UAW Concessions?

[Pin Wizard]

I am only for the bail out because of the contract company (non union)jobs that will be saved. When problems started, it was the contract/work to these companies that were cut...not employee benefits/salaries protected by the union.
I am sick of hearing how if the union was busted up, the employees would be making close to "minimum wage" and have almost no benefits, also. It would simply bring the union workers down to the financial level of others doing the same job at half the pay. Which is still higher than min. wage & with benefits. Would there be the great college initiatives for their kids? No. Would there be a computer at home program for $5 a month? Definately not. Nor would they have the retirement/insurance benefits.
I feel that as a taxpayer I am being strong armed by the union to accept the bail out so that jobs can be saved. Repeatedly, the unions have voted down sanctions that would lessen their benefits. Well, let the union pay-how about the union return some of the dues to the worker to help with the cost?
Oh, but they aren't going to do that.
For the most part, I think Unions have outlived their usefulness. After all, this isn't the early 1900's when employees were expected to work overtime with no overtime pay, chained in factories so they couldn't leave, and forced to work in horrid conditions for little pay. Labor laws have resolved these issues.

 

[Galahad]

A new Honda plant opened in Indiana this week - rolled out its first Civic this morning. They are going ahead with all of their hiring plans - putting none of it on hold and will also be producing natural gas powered Civics as well. American made cars! I wonder if the Japanese resent "shipping those jobs overseas".

 

[jodifla]

A new Honda plant opened in Indiana this week - rolled out its first Civic this morning. They are going ahead with all of their hiring plans - putting none of it on hold and will also be producing natural gas powered Civics as well. American made cars! I wonder if the Japanese resent "shipping those jobs overseas".

If the big 3 go down, they'll take all the auto suppliers with them, and there goes the new Honda plant.

It's all interconnected. Ever see It's a Wonderful Life??

 

[Galahad]

If the big 3 go down, they'll take all the auto suppliers with them, and there goes the new Honda plant.

Actually, probably not. They've run a lot of stories about this here in recent months. They are not the same suppliers. The big 3 go down, business will shift to those that can do it right. Even bankruptcy won't "kill" the big three. The Big three won't be able to survive unless they can reset all the contracts. Yes, something needs to be done about the executives. But unless you can reset the contacts there just be a lot of bitter out of work union guys rather than a lot of bitter working union guys.

 

[fkj2]

If the big 3 go down, they'll take all the auto suppliers with them, and there goes the new Honda plant.

It's all interconnected. Ever see It's a Wonderful Life??

Kind of like the connection between consumers who can't/won't buy cars because they can't afford them?

Just what we need...more unsold cars being produced.

 

[S. C.]

I am in the market for a new car. I have narrowed it down to two vehicles. The Saturan Astra B or the VW rabbit.

The anger that the UAW fills me with has me leaning way towards the VW and I dont give a damn if it costs a UAW worker a job.

Nice....your blaming UAW workers for something the UAW leader said

 

[jodifla]

Kind of like the connection between consumers who can't/won't buy cars because they can't afford them?

Just what we need...more unsold cars being produced.

They won't be able to afford Hondas or Toyotas either. Because the unemployment rate will spike totally out of control like a row of dominoes.

If the Big 3 close up job and put those hundreds of thousands of workers out on the street, then it will be just like when the Titanic sunk. It will suck everyone else down with it.

See how the stock market is tanking when Citibank cuts a measly 50 thousand jobs?

 

[jodifla]

Actually, probably not. They've run a lot of stories about this here in recent months. They are not the same suppliers. The big 3 go down, business will shift to those that can do it right. Even bankruptcy won't "kill" the big three. The Big three won't be able to survive unless they can reset all the contracts. Yes, something needs to be done about the executives. But unless you can reset the contacts there just be a lot of bitter out of work union guys rather than a lot of bitter working union guys.

http://www.google.com/hostednews/ap/article/ALeqM5g2gKfqnGZfYaUYuuUnAJkyb62vBQD94G75GO0



Yet even foreign automakers that build cars and trucks in the United States could be affected. Companies like Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co., with plants scattered throughout the South and Midwest, get their parts from the vast, multilayered network of U.S. suppliers that employs about 800,000 people.

