Print
E-mail
Share
digg
Newsvine
Facebook
Stumble
Technorati
reddit
Fark
twitterFor Ensign, no auto bailout unless labor costs are slashed
BLOOMBERG NEWS
John Ensign of Nevada, flanked by fellow Republican senators, speaks at a news conference Wednesday in Washington, D.C.
Thursday, Dec. 11, 2008 | 2 a.m.
Washington — As a conservative in one of rural Nevada’s most conservative counties, auto dealer Don Lindberg is not a bailout kind of guy.
But as he watches Congress debate whether to rescue the Big Three automakers, the owner of Wild West Motors in Yerington thinks some sort of aid should be extended. He has laid off five of his 30 employees in the small farming town of 2,500.
“I’m normally not inclined to be a backer of bailouts — I’m more conservative than that,” Lindberg said by phone Wednesday. But this time it’s different. “There’s too many jobs at stake.”
Nevada’s Sen. John Ensign is leading GOP efforts to block the bailout bill from passing in the Senate, vowing to personally halt the $15 billion plan unless it is altered to require GM, Ford and Chrysler to change their ways.
As Ensign sees it, the root of the problem with the Big Three lies in the labor contracts that prevent the companies from being competitive with the foreign companies that build cars in the United States with nonunion labor.
Ensign repeatedly points to the $70 hourly labor costs at the Big Three, compared with $30 paid by companies that do not use unionized labor.
If the car companies are not forced to restructure, preferably through bankruptcy court, where a judge would have the power to renegotiate wages and pensions, the “taxpayers’ money will be wasted,” Ensign said.
“It’s like a spending addict you’re going to loan money to,” Ensign said. “You’re not requiring the spending addict to address their problems.”
Experts say as many as
3 million industry-related jobs nationwide are jeopardized by the looming bankruptcies.
The ripple effect could be significant for a tourist economy such as Nevada’s, suffering from low visitor traffic and gaming revenue.
Democrats and the Bush administration have joined forces to support the bill. The House passed a bailout bill 237-170 Wednesday night. Rep. Shelley Berkley, D-Las Vegas, voted yes, as did outgoing Rep. Jon Porter of Henderson. Rep. Dean Heller, R-Carson City, voted no.
In the Senate, Republicans are wary. Ensign led his party’s internal policy debate Wednesday. Although much of the discussion revolves around whether the government should meddle in private industry and whether Detroit should be forced to build greener cars, the underlying conversation is about the future strength of organized labor.
After years of decline, labor is on the resurgence with a Democratic-controlled Congress and President-elect Barack Obama winning the White House with union backing.
Unions are pressing Congress to take up legislation in 2009 that would make it easier to organize workplaces — a bill Ensign and business allies are fighting.
David Madland, director of the American Worker Project at the Center for American Progress, a liberal think tank founded by John Podesta, the former Clinton administration official now heading Obama’s transition team, sees the auto bailout debate as a preview to the union battles ahead.
“You’re starting to see the first stages of the fight for the future of unions right here,” Madland said Wednesday. “This is the first volley of what the fight ... might look like.”
Madland said history shows workers would likely see wages and benefits cut if the companies are forced into bankruptcy court.
The auto bailout debate “has been hijacked by the untrue vitriol of conservative ideologues pushing their preexisting political agenda to attack workers and their unions,” Madland wrote on the center’s Web site.
He further argues that the gap between union and nonunion labor costs are not as great as Ensign and others say. Scholars at the conservative Heritage Foundation, however, back up Ensign’s numbers.
Madland said in an interview that nobody likes to see government interference, but “there’s a lot of blame to go around.”
“To put all the blame on the unions strikes me as just incredible political opportunism,” he added. “And it’s an incredible double standard when you look at how other companies have been treated in this financial crisis.”
Ensign is among those who voted to rescue Wall Street in October with the $700 billion bailout.
But Ensign said Wednesday that propping up the nation’s financial system is a far cry from saving battered automakers.
Wall Street helps the entire economy function, Republicans said. The bailout “was to keep us from falling into the abyss,” Ensign said.
“That was different from going sector by sector choosing winners and losers. Are we going to literally bail out the hotel industry? The airline industry?”
In Yerington, Lindberg has been watching some of the debate from afar, and blogging about it when he’s not selling cars.
