Union Pitches In, But Bailout Hopes Dim

Senate Majority Leader Reid Says Carmaker Bailout Doesn't Have Votes To Pass

(CBS/AP)  Senate Majority Leader Harry Reid says the Democrats' plan to tap the Wall Street rescue fund to save U.S. automakers doesn't have the votes to pass.

One day after Detroit's Big Three sent survival plans to Capitol Hill in an urgent plea for $34 billion in government aid, Reid said there's still not enough support in Congress for using some of the $700 billion bailout to help the teetering carmakers.

He told The Associated Press in an interview, "I just don't think we have the votes to do that now."

The Bush administration and auto-state Republicans and Democrats are pushing instead to take a $25 billion program to help the carmakers produce green vehicles and convert that into emergency loans.

Earlier Wednesday, United Auto Workers President Ron Gettelfinger announced that the union is willing to change its contract to help save the Big Three, letting them delay billions of dollars in payments to a union-run health care trust.

Gettelfinger also said the union will modify the jobs bank, in which laid-off workers are paid up to 95 percent of their salaries while not working, but he did not give specifics.

Some 3,500 UAW members are currently receiving an average of $50,000 a year under that program, CBS News' Dean Reynolds reports, something the union acknowledges is difficult to explain.

"There's a perception problem, there is. I don't question that," Gettelfinger said.

Those kinds of perks - negotiated decades ago when the Big Three were facing almost no competition - today add almost $2,000 to the sticker price of every car Detroit produces when compared to their now very real competitors.

Take-home pay at U.S. automakers now averages $28 an hour - close to what Toyota, Honda, and Hyundai pay their workers, Reynolds reports. It's the Detroit-negotiated health and pension benefits that have changed the equation. Factor them in and labor costs are $73-dollars an hour for Detroit, but only $44 for non-Detroit producers.

"We're going to sit down and work out the mechanics," Gettelfinger said at a news conference after meeting with local union officials. "We're a little unclear on some of the issues."

One local union member who was in the meeting said the changes to the jobs bank would nearly eliminate it. The member asked not to be identified because the details had not been made public.

Gettelfinger stopped short of saying the union would reopen contract talks with General Motors Corp., Chrysler LLC and Ford Motor Co. but said it would be willing to return to the bargaining table to change some terms.

The UAW's efforts to help the Detroit Three get up to $34 billion in government loans come after GM and Chrysler said they are perilously low on cash and need government help before the end of the year.

A top General Motors executive repeated claims Wednesday that the auto giant may not make it to New Year's Day if Congress doesn't approve a federal bailout for the beleaguered industry.

"That's what we believe we need in order to run our business through the month of December," said GM's chief operating officer Fritz Henderson on CBS' The Early Show.

"We've seen … not only continued pressure in our business but the pace of deterioration has accelerated. October and November were just the worst levels we've seen post-World War II."

Henderson said Tuesday that "there isn't a Plan B," for General Motors if Congress doesn't act.

Jim Press, Chrysler's vice chairman, also said Wednesday the U.S. automakers were "down to months left," as industry officials ratcheted up a fierce lobbying push to persuade Congress to approve an emergency aid package.

"We're on the brink with the U.S. auto manufacturing industry," Press told The Associated Press in an interview. "If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow. It could trigger a depression."

Congressional leaders are reviewing three separate survival plans from General Motors, Chrysler and Ford Motor Co. as they weigh whether to call lawmakers back to Washington for a special session next week to vote on an auto bailout.

Henderson said GM acknowledges the need to "size our company much differently," if it hopes to stay viable in a hostile economic environment that has seen a precipitous drop in car sales.

"We developed a plan that would allow us to be robust and pay back the loans, even with a very difficult set of economic assumptions," said Henderson.

In blueprints delivered to Capitol Hill on Tuesday, both GM and Chrysler said they needed an immediate infusion of government cash to last through December, and both said they could drag the entire industry down if they fail. Ford is requesting a $9 billion "standby line of credit" that it says it doesn't expect to use unless one of the other Big Three goes belly up.

But Chrysler said it needed $7 billion by year's end just to keep running. And GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit it might need if economic conditions worsen. The two painted the direst portraits to date - including the prospects of shuttered factories and massive job losses - of what could happen if Congress doesn't quickly step in.

In their first round of pleas for a government rescue last month, the Big Three executives arrived in Washington on separate private jets and enraged lawmakers who said they failed to take responsibility for their companies' troubles or justify a federal bailout.

"I think we learned a lot from that experience," Ford CEO Alan Mulally said.

He, as well as GM CEO Rick Wagoner and Chrysler chief Bob Nardelli, are all road-tripping the 520 miles from Detroit to Washington in fuel-efficient hybrid cars for hearings on Thursday and Friday.

Mulally and Wagoner both said they'd work for $1 a year - something Chrysler's plan said Nardelli already does - if their firms took any government loan money. Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said it would slash top executives' pay. Ford and GM both said they would sell their corporate aircraft.

