Liberally Conservative

"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free....... ~Ronald Reagan~

Thursday, December 15, 2005

Bailing Out Automakers....Or Not!

Ford Motor Co. Chairman and Chief Executive William Clay Ford Jr. proposed a basket of tax breaks to help the auto industry build hybrids and other alternative-fuel vehicles, as Detroit tries to loosen its dependence on gas-guzzling trucks and sport-utility vehicles. We wrote in length about this here.
Fledgling GM and their CEO John Wagner are asking for taxpayer help as part of it's "restructuring" plan to avoid bankruptcy. The Wall Street Journal reports on GM's "Job Bank", and this is not a place to file for employment.
GM's "jobs bank," which is the company's euphemism for a post-employment limbo in which GM pays laid off members of the United Auto Workers not to work. If you want to know why GM's costs are too high for the number of cars it sells, here's one explanation.
xxx GM doesn't like to talk about the "jobs bank," to the point that it won't disclose how many idled workers are in the bank or even how much it costs the company. However, the Detroit Free Press has dug around and reported that the "bank" holds some 5,000-6,000 employees, at an annual cost of as much as $800 million a year. And that's just the beginning of the damage it does.
The jobs bank was created in 1984 at a time when it became fashionable to worry that automation would cause robots to replace workers on factory floors. So in exchange for the right to introduce productivity improvements in factories, GM, Ford and Chrysler all consented to jobs banks. The idea was that in exchange for educating themselves, doing community service or in some cases just sitting around a factory, workers would continue to collect pay and benefits until the automaker could find another job for them. Nice work if you can get it.
In one recent Reuters story, a worker in the jobs bank by the name of Dean Braid was quoted as saying that he hoped the bank wasn't eliminated when the United Auto Workers' contract with GM runs out in 2007 because by then he'll be two years from retirement with full benefits. If Mr. Braid is still in the jobs bank when retirement rolls around in 2009, he will have spent a decade, or one-third of his career with GM, "in the bank."
We don't wish ill will on automaker employees or their families but when they sit around and collect "welfare" in the guise of employment for failing companies, it's not the responsibility of the U.S. taxpayer to pay their freight.
Apparantly Adam Smith's "no free lunch" dictum has been thoroughly tested at GM where a whole lifestyle has become free. One solution is to stop more good money chasing bad. Heads should roll starting at the top with John Wagner and William Clay Ford. They have mismanaged these companies into welfare states not productivity machines of American business.

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