Coomes on auto bailout

Joe Arnold-- on the WHAS11 political blog-- including an interview with Dr. Paul Coomes, the regional economics guru around here.

A University of Louisville economist says the proposed $25 billion bailout of the domestic auto industry will not make a difference, suggesting it would just be pouring more money into an industry collapsing under union wages and benefits.

Dr. Paul Coomes has researched regional economics for decades, including Kentucky's auto industry. The city and state have relied on his expertise, as have major local employers like UPS, General Electric, Churchill Downs and LG&E.

But his unvarnished account of the proposed auto bailout will not be a welcome assessment to Ford and the United Auto Workers.

Asked if the bailout would make a difference, Coomes responded,

"I don't think so. I don't think so. In my opinion it delays the company making a business decision they need to make...to renegotiate their union contracts."

The labor cost of each Toyota autoworker is about $44 an hour. Including benefits and retiree obligations, the average cost at Ford, G-M and Chrysler is about $73 an hour.

"You have to do it on the revenue side and the cost side," Coomes told WHAS11's Joe Arnold, "The revenue side has to do with putting vehicles out people want to buy at the right price. They know how to do that. The problem is the cost side....

Coomes says the threat of bankruptcy may force the United Auto Workers to make major concessions.

But the suggestion that Ford workers make too much money galls UAW Local 862 President, Rocky Comito.

"It's just disgusting to listen to the people who are not shooting the screws have no idea what it's like in there to be on that job continuously ten hours a day," Comito said....

Meanwhile -- even if the Big Three would collapse, Coomes says Louisville's location and workforce is still a natural fit for future vehicle manufacturing.

"Even if they were to go belly up, I suspect that particularly the truck plant would be taken over by another manufacturer. I don't think that's likely, I think Ford will stay here and keep doing that."...