Quietly, almost imperceptibly, the news hit the wires that two more United Auto Workers locals overwhelmingly rejected proposed changes to their labor contracts with Ford. The reports which came out late in October were shuffled way down the priority list of the major news organizations in favor of stories pertaining to the ObamaCare bill making its way through Congress.

The stories of the nationalized healthcare plan have dominated the headlines, but this story of the autoworkers union rejecting needed concessions with the one “Big Three” carmaker that refused to sell its soul to the government is a perfect example of how government intrusion into the workings of private industry can destroy the industry it purports to be saving.

Ford has been seeking to bring its labor contract into parity with the revised labor contracts of its major competitors, the now nationalized General Motors and Chrysler corporations. On October 29th the Associated Press reported a 75 percent no vote by the UAW members at Ford’s Saline, Michigan parts plant and a 90% no vote by its members at Ford’s Dearborn, Michigan research and engineering facility. Ford currently employs 41,000 UAW members in the United States. The votes in Michigan have been mostly negative while votes in other parts of the country, like the Louisville facility, have been much closer. Overall the concessions requested by Ford have been voted down by almost a two to one margin.

The concessions Ford is requesting would freeze entry level wages and require some higher skilled workers to perform more than one job. The union would also have to agree to a no-strike clause on issues relating to wages and benefits but would still be able to strike for other issues. In return Ford has agreed to give each member a $1000.00 bonus if the concessions are approved and guarantees of future work with new product commitments at several facilities. Even the union president has stated that the concessions would save some 7000 union jobs. But the rank and file has been quick to reject any compromise.

And why should they?

When General Motors and Chrysler finally succumb under the weight of years of unrealistic labor contracts the government stepped in and took over. In an unprecedented act of unconstitutional power, Barack Obama fired General Motors CEO Rick Wagoner and developed a settlement that allowed the government to take control of these longtime American icon companies, giving a 33% ownership stake to the unions. Ford CEO Allan Mulally who was all too familiar with government intrusion from his 37 years with Boeing chose to reject government support and saved Ford from a similar fate.

In order to remain competitive Ford must now bring their cost structure in line with its major competitors. But where is the incentive for union workers to come to a realistic agreement if they know that failure to do so will simply allow the government to step in and give them the same stock incentives as GM and Chrysler workers?

With the continued death spiral of new car sales after the completion of the Cash for Clunkers program it doesn’t take a degree in economics to see the peril American carmakers are in. Barack Obama and his incredibly shortsighted and unrealistic view of American business and organized labor has guaranteed failure, first with future union negotiations and finally with the companies themselves.

This scenario of nationalizing industry and redistributing its wealth to the workers may have sounded reasonable coming from a community activist but will prove to be fatal to American business coming from a president with no concept of business or a world marketplace.

How are you? We are fine. We hope you don’t think we are being greedy and we really are sorry that we have to ask, but our list is kinda big this year.

We have been very good this past year. We followed most of…. well OK some of the rules and made sure we supported all our union friends so they could stay organized and available to vote. As you are already aware of who has been naughty and who has been nice I’m sure you know who they voted for. It would be a shame if they didn’t vote like that for the mid-term election, wouldn’t it? We know they all like you Santa which is a good thing because some of those guys can hold a grudge for a very, very, very long time. If you know what we mean.

Anyway, even though we have been good it has been some tough sledding here lately. Some mean guys have been taking our market share and coming out with products that people seem to prefer over ours. I mean, come on Santa, how were we supposed to know that the days of low gas mileage and oversized vehicles was going to come to an end. We know you’re going to say that anybody who has been paying attention would have known that but we have always been able to tell people what it was they wanted and they used to listen. So you see Santa it’s not our fault, it’s just that the darn customers quit listening.

The mean guys have moved into places where there isn’t a lot of snow and also where there are not a lot of our union friends. We know you like the snow being from up north and we know you really like our union friends because they help keep you rolling in it. Snow wise and otherwise. These mean guys and their non-union friends have made it a very bleak Christmas this year. That’s why we are counting on you.

We are very sorry that we didn’t have much to say when we saw you last time. We were just not sure what to say. We had hoped we could sit on your lap like the old days and you would make suggestions. We would just nod our head, wide eyed and grinning, and then get a candy cane. We thought after all we have been through together that you would already know what it was we wanted. We didn’t know you were going to make us come right out and say it. But if that’s the way you want it, we can play along.

