Despite the bailout, General Motors, Ford and Chrysler may yet go under. They can't compete pricewise with the Japanese auto makers because of a huge pay and benefit differential.
Now I don't blame the United Auto Workers for trying to get the best possible pay and benefits for their members from the big three, but if the union does not make some substantial concessions, the auto workers may end up watching their employers go out of business. Then they will find themselves without any pay or benefits at all. According to Forbes:
Labor cost per hour, wages and benefits for hourly workers. Ford: $70.51 ($141,020 per year) GM: $73.26 ($146,520 per year) Chrysler: $75.86 ($151,720 per year)
Toyota, Honda, Nissan (in U.S. ): $48.00 ($96,000 per year)
According to AAUP and IES, the average annual compensation for a college professor in 2006 was $92,973 (average salary nationally of $73,207 + 27% benefits).
Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D., and 52.6% more than the average worker at Toyota , Honda or Nissan. Many industry analysts say the Detroit Three, must be on par with Toyota and Honda to survive. This year's contract, they say, must be "transformational" in reducing pension and health care costs.
What would "transformational" mean? One way to think about "transformational" would mean that UAW workers, with a high school diploma, would have to accept compensation equal to that of the average university professor with a PhD.
Then there's the "Job Bank"
When a D3 ( Detroit 3 carmaker) lays an employee off, that employee CONTINUES TO RECEIVE all benefits - medical, retirement, etc., etc., PLUS an hourly wage of $31/hour.
Here's a typical story.... Ken Pool is making good money. On weekdays, he shows up at 7 a.m. at Ford Motor Co.'s Michigan Truck Plant in Wayne , signs in, and then starts working -- on a crossword puzzle. Pool hates the monotony, but the pay is good: more than $31 an hour, plus benefits. "We just go in and play crossword puzzles, watch videos that someone brings in or read the newspaper," he says. "Otherwise, I just sit."
Pool is one of more than 12,000 American autoworkers who, instead of installing windshields or bending sheet metal, spend their days counting the hours in a jobs bank set up by Detroit automakers as demanded by the United Auto Workers Union - UAW - as part of an extraordinary job security agreement.
Now the D3 wants Joe Taxpayer to pick up this tab in a $25 Billion bailout package - soon to be increased to $45 Billion if Nancy Pelosi and Hillary Clinton have their way. The "Big 3" want this money - not to build better autos. No. They want it to pay the tab for Medical and Retirement benefits for RETIRED auto workers. Not ONE PENNY would be used to make them more competitive, or to improve the quality of their cars.
We ALL have problems paying for our Medical Insurance - but the Democrat leaders in Congress now want us to pay the Medical Insurance premiums of folks who have RETIRED from Ford, GM and Chrysler.
In Canada , the Conservative minority government must use taxpayers’ money to help out the auto industry. This is because the Liberals and the NDP have threatened to bring down the minority government if the auto workers don’t receive an "economic stimulus". The auto workers union bargained for high wages when the car industry was profitable, because the workers wanted their share. Now that the industry is losing money, the union insists that the workers can’t have their wages or benefits reduced.
EDITOR'S NOTE: Personally, I'm in no postition to complain about the retired autoworkers getting free medical insurance AS LONG AS they have to pay the premiums for their dependents. As a retired state employee, the state continues to pay for my medical insurance, but I have to pay the premiums for my wife.
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