[Marxism] General Motors trampled mass transit, now its workers on the way to date with Bankruptcy
jonathan.flanders at verizon.net
Mon Oct 17 15:40:07 MDT 2005
GM just announced a huge health care cost concession by the UAW.
According to a report on Bloomberg.com
"GM has 106,000 active hourly workers and 321,000 retirees and surviving
spouses. If each of them share equally in the changes announced today,
their annual out-of- pocket health expenses would increase by $2,341
annually, according to Bloomberg calculations. Active GM workers now
earn $58,240 a year in wages before overtime and taxes.
A $1 billion cut in GM's estimated $5.6 billion yearly health-care tab
and 25 percent cut in retiree health-care liability may be offset by
inflation for medical and the potential Delphi liability, Robert Barry,
an analyst with Goldman Sachs, said in a written report today. Selling a
controlling interest in GMAC could boost credit ratings and cut funding
costs but would also divert earnings from GM, he said.
``Severe operating challenges still confront GM, including mix, pricing
and market-share pressures plus a tough macro outlook as consumers face
rising interest rates and energy costs,'' Barry wrote."
If current trends continue, it is unlikely this concession will save
General Motors from the political earthquake of bankruptcy. GM is on the
hook for the bankruptcy bound Delphi parts manufacturer's pension fund.
In a previous post I said that the answer for a tax-payer bailout of GM
should be nationalization with the requirement that GM begin a massive
program of electric transport, specifically light rail, electric trolley
Here is some background on GM's role in the destruction of the US light
rail system in the first half of the twentieth century. GM organized a
company called National City Lines to buy up city rail systems and
convert them to diesel buses.
“By 1949, General Motors had been involved in the replacement of more
than 100 electric transit systems with GM buses in 45 cities including
New York, Philadelphia, Baltimore, St. Louis, Oakland, Salt Lake City,
and Los Angeles. In April of that year, a Chicago Federal jury convicted
GM of having criminally conspired with Standard Oil of California,
Firestone Tire and others to replace electric transportation with gas-
or diesel-powered buses and to monopolize the sale of buses and related
products to local transportation companies throughout the country. The
court imposed a sanction of $5,000 on GM. In addition, the jury
convicted H.C. Grossman, who was then treasurer of General Motors.
Grossman had played a key role in the motorization campaigns and had
served as a director of Pacific City Lines when that company undertook
the dismantlement of the $100 million Pacific Electric system. The court
fined Grossman the magnanimous sum of $1.
“Despite its criminal conviction, General Motors continued to
acquire and dieselize electric transit properties through September of
1955. By then, approximately 88 percent of the nation’s electric
streetcar network had been eliminated. In 1936, when GM organized
National City Lines, 40,000 streetcars were operating in the United
States; at the end of 1965, only 5,000 remained. In December of that
year, GM bus chief Roger M. Kyes correctly observed: ‘The motor coach
has supplanted the interurban systems and has for all practical purposes
eliminated the trolley (street-car)’ . . .
“Electric street railways and electric trolley buses were
eliminated without regard to their relative merit as a mode of
transport. Their displacement by oil-powered buses maximized the
earnings of GM stockholders; but it deprived the riding public of a
competing method of travel,” the report asserts, and quotes urban
transit expert George M. Smerk as saying that " ‘Street railways and
trolley bus operations, even if better suited to traffic needs and the
public interest, were doomed in favor of the vehicles and material
produced by the conspirators.’ "
Progressing from the conversion of rail systems to bus
transportation, new market temptations appear on the transportation
“General Motors’ gross revenues are 10 times greater if it sells
cars rather than buses. In theory, therefore, GM has every economic
incentive to discourage bus ridership. In fact, its bus dieselization
program may have generated that effect. Engineering studies strongly
suggest that conversion from electric transit to diesel buses results in
higher operating costs, loss of patronage, and eventual bankruptcy. They
demonstrate, for example, that diesel buses have 28 percent shorter
economic lives, 40 percent higher operating costs, and 9 percent lower
productivity than electric buses. They also conclude that the diesel’s
foul smoke, ear-splitting noise, and slow acceleration may discourage
ridership. In short, by increasing the costs, reducing the revenues, and
contributing to the collapse of hundreds of transit systems, GM’s
dieselization program may have had the long-term effect of selling GM
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