The auto dealer agrees with a lot of what Ensign is saying — that the companies need a massive restructuring to rein in executive pay and union contracts and to become more competitive with new cars.
He supports Ensign’s delay tactic if it yields a better bill — much as the Wall Street bailout was delayed as Congress made changes.
“If it’s just to block the Democrats, it’s wrong. If it’s to make it better like the earlier one, it’s right,” Lindberg said.
“I don’t think Ensign wants to put people out of work.”
Discussion: 31 comments so far…
Post a comment
- Most Read
- Discussed
- Most E-mailed
- Three arrested in fatal shooting of Metro officer
- Franchione potential early candidate for UNLV football post
- Police: 3 arrested in officer’s death have gang ties
- Big fight headed for a New Frontier?
- Mayor: Morale not good among LV city employees
- Creditors want to expand probe of Station Casinos deal
- MGM Mirage (finally) makes George Strait show official
- Reserve Rebels didn’t have time to panic
- $60 million to stabilize neighborhoods buys five homes
- Hotels rein in risque advertising campaigns
Blogs
Elsewhere
Marquardt v. Sonnen scheduled for UFC 109
Bloggity, Bloggity, Bloggity
Will a fourth consecutive title by Jimmie Johnson be good or bad for NASCAR?
Top Chef: Las Vegas
The Jet Stream: And then there were four
Top Chef Episode 12: On keeping it simple
Miech Again
Chilly start for Chace, but Stanback says he'll warm up (1 Comment)
Elsewhere
Harvard Poker Pro: Texas Hold 'Em skills can help traders
Oscar De La Hoya wants to see Pacquiao/Mayweather
- Live chat
- Tuesday, noon PST
- Chat with Krista Creelman
- Problem Gambling Center executive director Krista Creelman will answer questions about gambling addiction from Las Vegas Sun readers from noon to 1 p.m. Tuesday, Nov. ... Submit question
Calendar »
- 21 Sat
- 22 Sun
- 23 Mon
- 24 Tue
- 25 Wed
-
UFC 106 at Mandalay Bay Events Center
Mandalay Bay Events Center | 7 p.m. to 11 p.m.
-
The Four Tops at The Orleans Showroom
Orleans Hotel-Casino
-
Julio Iglesias at the Las Vegas Hilton
Las Vegas Hilton
-
The Four Tops at The Orleans Showroom
Orleans Hotel-Casino
The Sun
Locally owned and independent for more than 50 years.
I'm not for an over the board bailout, but I'm definately not for cutting union wages or taking the union worker back to a non union status.
The dawn of computerized manufacturing saw thousands of autoworkers scrambling to find new professions because their jobs were taken over by machines. Through the years the number of auto workers were becoming less as technologies erased the human labor factor. Now Senator Ensigns' answer is to throw away organized labor and replace it with the non-union worker. What has taken the auto workers' unions decades and more to achieve for their members, these elected officials' answers to the problems are appalling. Why don't we cut our senators and congressmens salaries because they are the ones that approved our government to fund corporate outsourcing of good american middle class jobs to foreign countries. In fact, let's take them completely out of their work force environment and see them scrambling to find a new profession while trying to take care of their families' future for survival.
Are either of our feckless Senators giving any thought whatsoever to the many, many problems people in their home state are experiencing?
Seems like NevaDUH is always at the bottom of the food chain in everything they do.
Yes, the bottom of the food chain; that's what Nevada is all about. We will not stop until every middle-class person in the country has been stripped of what they once held dear. A good job, home ownership, a little security for the family. Minimum wage for all! Heck, there are workers in other countries who'll do this work for peanuts, right?
Beautiful. Republicans blaming labor. Who would have thunk it?
Labor is a small piece of the cost of a car. How about executive compensation? Everyone from Level 8 (2nd level supervisor) and up gets a company car with gas and repairs paid for. And for 6-8 weeks every year, they gave thousands of employees new model year company vehicles (with free gas) to drive for a week. Wanna bet how many of them made that 600 mile round-trip to Chicago for the weekend?
How about the go-with-the-flow management with umpteen levels of approval required to get anything done? The way you got moved up at GM was by not making waves.
