UAW Concessions?

[S. C.]

I just don't buy this premise that 10% of all US jobs go "poof" if GM and Ford file for bankruptcy protection....I just don't.

You might want to research that a little more. Most people have no idea how many suppliers, restaurants, stores etc will lose jobs.

 

[WebmasterAlex]

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.

 

[dvcgirl]

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.

Yes, but the PBGC hasn't paid nearly as well for other employees. Look at what the Delta pilots got.....about 30 cents on the dollar. The PBGC is already terribly underfunded, and that will only continue to get worse. We simply don't have the money to fund it. Wait til the imaginary Social Security and Medicare "trust funds" timeline runs out. That's when things will get really interesting. Twice in the last month our US Treasury has held auctions for 30 year Treasuries....and they haven't gone that well. Perhaps the rest of the world is starting to get a bit concerned about our federal debt?

I get the "chapter 11" dilemma with the Big Three, but how confident does anyone really feel about buying a GM car right now? Or even if they get 30 Billion from the government? What does that buy them....another year? I'll admit, I'm biased. I owned one GM vehicle....a chevy chevette....right out of high school. Bought it used with my own hard earned money and it was just a total piece of crap. And I'm being completely honest when I say that most people I know who own American cars have many more issues with them than we've ever had with our cars....all foreign cars. My Aunt had a Chevy Trailblazer.....a 2005.....it was really cheap inside, and she hated it....had nothing but problems with it.

But the real argument is not just "we need to save jobs!!" It's really whether GM and the big three are even worth saving. Forget about "return on investment" for the US taxpayer.....we'll never see that money again....ever. GM stated that they need 10 Billion just to have enough to pay their bills through the next year, and 15 Billion to help them *close plants*, get rid of "failing models" and buy-out employees! So we're losing jobs here no matter what.

And the big "winning scenario" is this....once they buy-out all of those employees as quoted from a Time article...

"The carrot for GM is that any new workers it hires in the U.S. will make $13 to $14 an hour and collect limited benefits rather than work for $29 an hour and get full benefits — the old UAW wage."

So, yes, by all means, let's pay 50 Billion....minimum, to create a bunch of crappy jobs with limited benefits.

And let's all keep in mind, that GM *lost* 73 Billion dollars since 2004.....and now we're expecting them make enough to pay us back 50 Billion.

Again, the worst-case scenario is that we lose 2.5 million jobs...."poof", into the thin air. The reality is likely far different. All three won't fail....likely one will fail or get much, much smaller (which is what will happen regardless of what we do to help them). The other two will merge and get leaner and meaner (and hopefully smarter). The foreign auto makers will pick up market share...big deal....they've been doing that for years......and they'll likely open more plants in the US since we still seem to purchase a fair amount of autos. They'll also keep the suppliers and their employees busy. And so we'll still end up with a bunch of those $13-14 an hour jobs anyway.

I just can't see us pouring money into these companies that simply lose money hand over fist.

 

[Pin Wizard]

I think that the unions should do whatever is in the best interest of their members. Management should do whatever is in the best interest of the shareholders. Taxpayers should do what is in their interest, which is to let the industry succeed or fail on its own.

It will be a sad day when GM, Ford, and Chrysler fail. Unfortunately, there is no money to give them that won't cause problems elsewhere. The government can't give them money without taking it from someone else. They can tax money away from those that earn it. They can borrow money (taxing future generations), but that makes less money available for others to borrow. Finally, they can print more. That causes inflation, which acts as a tax on everyone that has dollars.

The world only needs so many cars. Right now, we have far too much capacity to make cars and far too little demand for them. I don't see demand increasing that quickly, so some car making capacity is going to go away. Better to deal with the adjustment than to drag down the rest of the economy trying to maintain excess capacity.

It's going to be very difficult for those that lose their jobs, but it's a necessary adjustment.

That would be great! Then maybe the dealership would knock off sending post cards when I've had a vehicle only 2.5 years saying I have enough equity to trade in.

 

[HOGFAN]

on msn.com there is an article from Consumer Reports that list the least reliable cars. Two-thirds of Chrysler cars rank below average. Personally I dont want to throw good money after bad. Ford cars rank average/above average, catching up with the imports. GM somewhere in the middle. Maybe IF there is a bailout, it shouldnt be for the poorest performer of the three.

