Friday, December 12, 2008

11th hour salvation for automakers?

It would be "irresponsible" to hurt the economy by letting the Detroit Big Three automakers fall, a White House spokeswoman said Friday following the Senate's rejection of a massive auto industry bailout.

Speaking to reporters aboard Air Force One, press secretary Dana Perino said the White House is considering using money from the $700-billion US Wall Street rescue fund to support the domestic automakers.

Perino said the administration would not typically make such a move, but said the White House would consider the option due to the economic distress confronting the United States.

"While the federal government may need to step in to prevent an immediate failure, the auto companies, their labour unions and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable," Perino said.

From the CBC. Whether this will help in the long run is hard to say; some are saying it's too late for GM. One thing is clear, though, the unions are getting a disproportionate amount of the blame for the automakers' troubles. For instance, ever hear that "$73 an hour" figure, about how much money the auto workers supposedly make? Well, it's misleading to say the least, according to no less authority than the New York Times:

Seventy-three dollars an hour.

That figure — repeated on television and in newspapers as the average pay of a Big Three autoworker — has become a big symbol in the fight over what should happen to Detroit. To critics, it is a neat encapsulation of everything that’s wrong with bloated car companies and their entitled workers.

To the Big Three’s defenders, meanwhile, the number has become proof positive that autoworkers are being unfairly blamed for Detroit’s decline. “We’ve heard this garbage about 73 bucks an hour,” Senator Bob Casey, a Pennsylvania Democrat, said last week. “It’s a total lie. I think some people have perpetrated that deliberately, in a calculated way, to mislead the American people about what we’re doing here.”

So what is the reality behind the number? Detroit’s defenders are right that the number is basically wrong. Big Three workers aren’t making anything close to $73 an hour (which would translate to about $150,000 a year).

But the defenders are not right to suggest, as many have, that Detroit has solved its wage problem. General Motors, Ford and Chrysler workers make significantly more than their counterparts at Toyota, Honda and Nissan plants in this country. Last year’s concessions by the United Automobile Workers, which mostly apply to new workers, will not change that anytime soon.

And yet the main problem facing Detroit, overwhelmingly, is not the pay gap. That’s unfortunate because fixing the pay gap would be fairly straightforward.

The real problem is that many people don’t want to buy the cars that Detroit makes. Fixing this problem won’t be nearly so easy.

Get it? It's not because the Detroit Three are being bled dry by the unions. It's because too many of their cars suck.

But now for some good news. Not all vehicle manufacturers are doing badly:

New Flyer Industries has racked up more than $1 billion in orders over the last three months, driven by the recent spike in fuel prices and concerns about the economy.

It is the first time the Winnipeg bus maker has reached the $1-billion sales milestone during a quarter. The value of its order backlog has ballooned by 50 per cent this year.

The company said Thursday it is further evidence of the recession-resistant nature of the business.

Glen Asham, New Flyer's CEO, said the strong sales are a result of increased ridership throughout North America, spurred on at the beginning of the year by sky-high fuel prices and more recently by economic concerns.

"I would suggest the current recessionary environment we are in is causing people to watch their cash flow," Asham said.

The largest of the new orders was from the Chicago Transit Authority (CTA) which is purchasing up to 900 60-foot diesel-electric hybrid buses. Since 2002, CTA has ordered a total of 1,258 buses from New Flyer.

From the Winnipeg Free Press. Let's hope this last trend continues; maybe New Flyer could buy up some of those shuttered auto plants in southern Ontario and put some of the people back to work making vehicles for the 21st century rather than for the 20th.

No comments: