Auto Industry Problems Prolong Nation's Misery

The NY Times has an article about our state's efforts to remake ourselves without "King Auto" that touches on things most of know - film incentives, green jobs, battery production, and worker retraining. It also touched on the fact that our problems are impacting the country as a whole.

On a broader level, the troubles of the auto industry are having a profound impact on the overall United States economy. The industry — with Michigan as its center — now accounts for only 1.5 percent of the nation’s economic output, down from 3 percent in 2007 and 5 percent at its peak in the 1950s.

The automakers have historically played a big part in ending recessions. Car companies, in the past, would increase production and add workers to satisfy pent-up consumer demand after a downturn. But now, the industry’s troubles may be prolonging the misery.

“If not for the problems in the auto industry, this recession would have been much milder,” said Ben Herzon, an economist at Macroeconomic Advisors, in St. Louis. [emphasis added]

Okay, that's something most of us know too, but I pointed it out for all the Limbaugh and Hewitt trolls that might be reading this. Hoping that GM or Chrysler fails is not in the best interest of the country. When we lose jobs, we lose money, and in turn we stop spending. When we stop spending, businesses lose money and they're forced to layoff people or cut wages. Unless you're independently wealthy, the pain will eventually trickle down to you too. Understand?

Follow G.M. Restructing on the Web

I'm still recharging my batteries and taking a break from blogging, but I thought I'd pass along a few links regarding GM that I thought you might find useful.

You can follow the GM bankruptcy proceedings online at GM Reinvention.com. The website answers questions about their restructuring and will post updates as they become available.

Want instant updates? Turn to Twitter.com/GMBlogs.

Finally, you can also check out FastLane Blog where Fritz Henderson had this to say:

We’re committed to open communications and I am personally putting a high priority on transparency. One way we’ll do this is by launching a series of live web chats on this website. I’ll kick things off later this week for one hour on Thursday, June 4 at 3 p.m. EDT. Following me, a steady stream of GM leaders from throughout the company will host additional chats, about two a week, on whatever topics are of most concern to you.

The weekly chats are a great idea and so is the high priority on transparency. It sounds like G.M. learned something from the Obama administration.

Buy It Here; Build It Here

USW President Leo Gerard is a soft-spoken man, but he has some blunt words about General Motors restructuring plans:

The proposition General Motors has presented to the United Auto Workers and American taxpayers in its latest restructuring plan is simple: You must pay for your own execution.

GM, which already took $15.4 billion in bailout money, wants another $11.6 billion and is offering in return this deal: It will close 16 of its American manufacturing plants, terminate 21,000 of its factory workers and double the cars it builds in low-wage Mexico, China and South Korea and ships back to the U.S. to sell.

There it is: GM is demanding that Americans pay to send their own jobs overseas.

In the world where corporate executives live, the one in which boards of directors grant CEOs multi-million dollar bonuses even after companies tank, maybe that’s not a perverse proposition.

But in the world where real Americans live, we’ve had enough of this crap. Decades of foolish tax and other federal policies that encouraged American manufacturing firms to throw Americans out of work and expatriate were bad enough. To expect American taxpayers to bankroll GM’s plans to layoff American workers and move their jobs overseas goes too far.

Gerard goes on to point out that this isn't just about the UAW or GM. This is about American manufacturing and the millions of people in good-paying jobs who depend on the auto industry - steelworkers, rubber workers, glass workers, healthcare, education, retail - a total of more than 7 million people.

What will we be left with if manufacturing dies? "America is in danger of attempting to subsist on an economy based on nothing more than amorphous derivatives, credit default swaps and Ponzi schemes." Manufacturing jobs helped millions of people achieve the American Dream and that dream is now under assault.

In just the past eight months of this recession, caused in huge part by recklessness on Wall Street, this country has lost 1.2 million manufacturing jobs, according to the U.S. Department of Labor. GM cannot take tax dollars to slash more. Former U.S. Labor Secretary Robert B. Reich agrees. Here’s what he told the Washington Post, “. . . it raises fundamental questions about the purpose of bailing out these big companies. If GM is going to do more of its production overseas, then why exactly are we saving GM?”

