All of those operations cost the government money. The government profits from the auto industry. The money flow goes from auto industry to government to defense department, so having a revenue stream is essential for the defense industry as well.
The Auto Bailout Scam
- Thread starter Liberalman
- Start date
Let's consider other points here. The auto industry creates spin off jobs across the economy, that's true. And that's a common argument for bailing it out. But what about spin off costs? Examples:
1. The more cars on the road, the more competition for oil, the higher gas prices are, and that costs govenment vehicles too.
2. The more cars on the road, the more roads we need to build and maintain. Not cheap. So the cost of maintaining th eauto industry now while we're in recession could prove unbearable in future if we go into labour shortage, as has happened in the past following recessions. If too many cars on the road, governemnt will need to hire more people to maintain roads, and an oversized auto industry will be putting a strain on surplus labour too, driving up inflation. By upgraiding our workers's skills now while we're in recession could help to prepare them to work more efficiently later, thus allowing one worker to produce as much output bet it in product or service than he can now. This increase in worker productivity would allow workers in the boom that will follow this recession to produce more and so reduce the burden on labour and so help control inflation.
A shrunken auto sector would also reduce the wear and tear on roads when the boom comes, thus freeing workers to go into the industries that need them.
Just look at history. Recessions have often been followed by labour shortages and inflation later. In that sence, we should be preparing for the coming labour shortage when in recession and preparing for recession when we have a labour shortage. In a recession we could prepare for the upcoming labour shortage by upgrading workers' skills, not by maintaining inefficient industries.
The more cars on the road, the more roads we need to build and maintain. Not cheap.
It definitely isn't cheap but the revenue to create those jobs come from industries that are a net profit to the government, like the auto industry. If you want less wear and tear, and less people employed there as well, then we need retraining programs for road maintence crews too. Retraining for what? Maybe handing out welfare cheques.
It definitely isn't cheap but the revenue to create those jobs come from industries that are a net profit to the government, like the auto industry. If you want less wear and tear, and less people employed there as well, then we need retraining programs for road maintence crews too. Retraining for what? Maybe handing out welfare cheques.
Look, in the news just a few days ago a new environmentally friendly paper company is still growing in spite of recession. Why not teach others how to make that paper and let this company hire them? A friend of mine is in home renovation. He's benefitting from all this because not only is business still good, but now all his products are cheaper too. These are the industries we need to be training people for. The growing industries, the industries that can proove that they can succeed even in the midst of recession. If they can withstand a recession, just imagine how they'll grow in good times. If they can't withstand recession, then in good times thy'll just be hanging on only to fall come next recession. If they can sustain themselves in good times only, then we'll have to bail them out every recession.
The baby boomers are retiring too, so we'll need more medical staff later. Why not start training for that? Instead of preserving jobs, let's study the economy and identify the growing industries and start training for them, because that's a sign they'll grow come next boom. I notice that organic and healthy food industries are still hanging on too and we're in recession now. Why not upgrade farmers' skills and teach them how to grow organic. I remember an organic farmer in Victoria BC (not a cheap city) who was middle class by urban standards! It increases the market value of the product.
So instead of bailing out weak industries, let's identify the growing ones or at least the ones that seem to be hanging on during the recession (and it appears there are plenty maybe not growing but hanging on waiting to grow come next boom) and train for them instead. So come next boom, they'll be able to swallow up the unemployed quickly because the qualifications will be there already.
And then come next recession, we won't have as many struggling industries anymore.
Let's look long term, not short term. identify the growing industries, not the faltering ones.
You missed the point. If the defence industry (or the Oil industry) were run the way the auto industry was run, we would demand a handout too. We're not though. So through the stupidity of GM, they get a reward?
Did you actually think that one through?
