Gallup on the Auto Bailout: Half of Americans are Un-American

I THINK THAT SOME OF THE PEOPLE IN THE AUTO INDUSTRY SHOULD GET SOME HELP. BEST HELP IS TAKE OUT THE UNIONS, THEY HAVE BEEN RIPPING THOSE WORKING MEN AND WOMEN LONG ENOUGH.

The whole problem is, American we need to stick together,We are helping to distory our Country,by buying imports that are made in America ,the money go's over sea's, Our young people buy import's and then complain when they cant find good paying job's,When Bill Clinton was in office he passed the Fair Trade Agreement,and all our Facorty Job's where moved over sea's, But the new President is going to create new Job's..By putting American to work on bridge's and other back breaking job's,. Because if he cant put the Middle class back to work,there will be no one to support all the ,Goverement welfare programs,Hud,section8,food stamps,most of the loan's given threw Fanny May where given to ,Low income person's,who did not have credit to buy home's like the rest of us do.We are faceing the same thing the Roman Empire had to deal with ,when more than half of the population jump on the welfare programs,there was no one working to support the Tax system, and if Obama was a man of his word he would push for pay cuts across the board for all member's of Congress and him self he would,Take a pay cut as President he would say and I will spread my wealth and help America by doing so.Just what is being spent to protect him is more than most of us will make in a live time.

the hoover party has brainwashed their working class voters into blaming themselves for the economic failure created by those neoconnism has put into power. They'll never catch on.

It was Reagan's plan to revert to pre-1890 robber baron control of the nation, and what happened now is the same as in 1906 and 1929. Without unions, working conditions and wages will return to the way they were before the Wagner Act.

The republicans who post here are caught up in republican melodrama and very easily manipulated by them. Some people have the good sense to start looking elsewhere for leadership after their own has taken about everything they have, but the appeal of their party to a large percentage of republicans is ideology, not practicality. In that sense, they're essentially hippies. Dreamers.

Look at their history of government, which takes about ten seconds, then listen to their excuses and rationalizations, which never end.

I googled the word "patriotism" and came to this website: www.truepat.org. They have a poll up asking the same question: is it patriotic or unpatriotic to bail out the automakers? I also didn't realize that this web site is based off of an actual book called the true patriot. very interesting and think it woudl highlight discussion on this article.

~~ What is the share of labor costs in total costs in car manufacturing? Part A ~~

Diehard union bashers want to believe that the problems of the Big Three are entirely due to unions. One of their claims is that, given the allegedly large share of labor costs in total costs, the UAW's strategy drove the manufacturers into the ground. It is patently clear that the UAW's strategy has a big repsonsibility in the matter but, if we are to argue about numbers, we should get our numbers right.

In my previous posts I referred to the following quote from the ('Liberal') New York Times's article

"... labor costs, for all the attention they have been receiving, make up only about 10 percent of the cost of making a vehicle. An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies, analysts at the International Motor Vehicle Program say."

Because the 10% number matches exactly the number provided by the UAW it immediately became suspicious to our friends on the Right.

http://www.uaw.org/auto/12_02_08auto1.cfm

Yet, as shown below, the same 10% number is used by yet another source, the Center of Automotive Research (C.A.R.).

http://economix.blogs.nytimes.com/tag/center-for-automotive-research/

"First, labor costs, while important, are not as big an issue as most Americans think. While much of the debate about the auto industry has concentrated on the expensive wages given to unionized workers, labor represents a surprisingly small portion of the cost of producing cars. Only about 10 percent of the cost of building a car comes from direct labor costs, according to Kim Hall, director of the Automotive Communities Program at the Center for Automotive Research (C.A.R. is a nonprofit research center with ties to industry, labor, government and academia)."

Now, the fact many agree on a number does not necessarily mean that that number is right. It could be that the number in question is estimated only infrequently, say, once a year. This happens in the case of many published statistics that are not citically important for policy making. In that case, when many people agree on the same number, what they are in fact quoting is the best known estimate as of a prior year. Then, it could be that the 10% number on which many different sources seem to agree is, in fact, last year's estimate.

In any case, I indicated a while ago that I was still looking for other sources to either confirm or qualify the number. It turns out that this estimate of 10% is somewhat on the 'low' side. In a previous post I have claimed that, even if it was on the low side, doubling it to account for benefits (health care and pensions), should be more than conservative. Any estimate above 20% seemed be totally unreasonable to me. It turns out that my educated guess was correct. According to the 2008 Harbour report, an undisputed source when it comes to statistics on the automobile industry, (see link below):

"Harbour gives kudos to the United Auto Workers union for their latest contract that allows for 20 percent of the workforce to be paid at half the wage scale, dramatically reducing the gap in labor costs for the Big Three from $600 more per vehicle than their Japanese competitors to less than $100 difference now. Labor accounts for 12 to 18 percent of total costs, but could go to 10 percent or less, and be dwarfted by rising material costs in the future."

http://www.caranddriver.com/reviews/hot_lists/car_shopping/latest_news_reviews/chrysler_ties_toyota_for_top_productivity_says

_2008_harbour_report_car_news+t-ramping_down_suv_and_truck_production+page-2.html

Based on this information, 'my' own estimate is around 15%. If I had the time and interest, I would try to check whether last year's Harbour report estimate the relative share of labor costs was around 10%. That would then completely solve the 'mystery'.

~~ What is the share of labor costs in total costs in car manufacturing? Part B ~~

If union bashers had one iota of honesty and acumen they would have realized by now, just by watching TV, that auto making is, as all experts seem to agree, a highly capital-intensive industry. When you watch TV you can see for yourself that EVERYTHING is highly automated. Robots do practically everything. Workers only help guide machines put the parts into the right place and occasionally finish the assembly by tightening a screw. You can find numerous references to that well-established fact in the press, books, etc. Here is a relatively recent example:

"The car industry is hugely capital intensive. It takes many billions and about a decade to design, tool-up and bring to market a new range of vehicles."

(see http://money.uk.msn.com/investing/articles/nicklouth/article.aspx?cp-documentid=11518508)

The capital-intensive nature of the industry can also be verified by looking at the balance sheet of any car manufacturer. You will see that a very large part of their assets consists of the plants and equipment they use to assemble cars. For instance, by looking at GM's balance (see http://finance.yahoo.com/q/bs?s=GM), you will see that the category 'Property Plant and Equipment' represents 38.18% of GM's total assets.

None of this exonerates the UAW's from having played a significant role in bringing about the current situation. But you have to put that responsibility in the proper perspective and quit thinking that the UAW is solely responsible.