Are UAW Union Bosses Abusing Their Positions for Pay?

[Astronuc]

Paulson: 'Orderly' bankruptcy might be best option for dealing with ailing automakers
http://biz.yahoo.com/ap/081219/meltdown_autos.html

WASHINGTON (AP) -- The Bush administration is convinced the ailing economy could not withstand the demise of Detroit's Big Three and is looking at "orderly" bankruptcy to keep the automakers from collapsing.

A White House decision on helping the industry could come as early as Friday -- none too soon for carmakers suffering from their slowest sales in 26 years and dwindling operating cash.

Bush administration officials were reviewing several approaches to assisting the automakers, including short-term loans from the Treasury Department's $700 billion Wall Street rescue program. But Treasury Secretary Henry Paulson told a business forum in New York on Thursday night that while bankruptcy for the automakers should be averted if possible, an "orderly" reorganization might be the best solution.

"If the right outcome is reorganization or bankruptcy, then isn't it better to get there through an orderly process?" Paulson asked.

Paulson said President George W. Bush wants to avoid bankruptcy -- "if it can be avoided." But Paulson said the No. 1 priority was getting U.S. automakers back on a viable path. Part of that effort, he said, would require all sides making sacrifices to boost competitiveness with foreign carmakers.

"It's difficult to do such things outside of reorganization," he said. "But sometimes that can be successfully done."

"When you look at the size of this industry and look at all those that it touches in terms of suppliers and dealers ... it would seem to be an imprudent risk to take," he said.

The Big Three automakers said anew on Thursday that bankruptcy wasn't the answer, as did an official of the United Auto Workers who called the idea unworkable and even dangerous. The car companies argue that no one would buy a vehicle from a bankrupt company for fear that the company might not be around to honor warranties or maintain a supply of spare parts.

The National Automobile Dealers Association also spoke out against bankruptcy "in any way shape or form, orderly or disorderly, prepackaged or unpackaged, managed or unmanaged," said spokesman Bailey Wood.

. . . .

Ostensibly, bankruptcy would save Uncle Sam from putting a lot of Treasury funds in the automobile dealers. Then the question seems to be - who assumes the losses? Investors? Creditors? Labor?

Bankruptcy or not - reorganization is inevitable.

 

[russ_watters]

Bankruptcy or not - reorganization is inevitable.

Not really, no. That's kind of the whole point that people opposed to the bailout have: a bailout could just hand them a big bag of money and allow them to continue on as before. People are talking about a "strings attached" bailout, which could require some reorganization, but it would almost certainly allow them to do less than a bankrupcy would require. That's why bankrupcy is the best option. It takes the power out of their hands and forces them to do the maximum.

 

[Astronuc]

Not really, no. That's kind of the whole point that people opposed to the bailout have: a bailout could just hand them a big bag of money and allow them to continue on as before. People are talking about a "strings attached" bailout, which could require some reorganization, but it would almost certainly allow them to do less than a bankrupcy would require. That's why bankrupcy is the best option. It takes the power out of their hands and forces them to do the maximum.

OK - I was thinking that the government would impose some reorganization, which some in government want to do while others don't. I expect the Bush administration doesn't want to impose on corporate management.

Isn't the government (Congress) supposed to regulate commerce, or at least interstate commerce. On the other hand, I suspect that the US Code does not permit Congress or the Administration to delegate to corporations. So how did FDR do it?

Makes me wonder (I'm diverging off-topic) - "if people think the government doesn't work, why would they expect a bankruptcy court to work". After all, they are comprised of people. Ultimately people make a system/institution work or not.

 

[Mentz114]

GM and Chrysler got some help as loan guarantees. But they have to 'be financially viable' by March 30th or give it back. NYT article 5 minutes ago.

 

[Greg Bernhardt]

GM and Chrysler got some help as loan guarantees. But they have to 'be financially viable' by March 30th or give it back. NYT article 5 minutes ago.

Would they have anything to give back?