Dave Andrea, vice president of industry analysis and economics for the Original Equipment Suppliers Association, a division of the Motor & Equipment Manufacturers Association, said that's why lawmakers need to be looking at the U.S. auto industry as a whole.

"We need to be talking about this at the U.S. level, not talking about the Detroit Three and then putting the other automakers in another bucket," he said. "If we have major failures of suppliers, the foreign automakers are going to be affected as well."

Automakers generally only have a one- to two-shift supply of some key parts, Andrea said, making them very susceptible to supply chain disruptions

 

[S. C.]

For everyone who thinks if the plants close it won't affect your jobs! There will be thousands of families that will have go on welfare because no one is hiring. Thousands of families that can no longer purchase the products that your job is involved with.

 

[S. C.]

They won't be able to afford Hondas or Toyotas either. Because the unemployment rate will spike totally out of control like a row of dominoes.

If the Big 3 close up job and put those hundreds of thousands of workers out on the street, then it will be just like when the Titanic sunk. It will suck everyone else down with it.

See how the stock market is tanking when Citibank cuts a measly 50 thousand jobs?

Exactly!

 

[gottaluvPluto]

Well, the last time the auto companies asked for help, it was Chrysler in 1979. And they DID restructure and do well. So it's not like they are constantly there hat in hand.

And THEY HAVE RENEGOTIATED their contracts, which will kick in in 2009. They were on track to get back to a solid business plan when the bottom dropped out of the economy.

Even Toyota, Honda and Nissan are reeling from all this. It's not just the American carmakers.

If the big 3 go down, they'll take all the auto suppliers with them, and there goes the new Honda plant.

It's all interconnected. Ever see It's a Wonderful Life??

What does the new contract state? Does the new contract bring the new wage to around $47 an hour. Does the new contract cut pension for the retired people? Just giving the big three money is a HUGE mistake and will not solve any of their problems.

People are using fear to try to get the bailout ..... fear....... fear...sky is falling.

 

[wall*e2008]

Actually, probably not. They've run a lot of stories about this here in recent months. They are not the same suppliers. The big 3 go down, business will shift to those that can do it right. Even bankruptcy won't "kill" the big three. The Big three won't be able to survive unless they can reset all the contracts. Yes, something needs to be done about the executives. But unless you can reset the contacts there just be a lot of bitter out of work union guys rather than a lot of bitter working union guys.

ITA

 

[jodifla]

What does the new contract state? Does the new contract bring the new wage to around $47 an hour. Does the new contract cut pension for the retired people? Just giving the big three money is a HUGE mistake and will not solve any of their problems.

People are using fear to try to get the bailout ..... fear....... fear...sky is falling.

The new contracts bring the wages down to $14 an hour for new employees, actually.

 

[Galahad]

Do you think that without a bail out that they will just shutter their doors and go home?

 

[DawnCt1]

Unfortunately this is nowhere near as simple as you would think from reading this thread.
You and I (meaning taxpayers) are going to pay for this no matter what happens. The question is what is the best use of our money.
People love to throw facts around out of context. The anti-union people love this 1,000 to 1500 of every GM car is union benefits! Nobody bothers to ask what that really means. The vast majority of it is defined benefit pensions and healthcare for retirees. If GM declares bankruptcy the defined benefit pensions will have to be paid by a Government agency, the PBGC. The PBGC does not have enough money to pay them so the government will have to bail it out, not much question there.
That is basically what Eastern Air lines did, the retirees still got a pretty good chunk of their pension, it's just that Eastern didn't have to pay it!
Obviously unemployement is going to go through the roof so we are certainly going to pay a TON there not just for GM employees but all the ancillary companies that are also going to face layoffs.
The other big problem is that they can't file a chapter 11 bankruptcy. Very few people are going to buy a car from a bankrupt automaker, pretty much both sides agree bankrtuptcy is the end.
Anyway you slice it a bunch of pro or anti union rhetoric or screaming about executive salaries may make you feel better but it's a smoke screen.
The big question now has to be what's the BEST use of the billions of dollars this is going to cost us no matter what happens. Can we save the auto industry and possibly end up getting some of the money back down the road or is it better to just cut our losses and get out.

