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Editoral from a Ford Dealership regarding the Big 3 & the Bailout

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Old 12-12-2008, 06:49 PM   #1
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Editoral from a Ford Dealership regarding the Big 3 & the Bailout

Well written "Letter to the Editor" from Elkins Fordland in the Pittsburgh, PA Region .


Editor:

As I watch the coverage of the fate of the U.S. auto industry, one alarming and frustrating fact hits me right between the eyes. The fate of our nation's economic survival is in the hands of some congressmen who are completely out of touch and act without knowledge of an industry that affects almost every person in our nation. The same lack of knowledge is shared with many journalists whom are irresponsible when influencing the opinion of millions of viewers.

Sen. Richard Shelby of Alabama has doomed the industry, calling it a dinosaur. No Mr. Shelby, you are the dinosaur, with ideas stuck in the '70s, '80s and '90s. You and the uninformed journalist and senators that hold onto myths that are not relevant in today's world.

When you say that the Big Three build vehicles nobody wants to buy, you must have overlooked that GM outsold Toyota by about 1.2 million vehicles in the U.S. and Ford outsold Honda by 850,000 and Nissan by 1.2 million in
the U.S. GM was the world's No. 1 automaker beating Toyota by 3,000 units.

When you claim inferior quality comes from the Big Three, did you realize that Chevy makes the Malibu and Ford makes the Fusion that were both rated over the Camry and Accord by J.D. Power independent survey on initial quality? Did you bother to read the Consumer Report that rated Ford on par with good Japanese automakers.

Did you realize Big Three's gas guzzlers include the 33 mpg Malibu that beats the Accord. And for '09 Ford introduces the Hybrid Fusion whose 39 mpg is the best midsize, beating the Camry Hybrid. Ford's Focus beats the
Corolla and Chevy's Cobalt beats the Civic.

When you ask how many times are we going to bail them out you must be referring to 1980. The only Big Three bailout was Chrysler, who paid back $1 billion, plus interest. GM and Ford have never received government aid.

When you criticize the Big Three for building so many pickups, surely you've noticed the attempts Toyota and Nissan have made spending billions to try to get a piece of that pie. Perhaps it bothers you that for 31 straight years Ford's F-Series has been the best selling vehicle. Ford and GM have dominated this market and when you see the new '09 F-150 you'll agree this won't change soon.

Did you realize that both GM and Ford offer more hybrid models than Nissan or Honda. Between 2005 and 2007, Ford alone has invested more than $22 billion in research and development of technologies such as Eco Boost, flex fuel, clean diesel, hybrids, plug in hybrids and hydrogen cars.

It's 2008 and the quality of the vehicles coming out of Detroit are once again the best in the world. Perhaps Sen. Shelby isn't really that blind. Maybe he realizes the quality shift to American. Maybe it's the fact
that his state of Alabama has given so much to land factories from Honda, Hyundai and Mercedes Benz that he is more concerned about their continued growth than he is about the people of our country. Sen. Shelby's disdain for "government subsidies" is very hypocritical. In the early '90s he was the driving force behind a $253 million incentive package to Mercedes. Plus, Alabama agreed to purchase 2,500 vehicles from Mercedes. While the bridge loan the Big Three is requesting will be paid back, Alabama's $180,000-plus per job was pure incentive. Sen.
Shelby, not only are you out of touch, you are a self-serving hypocrite, who is prepared to ruin our nation because of lack of knowledge and lack of due diligence in making your opinions and decisions.

After 9/11, the Detroit Three and Harley Davidson gave $40 million-plus emergency vehicles to the recovery efforts. What was given to the 9/11 relief effort by the Asian and European Auto Manufactures? $0 Nada. Zip!

We live in a world of free trade, world economy and we have not been able to produce products as cost efficiently. While the governments of other auto producing nations subsidize their automakers, our government may be ready to force its demise. While our automakers have paid union wages, benefits and legacy debt, our Asian competitors employ cheap labor. We are at an extreme disadvantage in production cost. Although many UAW concessions begin in 2010, many lawmakers think it's not enough.

Some point the blame to corporate management. I would like to speak of Ford Motor Co. The company has streamlined by reducing our workforce by 51,000 since 2005, closing 17 plants and cutting expenses. Product and future product is excellent and the company is focused on one Ford. This is a company poised for success. Ford product quality and corporate management have improved light years since the nightmare of Jacques Nasser. Thank you Alan Mulally and the best auto company management team in the business.

