Autoblog

Once you have cut everyone, who is left to cut? That's the problem facing GM, according to UAW President Ron Gettelfinger. The General has already harvested the low hanging fruit with previous buyouts, but they're embarking on another round to try and further reduce labor costs. We've already covered the specifics of GM's latest buyout offer that attempts to sweeten the enticement to leave so that cheaper labor can be brought in. The new offer was made to 74,000 employees, and Gettelfinger estimates that about 15,000 will accept the offer. Uncertainty over what the US economy is likely to do in coming months is playing a role in the decision for the roughly 46,000 GM employees eligible for retirement. Money is no longer pouring out of the housing market, and people who thought they'd cash out for a retirement in tropical climes are rethinking their plans while we all wait on tenterhooks to see what our brush with recession will look like.

In 2006, GM was able to entice 34,000 workers to leave, but since then the world economy has been stricken by a raft of bad loans made by brokers without scruples, so sitting tight and waiting out the storm might look like a smarter option. Sitting tight for just a little longer might look wise considering the accolades for GMs cars as of late. It really appears like the turnaround has gained some traction. Then again, if you're staring down retirement, putting a fat lump of cash in a tax free 401k might look awfully attractive, too.

[Source: Detroit News]

Rick Wagoner may be Motor Trend's most powerful person of the year, but Ron Gettelfinger deserves significant props for what he achieved over the course of the last 365 days. Automotive News has named the president of the UAW its Person of the Year, which is a fitting choice considering that Gettelfinger somehow managed to broker a compromise between domestic automakers and his union workers that satisfied both parties.

On one side of the equation, you had armchair analysts claiming that the UAW would force the domestic automakers into bankruptcy with its high legacy costs that add thousands of dollars to the bottom line of each vehicle sold. On the other, there are thousands of currently employed and retired union workers who don't want to pay an arm and a leg to get their arms and legs fixed. It wasn't easy, as strikes against both General Motors and Chrysler were required to get the deals done. But as 2007 came to a close, new four-year contracts with each of the Big 3 were in the books that would see most of the financial responsibility for retiree health care transferred from the automakers to the union itself, with significant concessions granted that will also reduce labor costs in the short term. The automakers got what they wanted, and in turn the union will keep many of its workers employed who would have otherwise been lost to plant closings and outsourcing. Good job, Ron.

[Source: Automotive News, sub. req'd, Photo by Bill Pugliano/Getty]

Two years ago, the UAW gave some health care concessions to struggling GM and Ford in an effort to help the Detroit giants save billions of dollars and stay afloat. At the time, Chrysler was relatively well-off and so the union rejected a similar package for them. UAW President Ron Gettelfinger says that it's time to make up for that omission. Since 2005, the Chrysler Group went from a profit of $1.8 billion, to a loss of $618 million last year, and on to a $1.98 billion loss so far this year. Gettelfinger said a review of Chrysler's finances shows there's a problem that needs to be addressed, so talks are ongoing.

More after the jump.

[Source: Detroit Free Press]

Last week we told you that DaimlerChrysler's Rüdiger Grube was heading to New York to visit with potential suitors for the Chrysler Group. And it appears he was a man on a mission. It seems that a close source has told news outlets that a sale could be wrapped up by as early as May. Although talks are ongoing and nothing is definite, it looks like at least one of the bidders has met the company's expectations in principle. Those bidders included Blackstone Group, Centerbridge Capital Partners LP and Cerberus Capital Management LP, as well as Canadian auto-parts supplier Magna International Inc. and private-equity firm Ripplewood Holdings Inc. After initial meetings, the final three appeared to be Cerberus, Blackstone and Magna.

Deals like this don't happen overnight, however, so even if a bidder has been chosen, it will take some time to dot the i's and cross the t's. And one slightly sticky point may remain. Workers' reps on the Chrysler supervisory board have reportedly been okay with a sale "as long as the buyer agrees to protect as many jobs as possible." That's a bit different than what UAW head, Ron Gettelfinger, said a couple of days ago. His words were a bit less supportive. Something closer to sale or no sale, UAW jobs were the most important thing. He also suggested he had the support of the supervisory board, of which he is a member. Equity partnership possibilities are also a potential stumbling block still. Since Kirk Kerkorian first brought that issue into the spotlight, other bidders have incorporated it into their proposals.

But billionaire Kerkorian's $4.5 billion bid is apparently still getting snubbed as well. Gettelfinger, who said he has met the bidders, said the UAW would reject any bid from so-called "strip-and-flip" investors. That seemed a thinly veiled slap at interested leveraged-buyout firms. The primary concern for the union is preserving jobs, which also explains why GM didn't ever have a real chance, according to sources. Of course, with a $1.5 billion loss last year, Chrysler still plans to cut 13,000 jobs in hopes of returning to profitability by 2008.

[Source: Automotive News, sub req]

Call it a case of "He said, he said." A Toyota spokesman says the Japanese automaker doesn't see an interest in unionizing among workers at its production facility in Kentucky, while UAW spokespeople say workers are showing more interest than ever in forming a union. So which is it? Could be a bit of both. UAW membership has been dropping nationwide, but the organization still has an undeniably powerful place in the industry. With more foreign automakers building plants in the States, particularly in the South, the UAW has failed to gain a foothold in these facilities.