(I used to work in EDS management at GM in Detroit. If you recall, GM bought EDS from Ross Perot and was a wholly owned subsidiary with people embedded at every GM location across the globe. When you manage IT systems, you come to intimately know a company's business model and business processes. I worked directly with high level management and did stints at Cadillac, Chevrolet, and corporate so I have first-hand knowledge of their vehicle engineering, manufacturing engineering, sales, service, marketing, and headquarters support functions.)
Upon much reflection, I propose freeing OJ and sending him to Detroit to be the Car Czar.
Obviously, the "Senator" is quite clueless. If he had been paying attention to the news over the past few months, he would know one of the main roots of the financial crisis we are currently in - thanks GOP - is that while business profits were steadily rising for the last 8 years, employee wages remained stagnant. Now he wants to require wage rollbacks for union worker wages before he'll vote for the auto bail-out. Then again, perhaps he just wants the entire Federal government with all wager earners to go completely bankrupt for some strange GOP conservative ideology. It's pretty sad that some politicians will resort to petty, partisan political maneuvers with total disregard for the well-being of the Nation.
Comment removed by staff.
The UAW has to shoulder its fair share of the blame here. One of the reasons Detroit can't re-tool fast enough is the UAW clauses keeping on un-needed workers who have been (sensibly) replaced by a machine. Those un-needed workers represent a pure waste of money.
I am fully behind Senator Ensign's position on the US auto bailout.
The UAW's unholy alliance with the US automakers is the death blow to any culture change needed to
unleash the US automakers from the bondage to their slow competitive death in this industry. Senator Ensign knows this. Too many Americans are afraid to face this fact.
The unit cost disadvantage to US automakers is staggering. This disadvantage is driven by the smothering
cost of union labor that is absent from the production costs of foreign manufacturers. Before US automakers can reinvent their business models, they must shed almost half of their unit labor costs. The UAW ,by its essence, will not cooperate enough to allow this radical change to occur---that's the very reason why reorganization through bankruptcy is the most effective option for US automakers.
The avg UAW worker gets around $73 an hour in wages and benefits.
The avg US worker in a Japanese plant located in the USA gets around $44 an hour in wages and benefits.
That means the UAW worker has to be almost twice as productive than the US worker in a Japanese plant.
Obviously UAW workers are not 2x productive as the US worker in a Japanese owned plant.
Toyota 30.37 hours per car
Chrysler 30.37
Honda 31.33 hours
GM 32.29 hours
Nissan 32.96 hours
Ford 33.88
Hyundai 35.10
Because of the labor cost disadvantage Japanese cars are more profitable.
"Honda and Nissan make $1641 in pre-tax profit on every vehicle assembled, while the average profit on a Toyota is $922. Contrast that with $1467 lost by Ford per vehicle, a loss of $729 on average for GM, and $412 in the red on a Chrysler product. "
On top of that the perceived quality of the cars.
US cars are only worth 30% of the original car value in 5 years.
Japanese cars are hold on to 50% of the original car value in 5 years.
I think Congress and UAW are working a plan to put the final stake into the heart of automobile industry.
"The UAW's unholy alliance with the US automakers is the death blow to any culture change needed to unleash the US automakers from the bondage to their slow competitive death in this industry. Senator Ensign knows this. Too many Americans are afraid to face this fact."
Wow, sounds straight out of Rushland. American cars can be competitive, but they need change from multiple quarters, not just dumping all on labor. While certainly labor should be slimmed down, especially in these times, management needs the same too. On top of that the business models they have stink. Their idea for the past 20 years was to make a bigger, less efficient, less safe car. They focused on trucks/SUVs without realizing that when gas spikes, these cars are not desirable.
Also while on the subject of labor, true that Japanese/Korean cars have less unionization, but that isn't true for other makers like the Germans. They have unions too, and they still do well. As said the problem won't be solved by punishing labor.
"The avg UAW worker gets around $73 an hour in wages and benefits."
This is just an out-and-out lie.
http://www.nytimes.com/2008/12/10/busine...
"The first category is simply cash payments, which is what many people imagine when they hear the word "compensation." It includes wages, overtime and vacation pay, and comes to about $40 an hour. (The numbers vary a bit by company and year. That's why $73 is sometimes $70 or $77.)"
"The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don't show up on a weekly paycheck. At the Big Three, the benefits amount to $15 an hour or so."
