Monday, December 01, 2008

Defense of the Big 3

Happy December, first official month of winter which has already started here.

As many of you know, I work for one of the domestic automakers, for now. (I say "for now" because we've been threatened with 10% more lay-offs by the end of January – this after 25% lay-offs accomplished earlier this year.) I believe that there are a lot of misconceptions out there (hell, people here in Detroit don't know or care to know half this stuff either), so I want to help out.

First off, while I normally don't agree with Mr. McCotter on anything, he got this right!



Second is my pet peeve that the media (and apparently, everybody else) seems to forget the automotive companies are not made up just of union (blue-collar workers) and executives. There are those of us in the middle (or what I consider the middle), the white-collar non-executive types who design the cars for the executives to make decisions about and for the blue-collar workers to assemble. You'd think we might be considered to be relatively important, but obviously we're not. I've worked here for over 8 years and for the past five years we've been suffering through lay-off after lay-off after lay-off, not that you'd know about that, because it's not the big guys and it's not the union.

We're the easiest to cut because we don't have big ass compensation contracts that guarantee us millions if we don't leave of our free will (read: executives) and we don't have the union to protect us and keep us in our jobs. So, we've been regularly on the chopping block (more than once a year in those five years). I've watched friend after friend being laid off and the thing that pisses me off is that nobody gives a shit about us. The media swarms the plants when blue collars get laid off, but us? Who cares?

And two years ago we had "voluntary separations" where damn near everybody in the company was offered buy-outs. You probably heard about the blue-collar packages – it included things like $100,000 or a college education and it might have included more – Ours? 3 months pay and supposedly you had to sign something that said you wouldn't apply for unemployment. Now we all know you take a hit of 50% for taxes on something like that. Compare a month and a half's pay (very low four figures, i.e., barely four figures) vs. $100,000.

Now, I should explain that I actually support the unions – in their original iteration. If you have benefits, i.e., medical, dental, etc., you owe that to the unions, even if you're not in a union, because companies don't give those out of the goodness of their heart, but because they want to keep the unions out. Have the unions overstepped the boundaries of late? Yes, a good many of them have. When a company can't fire an employee for poor performance, then that's a problem, or if they institute a program where the employee gets paid 95% of their pay while "temporarily" laid off, that's a problem. But are they solely responsible for the problems of the Big 3? Hell no.

Here is an article that debunks 7 of the biggest myths about Detroit's auto companies.

And anybody who starts in on how the Big 3 only made SUVs, blah blah blah, what a load of shit that is. First off, we made them because people wanted them. I hate SUVs and prefer small cars, so I own a small car made right here in Michigan. I've been driving it for over 8.5 years and there is nothing wrong with it (save a few dents from shit in Michigan's roads getting thrown onto my hood). I'm close to 90,000 miles and that's with walking to work for the past 7 years (save that one year in Bldg. C for Crappy). People only decided this year that they didn't want SUVs because of the price of gas, but if it weren't for that, there would not be the clamor for smaller cars. At least, not this overwhelming sudden demand. The public can change their mind *this* quickly that they no longer want SUVs, but automotive companies can't stop on a dime and re-adjust that quickly.

Another take on the way Detroit was treated by Washington.

Were the executives stupid for flying to DC in the private jets? Probably, but the bigger crime was that they make all that money and weren't prepared in the least bit. Shit, I could have done a better job, especially when that jackass Senator or Representative from Alabama said he didn't care about the domestics because he has a Toyota plant in his state. Well, he'll care because if something happens to even one of the Big Three, it will affect Toyota and Honda because we share suppliers. That means that if GM goes under (or even files Chapter 11) the suppliers will take a huge hit and trust me, they're on the ragged edge as it is. And if a supplier fails that will affect that Toyota plant in the south because there will be no parts coming in to build those fabulous Japanese cars.

Sadly, I can't find one of the columns/op-ed pieces that I want you to read on-line. I got it in an e-mail and I'm going to post it here with all the information as I received it.