Santa we want billions and billions of dollars. Seeing as this isn’t really your money we figure you shouldn’t have such a tough time shelling it out. We know your helpers worked very hard to make this money in their little workshops all over the country. But we think if you play your cards right you can convince them that giving their money to us is actually in their best interest.

First you can blame that mean old Grinch George Bush. Most of your helpers will believe anything negative you say about him. Just say he’s trying to steal Christmas. Or better yet, try to tie the story somehow to the money that was spent in Iraq. Believe us Santa. Your little helpers have believed the bologna we have been feeding them about safety, economy, reliability and style for years. As soon as you mention Iraq your little helpers seem to lose the ability for cognitive thought and their eyes will roll up into their head. Just talk about government waste and corruption in Iraq and that way nobody will look at the waste and corruption at our little workshops in Detroit. It won’t make any difference that the two have absolutely nothing to do with each other. Just say Iraq as many times as you can and people will believe you.

We can call the money you give us a loan. It doesn’t matter if we are ever actually able to pay the loan back. We know you know how that works having been the leader in creating home loans that nobody could ever pay back. We can just keep renegotiating the terms of this loan until we are able to figure out a way to convince your helpers that it would be better for them to just forgive the debt. We know you can do it. We have seen you do it before. You can just explain that we are people who can afford to stay in business but can’t afford to pay their debts. It worked when you said it about home owners, and like a good football play, you just keep running it until somebody stops you.

Santa we need the money really, really badly, and we need it quick. But we are also including a second request on our wish list. We need you to recreate reality. We need you to make it so that we can continue to stay in business without having to actually compete in our marketplace. Along with the mean guys down south there are other mean guys from outside the country. They are all looking to take away our customers. They didn’t make the same promises we have made in the past so they don’t have the legacy costs, hourly wage structure or benefits cost that we do. We don’t want to have to file for bankruptcy to eliminate these costs so we were hoping you could make them go away. We promise that we will make a bunch of changes internally and we can talk at great lengths about the shared sacrifices we are willing to make. None of these changes will actually put us on a par with the mean guys as far as quality, value, style or dependability but it will look like we are trying and that should satisfy your helpers. At least until we come back and ask for some more money, which you will no doubt be inclined to give us to protect your helper’s initial investment.

How can you reinvent reality, you ask? It’s easy.

Just call it “Change”. Santa and Change seem to go well together in the world of reality.

Your Pals,

GM, Ford & Chrysler
a.k.a. The Detroit Disasters

They say, whoever the hell “they” are, that the only things in life that are inevitable are death and taxes. I disagree. There are a few more. For instance:
· If you jump into the water you’re going to get wet.
· If I gain another 6 pounds I will actually begin to create my own gravitational pull.
· If you run a business with lousy service and a lousy business plan you’re going to go broke.
· If you work for a really lousy business and you continually make unrealistic demands that price your services out of competition with the world market and still consider yourself to be irreplaceable you will lose your job.

Such is the case with the Big Three Automakers and the United Autoworkers Union. The Detroit disasters and the union that controls them were seated before the Democrat controlled House Financial Services Committee chaired by the inane economist Barney Frank. It seems only fitting that Congressman Frank would chair this meeting as he was the one who, as both chairman and minority leader, started this whole mess with the infection of the credit markets through the viral carrier Fannie May and Freddie Mac.

I have recently owned Chrysler, Ford and GM products and could give you a litany of customer disservice stories and product performance nightmares of several crapmobiles, but I believe I could not give a better example of complete business ineptness than was exemplified by the comments of GM CEO Rick Wagoner and others to this august committee.

As the auto industry giants and union autocrats sat before the committee, lips pursed to suckle once again off the government teat, committee member Paul Kanjorski from Pennsylvania asked how much money would be needed just to keep GM’s nose above water until March 30, 2009. In a keen display of his in depth business acumen Mr. Wagoner said “Huh, I dunno”. When asked when their current supply of cash would run out, neither Wagoner or Chrysler CEO Robert Nardelli could answer with anything more definitive than to say it would be by the end of this year or sometime early next year. How could you come before this committee claiming your very survival was dependent on the outcome and be completely unprepared to answer these two very basic questions?

