Auto Bailout Stopped…For Now

It was reported this morning from Fox News that the Senate Republicans were able to block the $14 billion auto rescue package. In a story called, United Auto Workers Lash Out at GOP Senators Over Bailout Collapse, “the president of the United Auto Workers (UAW) union accuses Senate Republicans of thwarting the $14 billion auto rescue package.”

So why are the republicans opposing this, and as reported in the story above, why is the UAW lashing out at Senator Bob Corker? Well, according to a press release from Republican Senate Leader Mitch McConnell, Senator Corker and the Republicans said they would only go along with the bailout under certain conditions, which ultimately were not met. What were the conditions? “The Corker Amendment does not just encourage reform, it requires it. And it does so with crucial specificity. First, participating companies would be required to reduce their outstanding debt by at least two-thirds through an equity swap with bondholders. The Corker Amendment also requires that labor costs at participating companies be brought on par with companies like Nissan, Toyota, and Honda — not tomorrow but immediately — because it is delusional to think that a company which spends $71 per labor hour (US auto companies, with UAW union workers) could compete with a company in the same industry that spends $49 (foreign car companies, without UAW union workers)…The Corker Amendment forces necessary reforms, holds companies accountable, and assures taxpayers that these companies won’t be back for more.”

Further McConnell said, “We simply cannot ask the American taxpayer to subsidize failure…Americans are also worried about the prospect of the government intervening on behalf of some industries and not intervening on behalf of others — especially when there is no guarantee it that the interventions will work. They wonder when the spending stops. If I were to vote in favor of this bill, I would not have a good answer for them.”

For more information on what the Foreign car companies are doing to stay competitive, see this article from the Christian Science Monitor where they discuss how “in the South, host to foreign-owned plants, there is little sympathy held for Detroit.”–America’s Other Auto Industry

And for more information on what US auto makers like Ford are doing outside the US, and away from UAW contracts, see this video below from DetNews.com called “Ford’s most advanced assembly plant operates in rural Brazil.”