So we all know Senator Shelby is full of , but it's much better when somebody calls him on it. Letter from Peter Karmanos, Chairmen and CEO of Compuware, to Senator Shelby after seeing Shelby on Meet the Press:
The intent of this letter, however, is not to take you to task for the inaccuracy of your comments or for the over-simplicity of your views, but rather to point out the hypocrisy of your position as it relates to Alabama’s (the state for which you have served as senator since 1987) recent history of providing subsidies to manufacturing. During the segment on Meet the Press, you stated that:
“We don’t need government — governmental subsidies — for manufacturing in this country. It’s the French model, it’s the wrong road. We will pay for it. The average American taxpayer is going to pay dearly for this, if I’m not wrong.”
I trust it is safe to say that when you refer to “government subsidies,” you are referring to subsidies provided by both federal and state governments. And if this is in fact true, then I am sure you were adamantly against the State of Alabama offering lucrative incentives (in essence, subsidies) to Mercedes Benz in the early 1990s to lure the German automobile manufacturer to the State.
As it turned out, Alabama offered a stunning $253 million incentive package to Mercedes. Additionally, the State also offered to train the workers, clear and improve the site, upgrade utilities, and buy 2,500 Mercedes Benz vehicles. All told, it is estimated that the incentive package totaled anywhere from $153,000 to $220,000 per created job. On top of all this, the State gave the foreign automaker a large parcel of land worth between $250 and $300 million, which was coincidentally how much the company expected to invest in building the plant.
With all due respect, Senator, where was your outrage when all this was going on? … I certainly don’t recall you going in front of the nation (as you did this past Sunday) to discuss what a big mistake Alabama was making in providing subsidies to Mercedes Benz. If you had, however, you could have talked about how, applying free market principles, Alabama shouldn’t have had to resort to subsidies to land Mercedes Benz. Compe ively speaking, if Alabama had been the strongest candidate under consideration (i.e. highest quality infrastructure, workforce, research and development facilities, business climate, etc.), then subsidies shouldn’t have been required.
The fact is that Alabama knew that, on a level playing field, it could not compete with the other states under consideration and, thus, to lure the German car builder to the State, it offered the aforementioned unprecedented subsidies. In effect, Alabama — your state — did exactly what you said government should not do: provide subsidies for manufacturing.
It’s no great mystery why Alabama politicians went to such dramatic anti-free-market measures to secure Mercedes Benz — they did it for the betterment of their state through job creation and increased tax revenues. And who could blame them? Is that so different than what would occur by providing financial aid to help rescue the domestic auto industry? Such aid would save millions of jobs and millions of dollars in lost tax revenue.
http://www.washingtontimes.com/news/...t-in-gridlock/The talks broke off when the United Auto Workers refused Republican demands that the union set "a date certain" by which its members would have a lower pay scale, one comparable to such manufacturers as Nissan and Volkswagen.
Blame repubs all u want...but it sounds as if the UAW is having a temper tantrum.
http://www.heritage.org/Research/Economy/wm2162.cfmChart 1 shows the average hourly compensation for UAW workers and the average compensation for all private sector workers. These figures are based upon calculations by the Detroit automakers themselves as published in SEC filings, their annual reports, and other materials. According to briefing materials prepared by General Motors, "The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked."
UAW workers are highly paid, but not all this compensation comes as cash wages. Breaking the $73.26 figure down, General Motors reports that it pays base wages of roughly $30 an hour. At the end of December 2006, the average vehicle assembler at GM earned $28.02 an hour; the average machine repair electrician earned $32.43.[2]
Other provisions raise cash earnings above this base pay. For example, workers at Ford earn 10 percent premium payments for taking midnight shifts and double time for overtime hours worked on Sundays.[3]
Autoworkers put in substantial overtime hours at higher rates, raising earnings above their base pay. GM reported that its average hourly employee worked 315 overtime hours in 2006. Including all monetary payments--base wages, shift premiums, overtime pay, as well as vacation and holiday pay--GM reported an average hourly pay of $39.68 an hour in 2006.[4] About 54 percent of the average UAW employee at GM's earnings came in cash in 2006.
Earned Benefits
The remaining $33.58 an hour of hourly labor costs that GM reports--46 percent of total compensation--was paid as benefits. These benefits include[5]:
Hospital, surgical, and prescription drug benefits;
Dental and vision benefits;
Group life insurance;
Disability benefits;
Supplemental Unemployment Benefits (SUB);
Pension payments to workers pensions accounts to be paid out at retirement;
Unemployment compensation; and
Payroll taxes (employer's share).