All three plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.

Still, an auto bailout remains a tough sell on Capitol Hill.

Sen. Arlen Specter, R-Pa., said the mood in Congress "candidly is not supportive" of the automakers, although he called the consequences of just one of them failing "cataclysmic."

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable. "If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," Dodd said in a statement.

His panel is to hear testimony Thursday from the auto executives, Gettelfinger, and the head of the Government Accountability Office on the companies' plans.

The House Financial Services Committee is to hold a similar session on Friday.

[jsd330]

joule18 where is there a toyota plant that has been in the US for 25 years? The foreign automakers only have assembly plants in the US they don''t manufacture here.They don''t have foundry''s that have to meet EPA standards, they import all of their parts so they don''t have to worry about the extra cost to meet the EPA standards. And I''ll bet they don''t comply with OSHA, because if one of their employees complained about safety they would be fired on the spot.
It''s not just the management and labor costs that caused the money problems, there are a number of reasons why the foreign automakers have advantages, tax abatments from the states where they build their plants. If GM, FORD,or chrysler asked for those tax abatments from the states where their plants are they would get the same BS they are going thru now. I haven''t heard of one state tell the big 3 in order to save jobs we"ll defer your taxes and you can pay us back later, just like the loan they are asking for now, or we''ll reduce your taxes for a certant period of time. So until the playing field is leveled the US automakers will never be competetive.
The same is true for all industries and business, you never see the state governments step up to the plate when times are tough. But if you want to build a new plant they''ll give you anything you want.

[dan_da_ban3]

test 5

[mildlyinsane]

Testing

[fianalystgov]

I remember the decades of the UAW demanding wages and benefits and my having to hear about it in the news. I want to start hearing about what the UAW is willing to financially give up to keep these car companies afloat. I am not interested in hearing rhetoric and begging from the multi-millionaire CEO''s of the automakers. I am the CFO for a local government and am very familiar with the unreasonable demands from firefighters. Let me start hearing some self-motivated solutions rather than asking for a public bailout.

[joepack61]

Starting around 2010, new UAW workers will start at $14.00 per hour pay. Landscapers and construction workers can make around $18.00 per hour pay, believe it or don%u2019t.

[joule18]

The cost to GM is $72 an hour because there are a lot of benefits, union demands, etc. that cost them far more than the hourly wage. It is apparent that you have never run or been involved in the financial aspects of what it cost for employees.

[joule18]

The greedy, no matter whether they are at the bottom or the top will screw you. You screwed yourself.

I don''t think it is fair to call Toyota''s workers SCABS when they NEVER had union representation. If you want to call them that, fine. However, they will still be working while you are continue to bleed.

[joule18]

Posted by jbrown88881 at 12:42 PM : Dec 04, 2008

Unions helped in the early days and now they are just a huge stone around businesses neck. They have outlived their usefulness. The week-ends, etc. are so ingrained in our culture at this point that they are not in danger of being taken back.

My brother and his wife both have worked for Toyota for 25 years. There is no union involvement. Yet, they have no complaints about either their pay or their benefits as they have excellent pay and benefits. Toyota puts out a better product and is more competitive because of the lack of unions who protect workers who don''t do their jobs but continue to suck off undeserved money for doing ***.

[joule18]

The loans being asked for now will only postpone the inevitable . . . a filing for Chapter 11 that will allow reorganization under judicial supervision. So, let''s get it done sooner than later so a recovery can begin.

On the banking bailouts . . . it''s not helping as intended because in their haste to get the money out there to help the economy the necessary guidelines and overall terms were virtually non-existent. Now the banks are just sitting on the money. Furthermore, the public keeps getting the shaft because the credit card divisions of the banks keep raising interest rates and lowering credit lines.

It would be helpful to the public is the banks who took bailout money could help us a bit by having to lower interest rates on credit cards so they could actually be paid off.

Also the IRS should not be able to snag any stimulus check for anyone who may owe them some money. Many Americans did not ever see a stimulus check. All they saw was a letter from the IRS that the money was applied to their debt. That money could have gone out into the marketplace to stimulate the economy instead . . . even if it were to pay for utilities or groceries.

[mckinskl]

I dont think everyone understands the total domiono affect this is going to have on our nationwide economy, if the big 3 do not get the bail out money. There are still states in the north that are built around the auto industry. I believe that auto employees need to cut some benefits and pay in order to keep there jobs. But there is a give and take. Most people that work for the auto industry are the "bread winner''s" for their families. If you cut a person''s wages from $30.00/hr to $15.00/hr with no warning or ample time for adjustment, it is going to have a dominio affect of the whole economy. People that are used to making that wage have bills that reflect that wage. Many, may be forced to foreclose homes, those that used to shop, or go out to eat have to stop all of those extra''s. All that will then affect other industries, and drive us furtur into a possible depression. I think people need to consider the whole concept before they make an aggresive decision.

