"General Motors, like the other two geezers of the Old Three, is a vast retirement home with a small money-losing auto subsidiary."

Let us remember this when we speak of "national health care": money spent on one thing must come from somewhere else.

McArdle:

| Detroit didn't make a big profit by selling
| you a Ford Taurus. It made money on
| financing your Ford Taurus; often, the car
| was sold at a loss in order to get the
| finance business. The Big Three were
| banks manufacturing cars as a loss leader.

And it's a bad year in the finance business.

Yep, Crid. I think student loans, credit card balances, and auto loans are going to be the next big bubbles to crash. (So if losing money at making cars is not allowed to bring GM down, the collapse of GMAC Finance will.)

Those of us who worked our way through college, paid off student debt, pay off our credit card balances every month, and buy cheap cars for cash will be the ones picking up the tab.

For a graphic demonstration of just how much of a crippling burden the UAW is on the car companies, go here:

http://laborpains.org/2008/12/12/22-ponds-uaw-rules-and-regulations/

It's a photo of the UAW's latest contract with Ford. All 22 pounds and 2215 pages of it. And every one of those pages is chock full of pointless "work" rules that cripple the Big 3's competitiveness. Can anyone have the slightest doubt that Toyota, Honda or any other car company on earth would go bankrupt too, if they had to struggle under the burden of these parasites?

http://laborpains.org/2008/12/12/22-pounds-uaw-rules-and-regulations/

Ooops! Sorry 'bout that, folks.

I think actually they sold the GMAC division a couple years ago, but you're entirely correct: It's over.

In Iacocca's book about pulling Chrysler back to health twenty years ago, he talked about how he was forced to sell the military vehicle division, which was easily the most successful and secure part of the company, but he needed the cash. He acknowledged that if he'd had a lick of sense, he'd have kept that part, and to Hell with the consumer side.

Third times the charm:

http://laborpains.org/index.php/2008/12/12/22-pounds-uaw-rules-and-regulations/

I shouldn't have tried to post on your blog before I had my first cup of tea for the day:)

I'm not sure how the excerpt supports the argument that the UAW is the problem. The excerpt supports the argument that taking care of retirees, widows, and their families is a problem.

In Japan, apparently, people retire later, more retirees live with their children, and of course, Japan has universal health care.

http://ideas.repec.org/p/crr/issbrf/gib4.html

This makes me think that any relatively old, large company in the United States will be at a disadvantage compared to younger, smaller companies in Japan, but I don't see how *this excerpt* points the finger at the UAW.

Jerry -

Please stop making the fallacious comparison of the Japan-based factories and their American subsidiaries.

The Japanese government is not supplying health-care to Toyota's American employees. Nor are they subject to the cultural norms of later retirement and nuclear familiy structure prevalent in Japan.

And yet they still manage to outperform the UAW-encumbered manufacturers.

The UAW forces GM to do things that Toyota would never do - like let a worker sit idle due to a manufacturing bottleneck, or pay a worker to sit on his ass because his job's been replaced with a robot.

Most companies, if they do an unplanned shutdown to save cash would lay off their workforce and let them collect unemployment (which the company already paid for). Instead, Chrysler's not producing a single car in December, but is still paying 95% of its payroll due to union rules.

The reason the UAW wants card-check is so they can force their way into Toyota et. al. and make them as inefficient as GM. That's the only way GM can compete without tossing the UAW overboard.

Bed bath and beyond actually THANKS you when you spend with them. It's refreshing.

Gosh brian, maybe consider upping your lithium.

My claim was only about what this excerpt supported or didn't support and had nothing to do with other problems the UAW or unions in general may or may not be causing.

Japan IS supplying lots of subsidies in terms of healthcare and pensions to Toyota, which in general is a younger company than GM. I suspect (but I really have no clue) that Toyota US could not have made it without substantial help from Toyota Japan.

I'll add though, that I think the problems of GM, et. al., are largely self-inflicted and come from a long history of treating workers like shit and treating managers as gold, as you seem to think is their due. And in the meantime, under your theory, it's a pity we pay management ANYTHING, or pay dividends to the shareholders (actual owners) since both management and shareholders failed so completely to "just say no."

Instead, Chrysler's not producing a single car in December, but is still paying 95% of its payroll due to union rules.

