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Unions at Harley Davidson to end strike....beginning of the end?

Old 02-18-07, 01:59 PM
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Unions at Harley Davidson to end strike....beginning of the end?

Originally Posted by BBC
Wage deal could end Harley strike
Iconic motorcycle manufacturer Harley-Davidson has reached an outline agreement to end a two-week strike at its largest US factory.

Harley gave no details of its offer to workers but said it expected staff to vote on proposals in the next few days.

About 2,800 workers at Harley's plant in York, Pennsylvania downed tools on 2 February in protest at proposed changes to salary and benefits conditions.

Although its profits are rising, Harley is worried about long-term prospects.

Cost burden

It is concerned that the burden of rising pension and healthcare costs could erode its competitiveness in the same way as it has affected the leading US car companies.

Analysts believe the strike has cost Harley up to $11m (5.6m) a day in lost sales, while also hurting the company's many suppliers.


Unions representing the striking workers confirmed that a tentative agreement had been reached and that picketing at the plant was expected to stop this weekend.

The strike was triggered by workers' decision to reject a three-year pay and benefits deal, which union officials said created a 'two-tier' system of remuneration.

The walkout has dented shipments of models such as the Touring and Softail which are made at the factory.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/h...ss/6373187.stm

Published: 2007/02/18 12:16:30 GMT
I think it is just a matter of time until Harley is under the same pension burdens that haunt our domestic car makers? Do unions even care that they are doing irreversible damage to these companies and our economy?

-p
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Old 02-18-07, 02:04 PM
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Originally Posted by pedagogue
I think it is just a matter of time until Harley is under the same pension burdens that haunt our domestic car makers? Do unions even care that they are doing irreversible damage to these companies and our economy?

-p
Are you suggesting that these workers show up for work simply for the benefit of their respective industries? If they believe they are not being duly compensated, they should just shut up and come to work anyway?
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Old 02-18-07, 02:07 PM
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Well, we could pay the workers as much as Walmart and see what kind of quality would be crapped out of the plant. I bet the price of a Harley would then be affordable to everyone.
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Old 02-18-07, 02:09 PM
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Originally Posted by wewantflair
Are you suggesting that these workers show up for work simply for the benefit of their respective industries? If they believe they are not being duly compensated, they should just shut up and come to work anyway?
That's what many argue. Capitalism. If yah don't like yer employer, then show up anyway and suck it up or...many argue this one...get another job if your current one pays too low.

Yeah, like that's realistic.
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Old 02-18-07, 02:22 PM
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I'm suggesting that there be a fair and balanced plan between the companies and the unions. Of course this will never happen, because nothing is good enough for the union. Here is something I stumbled across that I thought was interesting:

Where Would General Motors Be Without the United Automobile Workers Union?

By George Reisman


This is a question that no one seems to be asking. And so I've asked it. And here, in essence, is what I think is the answer. (The answer, of course, applies to Ford and Chrysler, as well as to General Motors. I've singled out General Motors because it's still the largest of the three and its problems are the most pronounced.)

First, the company would be without so-called Monday-morning automobiles. That is, automobiles poorly made for no other reason than because they happened to be made on a day when too few workers showed up, or too few showed up sober, to do the jobs they were paid to do. Without the UAW, General Motors would simply have fired such workers and replaced them with ones who would do the jobs they were paid to do. And so, without the UAW, GM would have produced more reliable, higher quality cars, had a better reputation for quality, and correspondingly greater sales volume to go with it. Why didn't they do this? Because with the UAW, such action by GM would merely have provoked work stoppages and strikes, with no prospect that the UAW would be displaced or that anything would be better after the strikes. Federal Law, specifically, The National Labor Relations Act of 1935, long ago made it illegal for companies simply to get rid of unions.

Second, without the UAW, GM would have been free to produce in the most-efficient, lowest cost way and to introduce improvements in efficiency as rapidly as possible. Sometimes this would have meant simply having one or two workers on the spot do a variety of simple jobs that needed doing, without having to call in half a dozen different workers each belonging to a different union job classification and having to pay that much more to get the job done. At other times, it would have meant just going ahead and introducing an advance, such as the use of robots, without protracted negotiations with the UAW resulting in the need to create phony jobs for workers to do (and to be paid for doing) that were simply not necessary.

