The GM, Chrysler Restructuring Plans and Their Effects on My Family

On Monday, March 30, the U.S. government task force on automotive restructuring forced GM chief executive Rick Wagoner to resign, as it deemed both General Motors and Chrysler LLC's restructuring plans inadequate. This leaves bankruptcy as a real possibility for two of the big three American automakers. The government said they will provide GM with 60 days worth of working capital while the new management comes up with a rigorous restructuring plan. The government task force also said that it doesn't believe Chrysler LLC can survive as a stand alone company, and that it must merge with foreign automaker Fiat SpA in order to receive any more funds from the U.S. government. GM and Chrysler bondholders stand to lose large amounts of money as both companies carry huge amounts of debt.

As someone who's spouse has recently lost their job as a result of a Chrysler plant closing, I have a few thoughts on the state of the U.S. auto industry. First of all, while the media reports that U.S. autoworkers are overpaid and under worked, my husband has spent 58+ hours a week for 10 of the last 13 years working the night shift and never grossing more than 60k per year. While this is certainly a fair wage, he was never under worked, and never made a small fraction of the compensation of the executives who helped put the company in this situation. CNNMoney.com reports that executives on average make over 350 times the pay of their workers.

Massive executive compensation is certainly part of the problem, however it is not the entire problem. U.S. automakers have been handicapped since the eighties. We have to compete with foreign companies whose labor costs are below our minimum wage in many instances. These companies also do not have to follow the environmental regulations of our country, and finally they do not pay retirement or health care benefits to their labor force. My husband worked at Chrysler's top manufacturing plant in both quality and production, yet the jobs were sent to Canada where there is a national health care system. This saves the company as much as 15k per employee in health care premiums. These costs automatically place U.S. companies 2-3k behind in profit per vehicle.

The knee-jerk reaction is to cut benefits and health care from the American worker which is exactly what the government has asked the automakers to do.

This is not a solution. If it weren't for the health insurance provided by these jobs, my family would have lost everything already as my daughter is fighting brain cancer. The lack of living wage jobs with benefits and the lack of health care reform are the major reasons this economy is on the brink. No matter how much of our grandchildren's tax money we throw at this problem, cars will not sell and the economy will not improve if people have no money to spend.

Statistics can be misleading,for example, if we lose 1000 jobs at 21 dollars an hour and gain 3000 jobs at 7 dollars an hour the statistics would say we gained 2000 jobs when in reality we haven't. Those 1000 displaced workers will have to find a minimum of two of those $7 jobs just to try to make ends meet, and will not have the benefits they once had. The fact that the government requires the autoworkers to renegotiate their contract to give up wages and benefits when they have made concessions on every contract for the past ten years is an outrage to me, especially in light of the fact they claim to have no authority to force companies like AIG to break the contracts of the executives who have received millions in bonuses paid to them from bailout funds.

As long as we continue to eliminate the middle class, the economy cannot recover and the American auto industry will not be able to survive.

Sources:

At A Glance: US Government Moves To Overhaul GM, Chrysler , The Wall Street Journal

Jeanne Sahadi, CEO pay: 364 times more than workers, CNNMoney.com