Not an Auto Bailout – A Union Bailout
As if there was any doubt, it has become clear that the Big Three bailout will occur in some form. But here’s something to consider – after throwing $34 Billion a the three companies:
- the companies will still be managed by an apparently inept and inefficient bureaucracy,
- will still be bound to pension and health costs for retired workers which are beyond the ability of the current business model to support,
- will have 112 different car and truck models through 15 brands – Toyota has three brands, Honda two,
- must adhere to state franchise laws that insulate dealers from any real changes – GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000,
- has negotiated union contracts that impose astronomical health and pension costs, make innovation harder, reduce production flexibility – $7,000 of the cost of each car is attributable to union benefits.
It doesn’t matter whether the Big 3 are ‘an essential part of our industrial base,’ as Rahm Emanuel asserts. Does anyone think throwing $34 Billion of taxpayer money will be enough? Does anyone expect the companies to radically change their business models? Heaven forbid, turn a profit?
In reality, the bailout is payback for the $450 million raised by unions for the card-check and for benefit of the Democratic party and new Big Three CEO-in-Chief, Barrack Obama.