(Unbelievably, at its assembly plant in Oklahoma City, GM is actually obliged by its UAW contract to pay 2,300 workers full salary and benefits for doing absolutely nothing. As The New York Times describes it, "Each day, workers report for duty at the plant and pass their time reading, watching television, playing dominoes or chatting. Since G.M. shut down production there last month, these workers have entered the Jobs Bank, industry's best form of job insurance. It pays idled workers a full salary and benefits even when there is no work for them to do.")

Third, without the UAW, GM would have an average unit cost per automobile close to that of non-union Toyota. Toyota makes a profit of about $2,000 per vehicle, while GM suffers a loss of about $1,200 per vehicle, a difference of $3,200 per unit. And the far greater part of that difference is the result of nothing but GM's being forced to deal with the UAW. (Over a year ago, The Cincinnati Enquirer reported that "the United Auto Workers contract costs GM $2,500 for each car sold.")

Fourth, without the UAW, the cost of employing a GM factory worker, including wages and fringes, would not be in excess of $72 per hour, which is where it is today, according to The Post-Crescent newspaper of Appleton, Wisconsin.

Fifth, as a result of UAW coercion and extortion, GM has lost billions upon billions of dollars. For 2005 alone, it reported a loss in excess of $10 billion. Its bonds are now rated as "junk," that is, below, investment grade. Without the UAW, GM would not have lost these billions.

Sixth, without the UAW, GM would not now be in process of attempting to pay a ransom to its UAW workers of up to $140,000 per man, just to get them to quit and take their hands out of its pockets. (It believes that $140,000 is less than what they will steal if they remain.)

Seventh, without the UAW, GM would not now have healthcare obligations that account for more than $1,600 of the cost of every vehicle it produces.

Eighth, without the UAW, GM would not now have pension obligations which, if entered on its balance sheet in accordance with the rule now being proposed by the Financial Accounting Standards Board, will leave it with a net worth of minus $16 billion.

What the UAW has done, on the foundation of coercive, interventionist labor legislation, is bring a once-great company to its knees. It has done this by a process of forcing one obligation after another upon the company, while at the same time, through its work rules, featherbedding practices, hostility to labor-saving advances, and outlandish pay scales, doing practically everything in its power to make it impossible for the company to meet those obligations.

Ninth, without the UAW tens of thousands of workers its own members would not now be faced with the loss of pension and healthcare benefits that it is impossible for GM or any of the other auto companies to provide, and never was possible for them to provide. The UAW, the whole labor-union movement, and the left-"liberal" intellectual establishment, which is their father and mother, are responsible for foisting on the public and on the average working man and woman a fantasy land of imaginary Demons (big business and the rich) and of saintly Good Fairies (politicians, government officials, and union leaders). In this fantasy-land, the Good Fairies supposedly have the power to wring unlimited free benefits from the Demons.

Tenth, Without the UAW and its fantasy-land mentality, autoworkers would have been motivated to save out of wages actually paid to them, and to provide for their future by means of by and large reasonable investments of those savings investments with some measure of diversification. Instead, like small children, lured by the prospect of free candy from a stranger, they have been led to a very bad end. They thought they would receive endless free golden eggs from a goose they were doing everything possible to maim and finally kill, and now they're about to learn that the eggs just aren't there.

It's very sad to watch an innocent human being suffer. It's dreadful to contemplate anyone's life being ruined. It's dreadful to contemplate even an imbecile's falling off a cliff or down a well. But the union members, their union leaders, the politicians who catered to them, the journalists, the writers, and the professors who provided the intellectual and cultural environment in which this calamity could take place none of them were imbeciles. They all could have and should have known better.

What is happening is cruel justice, imposed by a reality that willfully ignorant people thought they could choose to ignore as long as it suited them: the reality that prosperity comes from the making of goods, not the making of work; that it comes from the doing of work, not from the shirking of it; that it comes from machines and methods of production that save labor, not the combating of those machines and methods; that it comes from the earning and reinvestment of profits not from seizure of those profits for the benefit of idlers, who do all they can to prevent the profits from being earned in the first place.

In sum, without the UAW, General Motors would not be faced with extinction. Instead, it would almost certainly be a vastly larger, far more prosperous company, producing more and better motor vehicles than ever before, at far lower costs of production and prices than it does today, and providing employment to hundreds of thousands more workers than it does today.

Few things are more obvious than that the role of the UAW in relation to General Motors has been that of a swarm of bloodsucking leeches, a swarm that will not stop until its prey exists no more.

It is difficult to believe that people who have been neither lobotomized nor castrated would not rise up and demand that these leeches finally be pulled off!

