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Report: New UAW deal to save automakers $1000 per car
While throwing billions of dollars into a health-care VEBA for workers might be a heavy hit for the Big Three, in the long-term, the new contracts will likely save each automaker a substantial amount of cash. According to analysts, when the new contracts are in place in 2010, Chrysler, Ford and GM will be saving approximately $1000 on each vehicle it sells. If all three automakers maintain market share – over 16 million vehicles sold per year – that nets GM $3.8 billion per year, with Ford saving $2.4 billion and Chrysler being able to pocket an extra $2 billion. The "if" that started the previous sentence is a big one, particularly with the U.S. economy teetering on the brink of the "R-word."
[Source: Automotive News – Sub. Req.]
Reader Comments (Page 1 of 1)
Steve_S 9:43AM (11/12/2007)
UAW Management Indicted in Embezzlement Scandal”
Will be the headline in a few years.
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elprogramer 4:39PM (11/12/2007)
The UAW doesn't get access to it. The arrangement is that the company and the union both appoint trustees or some such, but neither has direct access to the funds.
Nice try though.
Steve_S 9:53AM (11/13/2007)
Do some Googles on other VEBA's and see how its gone down in the past. Somebody from the UAW brass is going to have their hands in the cookie jar.
Kumar 9:44AM (11/12/2007)
I choose to think of it as $1000 more of content and quality for the same price.....
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TriShield 9:44AM (11/12/2007)
Hopefully this is true.
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Corey W. 10:25AM (11/12/2007)
Why do I get the nagging feeling the union workers are going to get screwed?!?!? Hopefully the fund is managed responsibly.
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RicardoHead 10:35AM (11/12/2007)
$50 billion + UAW management = embezzlement.
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rrm 10:58AM (11/12/2007)
So instead of the Fed bailing out the car makers, it will be the Fed bailing out the UAW. Either way the rest of us get screwed.
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Devin 11:10AM (11/12/2007)
I'm not sure how the "rest of us" are getting screwed. The domestics may be able to start making money on their cars. When they have more money, they can invest more money in bigger R&D programs, which only go to benefit the consumer. If all this works, maybe GM will agree to put more plants in NA, which would be another win for everyone.
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Rick 6:59PM (11/12/2007)
They need to pass that savings along to the consumer. One way to get sales back from better imports is to present better value. Same features but $1000 less could help a lot. Of course, they need to work on reliability, gas mileage, design, etc but you get the idea.
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iQuack 2:10PM (11/12/2007)
Domestics must undo damage done by past managements that gave away their companies to the UAW under strike threats 20 years ago.
Domestic cars cannot compete with non-union made overseas brands if it costs more to build the domestic-branded cars. Eliminating the cost difference will allow domestics to build cars of at least equal quality and content.
The choke-hold that the UAW has had on GM, Ford, and Chrysler must be released.
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dlm3 3:28PM (11/12/2007)
You said "particularly with the U.S. economy teetering on the brink of the "R-word.""
What "teetering" economy are you talking about ?
The US economy is steaming along just fine. We've had at least 18 quarters of 2% or greater GDP growth since 2003. Unemployment is at historic lows, core inflation is still nonexistent (despite crude oil speculation and the congressional ethanol mandate driving up the cost of gasoline and other commodities), and interest rates are stable or falling.
If you're referring to the current credit mess, and the deflation of the housing bubble, sure, that sector has some problems at the moment. But we have survived greater setbacks (e.g. the savings and loan debacle of the late 80s, the 2000 Clinton Recession, or the dip that almost was following 9/11). It will take a while, but that impact to the economy has already peaked and things will improve so long as we don't see some sort of outrageous tax increase or frivolous spending from the Congress.
I agree with the other posters who noted the positive aspects of this deal. UAW was slowly destroying the US auto industry. This is a positive step. And the auto makers aren't 'pocketing' the difference. YOU ARE, as they will necessarily pass the savings on to the consumer if they wish to be competitive.
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elprogramer 4:44PM (11/12/2007)
Unlikely. Chevrolet and Ford have already gone the discount routes and they've only damaged their reputations.
Besides, the focus right now is to build better cars for equal prices.
It's not an entirely unsound approach either, GM is desperate for cash, and can use this towards their profits, which they can further put back into R&D (unlikely) or pay a dividend and increase their stock price (low share prices create a worry of takeovers, as Kirkorian has tried).