[mildlyinsane]

Well, I gotta go work, See ya later....

[mildlyinsane]

Sure is funny how the far right-wing goonies blame everything on unions. You''d be minimum wage earners now if it weren''t for their hard-earned efforts over many decades of standing up to corporate bullies. Democrats fight for your right to make a living wage. Be thankful. It''s about time Bush and his cronies wiped their smug smirks off the their spoiled faces. There was a time when corporate hogs were so powerful they could literally bail out the government. Anybody know of the history of J.P. Morgan, who had to bailout the U.S government? Anyone remember the outrageous shenanigans of the corporate "self-made" hotshots who ran companies like Enron,Tyco, et al.? Rememember, this all occurred on Bush''s watch.

[kuei12]

All the big companies are now cooking their books and hiding income so they can get a chance to stand in line for bailout bucks. As i predicted this bailout has been nothing but a big scam that has helped the rich and politicians get richer at our expense. Congress put no reigns on the funds and failed to monitor how the money would be spent. OUR money has been completely wasted on lavish vacations and bonuses of monsterous porportions. And at the same time the economy has gotten much worse. The $700 billion bailout has not helped the middleclass worker at all. Americans get fooled again!

[paidgopshill]

Stupid peasants. When Ronald Reagan described a shining city on the hill, he forgot to tell you all that it was a gated community with a private security force. Riff Raff are not welcome.

[prometheus41]

BTW: If you haven''t figured it out yet, the reason that the government is willing to throw whatever future unborn taxpayer debt it takes at Wall Street, an unprecedanted move and outrageous scope of debt financing of a massive socialized capitalism program, is that letting the American people see the collapse of taxpayer sponsored AND INSURED private industry overhead of capital -- that''s right, where taxpayers ASSUME all the risk, and private industry ASSUMES all the profit -- might let them get a glimpse of a country where the federal government could actually eliminate private industry from the equation and a GREAT --- and I mean TREMENDOUS -- cost savings to BOTH taxpayers AND consumers.

They wouldn''t even extend federald direct student loans to all students during this crisis, because they didn''t want the American people to see what that would be like on even a small scale experiment.

Just in case you thought it was just your money and not fundamental human freedoms, free thought and government transparency that was at stake here.

[commonsince]

Before any action is taken the Big Three needs to recommit most of its production back to the US. They do need to start shutting down plants but only the ones outside of the US. This is also a great time to put the Unions in there place who have capitalized on the greed of the whole auto industry.

[prometheus41]

Let''s see, we could let every bank in the U.S. fail and have the government take over that function OVER NIGHT, and just add the cost of managing loans and credit DIRECTLY with FULL GOVERNMENT OVERSIGHT AND REGULATION on top of the prime interest rate (currently 1%), while over the period of a few years, completely measure the costs and problems of government management of the financial industry vs. private industry, announce the savings to consumers and taxpayers, heralding in a golden age of reason and commerce that completely SHATTERS the propaganda of free-market religion; altogether saving taxpayers the SEVEN TRILLION that the government is vesting in the financial industry bailout/financial terrorist ranson, and then loan the automobile industry whatever it needs out of the SEVEN TRILLION, as long as it costs a lot less; ooh and I bet it will.

American consumers, workers, taxpayers ALL WIN BIG TIME. American PARASITE sector sees American PARASITE trickle down economy vanish before there eyes while they scramble to find new ways to form a tyranny of media and special interest propaganda to convince the public that they need to be fed or else, but they have a harder time convincing us when all we had to do was let the government provide loans to people at 1% interest instead of private industry banks.

Would that ever happen in a truly free and democratic society? Of course. Will that ever happen in America? Of course not.

[lewiston14]

Kitty do you math. $60,000 is a long ways off $70 an hour. About a little less then half actually

[lewiston14]

Kitty:
It wont stop until all eight of these things happen.
1 %u2013 Keep all the jobs in the US
2 %u2013 Remove all of the people that do not belong in this country out and prevent them from coming back.
3 %u2013 Level the import / export playing field.
4 %u2013 Control the large companies that play with trillions of our money.
5 %u2013 Get rid of the entire lobby in Washington.
6 %u2013 Get our butts out of the wars and stop sending money to every third world country. We don%u2019t need them. Stop spending off shore.
7 %u2013 Get a grip on our energy use and nationalize energy or very tightly control it.
8 %u2013 Change patent rules so companies like big oil cant lock up technology like batteries to prevent the development of them and their ability to keep us only on oil.

[kittykatty2]

Oh, and Lewiston, auto industry line workers are very much like tobacco industry workers...they make GREAT money. Don''t try and kid me or anyone else otherwise. I will say without a doubt that the average auto industry line worker makes about $60,000 a year WITHOUT overtime. That is a wage that a family can live off with only one person working. Don''t you dare try and cry poor for the auto workers, I know better.