GM TRIES TO COPY AA

[Vortilon]

That's quite a red herring you threw there...

...And I thought I was in "thread drift country"

Hey KEV, no insult intended.. I like to interject a little off color humor from time to time. "Igor, why must you torment them so?" "It's what I do."

 

[Garfield1966]

the whole 'American/foreign' question is so irrelavant anymore. I used to own two GM vehicles. One was assembled in Canada, the other in Mexico.
I now own, and am delighted with, a vehicle with a GM badge (Pontiac) that is assembled on the same assembly line in Fremont, CA, as an almost identical Toyota model.

That was the point I was trying to make. So I got some model/makes wrong ... sue me

 

[Kev3188]

Hey KEV, no insult intended.. I like to interject a little off color humor from time to time. "Igor, why must you torment them so?" "It's what I do."

No problem! The humor wasn't lost on me; I just thought I had taken the thread far enough off the rails already w/o getting into Subaru's "demographics"...

 

[tech2101]

That was the point I was trying to make. So I got some model/makes wrong ... sue me

I used to own a Geo Prism (1994). It rolled off the same assembly line as the Toyota Corolla (Fremont, CA). The Geo was $2000 less than the Toyota model...

The lines of "Made in America" are blurry in today’s global economy.

 

[tech2101]

That's quite a red herring you threw there...

...And I thought I was in "thread drift country"

I bit on that one also. Sorry for the detour.

 

[eolesen]

Looks to me like the UAW lost, and GM one up'd AA -- not only did they get B-scale, but the union is now on the hook for the retiree health care, both being issues that the company wanted. So I don't see their strike as being anything more than a symbolic move to let the union save some face.

Executive compensation is another sore point. The European counterparts (part of this global community we're supposedly a part of) look upon what the USA execs get paid as ludicrous.

I don't necessarily disagree, but that's not what the union was taking issue with. You get what your union negotiates. I get what I negotiate. Sometimes you sell your house in a buyers market, sometimes you loose your shirt. That's how it works.

 

[tech2101]

Looks to me like the UAW lost, and GM one up'd AA -- not only did they get B-scale, but the union is now on the hook for the retiree health care, both being issues that the company wanted. So I don't see their strike as being anything more than a symbolic move to let the union save some face.
I don't necessarily disagree, but that's not what the union was taking issue with. You get what your union negotiates. I get what I negotiate. Sometimes you sell your house in a buyers market, sometimes you loose your shirt. That's how it works.

I'm not so sure that this is a done deal yet. We'll see how the ratification vote goes. The UAW has a hard sell on this one.

 

[Bob Owens]

Looks to me like the UAW lost, and GM one up'd AA -- not only did they get B-scale, but the union is now on the hook for the retiree health care, both being issues that the company wanted. So I don't see their strike as being anything more than a symbolic move to let the union save some face.

Wrong again, we have been paying for retiree health care for at least 15 years-Prefunding.

 

[eolesen]

You've been pre-funding, but AA is ultimately responsible for paying the claims. AA carries all of the liability and has to get union approval in order to make changes to benefit levels.

With this proposal, GM jettisons the $50B or so in balance sheet liability for retiree health care, and the UAW is on the hook to make sure that the trust doesn't run out of money. As I understand it, the UAW would determine benefit levels and could make adjustments without the company having to be involved at all. It's appears very much like having a pension fund be managed by the union as opposed to the company.

But, as the article below shows, it could very well backfire on them as it did a few years back at Cat. Their union managed VEBA ran out of money...

SAN FRANCISCO (MarketWatch) -- While final details of the labor contract between General Motors Corp. and the United Auto Workers are still under wraps, skeptics warn that the union's control of its retiree health-care fund could open a Pandora's box for its members.

GM is expected to pump $35 billion into a voluntary employee-benefit association, or VEBA, unshackling itself from more than $50 billion in long-term health care owed to the UAW and passing on the burden of managing the trust to the union.

Getting a handle on steep legacy costs is critical in GM's sweeping efforts to become more competitive in the global economy, where it says that it currently grapples with a wage gap of $25 to $30 an hour with foreign automaking rivals.

Corporate medical costs have soared 46% since 2003 to an average $9,312 per employee nationwide, according to human-resources consultants Towers Perrin. These figures are only expected to climb higher.

Add to that the red tape involved in administering a fund that covers more than 400,000 union members, retirees and their spouses, and the UAW will have its hands full.

The enormity of the task hasn't been lost on some loud voices within the union.

In an open letter to UAW President Ron Gettelfinger earlier this month, three former union leaders voiced dismay over the proposal and its viability.

"The potential consequences of adopting such a plan will be economically painful, if not disastrous, to those covered by it," they wrote.

The union has reason to be wary of such a deal. In 1998, the UAW negotiated a VEBA with Caterpillar Inc. that ran out of money by 2005, leaving retirees to sue the heavy-equipment maker to attempt to recover health-care costs.

While there are some key differences between the two deals, the potential for the well to run dry is a major concern for retirees.
Gettelfinger tried to soothe those fears when he said that the fund should be solvent for a whopping 80 years, but some industry observers see that timeline as questionable, at best.

"It is absolutely impossible that the VEBA will last that long. This is going to turn out to be a nasty boil that will continue to fester," said Nelson Lichtenstein, a history professor at University of California at Santa Barbara.

"Gettelfinger is making a mistake by dressing up defeat as a victory," he added.

Tom Mobley from Miami University's Farmer School of Business said that the UAW will get to know the harsh reality the GM brain trust has faced with its health-care burden.

"Eventually, the union is either going to have to go back to GM and ask for more money to fund the trust, or it will have to take some benefit cuts," he commented. "The money just isn't going to last forever."

Voting on the four-year labor deal is expected to start as soon as this weekend, with union leaders slated to be briefed on Thursday and Friday, according to Gettelfinger.