In 2009, the Obama Administration bailed out the General Motors and Chrysler automobile companies. Having begun their decent into bankruptcy in 2008, losing thousands of jobs, sales plummeting forty percent, with a high threat of liquidation, General Motors and Chrysler finally reached government-assisted chapter 11 bankruptcy in 2009. Obama allocated eighty five billion dollars in TARP funds to the auto industry, close to fifty billion dollars of it going to General Motors. The allocated funds were successful in keeping two of the Big Three auto companies afloat, keeping taxes from sky rocketing and saving millions of jobs.
In late 2008, General Motors was in financial distress due to some major financial liabilities. These included labor contracts that were extremely expensive, pension costs that were extremely high that also included healthcare, and an outdated and overgrown distribution system of dealerships that needed to be updated. According to its quarterly report with the Securities and Exchange Commission, General Motors needed to pay over seven and a half billion dollars in early 2010 to prefund the UAW retirees’ healthcare fund and at least forty five billon to its creditors. The financial data for Chrysler was unavailable due to the fact that it is not a publicly traded company, but the Chief Executive Officer, Robert Nardelli, stated that Chrysler would not be able to survive without the help of the government.
The Big Three automobile companies, General Motors, Chrysler, and Ford, also had a very demanding labor union, the United Auto Workers or UAW, which asked for many benefits and salary requirements which lowered their ability to compete with other companies on the market, foreign and non-union. The average...
... middle of paper ...
...2011.
• "All's well that ends well." Assembly July 2011: 6. General OneFile. Web. 26 Nov. 2011.
• "Is the Auto Industry's Recovery a 'Success Story?'." Internet Wire 24 Nov. 2010. General OneFile. Web. 25 Nov. 2011.
• "Obama optimistic on economic recovery." Hindu [English] 1 Aug. 2010.General OneFile. Web. 25 Nov. 2011.
• "What You Haven." U.s. department of the treasury. N.p., 2010. Web. 26 Nov 2011. .
• Olsen, Steve. "GM, Chrysler bailouts a success." Standard-Examiner. N.p., 01/19/2011. Web. 26 Nov 2011. .
• Zywicki, Todd. "The Auto Bailout and the Rule of Law." National Affairs. N.p., 2011. Web. 26 Nov 2011. .
The case study of GMFC provides an example of a company attempting to avoid unionization of its workers. GMFC is expanding by building a new U.S. plant which will manufacture motorized recreational equipment. The company plans to hire about 500 production workers to assemble mechanical components, fabricate fiberglass body parts, and assemble the final products. In order to avoid the expected union campaign by the United Automobile Workers (UAW) to organize its workers, GMFC must implement specific strategies to keep the new plant union-free. GMFC’s planning committee offers suggestions with regards to the plant’s size, location, staffing, wages and benefits, and other employee relations issues in order to defend the company against the negative effects of unionization and increase...
Talbott, John R. Obamanomics: How Bottom-up Economic Prosperity Will Replace Trickle-down Economics. New York: Seven Stories, 2008. Print.
Throughout the history of the United States of America the continuation of misfortunes for the workforce has aggravated people to their apex, eventually leading to the development of labor unions.
Union affiliation was first seen in the 1600’s when the roots of the United States were just being planted with skilled trade groups such as artisans, laborers, goldsmiths and printers. Over the next two hundred years, unions developed their desires for higher wages through the use of strikes and protests. The nation’s progress spurred the need for more labor and so began the Industrial Revolution. During the Revolution, many union members began to witness the power that employers had and as a result decided to make use of the concept of power in numbers. The National Labor Union formed in 1866 and worked to persuade congress to set a Federal eight-hour workday, which applied to government employees (Miller). Many large unions formed following in the NLU’s footsteps and uni...
In the midst of the current economic downturn, dubbed the “Great Recession”, it is natural to look for one, singular entity or person to blame. Managers of large banks, professional investors and federal regulators have all been named as potential creators of the recession, with varying degrees of guilt. No matter who is to blame, the fallout from the mistakes that were made that led to the current crisis is clear. According to the Bureau of Labor Statistics, the current unemployment rate is 9.7%, with 9.3 million Americans out of work (Bureau of Labor Statistics). Compared to a normal economic rate of two or three percent, it is clear that the decisions of one group of people have had a profound affect on the lives of millions of Americans. The real blame for this crisis rests on the heads of the managers that attempted to play the financial system through securitization, and forced the American government to “bail out” their companies with taxpayer money. These managers, specifically the managers of AIG and Citigroup, should be subject to extreme pay caps for the length of time that the American taxpayer holds majority holdings in their companies, as a punitive punishment for causing the Great Recession.