 

[WebmasterAlex]

Yes, but the PBGC hasn't paid nearly as well for other employees. Look at what the Delta pilots got.....about 30 cents on the dollar.

That's because Pilots make a lot more than even UAW workers. The amount that the PBGC pays is set by statute. This year it's $51750.00, I'll bet that's enough to cover a UAW workers monthly pension at age 65. They are TERRIBLY underfunded but nobody has any doubt the governement would have to save them.
We end up paying for this no matter what we do
I'm not even saying bail them out or don't bail them out. I'm saying people need to open their eye's and know what the true cost is going to be. Everyone has their opinion but this is an area for accountants and actuary's, instead we are getting political rhetoric

 

[minnie61650]

on msn.com there is an article from Consumer Reports that list the least reliable cars. Two-thirds of Chrysler cars rank below average. Personally I dont want to throw good money after bad. Ford cars rank average/above average, catching up with the imports. GM somewhere in the middle. Maybe IF there is a bailout, it shouldnt be for the poorest performer of the three.

What CR doesn't say:

1. The data are already about five months old, and will be over a year old when many people use them to buy a car next summer.

2. The average problem rate isn't very high, probably around 18 problems per 100 cars for the 2008s (based on past years; they didn't have a number when asked this year). So the differences between the different "blobs" is three or four problems per 100 cars. In both cases, the numbers are probably much lower than many people think.

For a site that promptly updates its vehicle reliability information four times a year and posts the actual repair rates:

http://www.truedelta.com

After all, do you want to know how reliable a car was a year ago, when it was a year younger, or how reliable it has been recently?

Link:

http://forums.contracostatimes.com/...mer-reports-annual-list-of-most-reliable-cars

 

[gottaluvPluto]

That's because Pilots make a lot more than even UAW workers. The amount that the PBGC pays is set by statute. This year it's $51750.00, I'll bet that's enough to cover a UAW workers monthly pension at age 65. They are TERRIBLY underfunded but nobody has any doubt the governement would have to save them.
We end up paying for this no matter what we do
I'm not even saying bail them out or don't bail them out. I'm saying people need to open their eye's and know what the true cost is going to be. Everyone has their opinion but this is an area for accountants and actuary's, instead we are getting political rhetoric

Not all pilots make a lot of money. You have regional pilots making $30,000 a year. Then you have some pilots making just a little bit more than that. Let us not forget that pilots are only paid from the time the plane leaves the gate to the time it gets to the gate.

 

[WebmasterAlex]

Not all pilots make a lot of money. You have regional pilots making $30,000 a year. Then you have some pilots making just a little bit more than that. Let us not forget that pilots are only paid from the time the plane leaves the gate to the time it gets to the gate.

Absolutely! The comment was in reference to the Delta Pilots and why they lost so much on their retirements. A lot of them made 6 figures

 

[Glenn]

It looks like the UAW & the auto industry are playing chicken. If they dont sit down & co-operate we just might see both of them disappear. Instead of all or nothing cannt there be a compermise? Maybe no pay raises for a yr or 2 for everyone including mgt. A higher co pay on insurance may not hurt too much. The bottom line is that management has to come to the table saying here is what we will give up & for how long to survive & and ask what will the Union chip in. You cannt ask rank & file to give things up when 10s of millions are spent on bonuses for mgt.

 

[SeeVee]

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.

 

[Pin Wizard]

It looks like the UAW & the auto industry are playing chicken. If they dont sit down & co-operate we just might see both of them disappear. Instead of all or nothing cannt there be a compermise? Maybe no pay raises for a yr or 2 for everyone including mgt. A higher co pay on insurance may not hurt too much. The bottom line is that management has to come to the table saying here is what we will give up & for how long to survive & and ask what will the Union chip in. You cannt ask rank & file to give things up when 10s of millions are spent on bonuses for mgt.

That's it...if you're not willing to compromise on things and apparently receive help, then good luck on your own. I'm sure many people would be watching to see when they go **poof**.