These benefits cost the Detroit automakers significant amounts of money. Critics contend that these benefit figures include the cost of providing retirement and health benefits to currently retired workers, not just benefits for current workers. Since there are more retired than active employees this makes it appear that GM employees earn far more than they actually do.
This contention contradicts the plain meaning of what the automakers have reported in SEC filings and in their public statements and would be contrary to generally accepted accounting principles.
Under the accounting rules established by the Financial Accounting Standards Board, the Detroit automakers must report their liability for future benefits as they accrue.[6] The hourly benefits figure includes payments into defined benefit pension plans to provide future pensions to current workers. It also includes the estimated costs of future retirement health benefits that current workers earn today.
Chrysler, for example, reports paying $20.14 an hour in health costs for its hourly employees. That figure includes the estimated cost of their health benefits in retirement, calculated according to Financial Accounting Standard 106.[7] The government does not allow Chrysler to promise to pay tens of thousands of dollars in health benefits in the future without reporting that cost on its balance sheets today.
Excludes Legacy Costs
The hourly benefit figures the Detroit automakers report covers the cost of current and future benefits earned by actively working employees. It does not include the cost of paying health benefits and pensions to current retirees.
Before they requested a bailout, the Big Three automakers specifically explained that their labor cost figures do not include the cost of past work. General Motors states in its filings with the Securities and Exchange Commission that:
GM maintains hourly and salaried benefit plans that provide postretirement medical, dental, vision, and life insurance to most U.S. and Canadian retirees and eligible dependents. The cost of such benefits is recognized in the consolidated financial statements during the period employees provide service to GM.[8]
In other words, GM records the expense for retiree benefits when workers earn the benefits, not years later when they collect their benefits. In less technical language, Ford explains that their total average hourly labor costs include:
(1) All the dollars paid to employees, (2) the cost of contractual benefits for employees, and (3) the cost of statutory payments, such as Social Security and Workers' Compensation--all calculated on the basis of hours worked by employees.[9]
Average hourly costs include the costs of wages and benefits (current and future) to employees divided by the number of hours worked by those same employees. It does not include the benefits paid to retirees.[10] This is in accord with standard accounting principles that require the Big Three to report their costs as they occur. Labor costs are the costs to the Detroit automakers of employing its current workers, not paying former workers for services performed decades ago.
Retirement Benefits Alone Cost $31 an Hour
The argument that retiree pension and health benefits inflate the hourly labor costs of the Detroit automakers cannot withstand basic scrutiny. For instance, General Motors UAW retirement plan paid $4.9 billion to 291,000 retirees and surviving spouses in 2006.[11] That works out to $31.04 an hour when apportioned among active workers.[12] That figure accounts for virtually all GM's benefit costs--before accounting for health care costs, disability benefits, supplemental unemployment benefits, or any of the other benefits GM provides. GM pays too much in retirement benefits to have labor costs of only $70 an hour if that figure included benefits to current retirees.
Labor Costs Similar Despite Retiree Differences
The Detroit automakers pay similar wages at each company despite having very different numbers of retirees to provide for. Table 1 shows the average hourly labor costs for the Big Three and the ratio of retirees to active workers at each company. General Motors has far more retirees per active worker than Ford or Chrysler. For each active worker at GM, there were 3.8 retirees or dependants in 2006. At Chrysler this ratio was half as much: two retirees for each worker. At Ford there were only 1.6 retirees per worker. If the hourly labor costs included retiree benefits, hourly wages at GM would be much higher than at either Ford or Chrysler.
But this is not the case. General Motors did not have the highest hourly labor costs despite having more retirees. Chrysler paid $2.60 an hour more in labor costs in 2006 than GM did. Ford paid only $2.75 an hour less than GM did, despite having half as many retirees relative to workers to provide for. All three automakers had roughly the same hourly labor costs despite having very different numbers of retirees to provide for. Hourly labor costs account for the expense of providing wages and benefits to current workers but do not include legacy costs.
Taxing the Many to Pay the Few
UAW spokespeople have roundly condemned the estimate of labor costs in excess of $70 per current worker hour. They assert these figures include the cost of current retiree pension and health benefits. They have done so, however, without marshalling evidence to support their case.
The Detroit automakers explain in their SEC filings that their benefit expenses are for current workers, not former employees. This is because they follow generally accepted accounting principles in preparing these estimates. If the figures did include current retiree benefits, the average hourly amount would be much higher than they actually report. UAW employees earn far more than most Americans do. Congress should not tax all Americans to bailout the Detroit automakers
I think all of the bailouts should be done (should have been done) through managed bankruptcies, where we taxpayers might get some transparency when all the creditors have to come to bankruptcy court and we could more clearly see where the bailout funds are going. With regard to the auto companies, bankruptcy would let them reorganize the obligations which are crushing them right now.