Here is an excellent opinion piece in today's WSJ. With regard to the consumer not buying cars from GM; there can be a warrantee fund. We have continued to buy airline tickets from the airlines, almost all of them in Chapter 11,at one point.


Why Bankruptcy Is the Best Option for GM
Chapter 11 would better preserve the valuable parts of the company than an ad hoc bailout.
By MICHAEL E. LEVINE


General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.
[Commentary] AP

Consider the costs of tackling GM's problems with some kind of bailout plan. After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of "change," GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM's. But their expenses for benefits are a fraction of GM's. GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it's not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

And therein lies the problem: The cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time.

GM's solution is to ask the federal government for the cash that will allow it to do all of this piece by piece. But much of the cash will be thrown at unproductive commitments. And the sense of urgency that would enable GM to make choices painful to its management, its workers, its retirees, its suppliers and its localities will simply not be there if federal money is available. Like AIG, it will be back for more, and at the same time it will be telling us that it's doing a great job under difficult circumstances.

Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM's viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn't be easy but, unlike trying to bail out GM as it is, it wouldn't be impossible.

The social and political costs would be very large, but if GM fails after getting $50 billion or $100 billion in bailout money, it'll be just as large and there will be less money to soften the blow and even more blame to go around. The PBGC will probably need money to guarantee GM's pensions for its white- and blue-collar workers (pension support is capped at around $40,000 per year, so that won't help executives much). Unemployment insurance will have to be extended and offered to many people, perhaps millions if you include dealers, suppliers and communities dependent on GM as it exists now. A GM bankruptcy will make addressing health-care coverage more urgent, which is probably a good thing. It would require job-retraining money and community assistance to affected localities.

But unless we are willing to support GM as it is indefinitely, the downsizing and asset-shedding will have to come anyway. Even if it builds cars as attractive and environmentally responsible as those Honda and Toyota will be building, they won't be able to carry the weight of GM's past.

GM CEO Rick Wagoner says "bankruptcy is not an option." Critics of a bankruptcy say that GM won't be able to get the loans it will need to guarantee warranties, pay its operating losses while it restructures, and preserve customers' ability to finance purchases. While consumers buy tickets from bankrupt airlines, electronics from bankrupt retailers, and apartments from bankrupt builders, they say consumers won't buy cars from a bankrupt auto maker. But bankruptcy no longer means "liquidation" or "out of business" to a generation of consumers used to buying from firms in reorganization.


GM would guarantee warranty support with a segregated fund if necessary. And debtor-in-possession (DIP) financing -- loans that provide the near-term cash for reorganizing companies -- is very safe, because the DIP lender has priority over all other claimants. In normal markets, it would certainly be available to a GM that has assets to sell, including a viable overseas business. Such financing is probably available even now.

In any event, it would be lined up before a filing, not after, so any problems wouldn't be a surprise. As a last resort, we could at least consider a public DIP loan to support a reorganizing GM with a good chance to survive -- as opposed to subsidizing a GM slowly deflating.

The fate of Daewoo -- the Korean auto maker that collapsed in 2000 after filing for bankruptcy, leaving about 500 dealers stranded in the U.S. -- is often cited as "proof" that a GM bankruptcy won't work. But Daewoo was headquartered in a part of the world where bankruptcy still carries a major stigma and usually means liquidation. Daewoo's experience is largely irrelevant to a major U.S. company undergoing a well-publicized positive transformation, almost certainly under new management.

GM as it is cannot survive without long-term government life support. If it gets that support, it can't change enough and won't change fast enough. Contrary to Mr. Wagoner's brave declaration, bankruptcy is an option. In fact, it's the only option that merits public support and actually has a chance at succeeding.

Mr. Levine, a former airline executive, is a distinguished research scholar and senior lecturer at NYU School of Law.

 

[fkj2]

They won't be able to afford Hondas or Toyotas either. Because the unemployment rate will spike totally out of control like a row of dominoes.

If the Big 3 close up job and put those hundreds of thousands of workers out on the street, then it will be just like when the Titanic sunk. It will suck everyone else down with it.

