Are GM, UAW close to concessions agreement... or are they at odds over China?
Depending on who you choose to listen to, General Motors and the United Auto Workers are either close to forging an important concessions deal, or they're still squabbling over GM's plans to sell imported vehicles to U.S. consumers.
GM and the UAW are in talks trying to slash $1 billion in annual labor costs, with reports stating that the plan would give the union a 39% stake in GM to help fund the Voluntary Employees Beneficiary Association (VEBA) health care trust. GM already has around $15 billion invested in the VEBA, but it is still on the hook for some $20 billion. If reached, the new deal would reportedly cut that figure in half.
The agreement, which the Wall Street Journal says could be reached as soon as this week, will still need to be voted on by the UAW's 60,000 GM employees, who themselves also face upwards of 20,000 more job layoffs as well as more wage and benefit cuts.
Conversely, the Associated Press is reporting that the issue remains very much in doubt, with GM and UAW negotiators battling over GM's plans to sell vehicles built overseas – namely those from China – in the U.S. While GM officials reportedly say that the balance of vehicles it makes and sells in the U.S. will not change, UAW officials are rankled that its members face 16 more plant closures and a slate of givebacks. In fact, according to the AP, the UAW is so upset that it has sent an email to its members asking them to voice their displeasure by contacting President Obama.
[Sources: The Wall Street Journal; The Associated Press | Image: Spencer Platt/Getty]
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Reader Comments (Page 1 of 2)
jamie 11:05AM (5/18/2009)
"We Built This City"
...And we will tear it down one brick at a time if we have to. LOL
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Sea Urchin 11:27AM (5/18/2009)
Won’t vehicles built in China do the same thing?
But I do love GMs strategy, suck money from Americans, give jobs to Chinese.
greatsunjester 12:55PM (5/18/2009)
But they can only tear it down a certain number of bricks per day, and must take a break every 15 bricks.
sunz 12:29PM (5/18/2009)
SIgh .. i know they have to fight for their jobs and what is right, but don't they see what is going to happen. They are going to destroy themselves along with GM. Make the deal already!
This reminds me of a news report about a supermarket owner who instead of laying off people decided to cut everyone down to a 32 hour work week. Some employees complained because they rely on overtime pay ... better to be employed i would think than not employed at all. Its a lot easier to adjust to lower income than it is to adjust to no income. Greed and Selfishness is destroying all of our chances to live happy.
-sun
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BoxerFanatic 12:51PM (5/18/2009)
Greed and selfishness? I am not sure I would go that far, but it is possible for those who are the only group NOT making making HUGE concessions in this whole mess... Oh, that would be UAW.
Businesses, be they GM, or a supermarket, don't have huge reserves of cash to just throw around, or for the head-honcho to just sit on. It isn't Scrooge McDuck swimming in his vault full of gold coins.
When business is down, cuts have to be made. I have a family member who works in an agriculture business that is seasonal, and is thus exempt from over-time pay, and minimum wage regulations. 10-hour days and 6-7 days a week from February to June, and then hardly enough hours other parts of the year to even pay for the gas to get to work, even at 8-9$ an hour, which still amounts to barely $10K a year for that job. That is not a living wage.
But what is the alternative?
Either they over-work a few people at barely enough wage to live on, but wear their workforce out in a season.
Or they hire a couple more people, and either go out of business trying to pay them, or everyone gets a pay cut.
Or they price themselves out of their market, and business goes to the competition, or out-of-state.
The grocer can either pay his current workforce less under fewer hours, or pay fewer people the same wage.
The now-taxpayer-backed car company can either continue to pay HUGE labor costs, both direct, and legacy-costs, and go out of business, as Chrysler might, and GM theoretically could...
They can pay the same people less money
They can pay fewer people the same money
Or they can out-source.
Or they can shut the doors entirely when they are completely insolvent.
The ag-businessman, the grocer, the car company manager all have to try to keep from losing everything. The employees have to try to live on their wages. Some of those employees need to disembark the gravy-train, and step back onto the platform called reality. That will be better than driving the gravy-train off a cliff.
Those, my friends, are called fundamental market forces. The government being involved, either through tacit management of companies, industry-wide regulation which adds cost, corporate taxation that gets expensed to the bottom line, or consumer/citizen taxation that affects both living wages and consumer demand, is the one putting the drag on the whole mess.
