Ironic Johnny at it again, spinning the BS

John is sounding the fire alarms with the much ado about nothing (From Kelo-TV):

Senator John Thune says changes to contracting guidelines could result in favoritism to unionized construction contractors bidding on federally funded projects in South Dakota and other right-to-work states.

Thune says the billions of dollars for “shovel ready” projects make the stakes even more lucrative for bidders.

Jackass Number Two divx

He says he worries that recent changes in the awarding of federal contracts could create unfair conditions for potential bids from nonunion companies.

The South Dakota Republican says such companies should not lose out on contracts just because they’re not unionized.

He is right that the bids will ‘prefer’ union contractors but it is not a ‘requirement’. Besides, I would prefer union workers did the job anyway, they get paid fairly for their work and most times do better work and are more professional. Of course John would rather see $8 an hour illegals building are roads instead.


#1 Costner on 03.04.09 at 9:11 am

Of course John would rather see $8 an hour illegals building are roads instead.

That’s not fair or true. Obviously conservatives like John are against illegal immigration, thus he would never condone such an idea, but that really isn’t the point.

It goes without saying that the GOP is not exactly union-friendly, and in today’s world I’m not so sure I can disagree. Look at what unions have done to the automakers and tell me they do a better job because they are unionized. Toyota and Honda make better cars that last longer with higher build quality and yet they operate factories without union labor.

Unions had their time and place in American history, but these days they are more likely to be connected to greed and fraud than they are in protecting the honest hardworking individual.

I’m not saying the concept of a union is a bad thing, but merely belonging to one doesn’t in any way suggest the work will be of a higher quality or that the workers are better trained or more productive.

I guess I have to agree with Thune in principle that I don’t think it is fair to give preference to union labor, just as I would say the same about non-union labor. They should all be on the same level playing field.

All of this being said, I’m just glad there will be a bidding process instead of the no-bid contracts we seem to hand out in our state like candy.

#2 l3wis on 03.04.09 at 9:19 am

Preference does not mean requirement, so Thune is really barking about nothing, especially in SD, since most construction crews are non-union. I was being sarcastic about the illegals to prove a point.

As for the autoworker union statement you made, I hope you are not drinking that kool-aid. 10% of the cost of manufacturing a vehicle is labor under unions. It is almost equal to non-union costs. This has been debunked numerours times and the Republican continue to spin it in an attempt to bust the unions.

#3 Costner on 03.04.09 at 9:42 am

I’m not talking about costs alone, but GM spends about twice per hour than Hyundai on labor costs and a large part of that is due to unions. The average cost to GM for a union employee with benefits is $73/hr.

The Chairman of the Center for Automotive Research, David Cole, says it costs U.S. automakers $130,000 a year on average for each active union employee (GM is even higher).

The unions are so strong that when GM closes a plant because of decreased demand, they still pay the employees even years later. I don’t have a problem with reasonable severance, but the union demands these people are paid indefinitely, and in some cases they can be paid their full salary while not working although many are in the 80% range.

Only now because of the fear that GM will go bankrupt are the unions willing to step in and re-negotiate, and that is only because they know if GM does go bankrupt all existing union contracts are void.

Spin it how you wish, but labor costs are significant and when you add another $4000 to $7000 to the price of a vehicle due to Union benefits, it is tough to complete with companies like Honda, Toyota, and Hyundai who don’t incur such costs. To top it off, those companies actually make cars people want to drive, and they don’t require government bailout money to stay afloat.

No spinning required, just reality.

#4 l3wis on 03.04.09 at 9:58 am

“The average cost to GM for a union employee with benefits is $73/hr.”

That number has been debunked already.

No point in arguing with you about it, you are obviously anti-union.

#5 Randall on 03.05.09 at 6:58 am

Yes… Honda, Nissan… non-union companies… from countries that have UNIVERSAL HEALTH CARE.

Another thing to consider when comparing GM and other US companies to Japanese companies…
Their CEOs make 10 times as much as their line-workers. OUR CEOs make 400-1000 times as much.

#6 l3wis on 03.05.09 at 7:35 am

I know, but it’s them damn Union workers causing all the problems.

Jim Hightower wrote a great article a few months back on how we should have bailed out the auto and manufacturing industry instead of the banking industry – we would have saved and created millions of jobs instead of giving handouts to banks who were managed badly.

#7 Costner on 03.09.09 at 2:05 pm

“The average cost to GM for a union employee with benefits is $73/hr.”

That number has been debunked already.

No point in arguing with you about it, you are obviously anti-union.

That is your response? I’m “obviously anti-union” and thus not worthy of you posting some facts to debate the issue?

