Ron Gettelfinger's basically saying "it's not our fault" when discussing the state of Detroit's automakers. Rather than admit that the UAW's plum labor agreements and contentious negotiations have contributed to the current gloomy situation, the United Auto Workers head man says that the economic downturn is to blame for everything, and that Congress should approve loans to the auto industry, saying "We cannot afford to...see this industry collapse." You've got to love that black and white logic. The current state of the economy, and in turn the automakers' pain, are both closely related, and separate issues at the same time.
Boosting sales numbers for the last decade by financing anyone who filled out some nominal paperwork was probably not such a hot idea, but it kept the lines running, putting off layoffs even though it meant overproducing. An automaker propping up its sales to avoid strife with its labor union? Why, that sounds like it's at least partially the UAW's doing; and now those chickens have come home to roost as easy credit has dried up. Bad management and uncompetitive products from domestic automakers is pretty much the story of the last 35 years, and that's something the auto industry in the United States is certainly responsible for. Only now, when they're on the brink of massive failure, are American cars truly competitive with the import competition that's been dogging them for 25-plus years. It's certainly true that current economic forces unrelated to the automotive business have a large role to play in this ongoing saga, but if a bailout plan is passed, will it really help?
Consumer confidence is at record lows, and at a time when people aren't buying household widgets, is it really conceivable that they could be enticed into a big-ticket automotive purchase from a carmaker that may or may not soon file for bankruptcy? All the dire predictions about how the auto industry cannot be allowed to fail amount to so much hot air; even if we pump federal dollars into the industry, if nobody's buying, it could still fail. If that happens, there will be much wailing and gnashing of teeth, but it's not an impossibility. If one of the Detroit automakers goes down, then what? The UAW will have to find some other industry to choke, that's for sure.
House leader Nancy Pelosi may have given the beleaguered U.S. auto industry it's biggest and best hope yet after the leading Congressional Democrat told NPR that Congress is considering more loan money for the ailing industry. Pelosi and House leadership met on Monday about a second $25 billion bridge loan that would buy the Detroit Three time during a brutal downturn. Pelosi is also meeting with management from each domestic automaker plus UAW President Ron Gettelfinger today to discuss possible loan packages. Pelosi said the potential loans are about "saving an industry," which goes a long way towards showing just how dire the situation has become. Government help for the U.S. auto industry likely won't get resistance from President Elect Barak Obama, as the new Pres has stated publicly in the past that he wants to help get Detroit automakers back on their feet.
This second round of money would come in the form of a low interest loan similar to the $25 billion that has already been approved for more efficient car tech. Washington will likely demand that executive compensation be curtailed as part of any deal, if only to keep shell-shocked Americans from blowing a gasket over the kind of money that is being thrown about our nation's capital. TheDetroit News is reporting that further details of these new potential loans may be available as soon as Friday, as Congressional leaders plan to put out a statement. That's the same day third quarter financial results are due to come from Ford and GM, and those numbers aren't likely to be good at all.
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.
GM is making better, more attractive vehicles, yet after losing nearly $40 billion in 2007 (most of which was an accounting adjustment, mind you), the Detroit automaker still has a lot of work to do to become profitable again here in the States. Even though GM shed 34,000 jobs in 2006, the company still has 46,000 retirement-eligible workers on the books. Those workers still make $28 or more an hour, and have some of the best benefits money can buy.
To get high-paying workers out and less expensive replacements in, here's what GM is offering in its newest round of buyouts. Retirement-eligible general labor folks are being offered $45,000 lump sum payouts and $62,500 are up for grabs for skilled tradesmen. Those who choose the buyout option can take a single lump sum payment, or elect to put all the money in a tax-free 401k. Non retirement-ready workers, meanwhile, can receive between $70k and $140k to walk away form the line. UAW chief Ron Gettelfinger estimates that 20,000 out of 74,000 remaining workers will take a package, and the General would likely love it if union Ron were right. Since the cash-saving VEBA contained in the latest union contract won't take effect until 2010, cutting labor costs is GM's best bet for making money in the U.S., aside from developing more attractive vehicles.
Pattern bargaining was established 60 years ago as a way of making sure no one auto company would get the leg up over its competition. Ron Gettelfinger and the UAW are planning on this year's negotiations to be no different than past agreements, which means Chrysler and Ford will likely follow GM's lead. The contract GM and the UAW pushed through seems to address the cost competitiveness issue that dogged the Detroit automakers for so long, but Ford and Chrysler still have to give it their thumbs up. There will likely be some differences in the contract, however, since all three companies are different, and have unique challenges.
The contract GM signed included a VEBA, which transfers control of retiree health care to the UAW, in exchange for a check that amounts to about 70-percent of the total liability. In GM's case it will be over $30 billion, but for Ford and Chrysler, the amount will be substantially less. For the sake of interesting news and putting labor negotiations back to the rear of our conscious, lets all hope that contract talks are well behind us in short order, and that there are no problems (read, strikes) for Ford and Chrysler.
Industry insiders and analysts have been talking about the 2007 UAW contract talks since before the ink dried on the current contract. The fact is, the talks have been eagerly anticipated because the Detroit three are falling apart, with the three companies losing over $15 billion last year alone. The wait is now over as the bargaining has officially begun after GM and Ford followed Chrysler to the opening ceremonies. The car companies make no bones about wanting concessions on the healthcare front, more flexible work rules, and lower wages. The union, on the other hand, say they're not going into the talks in a "concessionary mode". Yep, the contract jockeying has begun.
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.
UAW President Ron Gettelfinger is apparently done being pushed around by the domestic auto industry. Despite having given landmark cost-saving concessions on health care to both General Motors and Ford, Gettelfinger indicated to Reuters the same offer would not be extended to The Chrysler Group. The UAW considers Chrysler to be in a better financial state than GM and Ford, and therefore has disregarded the time honored tradition of pattern bargaining and not accepted Chrysler's latest concession proposal.
While the UAW may see Chrysler standing on a littler firmer ground than GM and Ford, the German-American hybrid automaker doesn't exactly have a rock solid foundation at the moment. The Chrysler Group still has a decent-sized inventory of unsold 2006 models despite the most aggressive incentive campaign of any automaker during the summer. As a matter of fact, Chrysler has already admitted that it will lose money this quarter for the first time in four years. Sorry Chrysler, you'll get no sympathy from the UAW.
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.
Ron Gettelfinger's basically saying "it's not our fault" when discussing the state of Detroit's automakers. Rather than admit that the UAW's plum labor agreements and contentious negotiations have contributed to the current gloomy situation, the United Auto Workers head man says that the economic downturn is to blame for everything, and that Congress should approve loans to the auto industry, saying "We cannot afford to...see this industry collapse." You've got to love that black and white logic. The current state of the economy, and in turn the automakers' pain, are both closely related, and separate issues at the same time. 
GM is making better, more attractive vehicles, yet after losing nearly $40 billion in 2007 (most of which was an 
Pattern bargaining was established 60 years ago as a way of making sure no one auto company would get the leg up over its competition. Ron Gettelfinger and the UAW are planning on this year's negotiations to be no different than past agreements, which means Chrysler and Ford will likely follow GM's lead. The contract GM and the UAW pushed through seems to address the cost competitiveness issue that dogged the Detroit automakers for so long, but Ford and Chrysler still have to give it their thumbs up. There will likely be some differences in the contract, however, since all three companies are different, and have unique challenges. 
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