Ken Lewenza is wrong because:
1. Without further concessions, neither the American nor Canadian governments will provide any further financial loans. This would have the effect of throwing both GM and Chrysler in front of a bankruptcy court in weeks, if not days. It would also immediately close a number of parts factories, many of them unionized.
2. While $19 per hour is a big hit, it is a cut that does not affect your hourly wage or current pension level. In other words, you will see no change on your weekly paycheck or pension cheque. Yes, you will be out some money from co-pays and such but that would be minimal.
3. Public opinion! Whether Lewenza is right or wrong in his stance, it's the average worker feeling the wrath of the general public. Read newspaper comments, blogs, listen to people at Timmies. Everyone seems to think its the guys and girls on the line that are the problem, when in fact the problem is much deeper than that.
4. Leading by example. Rather than play the blame game, with management and bondholders refusing to give anything up until the union does, and vice-versa, do our part first. Perhaps the union should go public after giving up the concessions with what management should concede, and then get the government to put the pressure on them in the same way. No further assistance until everyone from the CEO down also concedes a comparable cut to benefits and perqs.
Now lets look at why Ken Lewenza is right:
1. Cerberus, which owns Chrysler, and is made up of a number of billionaires with available funds totalling in excess of $18 billion, refuses to invest their own money into Chrysler. I'm sure in the event of a bankruptcy Cerberus will want to be first in line when liquidation begins, even if that means looting pension funds.
2. A newspaper report a few days ago is deeply disturbing. Chrysler dealers have been reporting they are losing between 25%-40% of sales because buyers cannot get financing. That is, the dealership has a signed sales contract but the buyer cannot obtain funds. This was improved recently by both governments when they provided funds to both GMAC and Chrysler Financial. Now here is the disgusting part. Obama recently offered Chrysler Financial another $750 million in funds, with the caveat that there would be a cap on executive salaries and bonuses. Now you would think a company in dire circumstances, who are demanding that workers take a 26% pay cut, would jump at the financial help, right? Nope, Cerberus, and Chrysler Financial turned down the $750 million, and got it elsewhere at a higher interest rate, all in the name of maintaining salaries and bonuses for executives.
In 2007, Cerberus capital picked up 80% of Chrysler, as well as Chrysler financial. They also own GMAC, GMs financing arm. The extremely profitable Cerberus, has refused to put any of it’s assets into helping Chrysler, deeming it bad investment. That’s a problem, but here’s worse. The financial arm of Chrysler and GM, both Cerberus owned, heavily tightened rules regarding leasing. People buying cars these days report they can’t get financing through Chrysler credit: off to the banks they must go. So the ownership of Cerberus won’t invest in Chrysler, the financial arm of Chrysler, owned by Cerberus won’t loan people money to buy cars. And finally, Chrysler Financial won’t be taking $750M in federal bailout money, it is reported, because executives don’t want limits on their pay.
These are the people I am supposed to take a pay cut to help?
A new player on the scene is Fiat. Here’s their idea: they pay $0.00, they assume debt equalling $0.00 and they get 20% equity in Chrysler. The condition, I have to take a pay cut. In short, Fiat will take the 20% with no risk only if I, and my fellow workers, buy it for them."
And finally, I would like to thank Joanne at Blue Like You. This is in my opinion the best political blog out there, always well written,thoughtful posts, great opinions expressed in comments. Joanne's blog is what all bloggers should use as both a template and inspiration.