First of all, that is a cop-out. Second of all I’m not “anti-union” and I support the worker’s right to unionize. However, I also support the company’s right to fire employees who are worthless, and as we have seen in our schools and in the auto industry, that is all but impossible with modern day unions.

If you wish to “debunk” the numbers I have provided (which are listed in a number of different AP stories and were just in a report on the CBS national news less than two weeks ago) please give me a source that “debunks” them. I can only base my arguments on the numbers I have seen and those I have found, but I’m not about to simply take your word for it that they aren’t accurate.

As to the comment from Randall about Honda and Nissan being from countries with universal healthcare, that isn’t exactly the point. I’m talking about US based factories that are not unionized, and thus just because the parent company might be located overseas has no connection to why they aren’t unionized right here in the states.

People are quick to point the finger at greedy CEOs and rightfully so, but when the unions are being as equally greedy and when it is obvious they have abused their negotiating power to make it all but impossible for American auto companies to compete – why isn’t anyone calling it for what it is… greed.

Under a 2007 agreement with the UAW, GM pays $5 Billion (yes Billion with a “B”) in annual healthcare costs for it’s employees and retirees. How many Chevy Cobalt’s and Silverados do you think they need to sell to make that work – and that isn’t even talking salaries, pensions, or other benefits.

Let’s just say unless radical negotiation occurs, I don’t see this ending well.

#8 l3wis on 03.09.09 at 2:32 pm

Costner, still doesn’t change the facts. The cost of making a vehicle by Union employees is 10% the cost of the vehicle. ONLY 10%! So why are we demonizing workers? Union or Not? That’s a frickin’ bargain. The American car companies downfall is innovation and R & D, it has nothing to do with the people who screw the cars together. We need to stop being so negative towards the American worker, he is the last person to blame for the mess we are in.

#9 Costner on 03.09.09 at 4:49 pm

I’d like to see a true breakdown to show where that other 90% of cost comes from, because that figure doesn’t jive with what I’ve seen.

If employee costs are only 10%, then a new Malibu that costs $28,000 should only cost around $2,800 for labor. However it costs GM over $1600 per vehicle for healthcare costs alone. Add another $1000 for union benefits like holiday pay, line relief and the infamous “get paid even when the plant is shut down”, and we haven’t even mentioned the actual salaries yet.

As the following article shows, it might not seem like a lot when you are only talking about $3000, but when you are losing money on every vehicle sold, that extra $3000 is the difference between going bankrupt or actually turning a profit.

So even if we toss aside those numbers and treat them as hogwash, even the most pro-union spinning of the numbers still says GM labor costs per vehicle are “only” $600 more than Toyota. That makes sense considering GM pays a huge amount to retired workers whereas Toyota doesn’t, but again that $600 might be the difference between black and red.

Aside from that – the costs for the employee salaries and benefits are only part of the story. The Union contracts dictate that even if a plant is losing money, GM can’t close it unless they fork over huge money, and they are forced to run plants at 80% of capacity even when they don’t need the vehicles.

Here is an interesting article from 2005 that speaks of it. The author must be running around yelling “I told you so” because even then it was obvious they had issues and the fear of bankruptcy was on the horizon.

So you see, even if union wages and benefits are only 10% of the cost – if they contribute to GM having to produce vehicles that they don’t even need due to their agreements, the costs incurred to build those vehicles still rest at the feet of those union contracts.

Listen – I’m not saying GMs problems are entirely union related. Clearly they have a mentality of pushing poorly designed vehicles onto the public and they have spent far too many years with the mindset that if they build it, someone will buy it regardless of the flaws. The union workers just build what they are told to build – they aren’t the source for quality issues or engineering flaws nor are they the ones pushing vehicles like the Pontiac Aztec or the Chevy Corsica.

Clearly there is plenty of blame to go around, but at the end of the day GM needs concessions from the union in order to survive because even if they get their engineering and quality issues resolved their costs are still higher than their asian counterparts, and nobody is going to spend $1500 to $2000 more for a Malibu than they would for a Camry or an Accord.

In truth, bankruptcy might be the only thing that can really force a turnaround for GM.

#10 l3wis on 03.10.09 at 6:41 am

Just google it, I don’t have time to provide nine-million links about the labor costs. Even if the labor costs was over 10% (which it is not) this is only for building NEW VEHICLES. Obviously employees get no $$ from anything a franchised dealership resells or repairs, which is very profitable. You have to remember, labor costs are so minute in the bigger scheme of things it is almost useless to talk about it. This is obviously an attempt by Senators from non-union states to bust up the unions, plain and simple. Like I have said before, the unions are not perfect and not all of them play fair ball, but the autoworkers union has one of the best reputations in the business, no use in pissing all over it.

