This is the week that the CEOs of Chrysler, Ford and GM make their second attempt at securing enough bailout bucks to stave-off bankruptcy (Ford not-so-much, but since you’re offering…). As is the way of such things, the serious “negotiations” is already going down, as politicians and supplicants prepare to posture for public presentation. Automotive News [sub] reports that Republicans have decided to focus their hypocritical ire (imagine a politician chastising an automaker for not balancing their budget) on the United Auto Workers’ (UAW) Jobs Bank. “The Jobs Bank requires the Detroit 3 to pay nearly full wages to hourly workers who have been laid off. Although the number of workers in the Jobs Bank has dwindled, the concept has become a powerful symbol of auto industry excess. General Motors is likely to propose its elimination, says a source familiar with the company’s thinking. Last week Bond did not spell out precisely which concessions he expects from the UAW. But during the congressional debates, many GOP lawmakers singled out the Jobs Bank as a wasteful Detroit 3 practice.”
Don’t be fooled by the pro’s prose. Either GM’s already cut a deal with the UAW to kill the Job’s Bank, or it hasn’t. And if it has, you can bet the UAW didn’t ask for something in return– something which will NOT be the subject of public debate or disclosure (the joys of having a public turnaround plan and private for-pols-eyes only plan).
“The enormous costs in union-required benefits are unsustainable,” said Sen. Elizabeth Dole, R-N.C. “Renegotiating these contracts would be essential if there were to be hope of keeping these companies afloat.”
What’s the bet the automakers’ suits will throw the UAW’s recent “historic accord” (Daniel Howes) under the proverbial bus? And why not? As many TTAC commentators have pointed-out, the UAW’s compensation is hardly the central reason for The Big 2.8’s slide into bankruptcy. But it’s a lot better for the D2.8’s chiefs if Congress focuses on the union– rather than the CEO’s epic mismanagement on the branding, product development, manufacturing, planning and marketing fronts.
In fact, Jet-gate may set the template: a class war between the haves and the have-mores, with a sideshow of SUV bashing. Politics. You gotta love it.
While it makes for nice headlines (especially if you want to bash the opposition’s base), the jobs bank is only a symptom not a cause of Detroit’s ruin.
Plenty of their competition have programs that pay core assemblers when the plant is idle. The problem with the jobs bank is that it is set up as if the 3 were still growing (and thus opening new plants). Instead of shuffling employees into new positions, it just adds cost to shinking capacity.
The problem with the “bank” is the same as having too many brands and dealers, it’s the result of a refusal to deal with market reality. Worse, because the 3 never shrunk to a sustainable size, they have never been able to stop the rot.
It concerns me to hear rumors about likely D2.8 plans which do not include the words “pre-packaged” and “bankruptcy” anywhere. If it were a real option for them there is no way they could have kept it a secret, especially GM.
Ed,
I’m guessing you will hear the words “too big to fail”, “catastrophic”, and “3 million jobs will be lost” during the coming week. The fear-mongering coming out of Detroit is sickening.
Tex
(the joys of having a public turnaround plan and private for-pols-eyes only plan).
We had a public-private deal go down this past year here in Detroit. …didn’t turn out so well for everyone.
The former mayor had a public deal in a large whistleblower lawsuit settlement – as well as a private-hush money-bury the evidence kinda deal off to the side.
(…and for the literalists out there I do realize this isn’t exactly the same thing as Ronnie and Ricky are doing)
…but Kwame is in prison today as a result. ….just saying.
I wonder how long it will take for the “secret” 80 page plan to leak?
RedStapler: I predict one day.
SexCpotatoes: “RedStapler: I predict one day.”
That Long?