Perhaps the American people do not rise up because they have never seen General Motors, or any other major American business, rise up and dare to assert the philosophical principle of private property rights and individual freedom and proceed to pull the leeches off in the name of that principle.

It is easy to say, and also largely true, that General Motors and American business in general have not behaved in this way for several generations because they no longer have any principles. Indeed, they would project contempt at the very thought of acting on any kind of moral or political principle.

One of the ugliest consequences of the loss of economic freedom and respect for property rights is that it makes such spinelessness and gutlessness on the part of businessmen such amorality a requirement of succeeding in business. Business today is conducted in the face of all pervasive government economic intervention. There is rampant arbitrary and often unintelligible legislation. There are dozens of regulatory agencies that combine the functions of judge, jury, and prosecutor in the enforcement of more than 75,000 pages of Federal regulations alone. The tax code is arbitrary and frequently unintelligible. Judicial protection of economic freedom has not existed since 1937, when the Supreme Court abandoned it, out of fear of being enlarged by Congress with new members sufficient to give a majority to the New Deal on all issues. (Try to project the effect of a loss of judicial protection of the freedoms of press and speech on the nature of what would be published and spoken.)

Any business firm today that tried to make a principled stand on such a matter as throwing out a legally recognized labor union would have to do so in the knowledge that its action was a futile gesture that would serve only to cost it dearly. And a corporation that did this would undoubtedly also be embroiled in endless lawsuits by many of its stockholders blaming it for the losses the government imposed on it.

But none of this should stop anyone else from speaking up and making known his outrage at what the UAW has done to General Motors.

This article is copyright 2006, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author's web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics. His book is available through Mises.org, Amazon.com, and on his web site. See his Mises.org Daily Articles Archive and read his interview in the Austrian Economics Newsletter. You can contact him by mail. To comment on this piece, go to the blog.
Source: http://www.mises.org/story/2124

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Old 02-18-07, 02:35 PM
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Originally Posted by DVD Polizei
That's what many argue. Capitalism. If yah don't like yer employer, then show up anyway and suck it up or...many argue this one...get another job if your current one pays too low.

Yeah, like that's realistic.
But this IS capitalism. The union, representing the workers, believes its collective services are worth more than they are being paid, and witholds those services until acceptable compensation is reached. I simply do not understand the hate for unions. The company has to agree to all terms in the contract; it's not like the union can arbitrarily demand things not in writing.
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Old 02-18-07, 02:45 PM
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Originally Posted by wewantflair
But this IS capitalism. The union, representing the workers, believes its collective services are worth more than they are being paid, and witholds those services until acceptable compensation is reached. I simply do not understand the hate for unions. The company has to agree to all terms in the contract; it's not like the union can arbitrarily demand things not in writing.
I agree for the most part. The people running the unions just tend to be inept. UPS strikes for a long time, UPS loses a lot of business, UPS lays off a lot of workers. Ford gives unions a nice contract, Ford hemorages money, Ford lays off lots of people.

The companies need to suck it up if they really think that the contract is going to hurt them in the long run.
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Old 02-18-07, 02:56 PM
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Originally Posted by wewantflair
But this IS capitalism. The union, representing the workers, believes its collective services are worth more than they are being paid, and witholds those services until acceptable compensation is reached. I simply do not understand the hate for unions. The company has to agree to all terms in the contract; it's not like the union can arbitrarily demand things not in writing.
The problem is that the anti-Union crowd have painted a broad stroke over all unions, thus making any union appearing to be bad. This of course, is not the case. I agree the automobile unions have grown out of proportion, but there are unions where just compensation is requested.
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Old 02-18-07, 03:20 PM
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Why can't Harley Davidson simply raise prices? It's been proven that money is no object for their target market.
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Old 02-18-07, 03:25 PM
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Originally Posted by wewantflair
But this IS capitalism. The union, representing the workers, believes its collective services are worth more than they are being paid, and witholds those services until acceptable compensation is reached. I simply do not understand the hate for unions. The company has to agree to all terms in the contract; it's not like the union can arbitrarily demand things not in writing.
Actually, it is more like a monopoly that prices fixes (except, being a union, it's "legal" and they can't be charged). If it were capitalism or a free market, the company could hire other workers or other unions, ie, it could shop around for the best deal, like any other consumer in a capitalist system.
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Old 02-18-07, 03:49 PM
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Some can...at least in right to work states, right?