See how the stock market is tanking when Citibank cuts a measly 50 thousand jobs?

Oh, I agree Honda and Toyota will suffer; they already are, but they're in a better position to weather this storm. At least they make cars that are deemed to be more reliable by the consumer. But if people are going to invest big $$$ in a car, they're going to expect value and reliability for it. The Big Three don't have that reputation.

Speaking of which, I made the last payment on my Jeep Liberty a month and a half ago. Ten days after I sent it in, the rear door wouldn't open. Timing is everything. And do I have the $350 or so a new latch and installation will cost me? Nnoooo

As to the domino effect, you betcha, that's exactly what's going to (and is) happening.

 

[c4a]

The new contracts bring the wages down to $14 an hour for new employees, actually.

A new employee would be making more than most contract employees, still. (Contract employees, around here, hire in at $9.) And contrary to the minimum wage argument-they would be making over double that (almost 3x that before taxes). Plus, would get the benefits.

It is still a better deal than the contract companies have. A lot better.
The benefits alone...
In the mean time, it has been the contract companies that have suffered because of the union greed. They are the one's who had hrs. cut because orders suddenly shrunk. And they do not get the majority of their pay when they are laid off, either.

And not all of the 3 Big retirees get those benefits. Salary (office workers who have college degrees) sure don't. Many of them had their retiree benefits done away with .... it's the union retirees who get the perks. And the union worker's don't care that not all of the retirees at their company get the same benefits. To me...that is greed. Plain and simple. They weren't voting to protect their retirees...they were voting to protect their own retirement plans. Well, only so much can be taken from the pot until the pot goes empty.
In trying to protect their retirement...they may lose their jobs.

 

[S. C.]

A new employee would be making more than most contract employees, still. (Contract employees, around here, hire in at $9.) And contrary to the minimum wage argument-they would be making over double that (almost 3x that before taxes). Plus, would get the benefits.

It is still a better deal than the contract companies have. A lot better.
The benefits alone...
In the mean time, it has been the contract companies that have suffered because of the union greed. They are the one's who had hrs. cut because orders suddenly shrunk. And they do not get the majority of their pay when they are laid off, either.

And not all of the 3 Big retirees get those benefits. Salary (office workers who have college degrees) sure don't. Many of them had their retiree benefits done away with .... it's the union retirees who get the perks. And the union worker's don't care that not all of the retirees at their company get the same benefits. To me...that is greed. Plain and simple. They weren't voting to protect their retirees...they were voting to protect their own retirement plans. Well, only so much can be taken from the pot until the pot goes empty.
In trying to protect their retirement...they may lose their jobs.

What benefits will the new workers be getting?

Now it's all the unions fault that the economy plunged and orders shrunk?

If I'm reading this right you are now blaming the union workers for what the company does or does not pay their salary retirees? The UAW does not vote on what salary workers/retirees get!

 

[gottaluvPluto]

The new contracts bring the wages down to $14 an hour for new employees, actually.

The key word there is NEW. What about the old employees, they HAVE to take a pay cut. Did they take a pay cut to $47 an hour?

 

[PatsMom]

Newsweek has an excellent opinion piece on the bailout:

How to Bail Out General Motors
Imposing tough conditions would improve the odds of success and discourage many other firms from seeking costly government handouts.

Robert J. Samuelson
NEWSWEEK
From the magazine issue dated Nov 24, 2008
So it's come to this: General Motors, once the world's mightiest industrial enterprise, is now flirting with bankruptcy. Ford and Chrysler may not be far behind. Car and truck sales have collapsed. GM is rapidly exhausting its cash reserves and may soon be unable to pay its bills. Here's the dilemma: GM and other U.S. automakers ought to be rescued to minimize damage to the economy, but the rescue should require tough conditions that neither the Democratic Congress nor the incoming Obama administration seems willing to support.

In a booming economy, a GM bankruptcy might be tolerable and useful. It would remind everyone of the social costs of mediocre management and overpriced unionized labor. But far from booming, the economy is declining at an apparently accelerating rate. Confidence among small businesses has dropped to a 28-year low, according to a survey released last week by the National Federation of Independent Business.

