The $14 billion government bailout for the Detroit auto makers died in the Senate because all but ten Republican Senators refused to vote for it unless the union representing the autoworkers agree to massive pay cuts.
Congressional Republicans have been in open revolt against Bush over the auto bailout. Senate Minority Leader Mitch McConnell of Kentucky joined other GOP lawmakers Thursday in announcing his opposition to the White House-backed bill, which passed the House on Wednesday. He and other Republicans insisted that the carmakers restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the United States.
I think I actually agree with the Republicans on this one. I think it would be great to get the pay and benefits that the average UEW worker gets. The problem is, the money just isn’t there. Because of the high cost of labor, Detroit automakers have to resort to not making cars, but expensive trucks, vans, and SUVs to absorb the high cost of UAW labor. When you are paying someone $69 in wages and benefits to turn bolts on an assembly line, it makes more sense economically for the big three automakers to make autos they can charge more for. Paying someone to turn bolts on a $9,000 car costs the same as paying someone to turn bolts on a $45,000 truck or SUV.
The automakers then have to spend millions on advertising to convince Americans that they need a truck or a sports utility vehicle to drive to work or to run errands. Unless you regularly haul around a full sheet of plywood, you don’t need a truck. You definitely don’t need a Ford F-150 truck, Ford’s best selling vehicle. It’s a vehicle that gets only 15 miles to the gallon in the city, 20 miles to the gallon on the highway. The fuel efficiency is even worse if the vehicle is hauling something heavy in the bed.
Not that this would ever happen.
If the big three automakers file for bankruptcy protection, UAW wages and benefits will be almost certainly be cut, but instead of the UAW leadership having any kind of say in the matter, it will be decided by a federal bankruptcy judge.
Jason
/ December 12, 2008General Motors had offered buyouts to all of its 74,000 U.S. hourly employees. [5] Those workers could have elected to take a lump-sum payment of $45,000 or $62,500, depending on their job description, and retire with full benefits. [6]
Republican Sen. George V. Voinovich of Ohio, a strong bailout supporter, said the UAW was willing to make the cuts – but not until 2011.
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