I just want to make sure I understand this: GM gets American tax dollars to keep it afloat by shifting jobs overseas. And the president is going along with this? Does anyone else see a problem here?
Tag: automobiles
Chrysler’s raw deal
We are about to feel the real effects of the debate over the future of the American auto industry. Chrysler announced yesterday that it is closing about a quarter of its dealerships including 30 in New Jersey (which includes the Belle Mead Garage on Route 206 in Montgomery and Coleman Chrysler-Jeep on Route 130 in East Windsor). General Motors is expected to begin closing dealerships, as well.
Chrysler said it will eliminate 789 dealers — or one-fourth of its 3,200 franchises nationwide — early next month so it can focus more on high-volume stores. The cuts are likely to be devastating in communities where car dealers are the biggest small business in town, with thousands of jobs and millions of dollars in tax revenue on the line.
“Businesses will close, and in many cases, given the state of the real estate market, you will have boarded-up commercial structures,” said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers. “New Jersey’s members of Congress did not vote for the auto bailout because they have a soft spot for Detroit. It’s because they have a soft spot for the 36,000 people who are employed at New Jersey dealerships.”
Dealers were told yesterday morning whether they would remain in the Chrysler fold or be terminated June 9. Chrysler vice chairman Jim Press called the cuts “difficult” and said the terminated dealers have no right of appeal. Car dealers are normally protected by state franchise laws, although such protections are usually superseded by federal bankruptcy law.
“This is a difficult day for us and not a day anybody can be prepared for,” Press told reporters during a conference call. “There are no winners and losers today.”
I haven’t seen any job-loss estimates tied to the 30 dealership, but you have to assume that several thousand will be looking for work — salesmen, business-office personnel, mechanics, etc.
And there will be ancillary impacts: vacant buildings, lost revenue for neighboring businesses (restaurants, etc.), lost tax revenue for communities.
Auto bailout plan as anti-union cudgel
We have an auto bailout. The broad outlines:
The plan pumps $13.4 billion by mid-January into the companies from the fund that Congress authorized to rescue the financial industry. But the two companies have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers and dealers.
The bailout plan sets “targets” rather than concrete requirements about what those concessions may be, meaning that Mr. Obama and his advisers have enormous latitude to decide how to define long-term viability.
It includes, of course, a little gift from the anti-labor Bush administration to the UAW:
Already, Ron Gettelfinger, the president of the United Automobile Workers union, said he was “pleased” that the administration acted on the loan requests, but said the President added “unfair conditions” that singled out blue-collar workers.
Mr. Gettelfinger said the union expects to appeal to Mr. Obama to alter the expectations for wage and benefit cuts. According to Treasury Department officials who drafted the wording, Mr. Obama would be free to change the requirements and loosen the standards, especially on how much workers will have to give up.
Empty Wheel offers this:
The President of the United States just dictated that American corporations pay their employees significantly less than the employees of foreign owned manufacturers. And/or, he dictated that American corporations pick the pocket of their senior retirees.
The union wage target, Empty Wheel adds, is part of an effort to break the union and require that “employees of American-owned companies make significantly less than the employees of Japanese-owned companies.”
Bush is demanding is that the UAW lower wages plus pensions to the level of Japanese wages plus pension (though since they have very few retirees, their pension number is basically zero). Alternately, they could lower this number by basically picking the pocket of a bunch of seniors, by taking away pension money those seniors already earned while they were still working. But one or the other will have to happen.
“In other words,” dday at Hullabaloo writes, the plan creates a race to the bottom because
the UAW must take wages and work rules that are the same as non-union plants, and since “wages” include benefits and legacy costs, and the Big 3 have quite a bit more of those than their Japanese counterparts, this would depress wages FAR BELOW non-union plants.
It’s a pretty bald move by an outgoing president who had told Congress that he had supported its earlier bailout plan, which did not include the union clause.
Toyota does it again
Innovation is not a word you can use to describe the American auto industry, at least not for a long time. So it should come as no surprise that it is Toyota that is planning to introduce the first “plug-in hybrid” in 2010 and offer hybrid versions of every car it makes by the 2020s.
Hank Kalet 