Thursday, December 04, 2008

Let Them Work It Out

The United Autoworkers Union has finally succumbed to reality and is now willing to discuss wage and benefit concessions to help keep the domestic automakers afloat. They've finally realized that they are a large reason why General Motors, Chrysler and Ford were failing miserably - unsustainable wage and benefits packages that made it next to impossible for the companies to ever turn a profit.

For their part, the automakers are promising concessions on executive compensation as well.

It's a start.

Let's see how the UAW and the automakers proceed. They don't need a bailout; they need a harsh dose of reality to spur them to do what should have been done years ago.

There's a reason that many are skeptical of the automakers claims these days, albeit that doesn't apparently include Sen. Chris Dodd, whose inability to smell the stench of impropriety should be legend by now given his rubber stamping of the financial meltdown and his Friends of Angelo mortgage benefit.

Let's not forget that spending billions on a failed industry to keep them afloat just a little while longer isn't solving anything, and it certainly isn't being fiscally responsible with US taxpayer dollars. All the claims that 10% of jobs are reliant on the automakers is overblown as well, given that reorganization of the companies would reduce liabilities and make the companies far more competitive and profitable down the line. That's why reorganizations under the bankruptcy code are allowed - it is creative destruction and allows for companies to improve their financial picture. Airlines have done this repeatedly and so too should the automakers. A bailout only puts a bandaid on a dire situation.

Of course, the automakers are still trying to influence the outcome through their lobbyists and donations to the tune of millions of dollars.

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