 

[DrClapeyron]

Home prices are plumetting from their decade high after nearly tripling within less than a decade. The $7 trillion 'bail out' is not over. As people have been suspecting on this board, the 'bail out' will come at the expense of a 'lost' decade like the 1990's were for Japan.

 

[Topher925]

Would they have anything to give back?

What? They don't have to give anything back by March 30th, they just have to show that have a restructuring plan to become financially sound by then.If anyone cares, I went to Chryslers HQ yesterday for a tour of the engine testing and development facilities. It didn't even seem like there was a crisis. There were still tons of people walking around and getting stuff done, kinda like a bee hive. If you have never been to Chrysler's HQ then you should go. Its an absolutely amazing structure, the most impressive I have ever seen. It makes Ford's and GM's look like crap.

 

[mheslep]

How often does that happen? I'd bet it's nowhere near as much as power failures. I've never seen a gas shortage in my life, but I've seen many power outages.

Yes but the pumps at the gas stations go out with the power failures. The odd grocery store will have a backup generator, but I've never seen a gas station with one. Of course people don't mind so much because one can usually limp out of the failure area.

If PHEVs gather any speed at all Id expect something like a service station to add small metered electric service for this kind of thing - anything to get people to stop in long enough to buy something else.

 

[mheslep]

Ok, I drive a Mazda 6i, 2.0L. It has five 2.25" vents up front. When I set the selector to blow at the face (it almost, but doesn't quite elminate airflow to other vents), the velocity is about 1300 FPM and the free area of the vents about 90%. That's an airflow of 160 CFM. I didn't measure temperatures, but let's estimate conservatively low: with the outside air damper closed, and the car only being on for a few minutes (and therefore not warmed up much inside), it can produce air perhaps 110 F from return air of perhaps 30 F. That's 4.1 kW - not an order of magnitude, but like I said, a pretty conservative estimate. Perhaps over the weekend I'll measure the actual delta-T (not going to start the car and let it warm up right now).

Sounds good, but that is the warm-up heating power needed, right? So 4kw for maybe 15 mins to reach steady state temp (1 kWh), then hopefully 0.75kw to maintain, unless one likes driving down the road in the Winter w/ the window down and heat on full. 750W would be no problem for EV batteries, especially if a heat pump is used to maintain the SS. And there is also the 10% heat loss from the E motor and batteries to tap.

 

[mheslep]

OK - I was thinking that the government would impose some reorganization, which some in government want to do while others don't. I expect the Bush administration doesn't want to impose on corporate management.

Isn't the government (Congress) supposed to regulate commerce, or at least interstate commerce. On the other hand, I suspect that the US Code does not permit Congress or the Administration to delegate to corporations. So how did FDR do it?

The Supreme court told him at first he could not do it. Then FDR threatened to pack the court with additional judges until he got the ruling he wanted, and the court backed down. Not his finest hour.

 

[Astronuc]

Bailout approved: Automakers to get $17.4B
http://news.yahoo.com/s/ap/meltdown_autos

WASHINGTON – Citing danger to the national economy, the Bush administration approved an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans in exchange for deep concessions from the desperately troubled carmakers and their workers.

The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.

At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.

President Bush said, "Allowing the auto companies to collapse is not a responsible course of action." Bankruptcy, he said, would deal "an unacceptably painful blow to hardworking Americans" across the economy.

Some $13.4 billion of the money will be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.

. . . .

The devil is in the details, wherever that is. Probably should be posted on the WhiteHouse.gov, Dept. of Commerce and/or Treasury websites.

 

[mheslep]

...

Makes me wonder (I'm diverging off-topic) - "if people think the government doesn't work, why would they expect a bankruptcy court to work". After all, they are comprised of people. Ultimately people make a system/institution work or not.

Rep Barney Frank made that very comment on the House floor in response to members attacking the car czar and auto bailout bill. Here's my response: because the judge is immune to special interest lobbying. A car czar will never cut the UAW benefits/salaries, if that's what is required, it would be politically impossible, especially for the UAW beholden Obama admin. The main problem with government: it is vulnerable to special interest pleading that results in "concentrated benefits and dispersed costs."

