Let me refresh your memory.
Immediately after the Banks received a “bailout” last fall the Automakers and the UAW went to Washington begging for tax dollars. Seems the Automakers and the Unions couldn’t run their business successfully so they needed Tax Payer money to foot the bill for their failed business model. High labor costs and crappy cars are a bad business mix.
Congress waffled and the Companies and Union were sent packing. They were told to go home. Review your business plan because it doesn’t work. Fix your business plan and come back and we will see if we can do something for you.
The UAW came back with the Automakers. They had no new plan. They had reached no agreements. They had fixed nothing and they had changed nothing. This was their second trip.
What happened? You already know. A temporary loan was given to the bums. “Temporary Loan” is Washington double-talk for “bailout”. A nearly $8 Billion dollar bailout. The Automakers and the UAW were told – now look – this is your last chance – go back and devsie a business plan that will, at some date certain in the future, provide a road map for you to be ”viable” or “profitable”. Don’t dare come back without a “viable” business plan.
The bums rerturned – again they had no plan – no concessions and no clue how to get to be viable. Washington responded with additional cash (an additional $9 Billion) and an additional admonition – don’t come back without a plan or well will make you repay the money immediately. You have until the end of March.
Remember, we will see you in March 2009 and if you don’t have a viable business plan, we will call your loans and direct you to Bankruptcy Reorganization.
Before the UAW and the Automakers can return to Washington with a “plan” – Washington volunteers an additional $5 Billion in cash – not directly to the Automakers but indirectly – Washington will pay $5 Billion in Automakers debts to ”Parts Suppliers”. Washington tells the American Taxpayer – “Oh, that money isn’t automaker bailout money. It went to part suppliers”. Just how stupid do they think we are. The fact that $5 Billion of the Automakers debts were paid kept their lights on until they could return to Washington. If the Government had not paid those “Part Suppliers” debts – the Automakers would have run out of Bailout cash in early February, a month before the schedulked return to Washington - Obama could not have that happen.
Now it is March and here comes the Automakers and the UAW. A fourth trip to Waashington. Still there is no plan. There have been no concessions, just tentative agreements. Independant Financial Analysts report neither GM nor Chrysler are “viable”, ongoing, concerns.
Obama’s Auto Task Force agrees. GM and Chrysler are not viable. The Task Force needs to be renamed, The Auto Bailout Task Force.
So what happens next. What we knew would happen all along. (See: http://mcauleysworld.wordpress.com/2009/03/26/auto-bailout-part-2-taxpayer-cost-increases-to-710000-per-gm-employee/ where this was predicted) .
GM and Chrysler get the cash without having plans. The automakers get additional time to complete the job they have not been able to complete during the last 15 years – to find a way to compete globally and do so at a profit.
The American Taxpayer is on the hook again. Billions in additional auto bailouts. (Washington won’t even specifiy how mush more they have agreed to spend – just “all necessary operating cash”).
As to Chrysler and Obama’s proposal – the American Taxpayer will underwrite Chrysler’s ongoing operations until Chrysler and Fiat finalize a partnership agreement. Such an agreement is guaranteed. Why do I say that? See: http://mcauleysworld.wordpress.com/2009/03/26/auto-bailout-part-2-taxpayer-cost-increases-to-710000-per-gm-employee/ where the preliminary Fiat/Chrysler agreement is reviewed. The US Taxpayer will provide Fiat with between $6 Billion and $20 Billion in cash to take Chrysler over. Fiat brings no cash to the table at present. Within 12 months Fiat will be allowed to “buy” a controlling interest in Chrysler for $25 Million Dollars. ($10 cents for every US Taxpayer dollar invested in this scheme). Fiat is under no obligation to keep Chrysler operational. Just like Daimler, Fiat can walk away at anytime. Fiat can pick up $6 Billion to $20 Billion for agreeing to payout $25 Million for a controlling stake in Chrysler. I’m sure the Fiat Attorneys can structure a deal that protects Fiat from assuming Chrysler’s legacy costs.