The financial collapse caused by the secondary mortgage fiasco and the greed of Wall Street has led to a $700 billion bailout of the industry that created the problem. AIG spent nearly $1 million on three company excursions to lavish resorts and hunting destinations. Paulson is saying no to $250 billion foreclosure relief and the whole thing is a mess. So when the Big Three ask for 4 percent of that of the $700 billion, $25 billion to save the country's largest industry, there is obviously oppositions. But does it make sense to reward the culprits of the problem with $700 billion unconditionally, and ignore the victims?

As a Ford dealer, I feel our portion of the $25 billion will never be touched and is not necessary. Ford currently has $29 billion of liquidity. However, the effect of a bankruptcy by GM will hurt the suppliers we all do business
with. A Chapter 11 bankruptcy by any manufacture would cost retirees their health care and retirements. Chances are GM would recover from Chapter 11 with a better business plan with much less expense. So who foots the bill if GM or all three go Chapter 11? All that extra health care, unemployment, loss of tax base and some forgiven debt goes back to the taxpayer, us. With no chance of repayment, this would be much worse than a loan with the intent of repayment.

So while it is debatable whether a loan or Chapter 11 is better for the Big Three, a $25 billion loan is definitely better for the taxpayers and the economy of our country.

So I'll end where I began on the quality of the products of Detroit. Before you, Mr. or Ms. Journalist continue to misinform the American public and turn them against one of the great industries that helped build this nation, I must ask you one question. Before you, Mr. or Madam Congressman vote to end health care and retirement benefits for 1 million retirees, eliminate 2.5 million of our nation's jobs, lose the technology that will lead us in the
future and create an economic disaster including hundreds of billions of tax dollars lost, I ask this question not in the rhetorical sense. I ask it in the sincere, literal way. Can you tell me, have you driven a Ford lately?


Jim Jackson
Elkins Ford




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Old 12-12-2008, 10:27 PM   #2
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So, please explain... what do you feel or think is the best course of action? I'm seriously confused now on this issue: Are the companies to be spared for the sake of employment/jobs, or the products they make? Help. And how does the union get exercised from the equation? Or should they be? Thank you sir!




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Old 12-13-2008, 05:56 AM   #3
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It is not that the big three are building cars nobody wants. It is that the current economy nobody wants any cars.

Some real concessions are necessary, but IMO preserving the big 3 is a matter national securty.
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Old 12-13-2008, 06:49 AM   #4
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The only fix is to renegotiate the UAW contracts. GM pays $87 an hour for labor after all the benefits and retirement. Toyota pays $49 at there US factories, thats why there not in trouble.

Ford is in the best shape of the 3. There not even asking for money, just a line of credit in case things get worse. Ford says there labor rate will be down to $46 an hour by the 3rd quarter of 2009.

I myself think it's there own fault. Any business should plan ahead and expect the economy to change. We can't go to the government when were behind on bills and taxes, hell they come after us!




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Old 12-13-2008, 06:58 PM   #5
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Bingo!

Quote:
Originally Posted by JTX View Post
The only fix is to renegotiate the UAW contracts. GM pays $87 an hour for labor after all the benefits and retirement. Toyota pays $49 at there US factories, thats why there not in trouble.

Ford is in the best shape of the 3. There not even asking for money, just a line of credit in case things get worse. Ford says there labor rate will be down to $46 an hour by the 3rd quarter of 2009.

I myself think it's there own fault. Any business should plan ahead and expect the economy to change. We can't go to the government when were behind on bills and taxes, hell they come after us!
Amen!




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Old 12-13-2008, 07:46 PM   #6
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I do a agree that american quality cars are very reliable. My chevy truck has 158,000 miles on it I use fairly hard both to tow my ranger and then everyday as a general contractor. I am on my second set of tires and second battery. Still haven't had to do the brakes or get the front end alligned.

I have a hard time figuring out how the failing of GM would cause Ford and Chrysler to also fail. If GM was gone then people would buy more Ford, Chrysler, and foregin cars. I see most of the GM truck, van and SUV buyers ended up at ford and Chrysler over Toyota Nissan. Isn't this where the largest profit margins are?

The media does make it sound like the american cars are crap though. Who would have thought that the media picks a side and plays it.
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Old 12-13-2008, 08:11 PM   #7
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Ford FTW.

GM is in a sad state.




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Old 12-14-2008, 12:01 AM   #8
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The only fix is to renegotiate the UAW contracts. GM pays $87 an hour for labor after all the benefits and retirement. Toyota pays $49 at there US factories, thats why there not in trouble.

Ford is in the best shape of the 3. There not even asking for money, just a line of credit in case things get worse. Ford says there labor rate will be down to $46 an hour by the 3rd quarter of 2009.