 

[baywax]

I didn't think orderlies made enough to go bankrupt.

 

[Astronuc]

Here's my response: because the judge is immune to special interest lobbying.

That would be my expectation with respect to the judge.

Regarding courts and the process:

The first company I worked for got pulled into an Interpleader in Federal Court. The judge had to disposition the funds in our ESOP (~$400K) + insurance (~$350K) against $800 K in liabilities minus lawyers fees (and there were some expensive lawyers involved, and it was not clear how they all got involved). Some evidence never got the judge, and in the end, two managers who had been involved in under the table deals that basically precipitated the demise of the company and 401K got benefits, and the rest of us got much less. I received $18 K of $60+ K that I had invested in the ESOP.

We had been told that the cash (deferred compensation) in the ESOP was guaranteed, and that stock was at risk. What happened however, was that the stock of the ousted managers was valued at full value before the collapse, which was charge against the 'our' supposedly safe cash. The rest of us, who remained after the collapse, got less cash and our stock revalued at a post crash value ($15 down from $50-55). Apparently the stock appraiser was unaware of the companies perilous situation and gave what amounted to a falsely (not his fault) value to the stock before the crash.

BTW the court was in Colorado and I was located on the E. Coast. I was welcome to go to court - at my expense. I couldn't afford to participate.

In the end as part of the settlement, I (and others) was required to surrender all rights to future litigation and basically let malefactors off. I personally feel they should have been prosecuted for what amounted to RICO violations.

 

[russ_watters]

Sounds good, but that is the warm-up heating power needed, right? So 4kw for maybe 15 mins to reach steady state temp (1 kWh), then hopefully 0.75kw to maintain, unless one likes driving down the road in the Winter w/ the window down and heat on full. 750W would be no problem for EV batteries, especially if a heat pump is used to maintain the SS. And there is also the 10% heat loss from the E motor and batteries to tap.

The difficulty for the steady state comes from bringing in fresh air, which is necessary in the winter to eliminate window fogging. If my car's fresh air fraction is 50% and the steady state airflow is 50% of maximum, that's 40 cfm and 760 w to get 30 F air up to 90 F. That's still conservatively low.

And that isn't the only thing on a car that uses a significant amount of electricity. Lights (night only, yes) are another couple of hundred watts, the stereo is another 50 at a bare minimum, rear window fogger probably another 100, power steering, power brakes. This all adds up to a very significant additional electrical drain.

 

[baywax]

The difficulty for the steady state comes from bringing in fresh air, which is necessary in the winter to eliminate window fogging. If my car's fresh air fraction is 50% and the steady state airflow is 50% of maximum, that's 40 cfm and 760 w to get 30 F air up to 90 F. That's still conservatively low.

And that isn't the only thing on a car that uses a significant amount of electricity. Lights (night only, yes) are another couple of hundred watts, the stereo is another 50 at a bare minimum, rear window fogger probably another 100, power steering, power brakes. This all adds up to a very significant additional electrical drain.

I used to scrape the ice off of the inside of my 63 Ford Falcons. The station wagon was murder.

 

[edward]

Paulson: 'Orderly' bankruptcy might be best option for dealing with ailing automakers
http://biz.yahoo.com/ap/081219/meltdown_autos.html
Ostensibly, bankruptcy would save Uncle Sam from putting a lot of Treasury funds in the automobile dealers. Then the question seems to be - who assumes the losses? Investors? Creditors? Labor?

Bankruptcy or not - reorganization is inevitable.

Again, the main problem I have with the bankruptcy is that a lot of people are going to get hit financially. And I am not necessarily talking about the big three.

There are numerous vendors who manufacture and supply parts for the big three. Will bankruptcy mean the smaller companies will be left out in the cold??

I have seen that happen before when a builder filed for bankruptcy during the Savings sand Loan debacle. A friend of mine who owned a small A/C company lost over $300,000.