And for all of the union's involvement in the government, the unions will suffer at the hands of the government's involvement, along with the rest of us, one way or another.
sunz 4:43PM (5/18/2009)
umm .. i think we agree .. .:) .. very long response ... to clarify i think the UAW needs to make a deal and understand that less is better than nothing. The supermarket guy took one of the choices that you mentioned. He decided to pay the same employees less hours a week. He didn't require them to work 40 (illegal), he just cut some hours so that the entire work force could bear the brunt of lower resources.
so i'm guessing we agree?
-sun
tuxchown 10:56PM (5/18/2009)
The union has been making concessions for years, most notably in the 2007 contract. It is their duty to protect as many of the rights and benefits for the membership as they can. There will no doubt be more concessions, but to allow concessions without negotiation, that is, to allow the company to take whatever they want to take, would be a serious detriment to the workforce.
mapoftazifosho 11:19AM (5/18/2009)
I was thinking the SAME thing!
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Jimbo 11:24AM (5/18/2009)
Great, now I'm gonna have that stupid Starship song in my head....
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tifosiotaku 12:28PM (5/18/2009)
Damn, beat me to it.
Sean Flanagan 12:36PM (5/18/2009)
On rock and roooooo HOOOOOOOOOLL
Den in IN 11:33AM (5/18/2009)
Funny, I have to agree with the Union guys on this one. Why bother saving GM if they are just going to move production offshore? Doesn't create or maintain any jobs and the corporation just becomes another front for Chinese knock-off products. What a waste...
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Polly Prissy Pants 1:49PM (5/18/2009)
But offshoring to the cheapest labor in the world is the American way. Since before the days of "free trade" we've been brainwashed that anything good for business is good for all of us, and many still cling to that old fashioned idea even in the face of economic collapse and middle class annihilation. If I can retort with the trite "That's capitalism 101" then the fact that our entire way of life is being dismantled doesn't matter. It's OK that you don't have a job, that more of your tax money is going to these megacorps and the ruling class than ever before, and that your children will be lucky to even afford to move out someday, it's capitalism and that means it's a-ok.
It's better to die in poverty under capitalism than to live under socialism/protectionism. That's what the politicians and business leaders want you to believe anyway, because once we stop they lose their profits and their power. And they won't have that. Just keep believeing a little while longer because soon it won't matter - it'll be too late.
alex 3:19PM (5/18/2009)
you do realize that this isn't about GM importing more vehicles right? this is about GM shuffling around which countries their imported vehicles come from. the % of domestic made vehicles will stay the same
tuxchown 10:50PM (5/18/2009)
Polly - I couldn't agree more. We have GOT TO BRING PRODUCTION HOME! If that means succession from the WTO, so be it. One of the biggest causes of our economic mess is a house built on a fake deck of cards. With the enormous trade deficit we are suffering with the rest of the world, we are dying. Protectionism NOW!
John 11:29AM (5/18/2009)
GM is taking a huge risk being the first to import Chinese made cars. They are going to receive a high level of scrutiny from agencies like NHTSA, IIHS, and the EPA. These vehicles are going to be subject to every possible safety and certification test. GM can't afford any bad PR from test failures.
I don't think they really need the headache right now and are making a big mistake. Let someone else break the ice first with Chinese cars.
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hypermiler 11:41AM (5/18/2009)
You haven't seen a Chinese market Buick, or have you? They are much nicer than US market models, fit enough to drive Chinese Communist Party leaders.
If the US is getting Chinese market Buick sedans at same price, then you would actually see a sales boost because of higher quality interior.
John 11:46AM (5/18/2009)
"You haven't seen a Chinese market Buick, or have you?"
I've worked in China and know the market well. That's why I make the comments I do. The certification required for Chinese domestic vehicles and NAS is a huge difference. Also, I know people in the cert. agencies here and they are specifically targeting Chinese made vehicles.
Like I said, GM is making a huge mistake.
Sea Urchin 1:09PM (5/18/2009)
The biggest issue is PR.
Will 6:20PM (5/18/2009)
More scrutiny sounds like a good thing for the rest of us.