-Armand C. Hale
Big Labor is aggressively twisting arms in Washington D.C. to make a 25+ billion dollar auto bailout happen.
Yes, the American automotive industry is an important part of the U.S. economy. But unless the Unions agree to come down to reality and the Big Three can commit to a sustainable business model, writing them a $25 billion dollar plus check, care of the American taxpayer is just throwing good money at bad.
The American automotive industry needs to be competitive. Really Competitive.
“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. Is it right to tax the average worker making $28.50 to save the jobs of workers whose labor cost is over $73 an hour.” -CNSNews-
You’ve heard the horror stories. Decent hard-working Americans will lose their jobs if something isn’t done this very second.
Well, it’s not quite that simple.
In a recent Opinion Editorial published in The New York Times Former Presidential candidate Mitt Romney made this statement if Detroit gets your tax dollars as requested, “the automakers will stay the course. The suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.”
This is a business man talking.
Peter Flaherty of the National Legal and Policy Center agrees:
“If President-elect Obama provides a short-term fix now on the UAW’s terms, these companies are doomed.
Later, he will face requests for even more taxpayer money.”
The Financial Times recently wrote:
“The US United Auto Workers (UAW) union has ruled out concessions - at least for the time being - to help rescue the ailing Detroit-based car industry. The union has been emboldened by the election of a Democratic president and a Democratic-controlled Congress.”
The Washington Post reported on an almost sublimely ridiculous interchange between Senator Bob Corker, Bob Nardelli of Chrysler and Ron Gettelfinger of UAW. According to The Post :
“Sen. Bob Corker told Chrysler chief Bob Nardelli that one of his lobbyists told him the previous day that, even if a Chrysler plant is shut down, Chrysler still has to pay wages to its union employees. How can you come before us, Corker directed to both Nardelli and UAW chief Ron Gettelfinger, and ask us for $25 billion if you’re asking taxpayers to fund this sort of activity?”
Lori Roman in the Opinion Editorial previously quoted in which she compares giving the UAW government funding to sending an arsonist to put out a fire. Here are some examples of the activities your tax dollars would continue to fund:
“One employee punched in his time card and then disappeared. One afternoon I was helping oversee the plant while upper management was off site. The workers brought an RV into the loading yard with a female ‘entertainer’ who danced for them and then ‘entertained’ them in the RV.”
Lori Roman’s recommendation:
“With deep regret and sympathy for the many fine folks who work in the auto industry I think it is time for consequences.
Let them file Chapter 11 and reorganize. Don’t make taxpayers foot the bill for an incompetent Congress, a greedy union and wimpy managers.”
I personally think Bankruptcy is a viable solution than forever providing taxpayer subsidies of failing companies.
Arizona Senator Jon Kyl and former Gov. Mitt Romney also agrees.
“These companies could easily survive under a properly structured re-organization plan. We have a mechanism for this. It’s called Chapter 11.” (Kyl).
“A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.”
“In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate.” (Romney)
There you have it. If done the right way, Chapter 11 could actually save the U.S. auto industry.
But throwing money at Labor Unions and companies that refuse to take steps to become solvent is not the solution.
It’s simply an invitation to throw more money at that same company down the road.
Armand C. Hale
Source material: Jeff Mazzella, President,
Center for Individual Freedom
