Big Three Heads, UAW Chief Begin Pleas
UAW chief Ron Gettelfinger kicked off auto industry testimony before the Senate Banking committee underway now and was so moved to tell his union's story that he went off-script.
"There is a lot of misconceptions about our union," Gettelfinger said. "We recognized that for these companies [GM, Ford, Chrysler] to be competitive, we had to make the tough calls," he said, citing a number of give-backs to automakers.
He seemed keenest on giving an update on the infamous UAW "job banks," a mainstay of the union for years, at which laid-off UAW employees were paid full wages to sit around and not work.
"Since September of '05 through September of '08, we have lost 47,000 workers at GM," Gettelfinger said. "By the same token, during that period of time and with that loss, we have all but virtually eliminated our jobs bank at all three companies."
In his opening statement, Ford chief executive Alan Mulally said that Ford was well on the way to retooling itself when the financial crisis hit.
Mulally said two questions will be addressed at today's hearing.
"Is there a competitive, sustainable future for our domestic auto industry and is a government loan better for our country than inaction?" he said. "The answer to both questions is yes."
Chrysler chief executive Bob Nardelli said the credit crisis has ground his company to a halt.
As such, if his company gets government bailout money, Chrysler -- which is privately held -- will offer complete transparency into its financials. This would mark the first look inside Chrysler since it went private in May 2007.
So far this year, Nardelli said, Chrysler has reduced fixed costs by $2.2 billion. He said Chrysler spends $6 billion per year on wages, $2 billion in pensions and pays $35 billion to suppliers.
Nardelli made his case for the $25 billion government loan.
"The average working American just can't get competitive financing to buy or lease a vehicle," Nardelli said. "Without a bridge loan, Chrysler's cash could fall below levels" required to stay in business, he said.
GM chief executive Rick Wagoner concluded the opening statements. GM may be in the worst shape of the three and is on pace to run out of money in only a few months without help.
When the new contract with the UAW kicks in on Jan. 1, 2010, the competitive disadvantage that Detroit has with foreign automakers -- the heavy, heavy overhead costs of pensions and health-care benefits to its retirees -- will disappear.
The global financial crisis "threatens our real survival," Wagoner said. What threatens GM now, Wagoner said, "is not our product lineup, not our business plan, not our employees and their willingness to work hard, not our long-term strategy." Instead, he said, it is the global financial crisis.
-- Frank Ahrens
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November 18, 2008; 4:39 PM ET
Categories: The Ticker | Tags: Detroit bailout, UAW
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