The UAW and Domestic Automakers

rockylee · February 2006

Well you will have to fire and replace all of the former GM workers with new untrained workers. Good Luck building products "Bobst Motors" If you keep the same workforce then you will have the UAW still.

Rocky

bobst · February 2006

Hi Rocky,

From your other postings, it is obvious that you know much more than I do about the UAW, the car manufactures, and their ongoing problems. I enjoy reading all of your postings.

To address your latest post, I appreciate your wishing me good luck, but I won't need it. I can easily hire non-union workers just like Honda, Nissan, and Toyota have done. I bet the unemployed UAW workers who will be getting nothing from a bankrupt GM will be glad to work for me.

I believe this is what happened to Bethlehem Steel, and it is going to happen to GM. Do you have any doubts?

rockylee · February 2006

With this administration the outlook isn't good pal. Yes you could hire non-union labor to fill you workforce. Not all company's need unions and some have good morale values and treat workers right. Ford has offered buy-out packages to it's workforce which is still being negotiated but are looking fair. GM will probably do the same.

It's a unfair world run by greedy people who have no loyalty to country and to the fellow citizen. I guess my socialist/isolationist character wants to protect our high standard of living from being baught up by foreigners. The Japanese and Chinese will own the United States if we don't change very soon. Who's fault is it ? I blame Washington for allowing it to happen. Both Democrats and Republicans have sold our wealth down the toilet. :mad:

Rocky

P.S. If GM can change the perception and reorganize it self it might beable to survive.

carlisimo · February 2006

So... after GM's latest cuts the UAW has said they've already made concessions and they're not going to make anymore.

And I'm wondering, what does the UAW have in mind? We could keep arguing over everything we've already argued about, but I'd like to hear your ideas on what you think the UAW is actually trying to do.

They can't be stupid. They're shrewd, at the very least. But they're risking their existence, and I don't see how their hard line is in their best interest.

It could be internal politics. The union is relatively democratic, and its voting base (who may not know so much about GM's true financial state, or may be older and need those pensions) will not let UAW officials make concessions. You know how elected officials are with short vs. long term stuff.

Or maybe the union thinks GM can't be saved no matter what they concede, so they might as well milk it while it lasts.

Or, they could be optimistic about GM, and believe it can be saved without concessions. In which case they'd draw a hard line so as not to be left poor as GM gets rich again.

Or maybe the UAW thinks it wouldn't go down in the case of a GM bankruptcy, either through superlawyers or some other intervention.

Any other theories?

rockylee · February 2006

I being close to the situation have talked to my father about it. Delphi in 6 days (14th) will be domino. I guess Steve Miller isn't budging from his $9-12 an hour work wage. The UAW told Steve he is being unrealistic in his demands. They said droping somebody from $26 an hour down to $12 with huge medical benefits costs added on isn't going to happen and we will strike.

I think Delphi-UAW will go on strike. It won't directly impact GM at first since they've built up a stockpile of parts already. However in a month or so it will start to impact them. If Delphi goes on strike it will shut down GM divisions at Gentex, Donnelly, Johnson Controls, Mercruiser Engines, Transmatic, Pullman Industries are just a few of thousands suppliers. The ones I just named are in my backyard back home in Michigan. Ford, Toyota, Diamler Chrysler, etc that get parts from Delphi will have to look at alternative places to get parts.

Dad said he's willing to take a pay cut to about $18-20 an hour with his medical and pension intact. Johnson Control UAW plants make $20 an hour and are making huge profits still. Could that be because they are better managed ?????

I think the best way for Delphi and GM to get rid of the problem is to take Fords approach with a buyout for the older workers. The new workers that hire into the GM/Delphi plants already know they aren't going to make the big money that the older ones made. The UAW knows this and to exist will only ask for nominal pay increases. No pension anymore, Just 401Ks now are the only retirement source offered by the company. The UAW might through better times get it's members more company contributions to the 401K.

-The bottom line is globalization has killed unions from being able to get a fair share of wealth. Well "fair" is defined by who ???? $50-60K for the guy building the car is fair, when the top guy is making $10 Million a year ????
"Look at how we've been conditioned as a society"
:confuse:

Rocky

rockylee · February 2006

Friday, February 03, 2006

Big 3 need Bush's buy-in, not a bailout
Governments in Japan, Germany intervened to reduce risk of failure
by Ron Gettelfinger

Following the painful plant closings and job reductions announced by U.S. automakers, some people ask whether it's time for Uncle Sam to come to the rescue.

