How about an employee owned car company? Worthy of a bailout?

[mdmc]

I often wonder why unions don't create employee owned companies to compete with the (CEO overpaid) private sector. Why doesn't SEIU open an nursing home or hospital that is employee owned? Why doesn't UAW create a car company? I would love to use Wall Street Bailout money to sell Chrysler to UAW. Why not?

[Jackpine Radical]

1. I tried to get a discussion going on that very topic the other day.

All kinds of people gathered around & pounded on me with blunt objects, many of them union people who were screaming that I wanted to take their jobs away. I guess that was because I had proposed to let GM go bankrupt & then let the workers buy it for pennies on the dollar.

[mdmc]

6. I fully agree that unions help the working people

what I don't understand is working people that want the executives of the big three to be bailed out. Why bail out the folks that caused this disaster? Why not bail out the UAW - and let them run the bailed out company? I bet the UAW could get competent executives to work for them at 40 times (instead of the current 400 times) the salary of the working man.

[lapfog_1]

10. uh, it's already "pennies on the dollar"

total market cap of GM is under $2B. Even in this market, they probably have assets (buildings, land, computers, etc) far in excess of $2B. The problem is that if you buy the assets, you also buy the debt. But if you are an employee owned company, that's not much of an issue (you want to keep your JOBS so you aren't interested in selling off the assets).

[thunder rising]

2. Cause then the UAW wouldn't be a union...they would be management.

If the Big 3 want bailouts then the Boards of Directors must fire the exec staff and bring in new blood vetted by the loan backers.

[LiberalFighter]

5. The Board of Directors should also be fired.

They didn't do their job.

The prime person that needs to go is Rick Waggoner. He has been his position how long?

[mdmc]

7. Why can't UAW be both?

Let the workers own the company - the executive staff would still be workers.

[lapfog_1]

3. For $1.8B they can buy one.

Namely GM.

By the way, Ravi Batra, an economics professor at SMU, made the same suggestion on Thom Hartmann last Friday.

http://www.ravibatra.com/

I included it in the list of "strings" that I want attached to a bailout of the auto companies. Feel free to expand or suggest modifications to the list.

Here is the complete list:

1. CAFE standards are going up, rapidly, adapt or die.

2. Those standards will include plug-in electric hybrids, and not just on a few select models. Fleet wide.

3. The jobs will stay here and will be union (and the union will have to play along too!)

4. We will get you universal health care so you can compete with foreign car makers on a level playing field.

5. The materials used to build the next gen cars will be much more "green" (recyclable or biodegradable)

6. There won't be the big three (well, medium two and a small one), you guys are going to be at least 5. That way, if in the future one of you is boneheaded again... too bad. Figure out which brands become companies and transfer assets to match.

7. Some of the money will be used to buy stock, for repurchase at cost over time by employees. GM has a market cap of under $2B yesterday, so this isn't a huge amount of money. (Credit this one to Ravi Batra, a brilliant economist who frequents the Thom Hartmann program).

8. All of this needs to be done by Christmas 2009 with (hopefully) a fall 2010 roll out of new, hybrid, green cars. If you can't design that fast, we will offer you thousands of college students to help out with the concepts. Great class projects.

9. NO MORE NIH! If some smart and small companies have good technology, use some of the money to buy them out, bring their engineers on board and start mass production of those designs.

10. $25B to $50B will be carved out of the $700B bailout already authorized. Too bad Wall Street - you guys screwed the pooch with the first $300B... the credit markets are still frozen, time to try a different approach!

[mdmc]

9. thanks for the link and the info

peace and low stress....

[lapfog_1]

12. Here is a link to the whole discussion from last night

only one of many threads on this subject...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4466545

[ayeshahaqqiqa]

4. Isn't there a clothing company like this?

Everyone is part of the union, and by the corporate charter, the CEO can only make something like 10x the amount of the lowest paid worker.

I'd like to see the UAW make cars with compressed air engines, like they are doing in India. Part of the government bailout money would go to creating a network of places where the air tanks could be exchanged or recharged--the technology to do this is already there.

[Sadie5]

8. Right on the money

Waggoner along with the board of directors need to be ousted for under performance. This same old tired old bunch who profess to be so knowledgeable are no smarter than Bush. Perhaps they can all get on that plane to Paraguay together.

[lapfog_1]

11. I would feel so sorry for the people of Paraguay. Really. - n/t

[lapfog_1]

13. Southwest Airlines is largely employee owned

and I think partially union, about 87% of employees belong to a union (according to wiki).

