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Almost 150 years after the American Civil War the struggle to save the country’s carmaking industry is once again becoming a battle between the Union and the Confederacy.
In this latter-day renewal of hostilities the union is the United Auto Workers (UAW) whose members are mostly employed in Northern states such as Michigan, the traditional heartland of US motor manufacturing.
Union leaders have bitterly denounced Republican Senators from the South for scuppering a $14 billion bailout package for General Motors (GM) and Chrysler which, along with Ford, make up Detroit’s “Big Three”.
Many of those who voted against it represent former Confederate states where foreign-owned car plants have sprung up in recent years and are proving to be more competitive than America’s domestic manufacturers.
Those opposing the bailout included Richard Shelby of Alabama, which has benefited from investment by Honda, Hyundai and Mercedes-Benz; Senate Republican leader Mitch McConnell, who has a big Toyota plant in his state of Kentucky, and Bob Corker of Tennessee where Nissan and Volkswagen have provided thousands of new jobs in recent years.
Jim DeMint of South Carolina, where a new BMW factory has been built, even gave warning that “we’re going to have riots” if more money was spent rescuing the carmakers in the North. “There are very few companies that aren’t hurting and they’re going to hurt. We don’t have enough money to bail everyone,” he said.
The UAW says that a double standard has operated by which the South has attracted investment from foreign car companies, with more than $3 billion of state subsidies since 1992 — while denying help for the North.
Brian Fredline, who is head of the UAW branch in Lansing, Michigan, said: “This is almost like Confederate senators fighting against the Union Army of the North. The parallels are frightening, and it’s almost this mentality that the South will rise again. They hold hostage the economic recovery of anyone who lives north of the Mason-Dixon line.”
Reprisals have already begun. Kentucky’s Republican Senator Jim Bunning, who was once a baseball star in Detroit, was abruptly uninvited from appearing at an event for fans in Michigan at the weekend as punishment for voting against the bailout. And a retired GM engineer last week started a website urging a consumer boycott of Alabama until Mr Shelby is replaced by a senator “who has America’s best interest in mind”.
Michigan’s Democratic Governor, Jennifer Granholm — who is an economic adviser to Barack Obama’s transition team — has joined the clamour against Southern Republicans. “The Republicans in the Senate have been protecting the Republicans within their borders,” she said. “They are not acting as Americans.”
Mr Shelby has denied wanting to destroy industry in the Yankee North to help foreign-owned plants in his state. “No, no, no — failure is never a good thing for anybody,” he said. “If I had five GM or Ford plants in my state, I would oppose this bailout.”
Yesterday Mr Corker said that Capitol Hill negotiations on the rescue deal had been wrecked by the UAW’s refusal to accept the imposition of costcutting measures that would have forced the carmakers to operate on the same labour costs as the foreign-owned companies. He dismissed suggestions that self-interest had influenced his position, pointing out that he also had a GM plant in Tennessee which is “very important to my state”.
Indeed, industry experts say the supply chain is so intertwined that the disappearance of any one the Big Three would affect carmakers in the South. David Cole, chairman of the Centre for Automotive Research, said: “You can’t separate them at all. Because of the tightly knit web of suppliers, a failure of a GM or Ford would take the supply base down for a considerable time.”
The foreign-owned manufacturers have so far remained silent on the fate of the bailout package, except to point out that they regard themselves and their workers as part of fabric of the modern American industry.
Much of the cost advantage they enjoy is explained by having been in business for less time than their US-owned counterparts who are saddled with multi-billion dollar obligations to retired workers. Many of them have also strongly resisted union recognition at their plants, prising loose the grip that the UAW has long held over the car industry. Ron Gettelfinger, the president of the union, claimed last week that the Senate Republicans had been seeking to break the UAW. “They thought perhaps they could have a two-fer [two for the price of one] here maybe,” he said — “pierce the heart of organised labour while representing the foreign brands.”
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The South has no business complaining about bailouts. Southern farmers get bailed out every year with billions in farm subsidies. If GM was corporate farm, DeMint et al would be falling over themselves to lavish public funds on GM. The conservative elites will never allow ending farm welfare.
George, Lutz, FL, USA
If US car companies fold, employees/unions have to go on welfare similar to minimum wage. How is that going to cost more than keeping factories open employing workers and funding unions at a far higher wage building vehicles that no one can afford to buy. Good workers will be re-hired elsewhere.
ed, kingston, uk
The Labour Unions are responsible for half the problems of the 'big three'. People have criticized management for not adapting quick enough to changing markets and they have a point. However, change is hard when faced with Unions hostile to any unless its more money for less hours.
Anthony Lester, Brum,
Norman from Georgetown.....get the facts.... the auto workers are making $30.00 per hour now. Not too many Wal-Mart people are making even $10.00 per hour. 90 percent +/- of the Wal-Mart employees are working part-time and have no benefits and very little pay.
Martha Dodd-Slippy, Greensville County, VA, USA
I just read today that perhaps the bigger issue than job losses rippling through the USA economy, is that The Big Three automakers and their suppliers, if they fall domino-like into bankruptcy, that there are huge amounts of corporate bonds at risk. Any bailout is potentially far bigger. Check it.
Elaine , Colorado Springs CO , USA
All the indicators say the US is going to hurt more than anywhere else. Less cars is just the beginning.
Andy Dyer, London , UK,
The UAW can't see the forest for the trees. They say if they take a pay cut they won't get a living wage, yet they rack up so much personal debt buying huge homes,cars,boats on this unrealistically high salary they are getting, w/o saving, and aren't prepared financially for layoffs/emergencies.
