November 13, 2008

AP’s Auto Bailout Coverage Nearly Ignores Excessive Labor Costs, Omits UAW’s Concessions Refusal

Wednesday evening’s dour Associated Press report by Tom Krisher and Ken Thomas on the proposed bailouts of General Motors, Ford, and Chrysler acted as if their fates will determine the viability of the entire US auto industry, and waited until the 15th paragraph to name the primary reason why the companies are where they are financially. Beyond that, the AP report did not mention that United Auto Workers has flatly ruled out union contract concessions.

Here is how the AP’s report began, followed by selected other paragraphs, including the one (of over 30) that mentioned labor costs (bolds after headline are mine):

Failure of auto industry could set off catastrophe
Advocates: Collapse of US auto industry could set off catastrophic chain reaction

Advocates for the nation’s automakers are warning that the collapse of the Big Three — or even just General Motors — could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.

Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation’s largest automakers, which are struggling to survive the steepest economic slide in decades.

“We’ve got to do this because the cost of inaction is so high to communities, to workers, to companies,” said Sen. Sherrod Brown, a Democrat from Ohio.

….. Even if just GM collapsed, the failure could bring down the other two companies — and even the U.S. operations of foreign automakers — as parts suppliers run out of money and shut down.

….. Opponents of the idea say government money will just delay the inevitable demise of companies that are on death’s doorstep because of years of mismanagement and labor costs that are far higher than their global competitors.

“How is this money going to make a positive difference in creating a new competitiveness?” asked Sen. Jeff Sessions, an Alabama Republican.

Sessions and others also fear that opening the treasury to automakers will invite more industries to plead for federal help.

….. Sessions and others say Chapter 11 might be a better option than government loans.

….. Automakers say they are poised to rebound because they have been restructuring for years — shedding jobs, consolidating engineering and design, and making plants more efficient.

But they can’t claim to have done much about labor costs, because they haven’t.

Here are three key values in a chart shown Monday at Carpe Diem (HT Small Dead Animals):

Total Compensation Per Hour, 2007-2008 (includes wages and all benefits):
Big Three automakers — $73.08
Toyota — $48.00
All workers — $28.48

In 30-plus paragraphs, the AP reporters “somehow” failed to tell readers about UAW President Ron Gettelfinger’s refusal last week to give an inch on labor costs, as reported by Dow Jones at

The prospect of concessions from the union came up during a meeting involving executives of Detroit’s Big Three auto makers and Democratic Congressional lawmakers on Capitol Hill Thursday. But UAW President Ron Gettelfinger made clear that concessions were out of the question, union lobbyist Alan Reuther said in an interview with Dow Jones Newswires Friday.

“Workers and retirees have already made significant sacrifices,” said Reuther, paraphrasing remarks that Gettelfinger made to House Speaker Nancy Pelosi, D- Calif., and others in the meeting, including renegotiated contracts. “We feel we’ve already stepped up.”

Translation: Taxpayers are just supposed to accept the UAW-imposed cost structure as it exists, even though those being bailed out earn $44.60 an hour more in wages and benefits than other working families.

What an outrage. The AP’s failure to mention the UAW’s stand is journalistically negligent.

As an e-mailer said in a post at Michelle Malkin’s blog earlier this morning:

The Big 3 has a cancer that needs to be removed. It doesn’t take a rocket scientist to understand why they cannot compete profitability (sic). They have parity on supply costs, materials, and energy with Honda and Toyota. So why can’t they compete? It is clearly the cost of labor.

There are several other howlers in the AP report, the most obvious of which is that the whole industry will somehow collapse if the Big 3 fail. I don’t want to minimize the difficulties posed by the dislocations within the industry and among its suppliers, but as long as consumers need and want cars, there will be companies who will make them — and there are plenty of others who make very good ones.

Cross-posted at


Selected Previous Related Posts:
- Nov. 12 — On the Idea of Bailing Out GM: NO
- Oct. 4 — Meanwhile, in Detroit (Taxpayers act as air bag for crashing companies)…..
- Mar. 29 — The Ford Boycott’s Results Demonstrate the Folly of Corporate Reliance on Old Media
- Aug. 1, 2007 — The Car Dealer-State Government Racket
- Feb. 9, 2006 — UAW Splinter Group May Have Cost Western Michigan a Multibillion-Dollar Toyota Plant
- Jan. 4, 2006 — Passage of the Day: Barone Compares Wal-Mart to General Motors (Who Do You Think Comes Out Better?)
- April 26, 2005 — General Motors on the Ropes (Maybe Ford, Too)



  1. [...] socialist banking system we can back companies that issue credit cards and car loans but we have no plans to help the automakers themselves. Call it selective socialism, if you will. But then again, why allocate funds from the [...]

    Pingback by It’s Time To Bail On The BailOuts | 101 Dead Armadillos — November 14, 2008 @ 12:58 am

  2. This solution sounds too simple:

    Rather than giving the money to GM, etc., give say $5000 (or 25% of the purchase price) to anyone who purchases a new American-Made car. This will give an immediate boost in demand for the manufacture of cars, parts, and other connected industries.

    The buyer will have money left over to purchase other things.

    If sales now are at 11 million, down from 16 million, I am sure it will change in short order.

    If 16 million people purchase a new car, it will cost us $80 billion dollars. But this money goes directly into the economy, eventually back to us, (the government).

    Marketing experts will be able to determine if $2000 or $4000 would be enough to get buyers out to purchase a new car.

    For sure, we should take advantage of the low gas prices now. People will be more likely to purchase 20m/g cars now.

    This seems too simple, but please help me see the fault in this thinking.

    Trig Simon
    832 Main
    Toledo OH 43605

    Comment by Trig Simon — November 17, 2008 @ 3:50 pm

  3. #2, do Honda, Toyota and Nissan buyers get this break for cars made in the US at Georgetown, Lafayette, Marysville, etc.

    If not, why not?

    If they get the break (there really isn’t a reason I can come up with that they shouldn’t), the market-share situation will get even “worse” in favor of the Japanese, German, and Korean transplant companies.

    If they don’t get the break, it’s blatant favoritism of one one group of American workers over hundreds of thousands of others.

    Comment by TBlumer — November 18, 2008 @ 10:52 am

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