www.CostaRicaTicas.com

This morning the news reported that the Senate has rebelled and that for now the auto industry bailout is toast. The key sticking point is that to pass, the legislation would force UAW members to get down to pay and benefit levels comparable with the Japanese autoworkers. The UAW simply won't do it since their contract is good until 2011.

Well, as much as I hate to see it, not getting wages down to comparable industry averages is the kiss of death for the big three. And if the Government provides bailout funds without this key concession, then that would just push the failure a little further down the road.

_________________
Providing humanitarian assistance to self employed chicas, one cash grant at a time.

The head of the UAW, Ron Gettelfinger, is a very modern, very savvy labor leader. Why then was he so adamant in refusing to endorse modification of his union's labor contracts as part of a bailout and thus virtually force bankruptcy? One phrase covers it--"political cover". This bailout is a Band-aid on a cancer, which wouldn't force the wholesale restructuring these company's need. Even with a bailout these companies face bankruptcy near-term. In bankruptcy (not liquidation or going out of business--that isn't contemplated), all labor and other contracts (supplier, warranty, etc.) would be voided. Other industries notably the airlines have used this process specifically to void labor contracts and break unions. So whether or not a bailout goes through now, those contracts will go out the window in a bankruptcy but without the dirty deed having Mr. Gettlefingers, er, fingerprints on it (that by the way is a common politician's trick--voting for a bill you know will fail so you can go back to your constituents and say,"it wasn't MY fault.". Kind of cynical but there you go.).
Now let's look at the much bruited-about huge wage disparity between UAW and foreign auto workers. This link explains it well and shows how bogus that $73/hour figure is. Key on Paragraph 14 please:
http://nytimes.com/2008/12/10/business/ ... =122914440
Bottom line: The bailout would cost workers money and benefits without hope of ever getting them back even if the company's regain stature. Meanwhile the necessary competitive changes won't be forced on the industry and its executives--lose/lose for Labor and the taxpayers.

_________________
"A man accustomed to hear only the echo of his own sentiments, soon bars all the common avenues of delight, and has no part in the general gratification of mankind"--Dr. Johnson
"Amen, brother"-ED