Tuesday, June 3, 2008

Unions and Gas Prices

Wow, three days in a row off work with the kids. Needless to say, that kept me off the blogs for the most part. So here's a short one, as I surely wouldn't want to disappoint.

The news has been trickling in about the closure of several General Motors plants, including one down in Moraine, Ohio (on the south end of Dayton). It's one of the factories that makes either trucks or SUVs or something big. Part of the closure is caused by a shift in demand, primarily due to the unholy spike in gas prices. Part of it is some internal stupidity inside of GM. Part of it is several hits the company has taken due to strikes by the union workers, as well as a recent strike by a supplier that crippled them for a couple months.

On a side note, there's word another GM factory will be expanding, adding another small car and a third shift.

I'll leave it to anyone who is interested to research it more. But I will propose questions for people to answer:

1. How many more people will lose jobs due to the gas price nightmare? And if the global warming agenda keeps moving along, will that only exacerbate the problem?

2. Does the union labor system that now infects the old automakers still benefit us, or is it becoming more of a problem?

3. What, if anything, should government do, and why?

Just some questions for discussion, as I already know the answers. All of them.


Beth said...

I think you answered your own question in your pointing out that the loss of jobs for larger vehicles is offset by the creation of jobs producing smaller vehicles.

I say, let the market dictate what is produced, based on demand.

Labor unions mess with the market in that employers cannot apply the same concept of supply and demand to its work force.

Name: Soapboxgod said...

1. A sizeable number I'm sure. And, while some of them will fing work elsewhere in the Private sector, the greater likelihood is that they will instead end up in the Public sector (recent findings by the Bureau of Labor Statistics prove this). This shift from the Private to the Public sector will continue to place an increasingly heavy burden upon the Private sector.

But, those that remain in the Private sector (at least in the energy industry) I fear will continue to be subsidized at the expense of the American taxpayer and the other energy industries vis a vis Cap and Trade, legislative mandates and regulations.

2. While I don't have a problem with Unions. I have a problem with their practice of using union dues to fatten up the pockets of their leaders and for political purposes. Moreover, the ever pressing desire to remove the secret ballot is cause for concern. It goes without saying that their demise is surely their own doing. It is for no other reason than that by way of their "collective" nature, a Union is only as good as its least productive member.

3. Start removing the regulations and mandates placed upon businesses and allow the market to work freely.

Name: Soapboxgod said...

* Edit:

But, those that remain in the Private sector (at least in the GREEN energy industry) I fear will continue to be subsidized at the expense of the American taxpayer and the other energy industries vis a vis Cap and Trade, legislative mandates and regulations.

Dave Miller said...

Patrick, you know, I think, where I will land on this.

Detroit is not going to change willingly. The auto makers will need an incentive to really ramp up high mileage vehicle production.

Now there are two ways to produce that incentive. We could legislate it. And I believe we would have some decent results. But do we really want gov't any more involved? I doubt it.

So, as I I have said before, I believe the President should sign an Executive Order requiring our Federal Gov't to buy and use only vehicles getting over 40 mpg, starting in five years.

He should then encourage all state and local gov'ts to do the same.

The effect of this would be to create a market incentive for the automakers. They would then feel safe enough to invest in developing the type of gas thrifty vehicles we will need as we move into the future.

This type of approach would still allow people who wanted to buy a 5 mpg Hummer the chance to waste energy if they wanted, but it would also, by sheer volume, open up the market for high mileage vehicles.

It also preserves the precious free market for our more capitalistic friends.

Obviously there would be exceptions to the Exec. Order as I cannot see a Presidential Motorcade of hybrids, but by and large, I believe this would be a sane approach to a growing problem.

Toad734 said...

Glad you asked:

Global warming has nothing to do with this plant closure. Gas prices are high because we elected a Texas oil man as President and the president of Halliburton as a vice president. This team of idiots invaded Iraq taking one of the largest oil producing nations in the world off the grid. This triggered supply issues and caused the price of oil to go up. Exxon and other oil companies who convert oil into gas used this as an excuse to pad their wallets with extra profits in the price of their gas. The larger the price tag of the item the larger the profit margins can be. It’s why people who sell used cars are poor and people who sell Mercedes are well off.

As far as how many people will lose their jobs? A lot. Our economy isn't set up to thrive on $5.00 diesel. Consumer’s budgets aren't constructed around $4.00 Gas prices. The only cars GM makes that people wanted were the SUVs and the gas prices are going to limit the orders for those cars. This doesn't stop at MFG, its retail, agriculture and anything that needs to move by truck or is purchased by people whose gas bill limits their budget. But hey, it’s your free market working at its capitalistic best generating large profits for already extremely wealthy people. Good thing you are there to fight the good fight for them.