According to the Wall Street Journal, President Bush takes a "dim view of a government bailout of the struggling automakers."

"I would hope I wouldn't be asked to make that decision," he said. "Why don't we think about the best, not the worst?"

We agree: Let's think positively about an industry that employs nearly 1 million American manufacturing workers and supports the jobs and income of millions more.

Governments usually help
But President Bush and other federal policymakers must recognize that the foreign auto firms who are gaining market share in the United States did not succeed while their countries let "free markets" run their course. Japan, Germany, South Korea and other countries actively intervene to support their industries. Because they bought in early, there's less chance these governments will be forced to bail out companies later.

Some say it doesn't matter what happens to the traditional Big Three, because America still has plenty of auto jobs. The jobs are just shifting, the story goes, away from Ford, General Motors and DaimlerChrysler and toward Honda, Nissan and Toyota.

In fact, the United States has lost nearly 200,000 auto jobs in the past five years -- and behind these numbers are real people with real families. The Big Three, meanwhile, still employ nine out of 10 American auto workers, manufacture three out of four American-made cars and trucks and buy 80 percent of U.S.-made auto parts.

There's a problem with the claim that all the new investment in the U.S. auto industry comes from non-Big Three companies: It isn't true. Between 1980 and 2002, Ford, GM and what is now DaimlerChrysler provided 85 percent of the new investment in U.S. auto plants. That's $176 billion, compared with $27 billion from Asian and European manufacturers.

This isn't a regional issue because the Big Three employ advertising, design, engineering, manufacturing, sales and service workers all over the country. The failure of any one of these companies would be a disaster. How can we prevent it?

Here are some ideas:

Fix health care: The United States spends $1.9 trillion on health care -- yet 46 million people have no health insurance. Without comprehensive, universal, single-payer national health insurance, we will continue to shortchange our citizens.
And without the effective cost controls that accompany a truly universal system, we're imposing huge health care liabilities on U.S. businesses, impeding their ability to make job-creating new investments. Honda, Nissan, Toyota and BMW don't have this problem -- because most of their employees and retirees are in countries where universal health insurance delivers high quality care at a much lower cost.

Tackle unfair trade: Japan has spent over 460 billion in U.S. dollars to intervene in currency markets since 1998, keeping the yen artificially low against the dollar. This reduces the cost of Japanese exports and the vehicles made by Japanese firms here in the U.S. These companies can collect their U.S. sales in overpriced dollars, while paying much of their expenses in Japan using underpriced yen. The result is an unfair cost advantage of $4,000 to $14,000 per vehicle.
The United States, meanwhile, is the most open automotive market in the world, but U.S. companies face tariffs, regulations and other trade barriers when trying to sell American-made vehicles overseas.

Invest in our environment: Cleaner and greener cars are the future of the auto industry. And contrary to popular belief, GM leads the field in fuel efficiency, with more cars getting over 30 miles per gallon than any other manufacturer. Ford brought the first hybrid SUV to market, and DaimlerChrysler is a leader in clean diesel technology.
But more environmental progress is necessary and possible, as Brazil demonstrates. The government there requires vehicles to run on a blend of sugar cane, alcohol and gas, using its own natural resources, enhancing the environment and protecting local jobs.

Cleaner cars are the future
The United Auto Workers union supports incentives to create a better infrastructure for distribution of ethanol, a technologically feasible alternative fuel. We also back the consumer tax credit for gasoline-electric hybrids -- and we want to strengthen it with a manufacturer's tax credit, so the next generation of advanced engines, powertrains and vehicles will be made in the USA.

To avoid a desperate request from a near-bankrupt automaker hitting his desk, Bush can do more than simply urge companies to make "products that are relevant." He can join Republicans and Democrats in Congress to craft policies that are relevant for American companies, workers and communities.

rockylee · February 2006

Mazda-6, Mitsubishi Galant, Mitsubishi Eclipse, Toyota Carolla, Isuzu Ascender(also IUE), Mazda Tribute, Mitsubishi Endeavor, Mazda B series, Mitsubishi Raider, Toyota Tacoma, Saab 9-7x

Further Proof that Americans Labor Unions can build foreign nameplate vehicles and help the company make a profit.