"Add the two together, and you get the true hourly compensation of Detroit's unionized work force: roughly $55 an hour. It's a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda's or Toyota's (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits. "
"The third category is the cost of benefits for retirees. These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix -- dividing those costs by the total hours of the current work force, to get a figure of $15 or so -- and end up at roughly $70 an hour."
The average worker DOES NOT "[get] around $73 an hour in wages and benefits."
If you divide the total compensation paid out by the total number of employees, you achieve near $73 an hour. A large chunk of that is paid to retirees, which the current worker gets NO BENEFIT from.
I think the lazy neocons need to do some research so they can stop repeating lies.
Well we need to bash the workers so that the executives can get more money, better jets to fly alone on, and an even bigger house.
The statement that US auto labor costs are approximately $73/hr is correct, even when re-structured as above by ksand. The corresponding number for non-US automakers is still about $44/hr. This is significant, and when combined with the active fight by UAW against automation it is a big contributing factor to the US automakers difficulties.
There is no doubt that payscales for management should be examined, too. But the UAW is just as guilty of raping the Amercian car consumer as any executive is.
"Labor costs" are not "wages and benefits," as jfnance32 incorrectly stated.
Jfnance32's plain language would lead someone to believe the wages and benefits that the average worker takes home is $73 per hour. As proven, this is not the case. Net wages and benefits of the average worker total $55 per hour.
The problem is with the Republicans and their foghorn kool-aid drinkers repeating a "labor cost" as "wages and benefits." Labor costs include the liabilities of retired workers... a figure which is not earned, nor received, by current workers. To portray those retirement liabilities as some sort of benefit to current workers is misleading at best.
http://online.wsj.com/article/SB12280932...
"But include benefits, and the picture changes. Hourly labor costs are $44.20 on average for the non-Detroit producers, in line with most manufacturing jobs, but are $73.21 for Detroit."
If labor isn't a problem why is it that GM and Toyota sold roughly the same number of cars last year, but GM is about to go bust, while Toyota is making a profit? Materials are the same cost. So what's left? Executive compensation and labor. But the idiots at UAW would rather have high pay rates than jobs. Because if they don't agree to pay cuts, there will be no jobs. And this is the same union that wants to unionize casino dealers? Pay attention gaming guys! They're coming after you next!
I guess we should just have a cap on what workers in America can make, right? No collective bargaining, no unions, back to the
dark ages for U.S. workers. NO representation. Fire em' for any reason you want.
Does anyone else see the irony of the nances of the world talking out of both sides of their mouths, bashing libs for being "socialists" and then proposing limits on what people can be paid in wages, benefits, and so forth? Yep, we ought to get rid of other stuff that brings prices up; Workers comp, unemployment insurance, paid breaks, etc. Workers in our country are spoiled, having come to expect a living wage for an honest days pay.
We should give them the same pay/benefits that workers in other countries give their workers so we can COMPETE! Otherwise, we'll just ship all the jobs over there. Heck, we're halfway there already.
Yes, jfnance32, thank you for agreeing with me that your original statement "in wages and benefits" was wrong, and that "labor costs," a dramatically different statement and statistic, is correct.
If a us senator worked 40 hours a week for 52 weeks that would be 2080 hours divided by $169,300.00 equals $81.00 an hour no counting his universal health care and lobbist paid bonus's
and he complains about someone making less seems to be a dispairity in pay since i pay him.
I hate Ensign. Send him back to BC. Unions are what made this country and it makes this country great. Lose the ability for workers to unionize, you will will be closer to the Socialism that hard heads are bleeting about. It may take some time; but, he will be up for election in four years. i won't forget and I will make sure the unions remember, too.
Let the UAW bail them out, they are the ones that did this!!!! With labor laws in the US, Unions are obsolete, they suck the companies/business dry and as far as "protecting the worker", the union runs away if the company closes, so long union members!
There are many reasons the "Big 3" are in their current financial crisis. Is there some responsibility on the part of the Union? Yes. Is there some responsibility on the part of the "Leadership" of these companies? Yes. The bottom line however, is can our Country afford to have one, or two, or three of these companies fail? Can we afford to have hundreds of thousands of more individuals in this Country unemployed? Will that not surely cause the financial crisis to spiral faster and further downward?