So which benefits should auto workers live without?
So the solution is what? strip these people of their health care?
I wonder how many conservatives on this forum get employer provided health care. I bet they are all crossing their fingers that their bosses will tell them to go buy their own health care for the good of the company business model.
In the mean time, let's continue to eschew universal health care since, lord knows, we wouldn't want US companies on a level playing field with the rest of the world.
http://www.economistblog.com/2008/12...sy-vs-reality/This $29 cost gap reflects the way Big Three management and unions have conspired to make themselves uncompe ive — increasingly so as their market share has collapsed (see the top chart above). Over the decades the United Auto Workers won pension and health-care benefits far more generous than in almost any other American industry. As a result, for every UAW member working at a U.S. car maker today, three retirees collect benefits; at GM, the ratio is 4.6 to one (see chart below).
Obviously employees deserve benefits, but future generations at the big three might have to have benefits comparable to other industries.
Shelby is a royal bag. Carry on.
Amazing isn't it? And people are applauding him.
Oh, and can I get a breakdown of the average AIG/Citi/etc. worker's salary/bennys and how much they gave back?
TIA.
They do give back bro...multi million dollar bonuses to themselves.
Yeah, but those are pretty, Hickey Freeman required, white collar jobs in the Big Apple.
These are dirty, grimy, push-a-button, don't have to think jobs in s my Detroit.
They just brought this up on the radio here, thought it was interesting.
What happens when the southern states start begging for water from the Lakes?
The blog failed to quantify how much more generous UAW benefits are than other industries. All it quantified was the number of retirees receiving benefits.
You must be a member of the UAW, RobinsontoDuncan.
Go ahead. Bail Wall Street out for ONE TRILLION dollars.
But run a ing circus on the auto companies for 15 billion.
I hate this government and the people whom support it. Kill us, please. You can be the Eloi, I will be the Murlock. Whats for dinner?
How many hours a week to some of you mother ers work, huh?
And when youre at work, what is it you exactly do that you deserve what you make, but auto workers do not?
Some of you are the ing lowest trash in the world. Especially some elected Southern politicians and their supporters.
I am anti-bailout anything to be sure, even at the expense of my career.
If it was your career at stake, would you be so convinced as well?
I highly ing doubt it with some of you cowardly, asshats with big opinions but light on facts/reason or conscience.
Come on up to the lazy world of the UAW. Come on, hang out with us. Lets see how long you ing last, wannabe. Why do you think we can go anywhere in the country and get treated like kings? The only people who can compete with the work ethic of someone from the rustbelt are born-and-bred Mexicans, not you ing 3rd generation en lement kids.
My brother, my uncle, my cousin, numerous friend and friends of friends are all told the same thing when they work out of state...."Man, youre a hard worker!"
Thats right. We ing work. Real work, not shuffling papers from one end to the other, not pushing a pencil or trading money on the market. We produce goods...not services. Tangible product of manufacturing.
So glorify your foreign compe ors as saviors, as examples of what American companies should be. Buy your ing car from whomever you want and in the end, you'll be depending on those same foreign companies to provide the simplest of items because your country will lack the means to produce them any longer.
You ers who are sooooo proud of yourselves that "the big bad auto companies" finally get whats coming to them are a ing joke. And if you had the balls to say some like you do here in my presence, you'd be swallowing your teeth.
I dont what part of the third world you ing live in where you celebrate the destruction of a national industry, but rest assured, in the new world after its death, you'll be next you son of a .
The weak are killed and eaten.
Dark Reign=
But really though...
I have mixed feelings on the bailouts from top to bottom.
Perhaps they were needed, but I think the government jumped way too fast in bailing out the banks.
They should have been forced to make some major changes BEFORE the money was handed to them....and I feel the same way about the auto industry.
What sacrifices should be made? I'm not 100% sure, but some companies are already taking steps in the right direction - scrapping the private jets and cutting compensation and perks for their executives.
I'm sure there are plenty of other areas where fat can be trimmed as well.
Bottom line: these companies need to be held accountable for the mistakes they made.
They have to take a hard look at where their money is going, and make changes accordingly, before they see government money.
GM needs to die...you can't run any business with losses of $2,500 per item sold. They shoud have cut loose from the UAW long ago and moved to a non union state so they could be compe ive with Toyota and Honda.
No, I'm not. Just because I'm not a blue collar worker doesn't mean I think unions are evil, or hardworking people should be exploited by this country's elite class in their quest to role back all of the hard fought victories organized labor has achieved this past century.
I think the problem is that everyone buys into the rhetoric that unions are just evil ins utions that lazy people join so they don't have to work, but that's bull and anyone that has seen how much autoworkers in Detroit bust their asses to make a living knows it.