Gerard says, "We have no intention of buying our own noose. We intend to win this fight." He's being joined in that fight by Sen. Debbie Stabenow, the Rev. Jesse Jackson, actor Danny Glover and Lansing Mayor Virg Bernero, as well as the USW, the Alliance for American Manufacturing, and the Mayors and Municipalities Automotive Coalition, among others. They're conducting an 11-state, 32-city protest bus tour: “Keep it Made in America.” The idea is simple. If we buy it here, we should build it here, which Gerard points out is not impossible for a U.S. auto company to do.

Ford Motor Co., which is not taking any bailout money, is investing $500 million in retooling its Michigan Truck plant outside Detroit so that it can make small cars that it will sell worldwide, including its next-generation, battery-electric Focus. And Chrysler, which is getting bailout money, has made a deal with Fiat under which the Italian car company will manufacture a small car in one of Chrysler’s U.S. assembly facilities, which, along with other long-term commitments, will eventually create 4,000 U.S. jobs.

At each stop along the tour, people are being asked to sign their petition supporting "Buy it here; build it here." Please click over and add your name too. They'll present the petitions at a teach-in conference in Washington, D.C. on May 19 when they'll explain to elected officials why GM’s plan fails America and why they must require GM to submit a new plan supporting American jobs.

Stabenow and Peters Talk Bankruptcy on "The Ed Show"

Sen. Debbie Stabenow was on the Ed Show Monday night and Rep. Gary Peters was on last night. They discussed a possible GM bankruptcy, which could jeopardize the pensions of 670,000 retires, with 335,000 seeing benefit cuts.

Both lawmakers agreed that bankruptcy should be a last resort, but Ed characterized Obama's Auto Task Force as throwing workers under the bus when it comes to their pensions. Stabenow had a different perspective:

SCHULTZ: But what about those retirees—senator, I have to ask you, what about these retirees. They didn‘t vote to have their benefits cut. These are your constituents in Michigan.

STABENOW: No question. If you‘re asking me, do I think bankruptcy is a good idea? The answer is absolutely not. I don‘t support bankruptcy as an option. And the reality is that taxpayers shouldn‘t either, because we‘re talking about 670,000 people with pensions with General Motors alone that would become potentially a federal responsibility. [...]

SCHULTZ: -- that if it goes to the Pension Guarantee Corporation, and people have to take a cut, I don‘t know how they are going to be motivated to come back and vote for the Democrats.

STABENOW: Well, first of all, people took a pay cut to get that pension, and they should not be cut in their pensions, period. People took pay cut after pay cut to keep their health care and to keep their pensions. And so there is a way to do this, even going into a bankruptcy.

Northwest Airlines, based out of Detroit substantially, went into bankruptcy, kept their pension obligations. We worked with them to help protect their pensions. They came out of bankruptcy. They kept their pension commitments. So it is possible to do that. And I am strongly urging the administration, whatever happens, to keep those pensions intact, because people have worked hard all of their lives for those.

Bloomberg reports that GM’s plan is in relatively better shape than others, because it’s about 87 percent-funded, but they also point out that as many as half of GM’s 670,000 pension-plan participants could see their benefits trimmed if the PBGC takes over the plan. Jack Dickinson, president of an advocacy group called Over the Hill Car People says, “Nobody really knows” what would happen with GM pensions in a bankruptcy." (The DetNews has more on how bankruptcy could affect workers' pensions.)

One thing struck me in the interview above. Schultz wondered why people would be motivated to vote for Democrats if General Motors files bankruptcy. Is Ed serious? As the Free Press recently pointed out...

Moreover, the government's track record setting policy that affects the auto industry is atrocious. Car companies have been flogged for not producing enough small, efficient vehicles, but the government eschews a national gas tax that would keep demand for such vehicles high. The companies have been derided for exorbitant labor costs, but in too many instances, government trade policy doesn't help them by holding other countries to decent labor standards.

Democrats and Republicans are responsible for that track record, but Republicans have been in control of the White House for the past 8 years and in control of Congress for almost 20 years. They were the ones actively pushing their free trade, anti-tax, kill the unions, drill, baby, drill rhetoric all that time. And when the chips were down last fall and the auto industry needed help, it was Republicans who pulled the plug on the industry and voted no.

