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Thread: Senator calls for 50-mpg mandate for Detroit to receive aid

  1. #1
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    Default Senator calls for 50-mpg mandate for Detroit to receive aid

    http://www.autoblog.com/2008/11/17/s...to-receive-aid

    "Thick and fast." That's the phrase that describes the opinions, pleas, advice, denunciations, and WTF? going on around the U.S. auto industry right now. Enter Congress, which is trying to figure out how to give Detroit automakers the $25 billion they were promised a few months ago. Congressmen are sounding off almost daily on what kinds of stipulations they want to attach to the loan/bailout/whatever you want to call it -- and that's just the ones who would vote for it at all.

    Next up is Senator Bill Nelson, a Florida democrat, who wants U.S. automakers to achieve a fleet average of 50 mpg by 2020. Right now, the CAFE target is 35 mpg by 2020 -- a goal agreed upon only after a huge amount of jockeying in and out of Congress. Nelson asked, "Why should we be pouring taxpayer money into an automobile industry that has continued to resist higher miles per gallon, which has led us in part to the problems we're in?"

    While that might sound like a great idea to some, it would cost a terrific sum of money to achieve. The Detroit Three need the money they're asking for just to get to Q2 of 2009, not to create a range of cars that would represent magnificent advances -- based on where we are right now -- in 11 years. There's a good chance nothing will be decided until the president-elect takes office, and by then, who knows what other requests Congress will have.
    RacePrecision GotApex

    "Be ashamed to die until you have won some victory for humanity." ~ Horace Mann

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    Genius.

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    I understand the frustration and mistrust of Congress.

    After all, our industry put all of its eggs into the SUV and truck basket, where there were no CAFE standards, raking in profits and not reinvesting them into better product.

    Why bother with high mileage sedans, when the can sell trucks at a 5 grand profit per vehicle? Of course, this helped to bring down the fleet mileage numbers, which burned up mass amounts of fuel, which cause price increases, which killed the value of just about all of those SUVS and trucks that are out on lease, and will have only a fraction of their residual value, and on and on.

    Meanwhile, Hummer introduces a new truck.

    There are no great American small sedans because the US manufacturers abandoned the market and took a cut in market share for short term profits on trucks. WTF?

    There are a few bright spots, but Congress is going to have to help these guys out, and there will be concessions from the industry. It could work out, as GM and Ford have some good small cars in Europe that could be re tooled, and they have licensed hybrid power technology from Toyota.

    However, this is at least 5 years off.

    50 MPG Cafe? Well, if most of the cars sold were small displacement diesels, this might be possible. It would certainly be the end of soccer moms driving three ton GVW to transport two kids to practice.

    Good.

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    Suppose you were an idiot?
    And suppose you were a member of Congress....
    But then I repeat myself.
    -Mark Twain

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    Does anyone remember the Studebaker? In the late 50's the UAW sought to expand their membership beyond Detroit so they would have more dues paying members. They solicited Studebaker employees and even though most were pretty happy with the company and how they were treated, greed and human nature became a factor. Many Studebaker employees bought into the belief that they should be paid as much as their counterparts in Detroit and they joined the UAW so they could get it. There was no thought about whether Studebaker could actually afford to do it. After a bit of a struggle, Studebaker management gave in and began paying their employees union wages. Prior to that, the company was run like a family business. It was not uncommon to see three or four generations of the same family working there side by side. It was the lifeblood of South Bend, IN. After the union got in and they began paying union wages, it didn't take long for the increased payroll expense to take its toll. Studebaker went belly up within about 8 years. There was no bailout option for them either. The union put them out of business. South Bend was never the same again.

    Anyone who has worked for the big three knows that they have been paid more than they could make in any other industry because the union kept asking for and getting more and more when the companies were rolling in cash. This only hits home when they lose their jobs and are forced to work somewhere else for a lot less. The auto unions have never really taken any responsibilty for the demise of the US auto industry, and even now the union leadership is telling us that none of this is their fault. Would the union members be willing to take pay cuts in lieu of losing their jobs? Has anyone asked them? Apparently their leaders don't even want to discuss it, given that the government seems willing to throw our money at the problem.

    Wouldn't the American taxpayer and the American auto industry be further ahead if Congress asked the union to renegotiate its contract to reduce wages and benefits as a condition of any bailout/loan? How do they expect the auto companies to repay the bailout/loan if they are forced to continue to pay wages and benefits that are more than they can afford? It's time for the union leadership to take responsibility and help save the US auto industry. If they don't, they probably won't have any members to pay their dues anyhow. What's better, some level of income/dues or no income/dues at all? It's unrealistic for them to hang onto the belief that the auto companies will survive without some rather large employee/union concessions. Things are just too out of whack with union wages and benefits as they are.

    Add to this the fact that the UAW and other unions virtually forces its members to support the Democratic ticket during every election and you have a real conundrum. They feel that their strong lobby assures them that a Democratic controlled government will not bite the hand that fed them so many votes and contributions. Who will man up and do the right thing for the taxpayers and the auto companies? Union requirements/restrictions and union wages and benefits are bleeding the life out of the big three, but the unions don't want to acknowledge that. It will be real interesting to see how it plays out. I know most of my friends back in MI who work for the auto companies or have retired are now very concerned about ever seeing their pensions, feeling that will be the first thing to go when the poop hits the fan.

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