This letter from ex-Ford spokesman Jason Vines, found at www.autoextremist.com was too good not to share.

Katrina on Wheels This Week's "Last Word" from Jason Vines

We may never know the financial burden of Hurricane Katrina on New Orleans directly and to other Americans indirectly. Some have pegged it at between 200 and 300 billion dollars. While we cannot stop hurricanes, almost everyone now agrees that more and better "things" should have been done prior to the storm and certainly in the days and weeks after the disaster.

What would those "things" have cost? Let's take a wild guess and say 100 billion dollars or half of what eventually was spent in a totally reactionary mode. Would we have spent it in advance? I believe the answer is yes and if that is the case, we have another disaster headed to our shores that will prove considerably more costly in a financial sense and impact far more communities than did Katrina. Like Katrina, we know this storm is coming and the question is do we do so me thing preemptive or in reaction to the disaster.

Unless the Federal Government comes to the aid of the U.S. auto manufacturers, the waves from the failure of these large employers and the core of our manufacturing base, will take a large and destructive path across America.

The U.S. auto makers are on the verge of collapse. When our economy, and other economies around the world recover and they will, someday there will still be millions of people who want and need new vehicles every year. Is it important that U.S. auto manufacturers are a part of that market? Yes for historical, contemporary and future reasons.

General Motors and Ford, both 100 plus years old, helped establish what sets America apart as the greatest nation on earth our strong middle class. The late historian Daniel Boorstein called the car the "great equalizer" of the 20th Century for Americans. It gave all of us mobility and an ability to further prosper.

When the world was threatened by Nazi tyranny and Japanese aggression in World War II, it was the U.S. auto manufacturers that turned their car factories into the Arsenal of Democracy. Without their support, well, it really is unthinkable to imagine where we -- Americans, French, Brits and, yes, Germans and Japanese -- would be today as a freedom loving people.

The demise of America's car companies, woefully short on cash as we speak, means the loss of millions of jobs directly from the assembly plant worker to the secretary to the dealership mechanic and indirectly from waitresses at local restaurants, to store owners, etc. It means not just a ripple effect through the economy, but a potential tsunami.

In 1994, while I worked for the then-American Automobile Manufacturers Association and its president Andrew Card, we embarked on a study of the true value of America's car companies to our economy. Our study found that the U.S. auto companies accounted for one of every 13 jobs in this country. I have seen new studies today that state the number at one in ten. That is an enormous figure and a key reason why all other major industrial countries that have an auto industry cherish and support it. That is also the reason that emerging markets put a lot of stock into developing a vibrant auto industry. Just look at China and Korea of late.

If you want to see a region that has shut down its manufacturing base and is left with a services-based economy, look no further than the United Kingdom. It isn't pretty.

Jobs don't tell the whole story though. Hundreds, if not thousands, of communities across our country depend heavily on the auto plants and the auto supplier plants. The semiconductor and other parts of the computer industry enjoy these U.S. car companies and their suppliers as some of their best customers, as do steel companies, glass companies, plastics companies and chemical companies. All of these communities that depend on the auto industry and its partners will be devastated. Community charities, school programs, sports programs will be hit hard when that local go-to car dealer can't support the Little League or Girl Scouts or the breast cancer walkathon.

You say they've got it coming, right? They got themselves into this mess you know! How so? They supported communities with jobs and taxes. They provided employees and retirees with good wages and benefits for all their hard work. They provided excellent health care and pensions while their foreign counterparts (read the "smarter car companies") didn't have to worry about this as their federal governments paid for these benefits through higher taxes on all citizens. And when recent times got more difficult, all of America's car companies restructured with their union partners to limit benefits for employees and retirees for the good of the companies.

They should have seen this coming you say? Seen what? Gas jumping up to more than four bucks a gallon? No, they didn't see that, but neither did Toyota and Japan Inc. as they sold larger vehicles in the U.S. market into segments once dominated by Detroit automakers and are too paying for this bad bet today.