 

[mheslep]

The difficulty for the steady state comes from bringing in fresh air, which is necessary in the winter to eliminate window fogging. If my car's fresh air fraction is 50% and the steady state airflow is 50% of maximum, that's 40 cfm and 760 w to get 30 F air up to 90 F. That's still conservatively low.

Hmmm. Could a lower power method of reducing the humidity be used?

And that isn't the only thing on a car that uses a significant amount of electricity. Lights (night only, yes) are another couple of hundred watts, the stereo is another 50 at a bare minimum, rear window fogger probably another 100, power steering, power brakes. This all adds up to a very significant additional electrical drain.

Nah, heating OR cooling is going to dwarf all of that energy wise. There may be some short term power spikes from this or that device, but battery power is not an issue in a vehicle that must provide ~200kW peak for motive load. Energy density is the problem, but I don't see auxiliaries taking more than 10% of a 16kWh charge in an hour of driving (40mi).

 

[BobG]

The difficulty for the steady state comes from bringing in fresh air, which is necessary in the winter to eliminate window fogging. If my car's fresh air fraction is 50% and the steady state airflow is 50% of maximum, that's 40 cfm and 760 w to get 30 F air up to 90 F. That's still conservatively low.

And that isn't the only thing on a car that uses a significant amount of electricity. Lights (night only, yes) are another couple of hundred watts, the stereo is another 50 at a bare minimum, rear window fogger probably another 100, power steering, power brakes. This all adds up to a very significant additional electrical drain.

How are you heating the incoming air? How efficient is your heater?

In fact, how efficient is the motor driving the car and how are you getting rid of excess heat? I really don't know how efficient the electric motors used on vehicles are, but, generally, finding a way to dispel excess heat is a bigger problem than generating it. I think air conditioning is going to be a bigger electrical load than heating.

 

[russ_watters]

Hmmm. Could a lower power method of reducing the humidity be used?

No. The other way to reduce the humidity is by running the air conditioner.

Energy density is the problem, but I don't see auxiliaries taking more than 10% of a 16kWh charge in an hour of driving (40mi).

I can see 10% being a reasonable estimate, but that makes your 40 miles 36. It is also presents a problem when there's heavy traffic: If you go 40 miles in an hour and use 1.6kWh for accessories, you'll use 3.2 kWh if it takes 2 hours.

 

[russ_watters]

How are you heating the incoming air? How efficient is your heater?

With an electric car, the heater is a 100% efficient electric coil. On a car with an internal combustion engine, the car is heated with waste heat, so there is no relevant measure of efficiency. You might say, though, that a 100W fan (estimate) can give you 4 kW of heating, or a COP of 40:1 (kinda like 4,000% efficiency).

In fact, how efficient is the motor driving the car and how are you getting rid of excess heat? I really don't know how efficient the electric motors used on vehicles are, but, generally, finding a way to dispel excess heat is a bigger problem than generating it.

Getting rid of the excess heat is done with a fan and that fan doesn't use much energy. There is much more energy rejected by the fan/radiator than is input into the fan.

I think air conditioning is going to be a bigger electrical load than heating.

It's a bigger load for a gas powered car because the energy for heating is free. For an electric car, the energy for heating comes out of the battery. In general, though:

-An electric heater gives you 1 kW of heating for every 1 kW of input power.
-An electricity powered air conditioner gives you 2.3 kW of cooling for every 1 kW of input power.

Now for an air condiitoner, that's highly dependent on the conditions: run an air conditioner out of it's ideal operating range and you decrease it's efficiency substantially.

 

[jal]

There are numerous vendors who manufacture and supply parts for the big three. Will bankruptcy mean the smaller companies will be left out in the cold??

