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In Exchange For Bail Out, Auto Makers Must Clean House — New Directors, Managers, Labor Contracts

Posted on November 13, 2008 by Mike Bock

Paul Ingrassia, writing in The Wall Street Journal, Detroit Auto Makers Need More Than a Bailout,says that in exchange for a bail out of Detroit auto makers, the government should insist that a completely new board of directors and new management replace the boards and managers currently in charge of the auto industry, and that all labor contracts be torn up and new ones made. Excerpts from his article:

Let’s assume that the powers in Washington — the Bush team now, the Obama team soon — deem GM too big to let fail. If so, it’s also too big to be entrusted to the same people who have led it to its current, perilous state, and who are too tied to the past to create a different future.
In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible.
That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. After all that, the company can float new shares, with taxpayers getting some of the benefits. The same basic rules should apply to Ford and Chrysler.
Giving GM a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake. The company would just burn through the money and come back for more. Even more jobs would be wiped out in the end.
The current economic crisis didn’t cause the meltdown in Detroit. The car companies started losing billions of dollars several years ago when the economy was healthy and car sales stood at near-record levels. They complained that they were unfairly stuck with enormous “legacy costs,” but those didn’t just happen. For decades, the United Auto Workers union stoutly defended gold-plated medical benefits that virtually no one else had. UAW workers and retirees had no deductibles, copays or other facts of life in these United States.
A thorough housecleaning at GM is the only way to give the company a fresh start. GM is structured for its glory days of the 1960s, when it had half the U.S. car market where they fix catalytic converter— not for the first decade of this century, when it has just over 20% of the market. General Motors simply cannot support eight domestic brands (Cadillac, Buick, Pontiac, Chevrolet, GMC, Saturn, Saab and Hummer) with adequate product-development and marketing dollars. Even the good vehicles the company develops (for example, the Cadillac CTS and Chevy Malibu) get lost in the wash.
If public dollars are the only way to keep General Motors afloat, as the company contends, a complete restructuring under a government overseer or oversight board has to be the price.
That is essentially the role played by the federal Air Transportation Stabilization Board in doling out taxpayer dollars to the airlines in the wake of 9/11. The board consisted of senior government officials with a staff recruited largely from the private sector. It was no figurehead.
Wiping out existing shareholders would end the Ford family’s control of Ford Motor. But keeping the family in the driver’s seat wouldn’t be an appropriate use of tax dollars. Nor is bailing out the principals of Cerberus, who include CEO Stephen Feinberg, Chairman John Snow, the former Treasury secretary, and global investing chief Dan Quayle, former vice president.

Posted in Special Reports | 1 Comment

Barack Obama, Student In Chief, Will Inspire Thoughtfulness, Vitalization of Our Democracy

Posted on November 12, 2008 by Mike Bock

John McCain, with the help of Joe the Plumber, ridiculed Obama for wanting to be “Redistributor in Chief,” and said that he, McCain, as president would be Commander in Chief.

Of course a president is in charge of the military, in charge of protecting the nation, but a president has even more vital roles he must perform.

After the election, I saw this headline, “Obama, must be ‘Educator in Chief,’” by Mitt Romney. I like that thought. Among the three choices — Redistributor, Commander, or Educator — Romney’s is best. I agree, a president should be an educator, a teacher.

One thing seems certain. If the children of today are to have any chance to get to old age like their grandparents, and to enjoy a peaceful and prosperous world, there is much, much work to be done. Right now, our future doesn’t look too good. This is surprising because, as a nation, we have great potential, great resources. As a democratic society we should be able to insure a great future for all of our citizens. But, we are failing to do so.

The turmoil in our finances, our threatened economy, our war in Iraq, I believe, are symptoms of what might be called a Systems Failure. The red lights are flashing: Our democracy is in trouble. Our democracy is not working as it should. Our democracy is in trouble.

The key to getting America to work as it should, is getting our democracy to work as it should. This will require making reforms in the system — like stopping gerrymandering — but it will require something much more difficult to achieve as well. For our democracy to work, as a nation, we need to rise to new levels of understanding and thoughtfulness. For our democracy to work, we need a citizenry that is better informed, more engaged, more thoughtful.

The leadership we need is one that models and inspires thoughtfulness.

To educate means to lead, to bring out — that which is best. A president who sees himself as a student, sees himself as a teacher, an educator, will add immensely to a culture of thoughtfulness, will add much to the vitalization of our democracy.

Barack Obama, Student in Chief, I’m betting, and hoping, will be a very effective president, a very effective Educator in Chief. As every good teacher does, I’m thinking that Obama will help bring out the best in us all.

Posted in M Bock, Opinion | 1 Comment

Unions Want Obama’s Help In Passing Legislation That Helps Workers Unionize

Posted on November 12, 2008 by Mike Bock

According to a New York Times article, After Push for Obama, Unions Seek New Rules, one big goal unions want to accomplish, with President Obama’s help, is passage of legislation that will make it easier for workers to unionize.

The NYT says, “Labor’s No. 1 priority is a piece of legislation called the Employee Free Choice Act, also known as the card-check bill. The bill would give workers the right to join a union as soon as a majority of employees at a workplace signed cards saying they wanted one.” Excerpts from the article:

With union membership sliding to 7.5 percent of the private-sector work force, one-third the rate in 1983, unions see enactment of the bill as the single most important step toward reversing their loss of membership and power. Some labor leaders predict that if the bill is passed, unions, which have 16 million members nationwide, would add at least five million workers to their rolls over the next few years.
Mr. Sweeney said that in the last four days of the campaign, 250,000 volunteers from A.F.L.-C.I.O. unions made 5.5 million phone calls and visited 3.9 million union households. All told, he said, unions reached out to more than 13 million voters in 24 states, with some undecided union members being contacted more than 30 times through phone calls, household visits and workplace conversations.
Union leaders say they were pivotal in helping Mr. Obama win several battleground states, including Florida, Indiana, Nevada, Ohio, Pennsylvania and Wisconsin. According to a voter poll by Peter D. Hart Research Associates, 67 percent of members of A.F.L.-C.I.O. unions voted for Mr. Obama, a Democrat, and 30 percent for his Republican rival, Senator John McCain.
While the Chamber of Commerce seems ready to cooperate with organized labor to back an economic stimulus package, Mr. Donohue, the chamber’s president, said it would be unwise for Mr. Obama to embrace the Employee Free Choice Act when the economy was in such bad shape. He said the bill — along with other labor-backed bills that would raise business costs, including one that would guarantee most workers seven paid sick days a year — would hurt companies when many were struggling.
Chamber officials voiced confidence that they have the backing in the Senate to block the bill, a move that might cause business and labor to negotiate a version with compromises. Among the compromises floated would be keeping the secret ballot vote, but holding the vote just a few days after the union requests an election. Other ideas are to give union organizers access to workplace sites and to limit employers’ ability to campaign against the union.