They didn't care about the environment? Really? Unquestionably, the most significant anti-pollution device in the history of the automobile industry (maybe all industries) is the catalytic converter. All automakers use one in every car or truck. So which Japanese or German company invented it? None, it was General Motors. And if you want to talk about clean manufacturing, America's car companies have facilities where the air and water that leaves the factory is cleaner than when it first came in.

The Detroit automakers don't care about fuel economy. Really? Get the facts. In the segments in which they compete, General Motors and Ford products in particular rate at or near the top in every one of them.

Insurance giant AIG's bailout has now grown to 150 billion dollars and Washington and New York didn't bat an eye. Meanwhile, America's car companies literally have to beg for a sum far south of those numbers.

And so, we see this storm getting closer by the day. The question is: do we do something about it before it hits the shores and devastates communities across our land; or do we say let 'em go broke and hope for the best. Ask the people of New Orleans what they wish had been done before the storm struck.

Jason Vines


Can someone please tell me why the banks get $700 billion BAILOUT (plus however much more) no strings attached (essentially) and no questions asked, but the domestic automotive companies are put through the wringer for a $25 billion LOAN? And being treated as if we caused this problem, instead of the banks?

I know it's popular to bash the Big 3 on their quality, but if you do that you're ignoring the facts. A year or so ago, Toyota had the LARGEST RECALL in history, not their history, all automotive history. J.D. Powers and Consumer Reports have both given Ford high marks (at least equal to Toyota) in the past few months. And I want to say that if you choose to believe those numbers when they're favorable to the Japanese automakers and unfavorable to the Big 3, then you have to believe those numbers when they're favorable to a domestic automaker.

One other thing on recalls, the Detroit automakers probably have more recalls historically, but one reason for that is that we err on the side of caution, while Toyota and Honda are well known within automotive circles for fixing their little recall problems when owners would bring in their cars for scheduled maintenance without the owners' knowledge. The Big 3 don't push for scheduled dealer maintenance, while Honda and Toyota do for that reason.

When it comes to Safety, just last week (or the week before), Ford had 16 vehicles with 5-Star Crash Ratings – the most of any automaker – including precious Toyotas and Hondas.

I have more articles to link to, but I'll save those for another day since I know this has become a shaggy dog of a story.

Just remember that when you buy a vehicle from Ford, General Motors or Chrysler, you're supporting tens of thousands of direct American jobs (not including suppliers, sub-suppliers, dealers, etc.) and the money stays here. If you buy a Japanese car, and if it happens to be built here, you've supported a few hundred workers and the money heads straight for Japan where we aren't allowed to sell ours in a free market manner as they can here.

I'm pretty sure this was not as well-written or organised as I would have liked, but I needed to get it off my chest. I'm just so tired of people bad-mouthing Detroit and the Big Three.

Labels: ,

19 Comments:

At Monday, 01 December, 2008, Blogger Jason said...

Well done! Washington and the rest of the country really have no idea (and don't care) how catastrophic it could be if we don't get the bailout. Do they even care about about the countless thousands that would lose their pensions if they're forced into bankruptcy? Nope. As long as the problem isn't in their back yard... They don't realize that it'll eventually trickle down to them and then it'll be too late. This is SERIOUSLY scary! The AIG and bank bailouts are ridiculous! If the Big 3 don't get the bailouts they may as well drop a neutron bomb on Michigan and start over.

 
At Monday, 01 December, 2008, Blogger Kathleen said...

Jason - Sadly, there are people in this country who would have no problem with dropping on a bomb on Michigan.

 
At Monday, 01 December, 2008, Blogger Evil Twin's Wife said...

I bought my Chrysler Voyager minivan used (but in wonderful condition - only one owner: a guy who runs a Nationwide Insurance firm here). It's a beautiful car and I love it. Will definitely buy another if/when the time comes. My husband drives a Buick (that was inherited after my dad, then mom passed away). My dad never bought a foreign car in his life.

Thanks for the information - I never knew all the intricacies.

