James S. Frederick – 11/28/08

This page was last updated on December 6, 2008.

U.S. must help auto industry; James S. Frederick; Beaver County Times; November 28, 2008. Though published in the Times print edition of November 28^th, this letter didn’t appear on the Times website until December 5^th. That appears to be because the person responsible for posting editorials and letters on the website was on vacation for the Thanksgiving weekend.

Below is a detailed critique of the subject letter.

“This is in response to recent articles and opinions concerning the automobile industry request for a government-sponsored bridge loan.

“There has been an ongoing theme in much of the media coverage on this issue that criticizes pensions and health care coverage. These benefits result from the commitments made by the industry through collective bargaining with the unions representing workers in the industry.

“I am astonished by the negative context that pensions and health care receive in the media and subsequently in the community.”

[RWC] Everyone in business and labor union management knew defined benefit retirement plans were train wrecks in waiting. Business management accepted them because it pushed the problem down the road and labor union management liked them because it could claim to have provided for its employees. Both parties knew the defined benefits could not be sustained over the long term. The known correct approach was to go with defined contribution plans [A 401(k) plan is an example.], but that didn’t happen.

“Retiree benefits provide the means for working families to live comfortably. These benefits should not be seen by society as the exception. Instead pensions and retiree health care should be seen as the rule and the fundamental basis of the middle class.”

[RWC] Sorry, businesses simply can’t afford to buy benefits for people who aren’t producing anything. Retiree healthcare benefits alone add somewhere between $1,500 to $2,000 to the cost of every Big Three vehicle. These are costs “transplants” (foreign manufacturers who build in the U.S.) were mostly smart enough to avoid.

“We should strive to bring pensions to all workers. The automobile industry provides three million middle-class jobs in the United States, many in western Pennsylvania. We have lost too many good jobs, and we can’t afford to lose more. We need to support the automobile industry and the middle-class jobs that it provides.”

[RWC] Mr. Frederick’s proposal would pretty much guarantee we’d lose even more jobs.