Answering Our Critics: The Truth About the Current Condition of the Auto Industry
by Local 2195 Webmaster and LUPA Advisory Board Chair John Davis

Over the past several months the U.S. Auto Industry has been taking a licking everywhere from the pundits, to the bought and paid for politicians, to the uninformed bloggers. There has been much misinformation and down right lies told since news broke about GM’s financial woes. Everywhere you turn there is some conservative, anti-worker mouthpiece sharing their opinions on why GM should be allowed to fail and the workers and retirees cast to the wind. The disregard that is given to big three workers also forgets the literally millions of other workers whose livelihood is tied to the automotive industry.

Let’s examine some the statements that have been made and look at the truth in what is said.

1. GM, Ford and Chrysler have made poor business decisions and should fail. False. The Big Three have taken a lot of flack for concentrating on trucks and SUV’s. While it is true they did concentrate on these markets, it is because that is what the market wanted. When the escalation of gas prices hit, it was impossible for these companies to retool over night to meet the demand for small cars. As a matter of fact, most of the foreign transplants had desperately trying to catch the Big Three on design and availability of trucks and SUV’s to share in that market.

2. Union contracts have put the big three in the shape they are in. False. Two years ago the big three negotiated contracts with the UAW that included concessions on virtually every aspect of the covered employees pay and benefits. The pay and benefits of no employee in the country is scrutinized the way auto workers are. Each contract year the press became obsessed with automotive pay. This contract closed the gap between union represented companies and non-union workplaces such as the foreign transplants. The Big Three were making huge strides at turning around when the banking crisis hit last summer. This resulted in two things happening. First, GM, Ford and Chrysler no longer had access to loans they routinely made has part of doing business. This meant they were forced to finance capital improvements out of their on hand cash rather than borrow money. Then, overnight the general public stopped buying cars. First through the failing economy and then because lenders stop financing new vehicles for anyone who fell below the very top credit rating. Only 25% of the buying market qualified for a loan for a new vehicle.

To those who demand that workers be shredded of their pay and benefits, namely Alabama Senator Richard Shelby and Tennessee Senator Bob Corker, they should look at one important fact. GM recently reported they lost 30.9 billion dollars in 2008. If their 70,000 UAW workers averaged $70,000 a year (and few GM worker’s made that much) that would have meant that GM spent 4.9 billion on worker’s wages. If GM had paid their hourly employees nothing – remember these are the ones who actual produced the vehicles sold – GM would have still lost $26 billion dollars. So, how can worker’s wages be blamed for GM’s losses?

3. Big Three workers make $150,000 a year for doing nothing. False. Let’s say the average GM worker at $28 an hour worked every available hour of overtime for the year. Could they have made that much? No. At $28 per hour a 40 hour check is worth $1120. Let’s say the worker worked 12 hours (which is the limit you can work in a 24 hour period) a day Monday through Friday. That is $840 more dollars when you consider after 8 hours they made time and half. That brings us to $1960. Then our worker works 8 hours on Saturday which adds $336 more dollars at time and half and now puts the worker at $2296. Then the worker adds 8 hours on Sunday at double time which adds $448 bringing the total to $2744 for the week. I can tell you from experience that a 74 hour week in an automotive plant is quiet taxing. If the worker worked 74 hours a week for all 52 weeks in the year that comes to $142,688. So those claims of GM workers making $150,000 a year are not only impossible but also improbable based on the taxing demands of the job.

4. Big Three workers are just drunks who pay no attention to quality. False. In the early 1980s the big three had trouble with quality issues. The UAW fought for and won new language in the contract that gave workers a voice in quality matters. Quality of the vehicles has long been a concern for the UAW and the addition of programs such as the Quality Network gave workers the right to stop production to address quality issues for the first time. It was after the implementation of these programs that the big three saw their quality match that if their foreign rivals. Big three workers are very focused on building quality parts. Jobs that pay a living wage such as in most of the automotive sector, are not easily replaced so this gives automotive workers an additional incentive to build in quality. Many of the bloggers who claim to have first hand knowledge of drunk workers in the plant are usually disgruntled salaried employees.

5. Richard Shelby as late as March 8, 2009 was still demanding that GM and Chrysler file bankruptcy and shed their obligations to retirees rather than receive additional bridge loans from the government. Shelby states he is against “wasting” the taxpayer’s dollars. False. Richard Shelby prides himself on being “watchdog” of the citizen’s tax dollars, when nothing could be further from the truth. In the past year Shelby has sponsored or co-sponsored a total of $647,263,200 in earmark spending according to legistorm.com. The bulk of that has been for defense spending. As a matter of fact, sourcewatch.com reports over the course of a decade (1996-2006), Shelby helped direct $50 million to military projects benefiting the COLSA Corp., a space and missile defense company. The firm’s owner, Francisco J. Collazo, is a longtime friend of Shelby who contributed $400,000 to his campaigns and committees over this same period of time. In 1996, Collazo hired one of the senator’s former aides as his lobbyist. So Shelby’s claim of “watching out for the taxpayers” doesn’t hold water. MSN reported that on the morning the House voted on the orginal bridge loan for the auto industry in December, Shelby sent a memo to the Republicans in the House demanding they vote no to “pay back labor” for the 2008 elections.

In the report to Congress, GM planly outlined that a bankrutpcy would cost the government as much as 100 billion dollars. Shelby even stated that GM would have access to billions in government dollars if they just filed bakrutpcy. How does this make more sense than issuing a loan that will be paid back with interest? The bottom line is the economy is much to fragile at the moment to absorb the failure of the automotive sector. Politicans such as Richard Shelby and Mitt Romney should be more concerned with perserving the democracy and less worried about “political paybacks.” A failure of the automotive industry would reek havic on the entire economy not just those auto workers and retirees that so many in Washington and on the message boards seem to loath.