Auto bailout

[ciphergoth]

Auto industry: labour costs 10% or $1.7B, must cut worker salaries to receive $17B bailout.
Financial industry: labour costs 90% or $490B, can have $700B bailout no strings attached.

Bush Loans $17 Billion to the Auto Industry

President Bush brought down the wrath of a large piece of the Republican Party on himself for giving the big three car manufacturers a $17 billion stopgap loan. The loan has a condition in it that members of the United Auto Workers union give back wage and benefits that bring them into line with what the Japanese companies pay at their plants in the South. The Republicans objection is that this condition is not written into law and Barack Obama could easily eliminate it after January 20th.

It is increasingly clear that what southern Republicans really want is to break the back of the UAW (which habitually supports the Democratic Party). Thus while demanding lower wages and benefits as part of the $17 billion loan to the auto industry (where labor costs are 10% of total expenditures) is crucial to them, they didn't make a peep about lowering salaries as part of the $700 billion bailout of the banking industry (where labor costs are 70% of the total). In other words, the $1.7 billion worth of labor costs in the (unionized) auto industry is a big deal but the $490 billion worth of labor costs in the (nonunionized) financial industry is a nonissue.

-- Andrew Tanenbaum

Comments

[incy.livejournal.com]

Of course the collapse of banks would also have a big knock on to other industries as well. And are you saying a job in banking is no less worth saving then one in the car industry?

There are differences in the bailout. Firstly in the car industry the US Treasury is simply handing over money to the companies, in terms of he banks they are actually buying the assets that the bank own (so the banks no longer own them, but the government does... in the car industry the equivalent would be the government buying the cars).

I was under the staffing costs in the US car industry was huge both (there medical insurance division are the biggest parts of the company, I do not know how true this is though). I am also guessing the bailout is an open ended commitment, but to help the firm to get their act in gear, which means getting their costs down and producing cars that people want to buy. Of course they cannot dictate the price of raw material for the cars so it really is only labour costs they can effect.

As for costs banks do tend to pay their workers as little as they can get away with and the industry has shown it is prepared to drive down it labours costs without being told to.

[deliberateblank.livejournal.com]

Of course they cannot dictate the price of raw material for the cars so it really is only labour costs they can effect.

This is only true if they point blank refuse to build anything smaller than a truck.