Saving U.S. Auto Makers Only Makes Sense to Save Jobs

The next version of the "big 3" U.S. auto makers' request for a Federal bailout came into view today. Here's how much each company is requesting:

• GM: $18 billion
• Ford: $9 billion
• Chrysler: $7 billion

In return what will U.S. taxpayers get?At least 30,000 lay-offs by 2012 for GM alone. That doesn't sound like a good trade-off to me.

Republicans from President Bush to Senators Richard Shelby of Alabama and Jon Kyl of Arizona have ridiculed any bailout as throwing good money after bad.

"Companies fail everyday and others take their place. I think this is a road we should not go down. They're not building the right products."

- Senator Richard Shelby.

But should families pay the price for bad management when we are in a recession and jobs are scarce? Is this not the time for government to step in? There seemed to be plenty of money to bailout Wall Street.

Democrats Harry Reid and Nancy Pelosi has been on the other side saying “we want to see a commitment to the future."

"A restructured, competitive American automobile industry will continue to play a crucial role in our national economy and in the global marketplace."

- Speaker Nancy Pelosi

If you work in the auto manufacturing or supply industry or are concerned about what bankruptcy will mean for hard working Americans, now's the time to make your voice heard. Write to your U.S. Representative or U.S. Senators and tell them that you support the use of Federal money as long as it also preserves U.S. jobs.

First time writing to the U.S. Congress? Here's a link about how to write a good letter.

Walmart Worker Trampled by 2,000 Shoppers

At a Walmart store in Long Island, NY, a tragedy befell a worker the day after Thanksgiving. Could it have been prevented?

Peter Goodman wrote an insightful article on the incident; here's an excerpt:

"It was a tragedy, yet it did not feel like an accident. All those people were there, lined up in the cold and darkness, because of sophisticated marketing forces that have produced this day now called Black Friday. They were engaging in early-morning shopping as contact sport."

If you can't stand up in a crowded theater and yell "fire" then why can a store create a situation where the chances of someone getting hurt are higher?

There is a way to prevent this: increase insurance rates for retail stores between Thanksgiving and New Year's day. Manager will then think twice before opening the doors to their stores as throngs of shoppers egged on by tales of free merchandise or "75% off" wait impatiently. Or maybe it will begin to change the contact sport that has become Black Friday.

U.S. Automakers Dipping into Auto Worker Pension

It's a tough situation to be in.

U.S. automakers fighting for their lives and running out of new sources of cash are dipping into pension funds set aside for its auto workers according to a piece by John Stoll in the "WSJ" ("Pension Agency Sounds Alarm on Big Three," 11/28/08).

The article says that when GM reported an update on its pension earlier in the month it said its plan for hourly workers was underfunded by $500 million because of restructuring expenses. However its plan for salaried employees remains overfunded by at least $500 million.

The U.S. Pension Benefit Guaranty Corp. (like the FDIC but for pensions) acts only if a company's pension plan fails. The U.S. PBGC sent a letter of concern to the big 3 automakers about how pension money is being used. The PBGC has reason to be concerned since it already has a $14 billion deficit (that may not seem like such a bigger number these days unless it's your pension on the line).

Is the writing on the wall? Is is better to walk away pensions still intact or use the pension money to fund U.S. automakers. It depends on whether you believe that the automakers can emerge as sustainable companies. Managers will always say yes, give us another chance. What do workers think?