Rae, Lincoln County, MO, USA
Welcome to the same economic battle-ground between Scotland and England that Labour has created. We will see much of the same here in the UK as 2009 unfolds.
clive, enfield,
Idiots ignore that the US car market has dropped from 17million to 11 million overnight - not that Americans prefer Honda - causing a crisis. Only the Herbert Hoover Republicans blame unions while the industry is burning. Keep it up - you'll be out for 50 years this time. Got a fire? Bring water.
richard block, London, UK
1 in 10 jobs (in America) are affected by the US auto industry. It's not an easy pill to swallow if you say to "let it go". In general, that is not what we are made of. When times get tough Americans are known for doing the work it takes to get through those tough times. Example to follow:
jjones, clearwater, florida, usa
Good Morning America! Wakey! Wakey!
The UK already tried the "economic experiment" of using public money to prop up car makers making undesirable cars with under-utilised over paid workers. It failed - three times - BMC, Leyland Triumph, Austin Rover. We crippled our national economy for nothing
Tony Ericson, Warwick, UK
After 9-11 Americans instictively came together. After India hotel massacre people are blaming instead of caring 1st. Is this a decent example? We have to come together and show compassion while deciding how to continue on. I am not employed by the auto industry but I only buy American makes.
jjones, clearwater, florida, usa
This is just the latest chapter in a long story. I recall a program on public radio about the impact of textile mills moving from North Carolina to China. One man mentioned that he was from Massachusetts, and his father had lost his job when the textile industry moved from there to North Carolina.
Mitch, Boston, Massachusetts, USA
It's a bit like this: give the Big Three the money now and millions remain employed. Don't give them the money and millions will be unemployed and the government will be footing the bill for welfare, vehicle warranty costs, and bankruptcy protection. Either way America, they're getting the money!
Scott, Toronto, Canada
It is not surprising that those seeking the bailout, who wish to prolong their entitlement position, will now look to a diversion. Let's stick to the facts. If all this money is poured into the Big Three will they survive? How much is this going to really cost? How will they decide who is next?
Glen, Toronto,
UAW workers already receive actual wages at level of Toyota workers, and last year agreed that new hires could be paid only half that (not enough to support a family on!). UAW has also already agreed to take some of the benefit burden off the companies and expressed willingness to surrender more.
J Manuel, Bella Vistam Arkansas, USA
I think the union vs conferate analogy is a bit of a stretch. This is more about classic protectionism of an inefficient industry. The fact these senators are republican, and therefore more likely to be free market advocates, is more important than the fact that they are from southern states.
Chenny, Sydney, Australia
The affect of a US motor vehicle industry meltdown will have far reaching affects on many other countries not just the U.S. The question, are these companies titanics awaiting to sink regardless of the short term assistance or are they able to restructure quickly enough and sail another day?
alan morton, Sydney, Australia
Nice to see a backbone being developed. These car makers only have themselves to blame and should not be bailed out by the tax payer.
Hamad Lone, London, England
Labor is 3% of GM's "problem", working for FREE won't reverse the Republican decimated economy. It's revenge on workers by Repgs for defeat in '08. Southern States have no problem providing BILLIONS to foreign manufactures (without health care/retiree legacy) to move into low wage areas. Class war!
Jess Wonderin, Los Angeles, USA
If the government gave american car companies a bailout, competition between american and foreign companies would make the market more available to consumers. N & S would get to keep their jobs and competition in the market would make more cars available to consumers who would stimulate the economy.
Kelly L, Cincinnati, OH, USA
Jim / Brisbane, I've always wondered the same thing. How many models of Chevy, Pontiac, Buick, Olds are the same thing with a different logo slapped on it? Chrysler, Dodge, Plymouth? Same. Just enough differences, especially engines in GM, to make it totally inefficient.
Dana, Tacoma, USA
Well, well. Finally some Republicans with balls.
This isn't like the war between the states, silly. This is about keeping the UAW away from my paycheck.
Eric Meadley, Winston Salem, NC, USA
USA union auto workers make something like $70 an hour.
USA workers at Wal-Mart make about $10 an hour.
If US union auto wokers would agree to $30 an hour, stil 3 times Wal Mart workers pay, with comensurate pay for managers all the way up the line, the big 3 car makers could make money.
Norman , Georgetown,
My retirement plan is in shambles like everyone elses, yet the UAW expects my taxes to pay for their retirees benefits? Hey-bail me out when you are at it...
GM and Ford in the USA are health/care benefit companies that make a few cars-problem is the ridiculous pay/benefits that UAW members get!
Frank , Dove Canyon, CA/USA
The article identifies 10 car companies manufacturing in the USA. That means 10 management structures all doing the same thing. I say that is 9 too many. Also each company produces many models and the others copy. Just 2 examples of the many inefficiences. Effieciency first or no money?.
Jim Wills, Brisbane, Australia
If you read Atlas Shrugged, you will see how a work of fiction then is today's fact.
In American business and liberal politics the mantra is, "We spent our way into this mess; we will spend out way out!"
Dale Smith, Sammamish, WA, USA
In Tennessee, Both GM and Nissan have car plants. It is well known here that Nissan is a better environment to work. Nissan workers have voted against unionizing even when threatened by the UAW to unionize or else. Nissan is doing well. meanwhile, GM may shut down. So much for unions.
Jake, Nashville, USA
14 billion is simply not enough to make these businesses viable. As a result the money will be wasted so the "no" vote is right - they need to develop a more solid long term plan for approval. However, I suspect the motivations for the no vote are, as the correspondent points out, suspect.
Billy Barnett, HK,
How crazy, car makers going broke because people are not buying their cars. They want money from the government to make more cars that people won't buy. If the US government is intent on employment in this area, why not provide a system of grants, no interest loans or such like, to potential buyers
Tom Swann, Townsville, Australia
The split between the liberal elites of the North and East and the traditional American conservatives of the South is as old as the United States itself, it will never die.
miko, Singapore,