2. America owes its status in the world, its economy, its middle class and its way of life to the labor union. Without labor unions the United States would be the China of 20 years ago. We would work 16 hour days, 6 maybe 7 days per week and earn $50 per day doing it. There would be no medical leave, no vacation days, no sick days, no paternity leave, no weekend, no safety standards in the work place, no middle class and a company could fire anyone they wanted for no reason and yes, we wouldn't have health care.

3. The government should take the real burdens the Automakers have away and eliminate it all together. That being healthcare. The US Automakers are mainly competing with German, Swedish and Japanese cars, all countries whose companies don't have to pick up the cost of their employees health care. Overnight GM and Ford could shed millions, if not billions of dollars in liability and would have that much more capital to invest in big SUVs that don't run on gas or cars that people want, new technologies or might just be able to make a cheaper car or afford to keep their plants open.

Name: Soapboxgod said...

As the old adage goes:

"You can wish in one hand and crap in the other and see which one fills first."

While you can wish and seek a legislative fix for higher CAFE standards, what you can't dismiss is the simple fact that a combustable engine only has so much output. It's akin to looking at a football player running down the field.

He can only run so fast. The only way to get him to have a better time is for him to shed some pads. Similarly, the only way to get better mileage out of the cars is to use lighter body material or make the cars smaller.

It is for this very reason that a number of studies have shown that CAFE standards have led to higher traffic fatalities.

What's more, unless everyone lives in a highly populated condensed soviet style dwelling and works within earshot of their home, these hybrid vehicles don't do anything to help the cause because they only run on the electricity when you're driving primarily in the city.

Moreover, the one's that run on ethanol are on average 30% less fuel efficient than their petroleum nemesis which means you're going to have to use MORE fuel to get from point A to point B.

This incessant demand and pursuit to get us to use LESS energy as we progress towards the future is quite frankly the most backasswards ideology I've heard in modern times.

We used to use a whole hell of a lot less energy than we do now. But you know what?? We progressed and got away from horse and buggy, candles, and the pony express.

Name: Soapboxgod said...

" The government should take the real burdens the Automakers have away and eliminate it all together. That being healthcare."

This is the fundamental difference between conservatives and liberals.

Whereas the liberal asserts the want for the government to coddle them from cradle to grave; providing for their every want and every need with no care as to whose expense...

The conservative asserts their God given right to their Life, their Liberty, and the pursuit not only to their own happiness but to define what the happiness is rather than have it dictated and rationed by government.

The conservative, in this regard, would then rightfully assert that we could remove the burden of healthcare upon the employer, not by then handing it over to government as the liberal suggests, but instead by handing it over directly to the individual. Thereby, giving the individual, through free-market principles, the right to cross state lines to purchase a healthcare plan specifically tailored to their desired needs and a plan which they may take with them regardless of where they work.

My life is wholly my own. No one else has a claim on it and certainly not a bureaucratic member of government.

Name: Soapboxgod said...

"The larger the price tag of the item the larger the profit margins can be."

"But hey, it’s your free market working at its capitalistic best generating large profits..."

Large Profits?? Indeed.

Large Profit Margins???

You'd do well to know that average net profit margins for the S&P Energy sector, according to figures from Thomson Baseline, is 9.7%. The average for the S&P 500 is 8.5%. So yes, energy companies are more profitable than many others...but not by an inordinate amount.

Google, for example, reported a net profit margin of 25% in its most recent quarter. Should we impose a windfall profit tax on them???

Dave Miller said...

Sorry Bro, the rest of my post on unions got lost.

Maybe next time.

Toad734 said...


The big government approach has worked for Toyota, Honda, VW, BMW, Audi, Saab etc.

Without the massive healthcare burdens they are at the forefront of technology. The Japanese were years ahead of the big three in Hybrid technology and will continue to be. Why? Not because they don't have unions, they pay their workers well, its becase those workers or their unions don't have to worry about providing themselves with healthcare and the company doesn't have to worry about paying for it. Say what you want about the government but I think if I trust them enough to deliver my mail, run schools, provide libraries, decide which countries to bomb, build our roads and highways, inspect our food, regulate financial markets, make trade negotiations etc, I think I can rely on them to fill my prescription. In fact, I would feel better about it knowing they don't have an incentive for me to be sick and quite the opposite, they have an incentive for me to get better where as my doctor makes more money the sicker I am.

And for the record, the majority of the people in the United States, Europe and most of Asia live in cities and can benefit from a hybrid. Sure cities like Atlanta are sprawling but traffic is so bad that in stop and go situations you could use electric only. In L.A. the average Highway speed is around 33 miles per hour. It doesn't take alot of current to move a little Prius 33 miles per hour.

Patrick M said...

Beth: Let me agree with you on the unions. The union is an idea that served (emphasis on the past tense here) a good purpose but should now fade away, as they now do more harm than good. I've go a few stories about the old union shops around here that are no more, and the factories everybody wants to work at and keep the unions out of.

Soapathon (name earned for excessive(ly cool) verbiage): There's always a problem when a union shop closes. That problem is that the union employees have to take jobs that pay much less. Or they can find the overinflation in pay that only a government job can provide. So naturally, some politician is always there to try bailing them out.