The Defence industry pays on a per capita basis as much as the auto industry, so your argument is moot
The baby boomers are retiring
That is the true "elephant in the room". Once the wave of workers retiring is greater than boomers still in the workforce, the revenue stream will start to virtually collapse and there won't be any more money in the kitty for the gov't to bail out their favourite charity.... I mean industry
I would say that more fault lies with the governments of North America than the unions - The government has been feeding the overcapacity in the auto market for decades. Money for foreign manufacturers to set up shop - money for the Big 3 when they threaten to close a plant - Politicizing the parts feeder plants so they are located 100 miles from the assembly plant in order to spread the jobs around the province or state. Failing to spend on the infrastructure at our border crossings - Opening the flood gates to foreign goods by not funding the number of staff necessary to inspect incoming goods.
Strange labour laws that add costs to operations by allowing (Ontario) employees to take 10 unpaid sick days at their choosing without any repercussions for abusing the system. Adding another stat holiday.
Strange labour laws that add costs to operations by allowing (Ontario) employees to take 10 unpaid sick days at their choosing without any repercussions for abusing the system. Adding another stat holiday.
You brought up this moot point (or someone else did). The auto industry is "profitable" to government. The defense industry is "not profitable" to government. Just like government employees are not profitable to government. The government pays out more to the defense industry than it gets in dollar return. It gets more money from the auto industry than it historically pays out, and that net profit helps them buy things like defense items. If you were arguing about who creates the most depreciating assets for the government then you could argue the defense industry. Or who adds the most to national security. But that's not what's at issue. Before buying defense items you need an income stream.
Of course you have data for this.... Other than that it still makes very little (if any) sense
In some ways this pinch will be good. THe Europeans have started to face it sooner than we have, so it gives us a taste of thigs to come. Here is a common debate in France in the last few years:
As a result of more retirees and fewer workers:
The elderly have propose that taxes increase or workdays increase to improve health care.
The young propose that the elderly work longer before retirement.
Some have proposed that it would be possible to avoid both problems above by increasing immigration or guest workers, but then both sides oppose that because it would change French culture.
Lately the debate was still raging and yet unsettled.
I'm guessing Canada will probably face the same debate soon enough, with both sides opposing immigration as the solution for cultural reasons, but with the elderly expecting the burden to be put on the workers, and the workers fighting to put it on the elderly. It'll be interesting to see where that goes.
Of course it might also mean a leaner govenrment in future, with there government focussing more on bread and butter issues, no more cushy arts funding, and abandoning certain sacred cows for more efficient alternatives, such as reform of our official bilingualism policy.
It doesn't really matter that people in other parts of the planet have seen what's on the horizon and are doing something about it. Canadians are too short sighted to follow suit. We are usually waist deep in the shyte before we think of looking for a shovel.
Let's not think other countries are too far ahead of us though. In France, they certainly haven't solved the problem yet. They've been debating it for a long time with still no decision made as the crunch approaches ever closer. In this respect France is ahead of us only in the sense that they've started to recognize the problem and debate it, though granted that already is a step ahead of us.
The Italian government has already taken radical steps to curb costs in their second-language acquisition policy with expected savings on interpretation and translation costs in both the private and public sectors in future, and Hungary has gone the same route along with Poland and Croatia. This shift had nothing to do with the babyboomers per se though. It was motivated mainly by attempts to make international communication more efficient and streamlined to save money for whatever may come in future, and of course that helps in any crisis.
Do you think the autoworkers union will "cave" to keep Chrysler afloat or will they "stay firm" on their stance and put the auto industry under
The 10 or so Special Paid Absence -- or SPA -- days workers get on top of normal sick leave and paid vacation days will almost assuredly be cut, the analyst said.
Many of the targeted extras don't extend to United Auto Workers in the United States. Instead, they've been built up over years of bargain negotiations to offset health-care savings GM, Ford and Chrysler receive because of Canada's publicly funded systems.
Begun last year, the U. S. union started making arrangements to handle medical costs for workers and retirees with their Voluntary Employment Benefit Associations (VEBAs), Mr. DesRosiers said.
The result works out to be around a $15-per-hour cost advantage for U. S. assembly workers, he said, making Canada the "highest-cost location anywhere in the GM, Ford and Chrysler worlds for manufacturing vehicles."