Rocky

bobst · February 2006

If the UAW workers (the ones who are actually working) think the UAW retirees do not represent their best interest, maybe they will break off and form their own union. Then they could negotiate an agreement that would benefit the workers even if it meant screwing the retirees. Is that possible?

Something like that happened in golf several years ago. The Professional Golfers Association was dominated by the club pros and controlled the big tournaments you see on TV, so it was getting a lot of revenue from the touring pros who played in the tournaments. Then the touring pros formed their own organization that gave them more of the money.

Could it be time for a revolt in the UAW?

rockylee · February 2006

Not possible since their contract was negotiated through the UAW. What stroke would retirees have since they are no longer employed by the company. The retirees have to live with what the working folks give them but do have alot of say so. There are UAW retirees that have seats on negotiations that affect them and are represented fairly. Kind of a check and balance thing so the ex-employees don't get screwed.

The working members want to take care of the retirees because they know they will be there one day. Also most of the auto workforce is at or near retirement age at the
Big 3.

Rocky

bobst · February 2006

"The Japanese and Chinese will own the United States if we don't change very soon."

That is part of the overall plan. The more Japan and China invest is the U.S., the more stake they have in our economy being successful, and they will adopt a foreign policy that is more in our interest.

If they have a foreign policy that hurts the U.S., then they will only be hurting themselves.

In other words, if the three little pigs had financed their houses with the big bad wolf, he would not have wanted to blow their houses down. Why would he destroy houses where he owned the mortage?

The more China invests in the U.S., the more control we have over them.

rockylee · February 2006

The economist conspiracy theorist says that the Japanese and Chinese on a certain day of their choosing could "all at once" dump the dollar and send our economy down the toilet. With us having no currency value they togeather could eliminate U.S. world control.

Rocky

carlisimo · February 2006

If we stop buying their exports, then their economies go down the tubes. If ours goes down, theirs go down too.

rockylee · February 2006

Well actually not if all of our american companies open up shops over there and provide good enough jobs so the ordinary people can afford the products they make. Kinda like the U.S. did in the old days. I believe you will see a strong robust Chinese economy and feel country's like India are rapidly growing. While we slide, they are climbing the ladder to economic dominance. I guess Uncle Sam will open the truck doors on the liqour trucks when were about to protest like they did in Soviet Russia.

Rocky

lemko · February 2006

I wonder what would've happened if the Japanese and Germans let the so-called "free market" run loose without government intervention? We'd see Chevrolet Camries, Ford Accords, and Plymouth Altimas. The Japanese and Germans also benefitted from our military protecting their butts throughout the Cold War while they could devote time to developing their auto industries. Without our troops on European soil and our Navy in the Sea of Japan, all of Germany would've been the DDR and Japan would be the Nippon S.S.R.

george35 · February 2006

Understand that the "average American" feels that the UAW is spoiled just like the UAW thinks everyone salaried is management. (Watched a neighbor cut his lawn and trim his hedges this summer have a couple beers and brag he is "still on the clock". The first thing you have to do is get rid of that 2% that rot the rest. But you have to do it internally.)
Disembowling GM will do nothing for anyone...it could bring a depression cycle to Michigan and perhaps the Midwest. The biggest issue is health care. If you can't solve that forget it. You could ELIMINATE the legacy costs of ALL salaried employees and you still would go belly up within 5 years. Why ? The product doesn't sell. Why ? Start by asking the worker at a GM plant that works 6/10's why he is driving a LEXUS or BMW. You may get a very detached answer. Who Me ?

imidazol97 · February 2006

> 6/10's

???? what does that mean?

mirth · February 2006

In other words, if the three little pigs had financed their houses with the big bad wolf, he would not have wanted to blow their houses down. Why would he destroy houses where he owned the mortage?

True, he wouldn't have destroyed the houses, but he still would have eaten them...

mirth · February 2006

Means the plant is running at only 60% capacity.

george35 · February 2006

To explain further: 6/10's means 6 days a week ,10 hrs a day. Not counting 'rocking chair money ".

