Today’s Qs for O’s WH – 5/29/2009

May 29, 2009 4:22pm

TAPPER: Is it fair to say that when the Auto Task Force comes up with these restructuring proposals that there is greater sacrifice asked of the debtholders than of the auto unions?
  
GIBBS:  I — I think that would be as wrong a characterization as you could probably come up with.
  
TAPPER:  Well, just in terms of monetarily, it looks like to many observers, many economic observers, that the unions are asked to sacrifice less.  Not that they're not sacrificing, but they're asked to sacrifice less than the bondholders.  And it was the same with the Chrysler deal.
  
GIBBS:  It's hard for me to talk a little bit about G.M., but I think — I think if you look at wage and benefit sacrifices, I think if you look at the change in value of the health benefits system overall, I think it's hard to make a clear and cogent argument that the workers aren't part of — part of the pain in this situation.
  
TAPPER:  Well, I'm not saying they're not part of the pain.
  
GIBBS:  No, I understand, but I think — I think it is — what I'm saying is I think it is incorrect and not accurate to say that somehow — and I now it's certainly been out there — but I know that — I don't think it's accurate to say that the unions have given less or haven't played their part.

I think they — they have given quite a bit.  You see — you see a great change.  I mean, look — just look in general.  I was reading the other night about G.M.  Again, I don't want to pre-judge the outcome, but 1979, General Motors employed about 618,000 people and was America's biggest employer.  I think they're down now to far less than 100,000 employees.

I think restructuring over the short term and certainly over the long term has impacted — has impacted workers in a very painful way.
  
HANS NICHOLS, BLOOMBERG NEWS:  So have the unions sacrificed more than the bondholders?
  
GIBBS:  You know, I — I don't know that I've seen the sheet that delineates the exact degree of pain, but I think that the notion somehow that bondholders have given all and the union has given very little, and I don't want to characterize necessarily what you're saying, but there has been that mem (ph) out there that somehow the workers have gotten off easy.

And I — you know, I — we can — we can get in my Ford and we can go to a lot of different communities in southeast Michigan and Ohio and Indiana and Wisconsin, and I can assure you there are real names and faces to people that have given — have given a lot.

HANS NICHOLS, BLOOMBERG NEWS:  Would you say it's co-equal then?

GIBBS:  I would say it's fairly comparable, yes.

TAPPER:  OK.  I mean, it sounds to me like in your characterization, your response, that you're looking at the general sacrifice that a lot of auto workers have made in general because of the tough economic climate and in terms of bad decisions by the auto makers. I'm just talking about the auto deals.
  
GIBBS:  But understand we are here because of the change in the climate of auto sales, and we are here because of some of the decisions that have been made by the companies.
  
There's no doubt — I mean, the notion that we are here because of just one fixed series of events I think is unfair.  I think we're here because, instead of selling 16 million cars a year, we're maybe looking at selling 9 million to 9.5 million cars a year.  Very few business models that are going to work for anybody — when you're planning to sell 16 million widgets and you sell 9 million to 9.5 million. I think, over the long term and in the short term, workers have given quite a bit in this case.
 
TAPPER:  So just to be clear, when you're responding to the question, you're saying that workers have sacrificed, you're looking at the overall…

GIBBS:  No, no…

TAPPER:  … history of the auto industry…

GIBBS:  No, no, no, no…No, no, no.  I'm looking — I am looking at — I am looking at the wage and benefit cuts that are being exacted on workers as we speak.  I think the notion that — the notion that they haven't given or sacrificed I think is just simply not true.

– jpt

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