Motley Moose – Archive

Since 2008 – Progress Through Politics

Let them eat cake – The death of the Big 3

As a life-long car guy, the plight of the auto industry is painful to watch. I worked for General Motors for 20 years before leaving to try my luck elsewhere. My father and both of my brothers spent their entire working lives at General Motors. The economy in my area is still highly dependent on good  paying jobs at area factories. The demise of GM would completely devastate this region of the country.

Many people have spoken out about the current crisis in the auto industry, including Mitt Romney. In an editorial in the New York Times, Romney argued for letting the Big 3 go through bankruptcy. That editorial will kill any chance he has of carrying Michigan in a future presidential bid. He angered those who know the industry best by not only placing blame in the wrong place, he got much of his argument wrong.

Romney argued that one important change the industry needs is to bring in top executives from outside the auto industry. Apparently, the presence of Alan Mulally at Ford and Robert Nardelli at Chrysler escaped his notice. Mulally came from Boeing and Nardelli from Home Depot. Those aren’t exactly car companies, Mr. Romney.

In the same editorial, Romney advocated major restructuring. This is another area that he apparently overlooked. The auto companies and the unions have already undertaken major changes in the new contracts that will take effect next year. This doesn’t include the many concessions the unions have made over the last twenty years in an effort to keep plants open.

Romney also argued for getting rid of the legacy benefits owed to retires. Just exactly how does he propose to do this? Should retires who worked for forty years for one company be cut loose to sink or swim now that they are in their seventies? That seems to be exactly what he is proposing. This would place a huge burden on public services as well as essentially destroying the quality of life for many of our seniors.

Shifting retiree burdens from the companies to the public sector is already happening. In a little known shift of policy, General Motors is taking away the health care benefits of retired white collar workers over sixty-five. It is replacing those with a $300 benefit. All of those workers will now be shifted to the Medicare system. Guess who’s going to make up the difference – the taxpayers. Now extend that to all hourly employees and you begin to get an idea of what a massive hit our economy would take if the Big 3 went under.

What many people advocating for the demise or complete restructuring of the auto industry fail to understand is that the job losses won’t just be at GM, Ford, and Chrysler. During the last thirty years, the major auto companies have outsourced most of their parts manufacturing. There are far more people employed at their suppliers than ever worked for the Big 3. It is estimated that more than 2.5 million jobs would be lost in the first year alone. Welcome to the next Great Depression.

One thing I keep hearing over and over from critics of the American auto industry is that they can’t build cars people want to buy. This is ridiculous. GM still sells more cars than any other car company in the world. The Big 3 sold 8.5 million cars last year. Someone seems to be buying their products.

In the end, it is a simple matter of throwing millions of Americans out of work and onto the dole or working to save an essential American industry, as General Wesley Clarke so ably argued in his recent op-ed piece. The argument shouldn’t be whether the auto industry “deserves” a bailout, it is whether or not letting them fail will make the current economic crisis worse. In my mind, there is no other choice than making every effort possible to keep them afloat.


  1. I read this in the NY Times a few minutes ago. Emphasis, mine.

    The hearings will be run by Representative Barney Frank, Democrat of Massachusetts and chairman of the Financial Services Committee, and Senator Christopher J. Dodd, Democrat of Connecticut, the chairman of the banking committee.

    Gee, the financial and banking industry gets $700 billion, but real companies, manufacturers, get zilch from these guys. Not stacking the deck are they?

  2. DeniseVelez

    to keep them from going under.  I also think that this is a direct attack on unions.  

    Do you have any suggestions about what we can do, to push our representatives?

  3. GrassrootsOrganizer

    I’ve been wanting to write a diary on this for days but can’t get my head around how or where to start.  I hope it’s not a problem if I comment the hell out of your diary!

    Yes, this is a direct attack on unionism.  Note the number of Republican legislators from “right to work for less states” trying to cast the UAW as the bad guy in this mess.

    Just a few reminders — the UAW got those contract gains during an era when the Big 3 could well afford them and they have been making concessions ever since.    And those contracts weren’t give-aways — men suffered, were wounded and died establishing the UAW, so that future generations of auto workers could negotiate their own work lives.  They not only risked their jobs but faced down billy clubs, tear gas and bullets to establish the UAW.  Victor Reuther lost a part of his face and his eye to a shotgun blast; the circumstances surrounding Walter’s death are still suspect.

    Here’s a quote from Wikipedia on the Battle of the Overpass:

    At approximately 2 p.m., several of the leading UAW union organizers, including Walter Reuther and Richard Frankensteen, were asked by a Detroit News photographer, James E. (Scotty) Kilpatrick, to pose for a picture on the overpass, with the Ford sign in the background.[1] While they were posing, men from Ford’s Service Department, an internal security force under the direction of Harry Bennett, came from behind and began to beat them. The number of attackers is disputed, but may have been as many as forty.[2]

    Frankensteen had his jacket pulled over his head and was kicked and punched. Reuther described some of the treatment he received: “Seven times they raised me off the concrete and slammed me down on it. They pinned my arms . . . and I was punched and kicked and dragged by my feet to the stairway, thrown down the first flight of steps, picked up, slammed down on the platform and kicked down the second flight. On the ground they beat and kicked me some more. . . ” One union organizer Richard Merriweather suffered a broken back as the result of the beating he received.[1]

    Yes, my neighbor, a lifelong UAW member, enjoyed a decent income for a mere “factory worker”.   He had job security, great health care, free training, an early paid retirement and a solidly middle class lifestyle.  (and shouldn’t everyone?) In return?  He gave 25 years of his life to lifting, sweating and risking personal injury lifting and positioning torque converters.  I find it particularly telling and disingenuous that politicians who couldn’t last an hour in the noise, smells, real work and risks of a large manufacturing environment feel comfortable critiquing the pay of those who will.  

    but I’m just getting started……


  4. during the 30’s. My mother and her sister carried food to them every day and then took them water after GM shut off the power and water to the plant.

