Inside the auto bailout Part II

Champagne corks are popping in Detroit’s most exclusive clubs and watering holes. George W. Bush, anxious for a positive lift at the end of his presidency, skirted Congress and even his own Treasury Secretary to dole out taxpayer funds to money-hungry carmakers. For the moment, GM’s chairman and his hapless crew can hold on to their jobs, while across town Chrysler’s crippled top management breathes a sigh of relief. The $14 billion dollars is a stop-gap, a temporary plug for a sinking ship. Imagine what that $14 billion could have done in the hands of thousands of small entrepreneurs and business owners. But, that’s neither here nor there. The management and non-union staff of the domestic carmakers aren’t really going to benefit much from the handout. Neither will George Bush’s legacy or the American taxpayer.

Given that labor unions will be the single largest beneficiaries of the auto bailout, UAW president Ron Gettelfinger acted like a typical union ingrate when the handout was announced. He figuratively spat in George W. Bush’s face, defiantly announcing that the union will sacrifice absolutely nothing in exchange for the money. This in spite of the fact that Bush’s gift merely suggested some concessions. Gettelfinger went on to say that his union would revisit the deal once Obama and the new Congress were installed. This isn’t suprising. It’s not even outrageous by union standards. It’s a cancer that’s been growing for decades. And with Obama in the White House and Democrats controlling Congress, the UAW and its sister unions are poised for a comeback.

The unions have in fact given up absolutely nothing, while asking everyone else, including their own members, to make sacrifices, however modest. It’s important to understand that the union organization itself is a separate entity. UAW president Ron Gettelfinger’s salary and benefits are not being threatened. Neither are those of union local presidents, union administrators, benefits planners, money managers and other union employees. The dues-paying ‘members’ are employees of the carmakers, not the union itself. And they do need to be reminded of that occassionally. It’s not the UAW or the AFL-CIO that created their manufacturing jobs. It was a for-profit corporation.

One can always condemn the unions for their reprehensible behavior and the fact that union leadership encourages the rank and file to work as little as possible for the highest pay rate possible. But, the blame for that union attitude rests squarely with GM, Ford and Chrysler management, as does pretty much everything else that ails the auto industry. It’s the short-sighted, self-serving and chaotic management style of this insular and clannish business community that’s wreaked havoc with hundreds of supplier companies, the lives of thousands and now threatens the greater economy.

At the height of the bailout crisis just days before the Bush announcement, GM management ordered its EDS supplier to prepare a company-wide email blast that all bonuses and raises for 2009 would be cancelled. Once the Bush bailout money was announced, that email blast was cancelled. In other words, the taxpayer money would allow GM to continue with business as usual. One would think that given this is taxpayer money, those bonuses and raises would be curtailed as a responsible measure to safeguard the public’s interest. No way. That’s not how Detroit works.

GM and Chrysler will burn through the money that the labor unions allow them to keep in about 60 days. They will return to Washington for another Oscar-winning performance. One would think these captains of industry abhor the notion of groveling in front of Congress for money. Nothing could be further from the truth. Don’t assume that these guys are entrepreneurs or capitalists. They are neither. These auto execs are bureaucrats and politicians as skilled as those facing them in Congressional chambers. They don’t have the vision, the guts or the leadership skills to pull these automakers out of the mess they themselves created. They have the savvy and decision-making skills of a potted palm. And the American taxpayer is going to make sure that they, along with their union counterparts, enjoy the ride.