I myself think it's there own fault. Any business should plan ahead and expect the economy to change. We can't go to the government when were behind on bills and taxes, hell they come after us!


id like to know where the facts with the $$ come from.... toyota pays equel if not more $ to employee's then say ford does they want to keep the unions out so they can fire atwill, its not the unions to blame they have been trying to work with the auto industry for a longtime with there declining sales.... who can compete in any industry against stuff thats made here or america at $35hr and in mexico/china/japan/korea for $10hr if there lucky no comparison
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Old 12-14-2008, 07:45 AM   #9
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I've seen what's written below personally....and IMHO, it's bullcrap!! Getting paid for sitting on your butt, wages that are out of kilter with the rest of US workers wages....It's no wonder the auto industry is in such trouble. It's both the UAW and the automaker's management that's responsible for the financial mess. Blind shortsightedness on both sides.


In 2005 Henry Payne, a Detroit freelance writer, writing for National Review Online, reported on the cushy situation for a UAW member.

Things haven't changed much for the Big 3, [General Motors, Ford and Chrysler] since 2005, but for the UAW worker, a cushy situation has gotten even cushier.

Back in 2005, there were massive job cuts at GM, and America, back in 2005, still "worried" about job loss and unemployment.

Along came Steve Miller in 2005, a "turnaround" specialist, who told Americans just how cushy UAW workers actually had it, and he warned America that these policies would not work.
We cannot continue to pay $65 an hour for someone to cut the grass and remain competitive.
Miller meant, literally, "cutting the grass." Henry Payne wrote:
Take grass cutting. As defined by the current United Auto Worker contract negotiated with the "Big Five" (GM, Ford, Chrysler, and top parts makers Delphi and Visteon), an auto "production worker" is a job description that covers anything from mowing grass to cleaning the toilets. In the real world, these jobs would be outsourced to $8 an hour, no-benefit wage earners, but on Planet Big Five, these jobs get the same wages as any auto line-worker: an average $26 an hour ($60,000 a year) plus benefits that bring the company's total cost per worker to a staggering $65 an hour.
But at least the grass cutters are working for their pay. The UAW contract also guarantees that 12,000 autoworkers get full wage for doing nothing. On the heels of Miller's straight-talk, the Detroit News reported that "12,000 American autoworkers, instead of bending sheet metal, spend their days counting the hours in a jobs bank." These aren't jobs. And they certainly aren't being "lost" to China.
"We just go in (to Ford's Michigan Truck Plant) and play crossword puzzles, watch videos that someone brings in or read the newspaper," The News quoted one UAW worker as saying. "Otherwise, I've just sat."
For Delphi [autoparts maker], this idled labor cost $400 million in the second quarter of this year alone. Facing similar numbers until the contract's end in 2007, Delphi took refuge in bankruptcy.
"The jobs bank must be eliminated," says Miller. "Paying people not to work is just not sustainable."
I am struck by the union member comments I've read on forums and message boards around the web. Anyone suggesting that unions need to clean-up problems like the jobs bank are met with heated accusations of greed and downright meanness. Union workers often see nothing odd about their own greed.

A 7th grader understands that something must be left lying on the bottom line after all debts are paid and future debts are factored in. When future debts (like health care and pensions) far exceed realistic estimates for future income, there's a problem. The union workers' loyalty is to the Union and not to the company or the stockholders. Hello...there is no Union without the company and stockholders. The Union's argument: there is no company without the worker. It's a good argument but those workers need not be Union. That's the reality.

Payne points out that the competition for these UAW jobs were not foreign laborers, but Americans. A UAW independent supplier, who does not receive Union benefits, in the industry in 2003, made an average wage of $15.76 an hour, compared to the hourly wage, minus the benefits, paid to UAW workers of $15.77 an hour. Add the benefits to the hourly pay in 2003, and the UAW worker received $65.00 an hour. That's $50.00 per hour paid in benefits alone to a UAW worker - $50.00 per hour more than the average.