My company instituted a no smoking on company property rule but the union is exempt. I think that is messed up
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Old 02-18-07, 03:59 PM
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Originally Posted by Jason
Why can't Harley Davidson simply raise prices? It's been proven that money is no object for their target market.
When there were no (or very few) imported cars. that worked brilliantly for the Big Three. As long as all three companies in the end got the model contract, there was no point in fighting the union and being struck. Just pay to avoid a strike, raise the price (your only two competitors will), and keep raking in the dough.

Amazing how fast a level playing field can tilt. Look how well that has worked lately.

As none of the Japanese transplants who manufacture cars here are unionized (I don't think they have unions at all, but certainly not the UAW or UAW wages, workrules), they have a substantial cost advantage on assembly labor due to lower wages and better work rules. It is over a couple of grand per car.
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Old 02-18-07, 04:37 PM
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Just give it time and eventually HD will be forced to start building in Mexico or Canada.
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Old 02-18-07, 07:53 PM
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Originally Posted by sjrab16
Just give it time and eventually HD will be forced to start building in Mexico or Canada.
I agree and see no problem with this. HD should make business decisions for the company. Some will no longer buy HD if there were to happen, while others who never bought, will as quality goes up and prices go down.
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Old 02-18-07, 07:58 PM
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Originally Posted by DVD Polizei
The problem is that the anti-Union crowd have painted a broad stroke over all unions, thus making any union appearing to be bad. This of course, is not the case. I agree the automobile unions have grown out of proportion, but there are unions where just compensation is requested.
I'm not seeing this. I see unions being useful for oversight for safety issues, on truely dangous jobs, but really that is about it.

Each and every worker should have to show they contribute to the company and the company is better off having them employeed. If not, the company should be allowed to fire/release them.

On the other hand, a company wants to be strong and many companies believe their strength lies in their people. So to hire and retain the best they pay and have benefits that attract the best.

If you are a contributor and do not feel you are compensated properly you are free to find another job. And if you do contribute, you will find another job. Period.
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Old 02-18-07, 07:59 PM
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Originally Posted by OldDude
When there were no (or very few) imported cars. that worked brilliantly for the Big Three. As long as all three companies in the end got the model contract, there was no point in fighting the union and being struck. Just pay to avoid a strike, raise the price (your only two competitors will), and keep raking in the dough.

Amazing how fast a level playing field can tilt. Look how well that has worked lately.

As none of the Japanese transplants who manufacture cars here are unionized (I don't think they have unions at all, but certainly not the UAW or UAW wages, workrules), they have a substantial cost advantage on assembly labor due to lower wages and better work rules. It is over a couple of grand per car.
Your exactly right. Unions prevent companies from moving fast, making changes as the envirnment changes etc.
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Old 02-18-07, 10:17 PM
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While it's very easy to compare Toyota to American car manufacturers of yesterdays, we have to remember something which no one on this forum has touched upon.

Toyota hasn't had the time to accrue a large retirement liability. Toyota is fairly new, so their retirement payouts are extremely low. Eventually, Toyota will face the same problems as the Big Three as time goes on, and more of their employees retire. In fact, Toyota is actually raising the ceiling on the retirement age by a few years--a sign they know what's coming down the road.

So for now, yeah, Toyota has an edge. But this edge will go away 10-20 years from now. I agree Toyota and Japanese automakers in general, have a different work philosophy and it is paying off. But GM, Chrysler, and Ford will always have an extra financial burden because they've been around the longest. As Toyota creates more auto factories and hires more employees, their liability will increase.
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Old 02-18-07, 10:23 PM
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i thought toyota had 401k's and not defined benefit?

anyway, i predict GM will declare bankruptcy this year or next or will have a major crisis. GMAC has been the money maker and they made a lot of risky subprime mortgages in the last few years
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Old 02-18-07, 10:34 PM
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Well, I think they do have 401(k) plans. The Three rely on pensions which indeed are higher. But we're also talking about healthcare costs. In general I'm just very cautious of everyone using Toyota as the perfect model when they haven't been around long enough. Toyota has an advantage because they are new to the US, and are using a totally different retirement system than the Big Three. You can't just cut everyone's pensions and say, "Ok, we're starting over." This is something that will follow GM, Chrysler, and Ford as long as they are in business. Toyota has that luxury to say they don't have such baggage. But the finanacial baggage will catch-up to Toyota eventually.