[HamdenRice]

14. There were many experiments with this in the 80s: Employee Stock Ownership Plans

and employee buyouts. There are positives and negatives. But the main problem was that in the context of our system and the advantages given to CEOs and bankers, the wealthy seemed always to undermine the employee control aspects and even loot the employees' interests.

The biggest problem is that these were implemented through the use of employee retirement funds or contributions, or employee give backs of salary and benefits -- the idea being that the employees have to invest in the company in some way in exchange for the share ownership. That meant that if the company went under, the employees catastrophically lost (1) their jobs and (2) their pensions at the same time.

Also, the way corporate law is structured, stock owners, including employee stock owners, have little control over management. They usually started out cooperatively, but CEOs would wrest control of the companies from the employees pretty quickly with the employees still the nominal owners.

It's worth a rethink, but would take a comprehensive overhall of corporate law to make a special kind of corporation available as a vehicle and right now that doesn't exist.

[DBoon]

16. The overhaul of corporate law is key

I would like to see such an overhaul proposed.

The OP mentioned this as part of a bailout - I think given the investment of government money, some ways can be found to address the financial drawbacks of existing employee ownership

[madrchsod]

17. i was part of an esop in the steel industry

the problem was the fucking chinese dumped steel to under cut our price per ton. we had the 3 of the biggest electric furnaces in the united states and could produce more tonnage than anyone.we finally gave up the esop and lost millions of dollars in "deferred wages" or esop shares when the company went public again. the steel mill closed and was reopened several years later with one furnace and one rolling mill.4500 employees in 1982 to 400 today.


the only way the esop plan could work is trade policies and as you said better laws on the books to protect the workers/company.

[gristy]

15. If you are thinking 100% owned by the employees, it would be because they don't have enough money

All the things you mention take capital, and lots of it.

[and-justice-for-all]

18. If they want our money, then it should be nationalized..nt

[justinaforjustice]

19. Workers Should Buy Out and Control the Company

Your idea is excellent, but it needs to be expanded. Legal ownership by employees of the stock must be accompanied by actual worker control of the decision-making in the company. Workers should elect their managers, subject to recall, and managers salaries should be reasonably restricted. The government should loan the workers the money to purchase the company at a reasonable interest rate, subject to long-term repayment. No more million dollar bonuses, no more incentive for top officials to fraudulently inflate the value of the stock in order to exercise their exorbitant stock options.

We must return our economy to creating real value, based on usable goods, not paper ponzi schemes such as credit default swaps. Key to this is worker decision-making. Merely "nationalizing" the company would only substitute government paid bureaucrats for private capitalist ones. Worker control of our companies can return it to sanity and real productivity.

[rucky]

20. I was called a socialist for suggesting something like this.

Right here on the DU

[Oregone]

21. Why not just nationalize, then create a government "Volkswagen" like project?

Make a cheap, fuel efficient, hybrid/electric car that everyone can afford.

[StreetKnowledge]

22. Folks, again, let's look at this Honestly

Is GM's management populated by idiots? Yep. Are they all idiots? No.

Could the UAW effectively run GM? Not a chance in hell. They'd sink it faster than anyone, because they would be totally unable to adapt to changes. This is the fundamental problem with the UAW as it exists now.

Should GM be bailed out? With how many jobs are on the line, if you say no, I'm gonna have to ask you to step outside. The Big 3 contribute at least one out of every 12 jobs in America. Breaking them up will just mean the engineering talent being spread out further than it already is, which is a big problem.

Right now, internal combustion engines are the method of propulsion. Period. Compressed air cars require monster air pressure and have a short range, not to mention needing to build a new infrastructure to support them. Is anybody gonna put up the cash for that? Electrics are not viable yet, either - they require long recharge times and the range is still far too short.

[mdmc]

23. why do you think that the UAW would be unable to adapt to changes?

It would seem that GM "has been unable to adapt to changes" in its current form.

As far as a bailout, I can't support bailing out the production of the HUMMER. I guess it is all in the details. I would oppose taxpayers subsidizing the HUMMER line. I support govt. keeping union jobs in America, but then again, I have always been an anti-free trade protectionist.

[JVS]

25. Because he wants big auto to keep doing what big auto's been doing even if it doesn't work

Addicted to the industrial monoculture

[JVS]

24. Bailing out the big 3 is like investing in 1840's Irish potato farming.

This whole too big to let fail bullshit has to be replaced with too big to allow to exist.