So it would be a benefit to all to deunionize, but leave the laws protecting unions there, just in case....

And don't get me started on the cap-and-trade bullshit.

It's as bad as the government trying to mandate anything: It costs us more.

Dave: The fact that the fed hasn't already moved to a fuel-efficient fleet is beyond me. This would be a no-brainer. But we're talking about people that want power, not efficiency.

Love the idea, though, using market forces rather than legislation. Almost makes me question your liberalism. That's a good thing.

Toad: I'll just ignore your Bush rant, as the errors and utter lack of logic don't deserve more than this response.

Now, as I noted, part of the problem for GM is that demand has gone down for the larger vehicles. So why you lapse into the greedy rich people crap makes no sense.

I have given unions credit for correcting some problems. But their time is passed for now. (And you think it's a good thing that we depend on someone else to pay for our health care?)

Toad734 said...

Actually the US manufacturing sector has profit margins of just under 6%.
Oil Industry returns on equity is 10 points higher than other industries at 27%

And when the oil industry, the industry which transports its own oil, and says the cost of diesel and transportation is up and they count that against their profit margin, it's not quite telling the whole truth, it's like robbing Peter to pay Paul. They are profiting on selling themselves energy to transport their energy. In the processing and transporting of oil to gas they can cook their expenses anyway they like to make it look like they have smaller profit margins but I think their stock price and the cost of gas says everything.

I would also like to point out that tax payers don't have to subsidize Google in order for them to have a product to sell. Google's web traffic also increased 24% in the 4th quarter 2007 from 2006. Google make 4 billion per year in profit, Exxon makes 42 Billion. Google didn't urge Bush to go to war to inflate their profits and Google also doesn't receive 2.4 Billion per year in federal subsidies like Exxon does, so ya fuck em, make Exxon pay the tax, Google earned their money honestly. Instead you guys vote for people who want to give these rich asses tax breaks…makes a whole lot of sense.

Toad734 said...

You still don't see the connection to Bush, Cheney and Rice (who has an oil tanker named after her) and the price of oil and cost of gas?

If my answers frighten you stop asking scary questions.

You say the time for Unions has passed and I say the time for greedy CEOs has passed. In the 80s most CEOs made about 40X the amount of their average worker and its about the same now in countries like Japan in Germany.
Now, Fortune 500 CEOs make as much in a day as their workers do in a year.The average CEO makes 364X what their workers are paid, this is at a time of peak productivity.

So you say greedy workers who want to be able to feed their children and take them to the doctor when they are sick and I say greedy CEOs who want to buy another house in Naples and incorporate his business in the Caymans to avoid taxes. Im sure glad these CEOs have someone in their corner fighting for them or we may just have to give them another tax break.

Name: Soapboxgod said...

"I say the time for greedy CEOs has passed."

I love it when a liberal asserts greed and selfishness on matters such as this.

It seems to me that what is selfish and greedy is that you think it your duty to calculate and determine what is just with respect to what a company decides to pay its CEO. Or when you, at the behest of your ideology, seem to harbor a belief that it is greedy for a businessman to become fabulously wealthy through rightful means by way of providing a good or service which you choose to purchase voluntarily but you think it not greedy or selfish that you believe his wealth ought to be confiscated and subjected to the "common good" for a social program that you deem just.

That my good man is the complete and total embodiment of that which is selfish and greedy.

Name: Soapboxgod said...

For the record. A tax break or tax cut is not a subsidy.

"Soapathon (name earned for excessive(ly cool) verbiage):"

It's cool Patrick. I've certainly been called worse. LOL

Patrick M said...

Toad: Your answers don't frighten me, just convince me that you have a serious case of BDS. Take it from a former Clinton fatigue sufferer.

You make assumptions, based on an anger and hatred for Bush. So let me pose simple questions in response.

You assume there's a direct connection between the Bush gang and the price of oil. This is because they used to work for oil companies or equipment suppliers (Haliburton). And for this reason, you assume we went into Iraq for oil. Am I correct so far?

What you leave out is that Bush can't directly influence the price of oil in any way. We've been in Iraq about 5 years. And the gas price spike has only come in the past two. So if the Iraq war was to cange prices, it tok way too damned long. And by the way, where's all that delicious Iraqi oil?

Now, as for your unions vs "greedy" CEO's line, what gives you, or anyone for that matter, the right to determine what someone is paid? You continue to pit class against class. Do you honestly believe that if you elect the right person (like, say, the Obamessiah), all these "greedy" systemic inequalities will be washed away?

As for the health care thing, I think I've covered that, but I still feel a post coming on about it.

Master Soap: That last one was due to the volume of text you delivered in glorious verbal combat with the Toad. I'll keep them coming until I come up with even better and more egomaniacal ones.

Name: Soapboxgod said...

I figured as much. Thanks Patrick.