I would say a merger might happen between GM and Chrysler as rumored in the business sector.

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Old 02-18-07, 11:00 PM
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Toyota does not (and will not) pay the same retirement costs as the big three

http://www.risingsunofnihon.com/2006...gacy_cost.html
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Old 02-18-07, 11:14 PM
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Originally Posted by wewantflair
But this IS capitalism. The union, representing the workers, believes its collective services are worth more than they are being paid, and witholds those services until acceptable compensation is reached. I simply do not understand the hate for unions. The company has to agree to all terms in the contract; it's not like the union can arbitrarily demand things not in writing.
That would be true except for the laws over many decades which have given the unions unfair advantages they would not be able to get in a true free market system. That is the main point of Reisman's perceptive and insightful article. A hundred years ago such coercive laws went the other way giving the companies the unfair advantages they would not be able to get in a true free market system.

Both are wrong. Neither is capitalism.
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Old 02-19-07, 12:17 AM
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Originally Posted by 4KRG
Toyota does not (and will not) pay the same retirement costs as the big three

http://www.risingsunofnihon.com/2006...gacy_cost.html

1. Toyota has been in the US a much shorter time. Only 258 workers have retired, and they retired early. Toyota won't see its first 25 year veterans retire until 2013.

2. Toyota uses a defined-contribution pension plan instead of defined benefit plan. Employees pay into the fund toward their post-retirement packages.

3. Toyota is able to predict future financial burdens whereas the Big Three cannot.

4. Toyota is operating its own medical center at the new San Antonio plant - the best way to cut health costs is to find the problems early and treat them sooner. Preventative maintenance is cheaper than corrective.

Toyota does management better, too.

----

#1 I already discussed.

#2, we simply don't know. And with how retirement "packages" are messed with by companies later on when they start to accrue debt, I'd be very surprised if Toyota employees encounter no cuts in their company-matched bennies in the future.

#3, that's a pretty arrogant statement. If they can magically predict future financial burdens, they would be the first company in the world to escape never-ending changes. Unfortunately, the Big Three could also foresee financial issues in the future, but they tried to hide them. Whether or not Toyota will try to hide them, is yet to be seen.

#4 is a good idea, but we simply don't have the stats to say whether it is beneficial or not. In fact, on-site clinics are not new to the workplace. They were initiated in the 70's I believe, but were not considered cost-effective so they were stopped. Today, it may be possible to reduce costs but we'll have to wait and see if this is the case. I think #4 is the most productive and all businesses should invest in this idea.

The fact is, Toyota is leveraging time. We simply don't know how Toyota is going to do until 10-20 years from now. In the meantime, it's easy to say Toyota is better.

And as usual, the way American Economics works, is that we hear about all the good in the short term, but hang around long enough, and you'll hear about the secrets and deceptions of a company you once thought was upfront with its costs.

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Old 02-19-07, 12:27 AM
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Originally Posted by DVD Polizei
You can't just cut everyone's pensions and say, "Ok, we're starting over." This is something that will follow GM, Chrysler, and Ford as long as they are in business.
That's the key.....as long as they are in business. Having agreed to pay many workers not to work, paying out huge pensions, etc. I would expect to see one of the big three go bankrupt at some point. It's like having to fund social security without having the advantage of being able to print your own money.
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Old 02-19-07, 06:16 AM
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Originally Posted by DVD Polizei
Well, I think they do have 401(k) plans. The Three rely on pensions which indeed are higher. But we're also talking about healthcare costs. In general I'm just very cautious of everyone using Toyota as the perfect model when they haven't been around long enough. Toyota has an advantage because they are new to the US, and are using a totally different retirement system than the Big Three. You can't just cut everyone's pensions and say, "Ok, we're starting over." This is something that will follow GM, Chrysler, and Ford as long as they are in business. Toyota has that luxury to say they don't have such baggage. But the finanacial baggage will catch-up to Toyota eventually.

I would say a merger might happen between GM and Chrysler as rumored in the business sector.
yes you can, PBGC

toyota also has the freedom to raise health premiums unlike the big three
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Old 02-19-07, 09:16 AM
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Originally Posted by movielib
That would be true except for the laws over many decades which have given the unions unfair advantages they would not be able to get in a true free market system. That is the main point of Reisman's perceptive and insightful article. A hundred years ago such coercive laws went the other way giving the companies the unfair advantages they would not be able to get in a true free market system.

Both are wrong. Neither is capitalism.
You beat me to it.
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