As to GM. The same old, same old. More operating cash. Why isn’t this company simply referred to bankruptcy re-organization where it belongs.
Mr Obama made some additional announcements. Some of those commenst are absolutely shocking. Not unexpected, but shocking.
Fisrt, the American Taxpayer will now be on the hook for “warranty repair costs” for all GM or Chrysley Cars sold this year. All of the unemployed, all of the middle class workers who don’t buy new cars and don’t have the luxury of a new car warranty, the workers who struggle to pay for the repairs to their own autos will now be on the hook to pay for other people’s auto repairs. Billions in hidden costs to the American Taxpayer’s to back New Car Warranties. MR OBAMA YOU ARE SIMPLY OUT OF TOUCH.
Mr Obama also said that the UAW and its workers have no blame in this mess. The rest of America knows otherwise. Hell, a significant number of UAW members will even admit this. The UAW has a great deal of blame. The majority of the blame, as a matter of fact.
Mr Obama – UAW workers were responsible for the demise of “Quality” in the American auto industry. I don’t want to hear how great GM and Chrysler cars are today. All your political spin aside that is a proposition in serious question. The Amercian Public questions that claim and perception is reality in the sales business.
The UAW and its leaders are responsible for the outrageous contracts and salaries paid to UAW workers. Even when one uses the UAW estimate for the wages and benefits paid to UAW workers it is apparent that those workers earn $150,000 per year with overtime. (http://mcauleysworld.wordpress.com/2009/03/26/auto-bailout-part-2-taxpayer-cost-increases-to-710000-per-gm-employee/) . That is an amount equal to 3 times the median salary in this Country. If workers are making 3 times as much as their neighbors, how do you expect their neighbors to afford the products they produce.
The UAW is primarily responsibe for the fact that the American Auto Manufacturers have never saved enough from the profits in the good times to weather the bad times. Billions upon Billions were paid out as bonuses to the UAW when the Automakers were profitable. The UAW opposed saving for a “rainy day” with labor strike after labor strike.
Just 1 year ago today (March 2008) long after this recession had started, the UAW workers went on strike, shutting numerous auto plants in the US andd Canada. Neither the UAW Leadership nor the workers believed the proven facts – the Amercian Auto Inductry was on the brink of bankruptcy – in fact they were already bankrupt – the just had not run out of cash. When presented with the “facts” the UAW Leadership failed to lead the UAW Leadership encouraged the strikes. Now how is it that the UAW is blameless. http://www.mahalo.com/American_Axle_Strike , http://www.mahalo.com/American_Axle_Strike , http://blog.mlive.com/autoblog/2008/03/american_axle_strike_hobbling.html , http://www.usatoday.com/money/industries/manufacturing/2008-03-11-american-axle_N.htm , http://www.mlive.com/business/index.ssf/2008/03/american_axle_strike_impact_wi.html ,
Mr Obama claims the Government has no interest in running GM. What Bull Shit! The President fired the GM Chairman and his Auto Task Force will develop the so called “restructuring plan” for GM and Chrysler. Unnamed Administration Officails have also stated that GM’s Board of Dircetors will be replaced. What else do you need to do to “run a company”. (By the way, former GM Chairman, Rick Wagoner, will leave with a $20 Million plus Golden Parachute – True, he worked for GM for 40 years – but $20 Million? How long will it be before Obama claims he did not know about this severance package?).
Mr Obama – why was the UAW President, Ron Gettlefinger, left in place? If it takes ”two to tango” – Gettlefinger was Wagoner’s dance partner. Just another Uni0n Pay Off, Mr Obama?
The next political election may be 20 months off – but American’s can vote before then. Just don’t buy GM or Chrysler. The Political Polls have been telling Washington that very fact for months. 80% of those surveyed say they will not buy an auto from a car company that takes Government cash. Listen Up Washington. Amercians won’t do business with companies who participate in your bailout BS.
Mr Obama, we are not as stupid as you think.
Stop wasting taxpayer dollars and send GM & Chrysler to Bankruptcy re-organization where they belong.