"That's not a good position to be in."
Before the VEBAs were commissioned in Detroit, average compensation plus benefits -- the total cost -- for factory labour was about US$75 an hour, whereas in Canada it is US$67 at Big Three operations, the analyst said. With the implementation of the VEBAs, labour costs are heading toward US$55.
Canadian compensation fares worse against foreign-based suppliers such as Honda and Toyota, where costs stand at about US$45.
Tyr might have been seeing the future a couple of weeks ago....with the death of the
"Canada–United States Auto Pact" (1965-2001)....GM or Ford or Chrysler no longer
has to be in the Canadian Auto Manufacturing market to sell vehicles in Canada. 8O
Canada-United States Auto Pact (1965): historical context, economic impact and related links
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Now Canada will have to rely on convoluted FTA & NAFTA rules for the former
protection of the Canadian Automotive Industry no longer provided by the Auto Pact.
NAFTA and the Trade in Automotive Goods
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GM refuses to tap $3B in bailout cash
By Andrew Mayeda, Canwest News ServiceJanuary 23, 2009 7:11 PM
GM refuses to tap $3B in bailout cash
OTTAWA — General Motors of Canada has turned down an offer by the federal and Ontario governments of emergency short-term aid, a move that has stunned some analysts and left negotiations on a highly touted auto bailout in limbo.
"For reasons that are their own, General Motors has decided not to call upon our short-term aid," Prime Minister Stephen Harper said Friday in an interview, to be broadcast Saturday on Global TV's Focus Ontario. "That's actually good news, but we're talking to them about longer-term restructuring."
Harper and Ontario Premier Dalton McGuinty announced with much fanfare on Dec. 20 that their governments would extend a combined $4 billion in emergency loans to GM Canada and Chrysler Canada.
At the time, the prime minister said the loans were being offered to avoid a "catastrophic short-term collapse" of the auto industry in Canada and the United States.
The Canadian plan was supposed to be proportional to a loan package of $17.4 billion US, announced the day before. GM Canada was to receive up to $3 billion of the Canadian loans, while Chrysler Canada was to get up to $1 billion.
But on Friday, GM Canada spokesman Stew Low confirmed that the company will not be drawing on the Canadian loans for now.
The company "is continuing our restructuring and has initiated more self-help actions to conserve capital, which has allowed us to take the necessary time to work (in the short term) with all our stakeholders to determine how to complete restructuring needs for long-term sustainable viability," Low said in an e-mail.
He said it is "more prudent to work that all through with our stakeholders" before drawing on government aid. "It is anticipated, however, that we will still require the offered assistance, as our 'self-help' efforts are for the short term."
Auto-industry analyst Dennis DesRosiers said it was "shocking" that GM has refused the emergency loans, considering the importance given to saving the auto industry before the bailout was announced. GM's withdrawal from the Canadian aid program now puts the company's production facilities at greater risk, he said.
"The survival of GM depends on the U.S. bailout. Canada was participating in order to protect Canadian assets, so if they don't get involved with the Canadian government, then, obviously, Canadian assets are more exposed," said DesRosiers.
Industry Minister Tony Clement recently expressed frustration with the pace of negotiations with the two automakers. Both companies have already begun to receive funds under the U.S. bailout plan.
Clement had given the companies until Feb. 20 to present restructuring plans that would meet the government's requirements for dispensing aid. Among other conditions, Ottawa had asked the automakers to ensure they could lower their labour costs to the level of their Japan-based competitors.
Darren Cunningham, a spokesman for Clement, said the company still plans to submit a restructuring plan by the Feb. 20 deadline. He said the government would have to see the company's request for funding before deciding whether it is still eligible for the money that was offered.
"What was originally announced on the 20th was for short-term financing. We'll have to see what happens when they come back," said Cunningham.
As for Chrysler, Harper said the negotiations continue. "We're still negotiating over some particular due diligence requirements before we release the money," said the prime minister.
A spokesperson for McGuinty did not immediately return a request for comment.