Probably one of them will need financing and will not be able to get it.
It's a long time to wait, (March 31), with no income and with fixed expenses.
Probably someone will be forgotten and you will be buying a car with no left door handles or something.
I'm not expecting very many assembly plants to re-open.
jal

 

[Proton Soup]

With an electric car, the heater is a 100% efficient electric coil. On a car with an internal combustion engine, the car is heated with waste heat, so there is no relevant measure of efficiency. You might say, though, that a 100W fan (estimate) can give you 4 kW of heating, or a COP of 40:1 (kinda like 4,000% efficiency). Getting rid of the excess heat is done with a fan and that fan doesn't use much energy. There is much more energy rejected by the fan/radiator than is input into the fan. It's a bigger load for a gas powered car because the energy for heating is free. For an electric car, the energy for heating comes out of the battery. In general, though:

-An electric heater gives you 1 kW of heating for every 1 kW of input power.
-An electricity powered air conditioner gives you 2.3 kW of cooling for every 1 kW of input power.

Now for an air condiitoner, that's highly dependent on the conditions: run an air conditioner out of it's ideal operating range and you decrease it's efficiency substantially.

if you're going to put in an air conditioner, then why bother with resistive heating? why not use a heat pump and get better than 100% efficiency for the heater, too?

 

[russ_watters]

if you're going to put in an air conditioner, then why bother with resistive heating? why not use a heat pump and get better than 100% efficiency for the heater, too?

For an electric car, yes, a heat pump is probably a better option. It'll raise the upfront cost, but reduce the energy cosumption considerably. When it is very cold outside (perhaps 20 F), you might get a COP of 2 - a little wamer (say, 40F) and you might get a COP of 4. But because the efficiency drops with temperature, you still need resistance heating backup.

 

[Proton Soup]

For an electric car, yes, a heat pump is probably a better option. It'll raise the upfront cost, but reduce the energy cosumption considerably. When it is very cold outside (perhaps 20 F), you might get a COP of 2 - a little wamer (say, 40F) and you might get a COP of 4. But because the efficiency drops with temperature, you still need resistance heating backup.

sure, and resistive elements are a common feature in heat pumps for homes.

 

[mgb_phys]

Heading vaguely back in the direction of the topic

Even Toyota is having a bad year http://news.bbc.co.uk/2/hi/business/7794888.stm
The interesting part is that they are predicting losses of 150BnYen for next year, but last year made a profit of 2.2Trillion Yen. So next years loss is going to be around 3weeks of profit!
I would have thought that any company that doesn't have one month of profits in the bank deserves to be in trouble. Toyota of course do and don't seem to be in any trouble.

 

[mheslep]

Senator Corker's plan seemed rational to me; the only thing on the table that qualifies as such. It had a great deal of support but the wage parity issue hung it up.

* It would have required the two firms closest to bankruptcy, General Motors and Chrysler, to reduce their debt by two-thirds. Bondholders would have “plenty of incentive to make sure that the debt is reduced by two-thirds” or risk losing even more if the firms go into Chapter 11, where their bonds might be further discounted, Corker said. “We’re going to force them into bankruptcy if they don’t do this,” he said bluntly.
* He also would have required that the Voluntary Employee Benefit Association, the entity created by the car firms and the UAW to handle retiree health care benefits, accept stock in lieu of half the cash payments due. The carmakers had agreed to fund VEBA but can no longer afford to do so. “If a company goes bankrupt, these future payments are never going to happen anyway,” he said.
* Finally, Corker’s bill would have forced the UAW to lower its members’ wages to the level of employees at Honda and the other foreign-owned car manufacturers operating in the United States.

The actual amendment:
http://wdef.com/system/files/Corker+Alternative+Amendment.pdf

In the last point, wage parity, there are obviously many factors that would come into play in measuring parity; Corker recognized this and left it up to the Sec. of Labor (in the new administration) to approve a wage plan.

Edit:Sen. Corker's new conference the day after the amendment
http://www.c-span.org/Watch/watch.aspx?MediaId=HP-A-13370

 

[edward]

Even the mighty Toyota Prius has fallen victim to economic chaos and plunging gas prices: Toyota said today it was postponing its plans to build the Prius at a new factory under construction in Blue Springs, near Tupelo, Mississippi—indefinitely.

http://www.hybridcars.com/news/toyota-kills-us-built-prius-25346.html

It is a bit troubling that the government is trying to push the big three into building hybrids in the USA when Toyota has called it quits.