Back then, in 2005, Payne reports what we may hear repeated in the near future, and he called on our political leadership to show some leadership:
The coming months will be painful for many American autoworkers. Accustomed to a certain lifestyle, they will see their wages cut in half, jeopardizing second homes, college tuitions, and car payments. One blue-collar Delphi worker interviewed by the Detroit News makes $103,000 a year operating a forklift and fears the consequences if his pay is drastically reduced. But many Americans will ask how a forklift operator felt entitled to a six-figure income in the first place (according to Bureau of Labor Statistics, the average forklift operator wage in the U.S. is $26,000).
It is an opportune time for political leadership to step to the plate and speak with candor, but the signs are not encouraging.
Does this sound familiar?
UAW leaders are threatening strikes, and their Democratic allies are parroting tired slogans of government bailouts and trade protectionism. Michigan's Democratic governor Jennifer Granholm recently traveled to Washington, D.C. to stump for auto-import tariffs, while Senator Hillary Rodham Clinton demanded President Bush convene a "manufacturing summit" to examine a taxpayer bailout for the Big Five's "enormous legacy costs, including paying the health care and pensions of retirees."
The Washington Post reports that GM's ratio of retirees to workers is 2.5 to 1. Many of the retirees went out on the 30 years-in-and-out with full benefits plan, regardless of age. Some are not eligible for Social Security and Medicare until years after retirement.

Move on to 2008 and nothing has changed, including the existence of the Jobs Bank, with the exception of the hourly wage plus benefits which is up to about $73.00 an hour. A headline in Canada Free Press: Unions Killing Detroit, shows the insanity of Union leadership.
If you’ve followed developments in the auto industry at any time during the past couple couple decades, you’ve probably heard of GM’s “Jobs Bank.” This nausea-inducing scam was the concoction of the UAW in the 1980s. Rather than allow GM to layoff workers when conditions warranted, the UAW had GM assign workers to the Jobs Bank , where they were paid almost full wages and benefits NOT to work. The Jobs Bank was pitched nominally as a retraining program, where workers would acquire the skills and train themselves in the technologies and techniques of the future, or where “workers” could perform community services. Alas, the Jobs Bank became little more than a casino and lounge, where workers would report for a full day of leisure, reading newspapers, playing cards, and generally not adding value to GM’s vehicles. (Sounds a bit like my job description, actually.) Now you know why a handle falls off or you hear a tinny sound when you slam your Chevy’s door.
Understandably, GM and the UAW generally don’t like to talk about the jobs bank. It sort of undermines the credibility of the argument that a bailout would save hard working Americans’ jobs. But it still exists and estimates are that thousands of workers report there for duty every day.




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Old 12-14-2008, 09:47 AM   #10
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just a thought... they wouldnt need the health care benefits if there was a health care syatem
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Old 12-14-2008, 09:59 AM   #11
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Or they could have health care benefits more in line with what the rest of the US gets. I pay about $150/month towards premiums (company picks up the rest) and I have a $10 copay for visits, $50 for ER visits.

I'm not for socialized medicine at all. It heavily favors the young and the wealthy (those that can pay directly for the best care). The old are left out in the cold, and the tax rates are killer. Take a look at what has happened to healthcare in England. I just hope your Canadian national health program doesn't head the same way.




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Old 12-14-2008, 05:45 PM   #12
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That is very interesting... I may never buy another vehicle. So really, the Big 3 need to be able to get themselves out of this situation, fold or file BK (whichever of the companies).

Health care system? No thanks. Health care insurance, eh... $40 copay; $100 ER visit.




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Old 12-14-2008, 09:13 PM   #13
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The only fix is to renegotiate the UAW contracts. GM pays $87 an hour for labor after all the benefits and retirement. Toyota pays $49 at there US factories, thats why there not in trouble.

Ford is in the best shape of the 3. There not even asking for money, just a line of credit in case things get worse. Ford says there labor rate will be down to $46 an hour by the 3rd quarter of 2009.

I myself think it's there own fault. Any business should plan ahead and expect the economy to change. We can't go to the government when were behind on bills and taxes, hell they come after us!
Amen x2. And who is going to bail out the autoworkers (and ones with jobs connected to auto industry) who have lost their jobs due to layoffs. nobody, THAT'S WHO!

And I really hae how the UAW and the workers it serves are being used as scapegoats. I don't think any of those workers are flying around in private jets or making Multi-million dollar salaries.




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Old 12-15-2008, 09:39 AM   #14
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They did get themselves into this mess by consistently offering wage increases unil they get to this "overpaid" point. It's much easier saying no to a hefty raise over taking away what folks already had.

I see merits to both sides of the arguement, whatever the outcome folks wont be happy.




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Old 12-15-2008, 10:15 AM   #15
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Or they could have health care benefits more in line with what the rest of the US gets. I pay about $150/month towards premiums (company picks up the rest) and I have a $10 copay for visits, $50 for ER visits.
As a Ford Motor Company/UAW worker, I'd like to adderss this statement.

As per the last (2007) contract, we now have a $300 per year deductible. OK, so I know that's not a lot.

You have a $10 co-pay, Ours is $25. Your ER visit co-pay is $50. Ours is $100.