Is it possible that these guys did not want to get pinned down to a number or a date, or are they really that dim? To sit before Congress and ask for “a loan” to supposedly save your ass from bankruptcy and not know how much money it will take or when the drop dead date is that you need it is almost beyond comprehension. Perhaps this is why these guys are before Congress and not the First National Bank – Bank President:“Yes Mr. Wagoner, we would be interested in discussing a loan with you. How much would you like?” Rick Wagoner: “Huh, how much you got?”

It’s no wonder that the UAW has been able to fleece these guys at a game of 3 Card Monty every four years or so. And as for the union, with everything that was being said about the immediacy of the situation, the possibility of the businesses failing or being forced into bankruptcy, when asked if the union would consider renegotiations of their contracts union chief Ron Gettelfinger said “The UAW can’t be the low hanging fruit. While we’re at the table, we’re asking that others come in and sacrifice as well”. Hey Ron, guess what!! The fruit is usually hanging pretty low on a dead freaking tree.

How can anybody take this whole scenario seriously? I keep waiting for Allen Funt to come out from behind a curtain and say “Smile, you’re on Candid Camera”. On one side of the table you’ve got Barney Frank, the chief architect of the credit disaster, as chairman. Plus you have questions and comments by committee member Maxine Waters who defended actions of the rioters and looters who caused tens of millions of dollars in damage during the 1992 LA riots as acceptable, describing them as baby mama’s who used the opportunity to take some milk, bread and shoes. She also told oil company executives that she was going to fight for socialism and get their oil refineries taken over by the government.

On the other side you’ve got the CEO’s who flew to Washington in their private jets to ask for money, but they don’t know how much or when they need it. And a UAW chief who doesn’t think his dues payers should have to sacrifice unless the companies which are going out of business sacrifice as well. In the immortal words of Lloyd Bridges “Bad week to quit sniffing glue”.

The numbers being bantered about regarding the possible failure of these companies are also pretty questionable. I received an e mail from GM outlining some of the basics on why I should support government intervention. It also included a web site set up by GM to further explain their position. It would have been nice had they been this corporately proactive with their new car customer service. I salute them for the money they spent creating this public relations campaign so they can get money. For a company that doesn’t have the math skills to identify what it will cost the taxpayers to save them from the grave they are pretty well informed as to what it would cost the taxpayers if we don’t. GM explains that 1 in 10 jobs in America depend in US automakers. Nearly 3 million jobs are at risk. US personal income would be reduced by $150 billion. Tax revenue lost in the first 3 years would be $156 billion. While these are pretty ominous numbers they are partially misleading and only accurate if a number of very unlikely things happen.

The 1 in 10 number may be true but it paints dependence with a fairly broad brush. Dealers, mechanics, parts suppliers, steel makers, tire manufacturers, etc. can continue to conduct business with automakers outside of Detroit. Personal income would only be reduced by $150 billion if the people that are affected do not get other jobs. And the $156 billion loss of tax revenue is actually all inclusive of state local and federal taxes and fees and increased unemployment and health care costs. This is only true if these employees stay unemployed and nobody buys a non-Detroit car.

Today’s was truly an historic meeting. At no time in the history of mankind has more stupidity been in one place at the same time outside of a Keanu Reeves birthday bash. I can only imagine that the vortex of idiocy was so strong that just passing by the meeting room in the hallway could leave you unable to define what is is.

It is inevitable that businesses like this, run by people that are so completely clueless, with a work force that elects and supports union leaders that are so totally out of touch with reality, must fail. I don’t like it. While I have no personal stake in it I can say I hate it. As a proud capitalist I don’t want to believe that these former all-star companies have sunk this low. But none of that matters. As surely as I will soon have moons circling me in an elliptical orbit, business run this poorly have no choice but to die. The problem is when you’re this dumb somebody may need to tell them to lay down.

As I asked before, how could you come before this committee claiming your very survival was dependent on their decision and be completely unprepared to answer a question as to how much you need and how quickly? Beyond reluctance or brainlessness there is a third possibility. Could it be that the only people who thought this was a real hearing were the spectators? Could this hearing have been for entertainment value only with the outcome already guaranteed? Was this staged like a professional wrestling match where the good guy Prince Congressman roars with indignant anger giving the crowd something to cheer about before the bad guy Automan comes up with some last minute stunt to win the championship? Did the UAW deliver the goods on November 4th and have some further mail to carry for the next mid-term elections?

Maybe I’m the one that’s slower than a 74’ Chevy Vega with the air conditioner turned on.