No one knows what further havoc a GM bankruptcy might inflict. A study by the Center for Automotive Research (CAR) estimates that 2.5 million jobs would be lost in the first year. The logic: if any of the "Big Three" went bankrupt, many suppliers would also fail; because car companies share suppliers, all U.S.-based manufacturers would suffer crippling parts shortages. American production would virtually stop until new supplier arrangements emerged. "It takes 6,000 to 14,000 parts to make a vehicle," says Sean McAlinden, CAR's chief economist. "If you don't have one, you can't make it."

This may be too pessimistic. In a Chapter 11 bankruptcy, GM would "reorganize." It would suspend many existing debt payments and continue normal operations. Perhaps. The snag is that even in "reorganization," GM would require new loans and these might not be available. "Historically, when companies go bankrupt, there's 'debtor in possession' financing—investors lend you money, but they get repaid first. That market has evaporated because of the credit crunch," says auto analyst Rod Lache of Deutsche Bank. No loans, no production. Another possible pitfall: worried about warranties and service, customers might shun a bankrupt GM's vehicles.

Why run these risks when the 6.5 percent unemployment rate seems headed toward 8 percent and almost a quarter of the 10 million jobless have been out of work for six months or longer? Just to satisfy a purist "free market" ideal? It doesn't make sense. But neither does it make sense simply to heave taxpayers' money at automakers. The objective is not to rescue the companies or workers; it is to shore up the economy and improve the U.S. industry's competitiveness. A bailout won't succeed unless other things also happen.

First, auto companies' existing creditors need to write down their debts. Even with federal aid, companies will shrink. Economist McAlinden estimates that the country has surplus assembly capacity of about 4 million vehicles, much owned by the Big Three and destined to be shut. GM will need a $25 billion government loan to get through the recession and cover closing costs, says Lache. But GM already has $48 billion of debt. Unless the old debt is sharply written down, GM would be overburdened and its rendezvous with bankruptcy would merely be delayed. Already, shareholders are essentially wiped out.

Second, labor costs need to be cut. By Lache's estimates, GM's hourly compensation—wage plus fringe benefits—totaled $71 in 2007 compared with Toyota's $47. Health benefits for retirees (many in their 50s, having retired after 30 years) are expensive. These costs contributed to GM's massive cash drain, $31 billion since 2005. But the United Auto Workers opposes making concessions. Just the opposite. Government aid, says UAW president Ron Gettelfinger, is needed "so that auto companies can meet their health-care obligations to more than 780,000 retirees and dependents." The bailout should be more than union welfare.

Finally, automakers need a consistent energy policy. Congress demands that companies produce more fuel-efficient vehicles (35 miles per gallon by 2020, up from 25mpg now). But politicians also want low gas prices. These goals are contradictory. To encourage consumers to buy fuel-efficient vehicles, Congress should mandate higher gas prices. Gasoline taxes could be raised gradually (say a penny a month for four years, possibly offset by other tax cuts). Wild swings between low and high fuel prices have crippled the U.S. industry by erratically shifting buyer preferences—to and from SUVs.

In bankruptcy, a judge can modify a firm's labor contracts and debts. GM needs the benefits of bankruptcy without the uncertainties, but the political process—so far—resists that desirable bargain. The conditions that Democrats seem to be discussing are mostly rhetorical gestures against high executive compensation (already limited) and in favor of more fuel efficiency (already legislated). The lame-duck Bush administration hasn't helped the conversation. It rejects additional assistance without saying why; if aid is forthcoming, it doesn't suggest what might be useful conditions.

We are now seeing the first political side effects of the open-ended $700 billion rescue of financial institutions. With so much money going to so many recipients, boundaries and rationales need to be established. When is public intervention justified? Who deserves support and why? Otherwise, political firepower will increasingly rule. The reason for imposing tough conditions on the auto industry is not only to improve the odds of success, but also—by the sacrifices required—to make the process sufficiently unpleasant so that countless other companies and unions won't demand similar handouts. In 1979, when it rescued Chrysler from bankruptcy, the Carter administration insisted on concessions from management, investors and labor. We should do as much or more.

URL: http://www.newsweek.com/id/169162