 
At Monday, 01 December, 2008, Blogger dr sardonicus said...

Excellent.

I think a lot of the reluctance towards helping out the auto industry is that people are scared that other industries are going to come to Washington looking for money next, and that the government and Wall Street are desperate to sweep things under the rug before the American people find out that this mess the bankers created is much bigger than anyone says it is. The problem as I'm understanding it is that the banks loaned out trillions of dollars that never existed, and now the Treasury is going to have to print the non-existant money and put it into circulation, and things are going to get ugly for a lot of people due to the coming inflation and dollar devaluation. The bankers, of course, are trying to get off scot-free and push as much of the pain onto the middle and lower classes as they can.

 
At Tuesday, 02 December, 2008, Blogger LL said...

I'm still a bit unclear... are you for the big three or opposed?

:P

 
At Tuesday, 02 December, 2008, Blogger Kathleen said...

ETW - I love to hear that there are still people out there who buy only American. I don't care if it's used or a hand-me-down.

Dr. - I forgot some facts, too, in my haste to get it written. I heard a number like 3 million people are employed either directly or indirectly by the domestics. And they're all interconnected.

LL - That's why we love you.

 
At Tuesday, 02 December, 2008, Blogger George said...

First of all I have never owned anything other than an American car. I have always refused to even rent a non-American car, just to take it one step futher.

Now on to the rest of my thoughts.

I haven't had a job that was in the automotive sector in more than 12 years.

And in those years I've never doubted that whatever I was doing was very dependent on the big 3.

When I worked for the ocean freight company we shipped a lot of parts and sub assemblies back and forth to Europe that finally ended up as part of someone’s car. Oh, we shipped a lot of other stuff too; Soybeans, wood products, Amway stuff, and whatnot, but if the auto business went away it would have represented more that 60% of the total freight going in and out of this area (which shipped more than the either the ports of NY or LA).

In the dental business where I covered 13 states a whole lot of the people that ended up being treated with the stuff I sold had dental insurance. And people who aren't working traditionally stop going to the dentist when they lose that coverage. Take dental away from 3 million people and you'll see a huge change in how your dentist treats you. It will be back to the early 20th century, just drill and fill and pull anything that could be saved with more advanced treatment because the patient can't afford to keep his teeth.

And now in the wireless industry just about every one of the 200+ customers I have now are tied either directly or at the very most at a single remove to one or more of the big three. Take even one of them away and every person in my office is going to take a huge hit.

And I am not sure that making smaller cars is the best idea. If deflation continues gas will stay cheap. People will continue to drive SUVs. And the margins on small cars will get even smaller. I am not sure that $4 per gallon gas will be back any time soon.

People who point to Europe and their small cars need to look a little deeper. European cities are much, much smaller than US cities with the same populations. Roads and streets were built when nothing bigger than a horse cart had to fit down them. The North End in Boston is maybe the best example of a European city in North America. It's narrow, winding, and densely packed. Residents there can walk a few blocks to get get groceries or clothing or basic supplies. They don't need cars.

Now look at a late 20th century city like LA, Dallas or Phoenix. They're sprawling. It's a 20 minute drive to the nearest grocery store. Crossing town takes an hour or more, even with little traffic. They grew that way because the people who built them all have cars. And they built them for people who have cars.

The bottom line is that making a comparison between the US and Europe is apples and oranges.

Many of our states are larger than whole countries. It's not a long drive from London to Paris. WikiAnswers says 7 to 9 hours depending on traffic. That's about the time it takes to go from Detroit to Milwaukee.

We built roads and infrastructure while the rest of the world was still cleaning up the rubble from World War Two.

We could afford cars while Europeans largely could not. US wages were many, many times what people were earning in Europe.

Read some history of World War two and you'll find out that a gunner on a bomber was paid more in a month that an English farmer made in a year. And privates in the US army made more than senior English officers.

Since no one had the means to purchase cars (or the need, frankly) and not many people were making them Europe built up a rail system.