If McCain had won the election, I have no doubt GM and Chrysler would be history already and the Republicans and their US Chamber of Commerce cronies would be giving one another high-fives.

And I won't soon forget how Republicans voted on minimum wage, SCHIP, equal pay, etc. They don't even feel we should have universal health care.

A vote for any member of the GOP is a vote against the middle-class, and General Motors filing for bankruptcy won't change how I feel about them. The lawmaker who does the most for the middle-class gets my vote, and the majority of the time that's a Democrat.

G.M. Worker Loses Job, Writes Song

This is a bittersweet story from the Flint Journal. Greg Miles worked for General Motors' Grand Blanc Weld Tool Center for three decades, and then a few weeks ago he learned that his job had been outsourced to a foreign country. What did he do? He wrote a song, "Didn't Quit My Day Job, It Quit Me."

The lyrics came to him in a rush one Sunday afternoon.

In an hour, he scribbled the song on a yellow notepad. He spent a few weeks recording the song in the basement of his Waterford home.

The title comes from realizing that his job, designing tools for assembly lines, was outsourced to foreign countries. The job didn't go away; it just wasn't being done by U.S. workers anymore. [...]

Sitting next to the Irish flag hung on the basement wall, Miles sang in his warbly voice, strummed his Fender acoustic guitar and played his harmonica.

The song combines folk, rock and country.

"It's kind of like a country song, but it's not real twangy," Miles said.

The song has become something of an Internet sensation, and he's already been contacted by several local media outlets and asked to sing at a concert.

"I've never had more fun losing a job in my whole life," Miles said, laughing.

At least they didn't take away his sense of humor, and his talent for strumming that guitar. He's pretty darn good.

Check out this excerpt from his song, along with the YouTube video.

"Need to figure out what I am going to be
Might be a rock star or a pirate at sea
All I know is that this job is history"

"It started very slowly, our work shifted overseas
Began to pick up speed, it spread like some disease
Didn't know why they did this, they don't buy our cars over there"

"Need to figure out what I am going to be
A Wal-Mart greeter or pizza delivery
Do you want fries with that or super-size it please
I'll park that car sir, just give me your keys
All I know is that this job is history"

For his sake - and everyone else in the same situation - I hope the future brings him something better than a Wal-Mart greeter or pizza delivery job. You can't live the American Dream on those wages. Good luck, Greg.

(Cross-posted at Blogging for Michigan.)

The Flint sit-down strike's role in history

The anniversary of the Great Flint Sit Down Strike was December 30. The strike took place in 1936 and is important because it resulted in General Motors' recognition of the UAW as a bargaining agent. For the next 41 days, Christine at Blogging for Michigan will be writing a series of posts describing what life was like during the strike. Christine asks the following:

Feel free to comment, or not, but I do hope you'll at least spend a minute thinking about it. Let it become part of who you are ... carry it with you, and pull it out when someone starts twaddling on about the right to work for less. If you really care about the future of the working men and women of this country, you'll do your best to understand their past.

I have a post over there too that reminds everyone it's important to understand the past. The Flint sit-down strike is a history lesson about the birth of unionization. For instance, what was the auto industry like prior to the Great Depression? Historian Stephen Sears described it as follows:

Before the Great Depression, unionism was in truth not much of an issue in Detroit. The vast labor army recruited during the auto boom of the twenties — white dirt farmers, poor city dwellers, southern blacks, recent immigrants — was docile and innocent of trade-union experience. Any labor grievances were defused by pay scales higher than those in most other industries and by a system of “welfare capitalism” (group insurance, savings programs, housing subsidies, recreational facilities, and the like) in which General Motors was a pioneer. Openshop Detroit had little to fear from the nation’s largest union, the American Federation of Labor. The craft-minded AFL devoted itself to horizontal unionism—organizing all the machinists, for example, regardless of industry. It studiously ignored industrial unionism, the vertical organization of the unskilled or semiskilled workers within a particular industry such as autos, steel, or rubber.

Then the Depression hit and everything changed.

