In addition to major restructuring by the automakers, GOP senators insisted on givebacks by the United Auto Workers. The UAW responded with a resolute "No." But the bailout foes won, killing the $15 billion in aid.
And they were right to do so.
As the chart shows, gold-plated union contracts are a big reason for U.S. automakers' woes (though managerial incompetence at the Big Three also played a role). The average Big Three worker made $73.26 an hour in 2006; the average worker at a foreign transplant, $44.20. Bailout foes wanted the gap to be shrunk by the end of next year.
A chart making the rounds on the Internet tells it all: Last year, Toyota made 9.37 million vehicles. GM, virtually the same number. Yet, Toyota made a profit of $38.7 billion on its global operations, or $1,874 per car, while GM lost $38.7 billion, or $4,055 a car, almost entirely due to its operations in the U.S.
Then there are pieces like this one from The News Observer that states:
For sure, no one savors the idea of a federal bailout, even in the form of loans with tight conditions attached. The U.S.-owned automakers have long been burdened with (or burdened themselves with) high costs and, lately, low sales. Their unionized plants aren't producing enough products that enough people want to buy.
That said, the picture isn't a simple one, nor are solutions. Certainly the United Auto Workers has won high pay for its members, but worker compensation isn't the only cause of Detroit's woes. Labor-related expenses are a small fraction of the cost of building a car. And Japanese- and German-owned factories in the South enjoy an edge in compensation costs mainly from their relative newness. These companies aren't sending checks to many U.S. retirees, because they don't have many U.S. retirees.
Both articles agree that the sales are not that different from the foreign companies and the US ones, but they disagree on who is to blame...
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