As far as teh unions go; they kind of painted themselves into a corner, but it was kind of inevitable.

Unions have to give their members a reason to remain unionized. In the beginning that was simple; negotiate a living wage, guarantee basic benefits, and ensure reasonable working conditions.

But once you have those things what do you do? Higher pay? Got it. Excellent health plans? Got 'em. Secure jobs? Yep. Safe working conditions? Check.

So now you have to start getting creative. More time off. Securing everyone’s job.

Once you get past that you have to start making Rock Star type demands because you have everything you could possibly want. But in order to keep the membership happy you have to prove that you're out there fighting for them.

And that's where we ended up in the 90's. There was just nothing more to ask for that was really necessary.

Recently the UAW has agreed to lower wages for new members and reduced benefits. They're also taking over retiree benefits.

Overtly they did it because if they didn't agree then they would be doing more than their part to amputate the arm that feeds them.

I think in the long term they did themselves a favor by positioning themselves to win back all the stuff they agreed to give back.

But the salaried work force at the autos has always had to look out for themselves, both blue and white collar. Those are the skilled workers who aren't trades people. Their skills are supposed to make the employable anywhere.

To a certain extent that's true. But when you live in what is darn close to a company state (and yes, I meant state, not town) that's easier said than done.

Executive pay is another tough nut. The job of a CEO is to make decisions about the direction of a company, but even more than that he or she is a salesperson, selling stock to wall street.

Do a good job with your pitch and stock goes up. You can create or destroy billions that way. So if you're getting 5% or so of the billions you're selling, is that wrong? As a salesperson I am not sure.

As an outsider it appears to me that the auto companies do have some culture issues.

I don't think they're managed well from the C Level all the way down to middle management.

They appear top heavy, with too many levels of vice presidents. and those VP's change more than a chameleon on a Jackson Pollack painting.

The enitre philosophy of management seems to be "Flog 'em harder."

I work for a very large company. We've had our troubles. But people in the company will admit to one another privately, that we like the company and have good jobs.

I don't know that I have ever heard that from someone at an auto company. And I know union workers, skilled trades people, salaried people, engineers, plant managers and executive vice presidents. Not one of them likes the company they work for.

My experience tells me that that's a top down problem. They need to do a lot of house cleaning. So much in fact that I am not sure that any company could survive that kind of shake up.

What's the solution? Hell, I wish I knew. I'm pretty sure that once I come up with the answer I'll be an instant billionaire.

The loan has to happen. My only concern about it is whether or not it's too little, too late.

 
At Tuesday, 02 December, 2008, Blogger Kathleen said...

Thanks, Jorge, for the additional support and information.

 
At Tuesday, 02 December, 2008, Blogger Jorge said...

Yeah, that was a little too much wasn't it?

One of these days I should think about getting my own blog instead of using everyone elses comment sections.

Sorry.

 
At Tuesday, 02 December, 2008, Blogger Kathleen said...

Jorge - No apology needed. I wasn't being in the least bit sarcastic.

I will, however, take issue with your executive pay theory. At least in the way it's been playing out here for the past few years - bonuses and higher pay even when the company's not showing a profit? Ridiculous.

I completely agree about being top heavy. It'd be nice to see some of that top heaviness get sliced over the next month, instead of the middle guy once again.

 
At Tuesday, 02 December, 2008, Anonymous Woof said...

FWIW, I'd rather see Ford, etc get a minor $25 billion than the pitiful behavior towards AIG (how many more billion) and the Citi deals (ha, Citi tried to get Wachovia, and now they got thumped)...

It's always who you know...

Full disclosure: I actually bought some Ford stock for a short-term trade. Doing well.

Kathleen, hang in there as best you can.

Woof

 
At Tuesday, 02 December, 2008, Blogger Kathleen said...

Woof - Thanks for your financial and otherwise show of support.

 
At Tuesday, 02 December, 2008, Blogger The Zombieslayer said...

Well written, but you already know that we agree on this one.