Seriously, why should only union concessions be part of the legislation?
Why not management?
Why not shareholders?
It's grandstanding.
I certainly understand you emotional reaction to this dark chapter in American history, but I don't think anyone here is going to hear you.
The sad truth about our society is that no one understands the value of producing tangible goods anymore, and soon enough we'll all be paying a steep price for that.
I laugh when people say we can become a service economy and maintain a high standard of living, but it just goes to show how little people actually understand about the difference between a real economy and a fake economy.
Last edited by RobinsontoDuncan; 12-12-2008 at 02:38 PM.
@ the people who make fun of banking.
Without banks, society goes to . Without GM, you but Toyota.
For the record, I'm for all bailouts becasue without them, instead of a two year recession, we would be in for a treat . . . 5, maybe 7 years.
I'm also for bailouts because there are very few people that can say they did not benefit from the last twenty years of cheap credit. Ergo, everybody bares responsability, everybody has to chip in.
link
Wall Street Journal
WASHINGTON -- Sen. Richard Shelby, a jut-jawed lawmaker embodying the hostility many in Congress feel toward the Big Three auto makers, has emerged as the face of the opposition during the debate over aiding the industry.
Mr. Shelby's objections are rooted in the interplay of long-held principle and home-state interest. The Democrat-turned-Republican has always been opposed to bailouts and big government. At the same time, his state of Alabama is home to manufacturing outposts of several foreign auto makers -- including Toyota Motor Corp., Honda Motor Co., Hyundai Motor Co. and Daimler AG's Mercedes-Benz -- that have competed successfully with U.S. auto companies.
Sen. Richard Shelby, left, speaks as Sen. David Vitter listens during a news conference on the auto bailout Dec. 10.
"It's a situation where the senator does not have to worry about cognitive dissonance," said David Lanoue, head of the political-science department at the University of Alabama. "Obviously this is one of those situations where you can follow your philosophy and the interests of your cons uents at the same time."
The band of mostly Republican Southern senators who form the heart of the opposition -- it also includes Senate Minority Leader Mitch McConnell of Kentucky and Sen. Bob Corker of Tennessee -- share Mr. Shelby's principle and cir stances. Kentucky is home to a major Toyota factory. The corporate headquarters of Nissan Motor Co.'s North American operations are located in Tennessee, and Volkswagen AG recently announced plans for a $1 billion, 2,000-worker plant in Chattanooga, Tenn.
Foreign auto makers have favored the South in part because of its nonunion, low-wage tradition, and these senators argue that if the Big Three's labor relations more closely resembled those of the Southern plants, they wouldn't be in such trouble.
Mr. Shelby held a news conference Wednesday to call the $14 billion plan a "travesty." It was just a "down payment" on what would probably become billions more in taxpayer-funded aid, he predicted, and without major restructuring, the Big Three would fail anyway.
Mr. Shelby denied that the collapse of the U.S. auto industry would help the foreign-owned plants in his state. "No, no, no -- failure is never a good thing for anybody," he insisted, adding, "If I had five GM or Ford plants in my state, I would oppose this bailout."
United Auto Workers President Ron Gettelfinger recently suggested a double standard in opposition to federal assistance for domestic auto makers while foreign manufacturers reap benefits from state subsidies. "It just seems odd to us that we can help the financial ins utions in this country and that we can offer incentives to our compe ors to come here and compete against us but at the same time, we are willing to walk away from an industry that is the backbone of our economy," Mr. Gettelfinger said during a late-November news conference. He said states have given foreign auto makers more than $3 billion in incentives since 1992 and singled out Mr. Shelby's home state of Alabama as a major benefactor.
Jonathan Graffeo, Mr. Shelby's spokesman, noted that the senator opposed the Chrysler bailout in 1979 when Alabama had no foreign plants. More recently, Mr. Shelby also fought the $700 billion rescue package for the financial-services industry.
Others make the broader argument that any major blow sustained by Detroit would send further shock waves through the national economy. "I think that the senators from Southern states that have foreign automobile manufacturers in their states are being dangerously shortsighted and, frankly, naive, with regard to the nature of the automobile industry in the United States," said Ohio Lt. Gov. Lee Fisher, a Democrat who is also his state's director of economic development.
—Louise Radnofsky and Mike Spector contributed to this article.
Seriously, why should only union concessions be part of the legislation?
Why not management?
Why not shareholders?
It's grandstanding.
They already have wording in the house passed version that prohibits bonuses for officers.
No cutting of base salary or benefits?
Why would anyone in management merit a bonus?
That's just a CYA measure written in because AIG execs gave themselves bonuses after their bailout.
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