    I’ve heard plenty of stories about what working conditions were like before the UAW managed to win the right to organize the workers. Anyone who thinks corporations are benevolent dictators is a fool.

  5. GrassrootsOrganizer

    My son is an Iraq veteran now working within the Department of Homeland Security.  (god.  can we change that name soon?)  He was nothing but against a Big Three bail-out until he talked to some of the old timers at work.  If American auto companies stop doing business with them will go the Jeep, the Hummer, the Stryker, the LAVs, the M54 truck and the diesels that power the Bradley.  

    Not only will we be buying all our personal vehicles from foreign manufacturers, but our military vehicles as well.  And that doesn’t even speak to how quickly the auto industry can and has adapted to the sudden need for military production and how six kinds of screwed we’ll all be if they can’t.

  6. GrassrootsOrganizer

    I had a meeting today at the AARP in Lansing on something utterly unrelated to the auto industry.  But I took the opportunity to ask the experts a few questions, starting with —

    what’s going to happen to the man or woman who did their “25 and out” but is not yet 65?  

    They’ll have no unemployment insurance to collect and they aren’t qualified yet for SSI.  If the live in Michigan they can’t move unless they give their home away and there is no equity to take out of it.  There are no jobs here as it is, and that’s only going to get worse when you dump a couple thousand current auto employees in the state into the pool of the unemployed.

    Their answer?  They’ll be screwed.  They’ll go on Medicaid.  They’ll apply for food stamps.   They’ll scramble for what minimum wage service sector jobs there are, which aren’t many.  They’ll scrape away in the underground economy at 55 collecting firewood and raising rabbits.  

    Those that can relocate will literally walk away from their middle class homes, leaving them vacant and further driving down already abysmal property values, but now in once solidly middle class communities.  Those with mortgages will end up homeless.

    The Michigan Medicaid system will all but collapse under the sudden new load. Communities across the state will see their tax base erode to the point where schools will close.  The city of Dearborn will belly up if Ford disappears and takes it’s retiree checks with it.  Detroit?  Stick a fork in it — it’s done.  So too Saginaw and Flint as retiree benefits are the only economic fuel sustaining them.

    I am aghast at the notion that we can spend 12 billion a month rebuilding Iraq but chafe at spending two months worth of that to prevent the collapse of the auto industry — not to mention our 8th largest state, our 11th largest city and the millions of Americans who will be impacted if not devastated.  

  7. alyssa chaos


    Bailout means that we are essentially just giving them the money with no return for the tax payer.

    They will go under with out the money, so lets loan them the money. I was watching the hearings yesterday, and my only advice to legislators:

    1. Make sure there are plans for the money. How will it be used. [mostly for paying suppliers at this point] Make sure the company itself is taken care of rather than the stockholders. [im no econ major so does this last bit make sense?]

    2. Make sure it comes back to the tax payer. Maybe make it that after 5 yrs, they have to pay it back. otherwise they might make billions on top of billions off taxpayers because of taxpayer relief earlier.

    GM for sure will tank without the money, and it seems Ford is doing okay but the market is so volatile right now they are scared.

  8. GrassrootsOrganizer

    The Big 3 have been actively restructuring for a few years — renegotiating their UAW contracts, trimming white collars like crazy, shutting down older facilities and dropping brands.  They were addressing their problems and making headway until the economy kicked them square in the balls.

    The first thing to go in a credit crisis is the purchase of a new car.  Other than my dad, who’s been dead for 20 years, name one person you know who can pay cash for a new car.  

    Meanwhile, the banking industry and Wall Street has been careening around, drunk on money, until they walked right into the brick wall of a crisis they created. We can throw 700 billion at them, but we can’t spare a fraction of that for an industry that has been trying to operate responsibly, was making progress and could not possibly avoid being supremely fucked by the credit industry.

    Why the HELL are we bailing out a bunch of players who produce nothing, employee few, care for no retirees and essentially function to siphon money off the system to line their own portfolios?  OH yeah, because if we don’t we’re screwed so we hold our noses and do it.  Well, lose the American auto industry and you are kicking the second leg out from under the table.  The cascade it creates would be just as devastating as the banking crisis in the burden it will throw onto the government in the form of lost wages and taxes, increased trade deficit and the costs in social services.


  9. louisprandtl

    jobs depend directly and indirectly on the automobile industry.  Letting them go under would completely devastate vast stretches of Midwest. Life in several cities and towns would come to a stop…watch what’s happening in Dayton right now.. On the other hand I doubt 25 billion would anything to help. GM itself is burning through cash, about $5 billion a month. Even with all the bailout money going to GM only, it will survive only 5 months. There is no way GM can turnaround its business in 5 months with its current model. GM’s spun off company and main supplier Delphi is already in bankruptcy and having trouble to come out of bankruptcy. On the other hand GMAC has filed today to become a bank holding company. GM and Ceberus Management (owner of Chrysler) owns 40% each of GMAC. What does it mean for GM and Chrysler? It might make GMAC easier to continue provide credit for GM cars…So one way or the other GM is going to tap into the bailout money….….  

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