plight or some autoworkers' union speaker, I can't help but just think to myself, 'C'mon man.'

Your resources are so messed up right now that you can't find any solution to your problems. A government handout is what the so called "backbone of America's economy" needs when our economic system is in the biggest shambles it has seen since the Great Depression. Isn't the backbone supposed to stay strong in the worst of times? You really can't declare for bankruptcy like the airplane industry did a few years back?

Seriously, is it really everyone else's problem or the government's problem that your business model was so shortsighted in the 1990s as you were busy selling thousands upon thousands of SUVs to America. Think about it, in a matter of 30 years, we went from a society that had entire families owning one, maybe two cars in the 1960s to each child having their own car in a good portion of the country. That means technically, in recent times, the car industry has been doing triple and sometimes quadruple the amount of business it did just thirty years ago.

We're not even talking about inflation here. Remember back in the day when that family car lasted 10 and sometimes 20 years. Now a good portion of the world has a car for two years tops and then signs a lease for a new one. And then there's this: I just don't think the government should be loaning money to industries that were just shortsighted. See, as the car industry was doing all these record sales, they decided to bask in the glow of their business, rather than be active members of the business community and do some forward thinking.

At least that's the sense when I read things like this in yesterday's Washington Post:

But the car company ... lawmakers envision for the future could turn out to be a money-losing operation, not part of a "sustainable U.S. auto industry" that President-elect Barack Obama and most members of Congress say they want to create.

That's because car manufacturers still haven't figured out how to produce hybrid and plug-in vehicles cheaply enough to make money on them. After a decade of relative success with its hybrid Prius, Toyota has sold about a million of the cars and is still widely believed by analysts to be losing money on each one sold. General Motors has touted plans for a plug-in hybrid vehicle called the Volt, but the costly battery will prevent it from turning a profit on the vehicle for several years, at least.

Seriously, c'mon man. How is that you haven't found a profitable way to sell these things? Aren't these the essential, yet most of the time simple solutions that high paid execs are supposed to find? Instead of doing testing on the future of the car industry in the '90s and beginning part of this decade while they racked in the cash, the automakers decided to act like God damn Scrooge McDuck from Ducktales and swim in their towers with pools of gold, while laughing at the average American as they drove around in their gas guzzling SUV.

But it isn't just the high powered execs when it comes to these automakers. The average American auto worker is to blame for all this. Actually, I should clarify. Not the average worker. I really mean the average American autoworker union. I don't mean to just stomp on the auto industry — and specifically the American auto industry — but they are actually asking for billions of tax dollars to save their asses when this is the case right now:

Economists in Michigan, the long-time home of the auto industry, say they don’t support the proposed multi-billion dollar bailout of Big Three automakers Chrysler, GM and Ford.

One reason why, they say, is the ultra-high labor costs for union workers employed by the Big Three. It costs over $73 per hour on average to employ a union auto worker, according to University of Michigan at Flint economist Mark J. Perry.

Wait, wait, let that $73 an hour sink in just a little bit. If you multiply that out by 40 hours a week, 53 weeks in a year, the average American autoworker costs $154,760 a year to employ. That's five times what I currently make working 45-50 hours a week as a writer. Now I'm not saying I have the most difficult occupation in the world, but I sure don't think it's five times as easy as working on an assembly line. Oh, but the non sense these unions have been able to negotiate at American auto plants gets even more ridiculous:

For U.S. workers at Toyota, however, the per hour labor cost is around $47.60, around $43 for Honda and around $42 for Nissan, Perry added, for an average of around $44.

What? Really? Now if you're wondering what these figures like $43 an hour at Honda or $70 at Ford, I'll explain. That includes "hourly pay, plus the benefits they’re receiving and all the other costs to General Motors, Ford and Chrysler, including legacy costs – retirement costs, pensions, and so on," according to that Perry fellow quoted above.

So now that some cuts have been identified rather easily, why doesn't the auto industry just implement them right away, so the amount of money they're asking of the average American will at least not be totally outrageous. It can't be too hard to make the battery in a hybrid or electric car cheaper to make or have the workers maybe make something closer to $100,000 a year (Who am I kidding, even that sounds ridiculous for someone working in an auto plant). I guess they are sort of trying to figure the hybrid car thing out, it has just been a lot harder than expected.

But the workers, well, the world has been fighting this war against the unions for years. And well, we've been down this road before and the only person I know to come out with his name in tact was Eliot Ness. Let me just put it this way, I go with the Grand Theft Auto theory of "Union's just another word for mafia." A couple of kind authors out of the University of Chicago weigh in:

The labor movement and its members have long suffered from extortion, thievery, and fraud. Corrupt labor officials have used union power to extort money from businesses. Labor racketeering has been a major source of the Cosa Nostra crime families' power and wealth since the 1930s.

Yeah, so to take down the unions, and maybe fix the economy, we just gotta get rid of the mafia. That shouldn't be too difficult, right?

Basically we're looking for the auto industry version of Jimmy Hoffa. If you don't know, he's the man pictured above and was the corrupt leader of the Teamsters back in the day. They made a movie about his life. See below:

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