[...] In the early 1930's Detroit auto workers found themselves powerless as the industry collapsed like a punctured balloon. Welfare capitalism was silent on job security. Wages and work time were slashed. As layoffs mounted, workers with ten or twenty years’ experience discovered that their seniority counted for nothing; it counted for nothing, either, in the call-backs that marked an upturn in auto sales beginning in 1933. Assembly lines were speeded up mercilessly to raise productivity and restore profit levels. Bitter men protested. “You might call yourself a man if you was on the street,” a Fisher Body worker recalled, “but as soon as you went through the door and punched your card, you was nothing more or less than a robot. ” “It takes your guts out, that line. The speed-up, that’s the trouble,” another said. “You should see him come home at night, him and the rest of the men … ,” a Flint auto worker’s wife testified. “So tired like they was dead.… And then at night in bed, he shakes, his whole body, he shakes. …”

The auto workers saw unionism and the strike as their only hope of redressing the balance. Stop and think about the courage those workers showed. As wizardkitten pointed out at BFM, "the fact that they did this in the middle of the Depression is astounding."

Sears described the gains the workers made like this:

Victory in the Flint sit-down by no means ended the discontents of the auto worker. Yet now, for the first time, he could envision himself as something more than simply an insignificant part of a great impersonal machine; as “Solidarity” phrased it, the union had made him strong. “Even if we got not one damn thing out of it other than that,” a Fisher Body worker said, “we at least had a right to open our mouths without fear.” [emphasis added]

Unions are more than just bargaining units for better wages and benefits. They give workers a voice. That's something you can't put a dollar sign on.

Union made and proud of it!

This was forwarded to me by someone I know who works for GM. The original sender said he was just walking thru the State Fair of "The Gret Stet of Texas" minding his own business...whistling "This is Our Country"...when LO AND BEHOLD...here comes a Toyota Motorsports Trailer...sez "We're here to race"...

And WHAT truck would YOU use to pull a Toyota Trailer?

That's right - a CHEVY SILVERADO... The RIGHT TRUCK!!


Jalopnik has more pictures and adds this:

Obviously the reason why Toyota wasn't going to be able to haul this heavy of a trailer was because they don't have a heavy duty pickup to hitch that big Toyota racing trailer up to. But even the most hard-core Toyota truck fan's got to admit it's probably a little embarrassing to have the competition hauling you around by your johnson trailer hitch.

Texans have an expression that Toyota might have heard: All hat and no cattle.

It seems appropriate somehow.

The General Takes a Cue from Rove

This story from Newsweek is funny:

GM Stuffs the Ballot Box! Slipping behind Toyota in sales, the giant automaker manipulates a Newsweek online survey, turning out the vote in a drive worthy of Karl Rove.

GM may have to hand over its crown to Toyota this year, but it's determined to beat its Japanese rival in at least one race: the Newsweek.com's readers poll. In an online survey accompanying a story I wrote with Allan Sloan about why Toyota is overtaking GM as the world's largest automaker, Newsweek.com asked readers this week which company they thought made a better car. On Monday, Toyota was several laps ahead of GM, by an 80-20 margin. But by Friday, GM was leading by an 83-17 margin, as the total respondents had mushroomed to 80,000 from 14,000.

Turns out GM was orchestrating a get-out-the-vote campaign that would make Karl Rove proud--something that became clear to me when a GM employee called me on Thursday, frustrated that our software wouldn't let him vote twice. (You can't). It seems that on Thursday morning, GM PR official Katie McBride had sent an e-mail blast to the company's worldwide workforce of 318,000 and 7,000 dealers, asking them to vote for GM in our poll--a highly unscientific survey, like all internet polls that invite audience participation. "It's time to stand up and tell the world we're proud of who we are, what we build and how important we are to the U.S. economy," she wrote, including a link to our website. [...]

Did GM do anything unethical? After all, internet polls are driven by reader passions, and are more a form of web entertainment than meaningful measures of public opinion. "No, I don't even find it distasteful," says Poynter Institute journalism ethics instructor Kelly McBride (no relation to Katie McBride). "It sounds like good old-fashioned politics. And it shows that GM has a lot more loyal employees, or maybe desperate employees, than we may have thought."

I don't see anything unethical about GM's actions either. Unethical would be denying what they did or trying to cover it up and that's not the case. GM's top PR spokesmen readily admitted their actions. I say kudos to GM for acting preemptively and sending their employees the link. I have no doubt Toyota would have done the same thing if they had thought of it first.