 

[MarkBarbieri]

No amount of pay cutting by the UAW or the executives is going to save GM. This is a company that once sold over half the cars in the US and now sells about one fifth. At the same time, it still has over four times as many dealerships as does Toyota.

GM's core problem is that it's contracts make downsizing almost impossible. A healthy GM would have far fewer employees, dealerships, and facilities. If the taxpayers pour money into GM but don't fix those structural problems, they'll just be refilling a leaking bucket. The only long term answer is for GM to get much smaller. Doing so, however, would be so painful to so many employees, dealers, cities, and other groups with GM contracts that it won't happen outside of bankruptcy.

The irony is that GM's management condemned it by writing contracts with everyone to ensure their security. The unions negotiated deals that prevented the loss of jobs. States, cities, and dealerships negotiated deals protecting them against GM shutting down facilities. Everyone got a little more security, but in the end they all conspired to bring down the corporation.

GM has a market cap of less than $2 billion. That still seems staggering for what was once America's biggest company. They have about $16 billion in cash, but have a negative $10 billion in leveraged cash flow. They are already $45 billion in debt, but their bleak future is going to make future borrowing almost impossible for them. From a financial perspective, it's a slow motion train wreck and there is no stopping it.

If the government is going to bail out GM and make it succeed, they need to do so with the agreement that a large portion of the labor force, dealerships, and facilities must all be shed. To do anything else is just buying a little time.

 

[Galahad]

GM's core problem is that it's contracts make downsizing almost impossible.

Yep. I saved this clip from an story a few weeks ago about, I think, a Ford plant that was closing.

During the layoff, workers will get close to full pay and benefits through supplemental pay and state unemployment. After 48 weeks they go into a jobs bank in which the company pays 85 percent of their salaries, plus benefits. Within two years, the workers could lose pay and benefits if they don't transfer to another plant.

On the hook for 85% of pay an benefits for up to 2 years!

 

[DisneyMomOK]

It sounds like they are getting the money no matter what, if they can wait until after 1/20 (Bush would probably veto it now). However, this will not fix the problem (as stated above) and I wonder how many times Congress will require the rest of the country to bail them out? Two, five, or until the public finally screams, "Enough!"?

 

[jodifla]

It sounds like they are getting the money no matter what, if they can wait until after 1/20 (Bush would probably veto it now). However, this will not fix the problem (as stated above) and I wonder how many times Congress will require the rest of the country to bail them out? Two, five, or until the public finally screams, "Enough!"?

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.

 

[DisneyMomOK]

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.

Chrysler in 1979 with a Lee Iacocca at the helm is totally different from the companies and situation today. The monies requested are well in excess of the corporations' capitalization. Are you or anyone you know planning on purchasing a GM vehicle in the next couple of months? I think too few people want cars, especially ones with possible warranty support issues. My Dad did buy a Chrysler shortly after the 1979 bankruptcy, but that type of optimism does not seem to be running rampant today.

 

[c4a]

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.

 

[maymom96]

Not everyone who makes cars is in a union nor do they get all the perks. My husband works at a non union factory that makes car parts. He makes top pay at $15 per hour, gets two weeks paid vacation, no sick or personal time, no retirement package and we pay for our own crappy insurance with high deductibles.
I want a bailout because I want my husband to have a job. But he just got a letter that his factory is closing in 2 months. The reason is because they are losing money. Want to know how they are losing money? The factory projects what they will make each year. If they don't make that projected amount, they write it down as a loss. So even if they did make money but not as much as they hoped, it was still a loss.
I wonder if I should project our income as a million for the 2009 tax year. When we don't come close, that will be a loss and I'll report it on our tax forms.

 

[c4a]

I also have family members who work at the contract companies. (Plus 2 brother's who work at Ford). It has amazed me for years, how the guys at Ford make so much more & have so much better benefits than my brothers who work at the contract companies. It also blew my mind, that even though the Ford guys get most of their pay & keep the benefits when they get laid off...my non-union brothers don't. My union Ford working brother's attitude for years is..."Don't like it? Go to work for a union company." I feel for them but I can't seem to be on their side. And when discussing why they voted to not change the retirement benefits...I believe they believed the bull they were saying.
The contract companies are the only reason I am for this bail out.