“The National Debt (sidebar).” Issues and Controversies. Facts on File News Services, 23 Jan. 2009. Web. 25 May 2011. .
The United States’s industrialization lead to a great boom in both economic and population growth, allowing businesses to flourish. With more money and workers at their disposal, employers often would often mistreat workers, suddenly cutting their wages or firing them. With only profit in mind, industries eventually became monopolized and the conditions of workers only worsened. Defenseless and barely able to survive, laborers soon found power in uniting with each other, leading to the establishment of American labor unions during the Gilded Age. They provided workers with necessary protection from their employers’ capricious decisions, and while their presence elicited fear in business owners, unions eventually bettered the standard of living for the American proletarian through compromise.
The Detroit bankruptcy has been one of the most revolting situations. Declining the economies economic development, previously a highly industrialized economy. The city of Detroit has experienced a devastating fiscal collapse ranging from an avalanche of underlying factors which explains what could possibly cause this level of crisis.
I think General Motors is responsible for the economic problems of Flint, Michigan. The Chairman and CEO of General Motors announced that ten plants would be closing, including one in Flint, Michigan. The reason behind this is to ship business and jobs to cheaper countries such as Mexico, where workers do not have to be paid much for the same amount of work. This saves the company millions of dollars. The General Motor plants closing was the catalyst that caused more problems for the working class economy of Flint. Plant workers did not have extra money to spend, causing local shops to close or move to different cities. People lost their main source of income, their house and their trust in General Motors. While this might have been a great
The Industrial Revolution that took place after the Civil War made for a more economically sound country. American workers, however, were becoming more and more dependent upon their wages; a fear of unemployment also stemmed from this. Workers didn’t share in the benefits that their employers reaped. In a chart representing the hours and wages of industrial workers, from 1875 to 1891, it shows that even though their wages were subtly increasing, their 10-hour work day remained the same (Doc. A). Factories were headed by large corporations; this, in turn, meant that new machines lessened the amount of workers in certain fields. As a result of these unsuitable conditions, labor unions were formed. The challenges that these unions faced weren’t easy. If the workers involved in organized labor got too far out of line, these corporations could get federal authorities involved. Moreover, these companies could enforce “ironclad oaths” upon their employees. In a Western Union Telegraph Company employee contract, in 1883, it states that the employee will not be affiliated with any societies or organizations (Doc. E). Despite such setbacks, by 1872 there were over 32 national unions.
“The Budget and Economic Outlook : Fiscal Years 2010 to 2020.” Congress of the United States
Throughout American history, labor unions have served to facilitate mediation between workers and employers. Workers seek to negotiate with employers for more control over their labor and its fruits. “A labor union can best be defined as an organization that exists for the purpose of representing its members to their employers regarding wages and terms and conditions of employment” (Hunter). Labor unions’ principal objectives are to increase wages, shorten work days, achieve greater benefits, and improve working conditions. Despite these goals, the early years of union formation were characterized by difficulties (Hunter).
Unions have an extensive history of standing up for workers. They have advocated rights of steelworkers, coal miners, clothing factory employees, teachers, health care workers, and many others. The labor movement is based on the idea that organized workers as a group have more power than individuals would have on their own. The key purpose of any union is to negotiate contracts, making sure workers are respected and fairly compensated for their work. “In theory” unions are democratic organizations, resulting in varying inner authority. Workers look for security within a job a...
Price, Lee. "The Boom That Wasn’t: The Economy Has Little to Show for $860 Billion in Tax Cuts." Economic Policy Institute. N.p., 25 Oct. 2005. Web. 12 May 2014
(4) Abel, Ivan, Maali Ashamalla, and Robert Camp. Competitiveness of the US Automotive Industry: Past, Present, and Future. Rep. 2nd ed. Vol. 10. Indiana: American Society for Competitiveness, 2010. Print.