Larry explains why the bailout negotiations for the Detroit auto industry failed. The plan put together by Senator Bob Corker likely would have worked, but he asked the union to restructure their contracts to match that of the average foreing onwed firms, but the union would not agree to any date in 2009, instead insisting that the existing contracts stay in place until 2011 when thye expire.In effect, the UAW beleived it would get a better deal after the new Senate convenes.
"If the Detroit carmakers are in dire straits, going broke in two weeks, right now in late 2008, how can the UAW wait until 2011 to make its concessions? The financial problem is today, not two years from today. The threat of liquidation, with perhaps a few million autoworker, supplier, and car-dealer jobs lost, is today's threat, not a 2011 threat. So what's the UAW waiting for?
That's easy. Gettelfinger is waiting for President Obama and a Senate with 58 Democrats. He also was playing a game of bluff with President George W. Bush. He knew Bush had $15 billion of TARP money ready to go, meaning the TARP was Gettelfinger's trump card. The tough-minded union leader never believed the White House would let GM sink and possibly force millions of job losses in the middle of a recession."
If the union had appproved of the plan, it is thought the Senate would have passed the ligislation with as many as 90 votes. What is interesting is the impact the negotiations have had on the image recognition of Senator Corker, a former businessman in the construction industry. He got a lot of credit from both sides of the aisle for putting such a solid plan together, and he may wind up being the big political winner out of all these events.