I'll Address the $73 an hour myth, as well as the difference between what we make, and what the foreign auto workers pay is in the next post.
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Old 12-15-2008, 10:35 AM   #16
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OK Folks, here's how they come up with that "$73" an hour.

I actually make $28 and change.
They add what my healthcare costs per year, break it down to an hourly rate, and add that to the $28.

Then they add up what pension costs are per year, break that down to an hourly rate, and add that to the $28.

Then they add what they pay RETIREES (company wide) per year, break that down to an hourly rate, and add THAT to my $28.

Then they add retirees HEALTHCARE per year, break THAT down to an houry rate, and add THAT to the $28.

THEN they add the pension and healthcare that they're paying to the surviving spouses of retired employees who are NO LONGER LIVING, break THAT down to an hourly rate, and add THAT to the $28.

They take the whole figure they come up with, divide it by that number of ACTIVE, WORKING employees, (they DO NOT include retired employees, or surviving spouses) AND THIS is how they come up with the magical $73 an hour figure.

The retirees pensions and healthcare is called a "Legacy Cost"

OK. The disparity in the hourly rate between the Big 3 wages, and the foreign automakers wages comes from the fact that those foreign auto makers have either not been here long enough to have very many retirees, or are JUST NOW starting to have people retiring! SO they aren't figuring "Legacy Costs" into their wages!

Doesn't really seem fair, does it.

I know everyone is hating on guys like me right now, and that's ok. The mainstream media has portrayed us as "the bad guy"

The Citigroup was handed 306 Billion dollars without so much as one question asked. But as soon as the Big 3 ask for 25 Billion, suddenly it's the Spanish Inquisition all over again.
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Old 12-15-2008, 10:48 AM   #17
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As a Ford Motor Company/UAW worker, I'd like to adderss this statement.

As per the last (2007) contract, we now have a $300 per year deductible. OK, so I know that's not a lot.

You have a $10 co-pay, Ours is $25. Your ER visit co-pay is $50. Ours is $100.

I'll Address the $73 an hour myth, as well as the difference between what we make, and what the foreign auto workers pay is in the next post.
Do you have to pay part of the premiums as well? I have to pay $107 a month for my health care plus the first $3500 a year comes straight out of my pocket. $80 visits $40 X rays $10 bandages every penny I pay till I hit $3500 then I get to start doing co pays. Perscriptions are like $50 for name brand and $20 for generics.




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Old 12-15-2008, 10:55 AM   #18
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OK Folks, here's how they come up with that "$73" an hour.

I actually make $28 and change.
They add what my healthcare costs per year, break it down to an hourly rate, and add that to the $28.

Then they add up what pension costs are per year, break that down to an hourly rate, and add that to the $28.
So what is YOUR actual hourly rate if you take off all the legacy costs but include your medical and penssion costs?

I am not sure what you do at the plant but the guys I see with a machine that picks up the seat puts it in the car and tightens down 4 bolts with a torque specific wrench should not be making $28 an hour plus bennies. In the construction field I am in most guys do not come close to doing that.

If I tried to charge $73 an hour for every guy working for me I would have to be asking for a hand out as well.

While the problems are not dirrectly your fault you get to be the pawn that has to pay the price for it.




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Old 12-15-2008, 04:08 PM   #19
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Thats the problem i think. OVER PAYED! UAW workers are making as much as most people with DEGREES! Not saying you, but most are not educated either, there just blue colar workers like the rest of us. I make $22 hour and that is top dollar for this area with no degree. Whats starting pay for the UAW? I believe it's both sides fault, but like others say. Either take a pay cut or lose your job, and from the looks of it UAW is on the way out. Bankruptcy means no more unions and the big 3 only pay $15 for labor.

The unions tried to take out Wal-Mart because they refused to unionize. Now look! Wal-Mart is the strongest company in the world, good benefits, and they pay $22 an hour at a distribution center. Oh yeah, and 100000000000000% job security. Who would you rather work for?

There's a reason Unions aren't around much anymore. I bet in 20 years there will be none...




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Old 12-15-2008, 04:58 PM   #20
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FordKTPJoe- Thanks for sharing your information with us. It's nice to see this actually get broken down. How many years have you been doing this? Do you get full pay pension when you retire?

Rockranger- I couldn't agree more, you are a builder, I've been in both sales and the labor side of 2 industries. If I could work 40 hours a month, 50 weeks a year and make $56K guaranteed with no stress, no negotiations, no losing sales to the next guy, no gray hairs, no p!ssed off customers, no deadlines and 2 weeks off unpaid with a $300 health deduct I would be very very satisfied. Even at $28 an hour it may be a little high for the quality of work.
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