I smell big oil involvement on this one.

The big three shells out a lot of money for retirees and retiree health care.

I see an advantage that Toyota Nissan and Honda America may have. They haven't been here long enough to have retirees.

 

[Proton Soup]

http://www.hybridcars.com/news/toyota-kills-us-built-prius-25346.html

It is a bit troubling that the government is trying to push the big three into building hybrids in the USA when Toyota has called it quits.

I smell big oil involvement on this one.

The big three shells out a lot of money for retirees and retiree health care.

I see an advantage that Toyota Nissan and Honda America may have. They haven't been here long enough to have retirees.

how do they fund retirement, anyway? the old fashioned way, or through private retirement accounts.? if they'd put employees on 401K plans, they'd never have to worry about paying out benefits, and the employees wouldn't have to worry about the company borrowing (stealing) from it.

 

[mheslep]

http://www.hybridcars.com/news/toyota-kills-us-built-prius-25346.html

It is a bit troubling that the government is trying to push the big three into building hybrids in the USA when Toyota has called it quits.

I smell big oil involvement on this one...

?Oil companies want the government to make Detroit build hybrids?

 

[edward]

?Oil companies want the government to make Detroit build hybrids?

The oil companies always want gas guzzlers. The government wants the big three to invest in hybrid technology at the same time Toyota just bailed out of building hybrids in the USA.

With the price of oil down there is no incentive to buy hybrids. The price of oil will come up when big oil wants it to come up. Admittedly big oil probably got a big surprise from the sudden economic crisis.

On the other hand they have plenty of money to weather the storm, and the last thing they want is economical automobiles.

 

[mgb_phys]

This isn't necessarily anything to do with Hybrids - they haven't announced opening a pickup plant instead.
It might be that they;
Don't want to lay out a lot of cash right now
Think they can get a better real estate/state subsidy deal in 6months
Think they can buy a chrysler plant for 25c in 6 months.
Are waiting to see what strings the Detroit bailout might have.
Are waiting to see what the new goverment's attitude to foreign investors might be.

Abit announced today they are getting out of the motherboard business - this doesn't mean computers are a thing of the past.

 

[edward]

how do they fund retirement, anyway? the old fashioned way, or through private retirement accounts.? if they'd put employees on 401K plans, they'd never have to worry about paying out benefits, and the employees wouldn't have to worry about the company borrowing (stealing) from it.

The big three have switched to 401ks for new union hires. It will obviously take a number of years to completely make the switch. They still have the health care issue.

Toyota, Nissan, and Honda America use 401k's along with a spartan health care plan.

401k's have their downside. Just ask anyone who wants to retire in the near future. The 401k's lost a lot of money recently.

 

[BobG]

Heading vaguely back in the direction of the topic

Even Toyota is having a bad year http://news.bbc.co.uk/2/hi/business/7794888.stm
The interesting part is that they are predicting losses of 150BnYen for next year, but last year made a profit of 2.2Trillion Yen. So next years loss is going to be around 3weeks of profit!
I would have thought that any company that doesn't have one month of profits in the bank deserves to be in trouble. Toyota of course do and don't seem to be in any trouble.

I find 71 staight years without a loss to be pretty incredible. That extends back to the 30's - meaning they were recording profits straight through World War II. The Japanese auto companies didn't suffer much direct damage from bombings, but the entire Japanese nation was running into some serious resource problems by the end of the war. I would have thought that would make it real hard to make a profit by the end of the war.

 

[mgb_phys]

I find 71 staight years without a loss to be pretty incredible. That extends back to the 30's - meaning they were recording profits straight through World War II.

It's always a bit tricky to compare, you don't really know what accounting standards applied.
Japan's oldest company went bust a few years ago, a builder - they had been in business for 1500years!

What is more interesting is their attitude - they are blaming themselves! Even though the loss is really only due to currency differences. They said they need to look at their strategy for managing money and to re-examine their line of cars. That's a slightly different attitude to spending $100K on a WSJ ad praising the managers of a bankrupt chrysler.