Autoblog

A key part of the labor contract signed between GM and the UAW last year was a second tier of wages for non-crucial, i.e. not involved with building a car, job roles. As higher-paid workers take buyouts and retirement packages over the next few months, the General is allowed replace up to 16,000 roles with lower wages that are half what current workers make at around $14he contract stipulates the total number of second tier jobs, but some union officials say GM has raised the per-plant number at all locations.

While some locals feel they have been fairly represented, at least three feel that GM is trying to allocate too much of their labor as "non-core." The Orion, Michigan plant that produces the Malibu and G6, for example, is being tasked with 580 tier two jobs, while union locals feel the number is actually closer to 300. Union leaders say the solution will need to come from additional bargaining, as if we aren't still burned out on union talk as it is. The good news is that any problems the two sides may have will likely be solved by the end of summer, as July 1 is when buyouts start to take effect and GM will have to start hiring new workers to replace them.

[Source: Detroit News]

GM has been chosen as the lead company in the UAW contract renegotiation talks. That means that the UAW will come to a contractual agreement with GM first, and that contract will be used as the template for negotiations with the other two carmakers, Chrysler and Ford.

Of course, that also means that GM becomes the first target of a strike. The UAW's agreements with all three carmakers ends today, September 14th, and Chrysler and Ford have managed to work out extensions. GM, however, has not, and the UAW has told its members to be ready for a strike that could come as early as today.

[Source: Auto News, sub req'd]

After a very rough June where both GM and Ford had terrible overall sales vs. the same month in 2006, one would expect investment firms to further downgrade their stock forecast. As it turns out, firms like JP Morgan aren't that interested in sales numbers after all, as the investmant stallwart upgraded both domestic automakers to "overweight". The reason for Wall St.'s optimism has a lot more to do with the UAW and the current feeling that the union will finally grant concessions in upcoming contract talks, including the possibility that the union will take on responsibility for retiree benefits. JP Morgan points out the obvious that savings from oppressive union contracts would help the each automaker's bottom line, though the cash influx could take 12-18 months to bear fruit. The General, whose stock was $18/share about 18 months ago, has received an adjusted target of $50 per share, which is still almost 50% better than it was just a few weeks ago. It looks like the folks over at JP Morgan haven't talked to to Jim Cramer lately.

Most don't want an upgrade to "overweight", but in the stock world, it's a good thing. This is good news for GM and Ford investors, but we don't even want to imagine the fallout if the big-time concessions don't end up happening.

[Source: Detroit News]