Time to smack the auto industry and the UAW again. From a column in yesterday’s Wall Street Journal:

The collective bargaining agreement with the UAW is a heavily negotiated document the size of a small telephone book. It is virtually identical for each of the Detroit Three, owing to “pattern” bargaining, but it doesn’t exist at all in their U.S. competition, the nonunionized transplants. Not only work rules, but fundamental business decisions to sell, close or spin-off plants are forbidden without permission. That permission may come, but only at a price, since everything that affects the workplace must be negotiated. …

In an environment of downsizing, the problem is exacerbated, as the entrenched bargaining structure causes innumerable inefficiencies. Typically each plant or warehouse is a “bargaining unit” and has a union president, who has a staff. If the company consolidates facilities, there will be no need for two presidents and two staffs. Since neither president wants to play musical chairs, they will both point to the bargaining agreement and resist consolidation. As a result, unnecessary facilities are not sold, but kept open, lit and heated, just to preserve a redundant bargaining-unit president and his team.

Not exactly a nimble, streamlined organization designed to compete effectively in the rapidly evolving 21st Century marketplace.

Fortunately, the government has a solution: On top of the $17.4 billion in loans already pledged to keep GM and Chrysler out of their rightful place in bankruptcy court, let’s invest $6 billion of taxpayer money in auto finance company GMAC. That way, customers who are less credit-worthy can “afford” vehicles that are overpriced to sustain entrenched unions.

Over to you, Mr. Obama, and good luck.

Tagged with: Auto Industry

Color me unsurprised.

The Bush administration said it would lend $17.4 billion to General Motors Corp. and Chrysler LLC, buying them a few weeks of financial relief but leaving the biggest decisions about the industry’s future to President-elect Barack Obama.

Another WSJ article suggests, contrary to the opinion flagged by my new BFF Mickey Kaus, that Ford can share in the upside without suffering from the downside.

As the lone Big Three auto maker passing on a federal bailout, Ford Motor Co. won’t have to undergo an intrusive government review of its books and its business plans to become a viable company in order to qualify for –and keep — the low-interest loans authorized by the Bush Administration Friday.

At the same time, the Dearborn, Mich. car company is likely to benefit from many of the concessions that General Motors Corp. and Chrysler LLC exact from the suppliers, unions, dealers and debt holders shared by all three companies.

I’ve written so much about the auto industry lately that I feel like I ought to have more to say about yesterday’s development. But as the first excerpt above points out, all this does is buy the companies a few weeks of grace, with any longer-term resolution to be overseen by the Obama Administration. And so I’m like, whatever.

Besides, I have to go out now and chip and shovel the snow that turned to rain late yesterday before freezing solid overnight. I suppose I could have written (or shoveled!) last night, but I had to sit on the couch and watch the original Die Hard on DVD with the Web Goddess. It’s always something.

Tagged with: Auto Industry • Obama

To be precise, Mulally was Tweeting by proxy yesterday, via Scott Monty. It only lasted a few minutes, but it’s still fairly cool. No great revelations on weighty policy matters, but I learned that Mulally makes a point of driving a different auto every day, including competitor models, to stay close to the public experience of driving. Not earthshaking, but humanizing.

It’s notable that Mulally, a former Boeing exec, first started working for an auto company only two years ago. As I’ve written in previous posts, Ford is seeking to differentiate itself from the Big Other Two. It’s working for me.

Photo credit: Ford Motor Company

Tagged with: Auto Industry • Social Media • Twitter

You go, Mitch McConnell! Here’s hoping enough GOP Senators stay in line to filibuster the auto industry bailout. From another MM:

The so-called “Wall Street bailout” was different — rather than being focused on particular companies, it actually was a rescue of the entire economy. (Ask somebody from Lehman Brothers if they feel “bailed out.”) Somebody aptly described the financial system as being like a utility — and the government would never allow the electric grid to go down because ConEd or PSE&G ran out of money.

But the problems with the auto industry are tailor-made for a bankruptcy workout. The McConnell speech I linked to above describes why, and is worth reading in full, if you have any interest in the topic. (And hey, a month ago nobody would have suspected that I even cared about the auto industry.)

Tagged with: Auto Industry • Financial Meltdown