#11 Costner on 03.10.09 at 9:48 am

Building NEW VEHICLES is what makes GM money. Oh sure they make a certain amount of profit from selling parts, but the dealerships make the bulk of that profit and they get all the labor profits….not GM.

You don’t have time to provide links but I’m supposed to just take your word for it? Hmmmm. The thing is – I did Google it, and that is how I came up with the links I provided.

We simply disagree about the reputation the UAW has… because in my view they probably have the absolute worst reputation of any union nationwide. They refuse time and time again to give real concessions to the automakers. They pay $0 for healthcare and only $5 for pharmacy co-pays while salaried non-union staff at GM pays much more. They have benefits that force GM to continue operating a plant at a loss even if they don’t need the vehicle inventory, and they have union contracts that prevent GM from making more than one type of vehicle at a factory. Thus, if truck sales plunge and they want to convert a truck plant over to a economy car plant, the union says no – and GM is stuck with a choice to either make vehicles they can’t sell with the hopes the market will improve, or they simply close the doors.

The best part is, even if they close the doors those union employees still get paid.
Sometimes their full salaries.

Plus Benefits.

For years.

Even if the plant never reopens.

I wonder how valuable free healthcare is when GM goes bankrupt and stops paying for it – along with pensions. Just like corporate CEOs, the core problem is greed, and unless the union makes honest concessions and is willing to level the playing field with their non-union counterparts from Toyota and Honda….GM will continue to lose money on every car sold until nobody – not even the government – is willing to rescue them.

#12 l3wis on 03.10.09 at 11:23 am

Kinda sounds like the Execs let themselves get bullied or that they were satified with the job Union workers were doing. Funny how the Union’s were not bad when the economy was good, but all of a sudden they are the culprit. Non-union plants in America are also losing money (Toyota and Nissan have also had losses). This isn’t about the ‘overpaid’ union workers. It is about a combination of the economy and bad decision making.

#13 Costner on 03.10.09 at 3:22 pm

Actually people have commented on the abuse of power of the UAW for years if not decades. I remember concerns about some of their benefits as far back as the 80s.

There was a time when they were a great thing, but soon they became too powerful and became corrupt in the process. I guess it isn’t just political parties that can suffer from this pattern.

The UAW have had the big three over a barrel for years which is likely why the competition has left them behind, but you are right that the management (execs) let it happen. Whether that is because they felt they were invincible or because they simply couldn’t afford another strike like they had in the 80s for fear of going broke I cannot say.

You said non-union plants are also losing money and that is true to a degree as car sales have dropped sharply, but Honda and Toyota are still sitting very good in comparison to GM and Chrysler.

According to Honda’s website, they sold 460,000 vehicles in North America in the 1st quarter of 2009 which is only 5,000 less than 08 and more than 07. They made money in 2008 and they also continue to show a profit – albeit not nearly as large as previous years.

Now look at GM. They lost over $30 Billion in 2008 alone. $30 friggin’ Billion.

That is over $82 Million dollars a day.

Now I’m not saying that is all the fault of the union, but when retiree healthcare costs run upwards of $7 to $10 Billion alone not counting current employee costs or actual pensions….well obvious it make it much more difficult to turn a profit.

Let’s just say I’m not about to invest in GM because I simply cannot see how they can turn this around. They can sell off brands and restructure, but I still think they will end up in bankrputcy unless something radical happens to increase demand, and even then it is a 50/50 chance.

#14 l3wis on 03.11.09 at 6:43 am

Costner? Are you Troy Jones from DWC in diguise, he likes to write essays to.

#15 Costner on 03.11.09 at 6:57 am

No – but I’ll admit I tend to get a little verbose. You should be honored – other than the occasional post on the Argus or Steve Hemisphere’s blog on Kelo, this is the only one I ever comment on. I don’t even visit the others unless someone links to them with a story I might find interesting.

#16 l3wis on 03.11.09 at 7:30 am

Because I’m the bestest? Right?!

#17 Costner on 03.11.09 at 8:37 am

Well the most entertaining….I’ll grant you that much. In truth I just appreciate your desire to see open government and how you make an effort to promote the arts in the community.

Now if you could just figure out a way for us to subscribe to specific posts so we know when comments have been left I’ll really get excited.

#18 l3wis on 03.11.09 at 11:14 am

Can’t you do that in a RSS feed? Angry Guy – can you help us out on that? I’m lost.