For those that are such staunch supporters of the Unions I would say this: Even at forty dollars an hour, the workers are not getting rich. Just like with any big company, the only people within the Unions getting rich are the top executives. Union or not, if an employer wishes to attract qualified, hard working individuals, they must pay competetive wages. For the staunch supporters of the Big 3 I would say this: If you were to run a company, and consistantly operated in the red, would you be of the belief that someone should give you a handout because of your incompetence?
Is this the same Ensign that jumped to handout 700 BILLION to banks? Ensign, Porter, and Reid all voted to give money this country doesn't even have to banks. I see Porter is looking for other employment now.
Though I think UAW must make concessions, we can't let the big 3 go out of business, Hell, what do we still manufacture in the US besides trucks? Not much.
ok, here we go
40x70=$2800 per week
2800x52=$145600.00per year now tell me what auto worker makes that kind of money per year?? Its more like 35 or 40 thousand per year, so where is this $70 per hour coming from and who makes it?? Ensign needs to try and live on a auto workers wage and like NE thing else then he would b such an AH when he opens his mouth. the us is going doen the tubs because of folks like Ensign just like the state of NV.
Ford, Chrysler and GM's contributions after 9/11
An interesting commentary...You might find this of interest:
'CNN Headline News did a short news listing regarding Ford and GM's
Contributions to the relief and recovery efforts in New York and Washington.
The findings are as follows.....
1. Ford- $10 million to American Red Cross matching employee
Contributions of the same number plus 10 Excursions to NY Fire Dept. The
company also offered ER response ! Team services and office space to
displaced government employees.
2. GM- $10 million to American Red Cross matching employee contributions
of the same number and a fleet of vans, suv's, and trucks.
3. Daimler Chrysler- $10 million to support of the children and victims
of the Sept. 11 attack.
4. Harley Davidson motorcycles- $1 million and 30 new motorcycles to the
New York Police Dept.
5. Volkswagen-Employees and management created a Sept 11 Foundation,
funded initially with $2 million, for the assistance of the children and
victims of the WTC.
6. Hyundai- $300,000 to the American Red Cross.
7. Audi-Nothing.
8. BMW-Nothing.
9. Daewoo- Nothing.
10. Fiat-Nothing.
11. Honda- Nothing despite boasting of second best sales month ever in
August 2001
12. Isuzu- Nothing.
13. Mitsubishi-Nothing.
14. Nissan-Nothing.
15. Porsche-Nothing. Press release with condolences via the Porsche website.
16. Subaru- Nothing.
17. Suzuki- Nothing.
18. Toyota-Nothing despite claims of high sales in July and August 2001.
Condolences posted on the website
Whenever the time may be for you to purchase or lease a new vehicle,
keep this information in mind. You might want to give more consideration to
a car manufactured by an American-owned and / or American based company.
Apart from Hyundai and Volkswagen, the foreign car companies contributed
nothing at all to the citizens of the United States ...
It's OK for these companies to take money out of this country, but it is
apparently not acceptable to return some in a time of crisis. I believe
we should not forget things like this. Say thank you in a way that gets
their attention..
++++ Pass it on, I just did. ++++
As for Sen. John Ensign .... it's time for him to go!! He's anti union and NOT good for America. He's a bottom feeder for sure.
At least we've got one senator with some balls. He'll be the next majority leader....
Without the middle-class who will be able to purchase a new car?
People who voted for Ensign may have been middle-class at the time Ensign was elected. I wonder what class those same voters are today?
The workers do the work. The UAW had nothing to do with running the company into the ground. Why are the workers blamed for the complete failure of the CEO's?
Who does Ensign represent; corporate America or middle class Nevadan's? Who are his constituent's?
God help America.
I went to school to be a Pharmacy tech and after 5 years of working I am getting about 14 dollars an hour.I really dont think my tax money should go to somebody who is making more than twice as me and are not willing to take a pay cut,even then they will be making much more than me.I dont understand the logic.To those who support the bail out and living in Nevada,I have a question for you,do you think the government or anybody in other parts of the country will agree to a bailout of our casinos?.Businesses will evolve,grow and sometimes go bust,that is one face of capitalism.It is the survival of the fittest.In these times for the car companies to survive,the union has to go or agree to appropriate wages on par with foreign companies.I think the retiree benefits should also be scrutinized and changes should made for the car companies to survive.
Where in the Constitution does it state that our federal government has the power to tell any business what to pay its employees?