Blaming the union is like me blaming my kids for behaving like brats knowing I'll give in and give them more ice cream. Certainly management and shareholders bare a great deal of personal responsibility for this.

Union, shmunion, apparently management and the shareholders thought these contracts were reasonable. And the CxOs collected bazillions in stock incentives and bonuses while being unable to perform their job of saying no.

Pound for pound, the deals the union got are no more than what American Executives have been granting to themselves.

The labor contribution to a car is about 10%. That 10% is not what's causing the massive sucking sound heard at GM. That sound is caused by the stockholders fellating the executives.

I think unions can cause problems, and I suspect they do at GM, Ford, and Chrysler. But that's not what this excerpt shows and your foaming isn't all that impressive.

Bed bath and beyond actually THANKS you when you spend with them.

I've always found it very weird, and offensive actually, how car salesjerks and their managers don't thank me, but *congratulate me* on my purchase.

(And up above, let me correct "bare" to "bear".)

Three separate thoughts:

1. What the Big 3 Automakers are going through is a preview of the problem that most countries in the Western World will be facing in the coming decades: Too many old people and not enough younger people paying taxes. It ain't gonna be pleasant.

2. Jerry can spin as much as he wants but there's little doubt that BOTH the Big 3 Mgmt and Unions are to blame for their downfall. The fact is that the UAW has been greedy over the past decades but the car companies caved in for short term peace. The snowball got bigger and bigger and now it's rolling down the hill over top of all of them.

Japanese companies like Toyota exemplify the way manufacturers should strive for. Here's an introductory article about their approach.

3. In her subsequent posting, Amy talks about the problems in California. Steyn takes a good swipe at Arnold that will be sure to put a smile on the face of most state residents:

"Ah, California. The Golden State! To a penniless immigrant named Arnold Schwarzenegger, it was a land of plenty. Now Arnold is an immigrant of plenty in a penniless land. What's the motto on the license plates? "Ah'll be back …for more of your money!" In California you don't have to be an orange to have your pips squeezed. The Terminator makes Gray Davis look like Calvin Coolidge. Care to terminate a government program, Governor? Hey, great idea! We'll hire 200 people to do an impact study on terminating the Department of Impact Study Regulation and get back to you in a decade. And when Gov. Girlyman has run out of state taxpayers to fleece for his ever-more-bloated bureaucracy, he'll go to Washington to plead for a federal bailout of Cantaffordya."

2. Jerry can spin as much as he wants but there's little doubt that BOTH the Big 3 Mgmt and Unions are to blame for their downfall. The fact is that the UAW has been greedy over the past decades but the car companies caved in for short term peace. The snowball got bigger and bigger and now it's rolling down the hill over top of all of them.

Spin? Seems like you and I are in violent agreement.

Here's an interesting video I found for everyone (except for 'Violent' Jerry) to view: The Toyota Way

The WSJ adds to this discussion. I quote their
recent opinion piece:

[edited] Mr. Bush didn't mention the hedge fund Cerberus that owns most of Chrysler. It might be embarrassing to reveal that taxpayers earning far less than UAW wages will be rescuing Cerberus's rich investors.

Andrew, even in your snippet, I don't understand *that* attack on the UAW.

Why would it matter to taxpayers what their wages are compared to the UAW? The issue is that the taxpayers are rescuing rich investors who earn far far far far more than either UAW or themselves (AND potentially that those investors hold the company privately so presumably the taxpayers don't even get shares/warrants.)

Jerry - Are you a union member?

If so, that would explain your hostility.

If not, then perhaps you are unaware that management was in the unenviable position of being legally forbidden from saying 'no'.

And regardless, the taxpayers ought not be on the hook for a failed business. GM had the option to file chapter 11. They chose not to.

Bush is finally unashamed to let his full liberal nature come out, and has acted in favor of partial nationalization of a business sector. The protectionism and "card check" legislation that Obama promised is the next nail, and Toyota, et. al. will simply shut down their U.S. operations and put all those people out of work, and idle all that real estate. The financial damage that this represents is incalculable.

Because Bush didn't want "he let GM fail" as his legacy, he will instead be remembered for triggering the Second Great Depression.

If I sound angry, it's because I am. I never expected much from Bush. I expected him to be a liberal. I never expected him to repeat the mistakes of FDR.