$700 billion. That's a lot of fucking money, money that these stupid banks do not deserve. That's my money. And yours. They ran this economy into the ground. It was their fault, plus George W's stupid spending problem, plus a few other things, but this whole bank bailout is a bunch of bull.

So, I propose that if we're already wasting $700 billion on banks, bail out the automakers out of that $700 billion. $25 billion for someone who actually produces something vs $700 billion for people who move papers around? WTF?

The other thing, American cars kick ass. I hate people who say American cars suck. Hate them. I'd like to slap them all upside the head. I've had American cars all my life and they're wonderful. 272k miles out of my Ford Taurus. 163k out of my Saturn (and I got rid of it because I wanted a new car, not because the car was bad).

For those who still say American cars suck, read December 2008's issue of Consumer Reports. Ford is neck and neck with the Japanese.

Nobody put a gun to anyone's head and told them to buy SUVs. That's something consumers do. I've always bought cars because I'm good at economics. If you don't do manual labor, you don't need an SUV. It's as simple as that.

I happen to be from the Midwest and have lived on the West Coast, in the South, and spent enough time on the East Coast to tell you that the Midwestern people are the warmest, friendliest people in America. I'd hate to see them forgotten.

Another thing, that dickhead (pardon my French, but I'm still pissed off about the bank bailout) from Bank of America was complaining about $25 billion to the auto makers while BAC alone got $25 billion. WTF? Plus Citibank's alone getting around $50 billion, which is double of what the automakers were asking for.

 
At Tuesday, 02 December, 2008, Blogger The Zombieslayer said...

Oh, one more thing, I'll keep my fingers crossed that you survive another round of layoffs.

As someone who's been laid off many times, I feel your pain.

And also wanted to add, you mentioned fuel economy and American cars. Through Texas on I-10, I was getting in the high-30s mpg in my Ford Taurus in the 90s. Through Texas on the I-10, I was getting 47 mpg in my Saturn a decade later. That's not good gas mileage? Better than the Japanese. Much, much better than those God damn overpriced German cars (and pathetically bad English cars). I average around 80-85 mph too, but I keep the speed steady. I'm not one of those foot on, foot off accelerator people.

 
At Tuesday, 02 December, 2008, Blogger JennyLu said...

I am so glad that I got out of the auto industry. I hope you make it past the Traditional January Lay off's. Well written post and thanks for stopping by.

 
At Tuesday, 02 December, 2008, Blogger Kathleen said...

ZS - Thanks for hitting the points I missed.

JennyLu - I wish it were just January lay-offs, but we've had July lay-offs as well for the past few years. Hard to escape automotive in Detroit, because even if you do you'll be affected by anything bad that happens to the Big 3.

 
At Wednesday, 03 December, 2008, Blogger The Zombieslayer said...

Kathleen - Sure. When I get my brain working, I'll do a post on how American cars are actually pretty good.

 
At Thursday, 04 December, 2008, Blogger Warped Mind of Ron said...

The whole bailout thing is a tricky business. I do think some severe monitoring of where the money goes is needed for ALL of the money in a bailout. I think using that money so a CEO and get a retirement bonus is BS, it should go in the company so all the workers can keep working.

The Big 3 certainly deserve a bailout deal as much as the banks. They directly and indirectly influence so many random things that it's really hard to say exactly what would happen if one of them crashed. I may be prejudiced as my company indirectly supplies automakers with dunnage so if they go down my company loses sales which equals layoffs. The economy is one big table of dominos and you need to be really careful of which ones get knocked over.

 
At Thursday, 04 December, 2008, Blogger fermicat said...

While I am not sure what the right solution is, I am very sure I don't want to lose the entire auto industry here in the USA.

As for stupid executive behavior, the banks have also been guilty of that in their own unique ways (although perhaps not is such a dramatic fashion).

Hang in there Kat. I wish you and the other white collar, non-union workers well. You are caught in the middle without much of a voice in all this, but they can't make new cars without you.

 

Post a Comment

<< Home