The Detroit News is quoting Toyota spokesman Rick Hesterberg as saying the carmaker sees no evidence of increased UAW interest among its Georgetown, Kentucky plant workforce. But the News also offers statements by UAW president Ron Gettelfinger and the union's head of organizing efforts, Terry Thurman, that contradict Toyota's position. They say there is "increased activity" ever since workers found out about a proposal to lower some workers' wages to cut costs. They admit that Toyota workers' wages are close to UAW rates, but say the difference is in how volatile wages can be at a non-union plant.

Though the UAW's power has been waning, the slow resurrection of profits at General Motors will give it more bargaining power at the table this year. If a union ever were established at a Japanese-owned production facility in the U.S., that precedent would also create the opportunity for a resurgence in the UAW's popularity among hourly auto workers.

[Source: The Detroit News]

Chrysler no doubt felt a little burned by the United Auto Workers Union after being told it would receive no concessions for health care like the ones offered to both General Motors and Ford. At the time, the UAW cited the Chrysler Group's better financial health as the reason for the snubbing, but apparently the automaker's $1.5 billion loss last quarter and its expected loss of $1.2 billion for the year is enough to convince UAW president Ron Gettelfinger (shown at right with then Chrysler Group CEO Dieter Zetsche in 2003) that Chrysler's not doing as well as he first thought. Therefore, the UAW is conducting an independent financial study of DaimlerChrysler, just like it did for GM and Ford, to assess the company's actual fiscal standing before a decision to offer concessions is made. Since DCX is an German-American hybrid, however, they're finding it more difficult to gain access to the financial info they need. DCX, however, should be as forthcoming with that data as possible if it hopes to convince the UAW that health concessions would be in both their interests.

[Source: The Detroit News]

The UAW on Wednesday jumped on rumors that it had reopened talks with Chrysler. According to a piece in The Detroit News, UAW spokesman Roger Kerson said there was no meeting over one of the biggest sticking points, health care, as was rumored elsewhere. Although the UAW has reached health care agreements with GM and Ford this year, they broke off talks with Chrysler over this issue in September, likely because Chrysler wasn't in as dire of straights as Ford and GM. Chrysler spokesman Mike Aberlich said they are still communicating with the UAW on this issue but stated "we're not in negotiations."

Just prior to halting talks, Chrysler was set to announce a $600 million third quarter loss. Chrysler has since refigured the loss at $1.5 billion. The automaker has about 50,000 active UAW employees and spends about $2.3 billion on health care for them and another 100,000 hourly retirees. That cost rose about 10% from last year's $2.1 billion. Although Chrysler claims it could save about $340 million a year by renegotiating along the same lines as GM and Ford did, the issue is still officially off the table.

UAW President Ron Gettelfinger, who also sits on DaimlerChrysler's supervisory board, upheld his decision in an interview with The Detroit News this week. "People say, 'Well, Chrysler has projected a loss,' " Gettelfinger said. "But this is one quarter, and we're going to work our way through the situation there no different than we did at Ford and General Motors." Even after 12 straight profitable quarters, DaimlerChrysler CEO Dieter Zetsche has criticized the union for its hard-line stance on this issue. "It's a very strange position that we should lose $10 billion before we can have the same as Ford and GM," he said.

[Source: The Detroit News]

If there is anything the Rick Wagoner has learned during his time at GM, it's that you never piss off the unions. That morsel of knowledge might be something that Carlos Ghosn has to consider now that the United Auto Workers (UAW) has come out in opposition of a possible merger of General Motors and Renault/Nissan.

Ron Gettelfinger, president of the UAW, has joined hands with his compatriot in Canada, as well as union leaders in France and Germany all weary of the alliance. The Japanese Auto Works (JAW) has remained mute so far, but is very interested in the outcome of such a merger.

Ghosn has had his share of dealings with unions in the past and has dealt with them in a manner contrary to his perceived slash-and-burn persona. During the '90s Mr. Ghosn was confronted with a possible strike of workers in the JAW that subsequently led to 21k in buyouts, improved salaries and long-term stability for all the workers at Nissan's various operations. This and other deals over the past decade have solidified Ghosn's position towards unions, seeing them as an integral part of the business and not a force to do battle with.

Where this new development leaves the proposed GM/Renault/Nissan coalition remains to be seen, but another layer of complexity is inevitable with so much at stake.

[Source: The Car Connection]

Nobody saw this one coming... Ron Gettelfinger, ran unopposed and was reelected as the president of the United Auto Workers (UAW) at its 34th Constitutional Convention in Las Vegas. Alongside him on the slate were five vice presidents, three of which are expected to be named as liaisons to Ford, Chrysler and General Motors, as well as a secretary-treasurer.

Despite this being a surprise to precisely nobody, it's interesting that Gettelfinger ran completely unopposed, particularly given the strife between his organization and OEMs and their suppliers, as well as the fact that the union has lost enough of its membership to be credited with the lowest numbers since 1942.

[Source: The New York Times]