If there were any profit sharing in previous years maybe they should have given ALL UAW members 1/2 of THEIR profit sharing in those......OHHHHHH. STOCK OPTIONS AT $70.00 a share.

God, it was great being salaried according to the UAW.
Right !!!!!!!!!!!!!!!!!!1

george35 · February 2006

A foreign manufacturer will NOT operate a plant at less than 95 % capacity. If this drops they remove plants,people and benefits......PERIOD ! It is simply a business decision.

george35 · February 2006

Oh,well the "other morons" LIKE the idea that Oprah gets
55 million for three years to entertain the brain dead viewing audience. God man, look at your priorities vs responsibilities . I think we are nuts as a society !

george35 · February 2006

Stock options are issued at a given market price at time of distribution. The corporation takes the write off immediately as part of their operating costs. As for price, how about a stock option issue as a part of your profit sharing payout ?It has been done for years. Unfortunately it is 95 % worthless since the value of the stock never gets to or above the issue price. IT IS PART OF THE SALARIED SYSTEM !

God, you must be a UAW member. And you believe all that B.S. UNION propoganda ?

rockylee · February 2006

I'm not a UAW memeber. The GM workers driving Lexus or BMW 's :confuse: Last time I checked the UAW members like my father didn't engineer or design the products they produce. If they (UAW) did have more imput on product, GM would build the best engineered cars like BMW or Mercedes. Yes they would be 100% UAW American made and would be more expensive because of all the Union content but would be rock solid in reliability and build qulity to justify the price.

Rocky

As far as the rest of the stuff you put in this forum I'm still trying to figure out the point you were trying to make.

george35 · February 2006

A wonderful, albeit fanciful scenario. Ahhhhhh...I can see it all now, a well engineered CTS for $65,000 or a Lacrosse for a mere $56,000. Get real. Styling and the selling price are bigger deals than engineering that is perfect. What is the biggest part of that ?.... DOMESTIC LABOR COSTS !
The average purchaser is NOT into supporting U.S. production when the difference hits his pocket. They are into what is best for ME..right now. THAT is the Issue.
By the way my last purchase was a 2005 Envoy. Yes,I do support GM products. 5 different models in the family.

beliver · February 2006

george35: What really scares me is the number of people in our society that "eat up" all the typical slop that the Oprah & Dr. Phil ilk slosh around. I really get disgusted (even within my extended family) with "well, it was on Oprah et al so it MUST be true". Gag, hurl, choke, choke !

believer

bobst · February 2006

"They are into what is best for ME..right now."

That's exactly right, George.

Some of us used to be nice people and tried to do what was best for everyone, but then found that people took advantage of us. We learned to watch out for ourselves and do what is best for us - right now. Just like you said.

rockylee · February 2006

Your blowing it way out of proportion. A Silverado is 90% NA content made by UAW and CAW workers. My point was it can be done and the prices not being inflated $20-30K like you claim. If we protected american buisness from cheap labor and leveled the playing field then everyones "standard of living" would rise. Our governments goal if it was ran by people who really cared would be to make the United States the richest, most technological, educated, country in the world. If everyone had to pay to do buisness in our country, we wouldn't have deficits and would have balanced budgets because everyone would be paying their fair share/contributing to the overall wealth and good of our country. That is something I do really give a damn about and that's the good of my neighbor. His family, His buisness, His community.

Rocky

jfk1965 · February 2006

YOU ARE NUTS! If the UAW did 100% of the design and build of these cars they would cost twice as much, be built to a lower standard of quality and no one would want to fix them because the parts would be crap. Sorry man, but are you reading the same newspapers I am. The UAW is going to kill GM and Ford. A Delphi bankruptcy would be great. It could then force GM to go bankrupt; void the union contracts and if MR Wagoner (sic) has any balls or brains he'll hammer the UAW if not ignore them and hire outside. Hey, all the foreign car companies in the US are paying wages not too far behind the UAW wages (take out eh union dues and they are really close). the big differnce is the "no entitlement" agreements. 401K vs. Guaranteed pension. You pay more of your healthcare like most of us in this country and when you retire, you can live pretty good, not better then when you worked.

rockylee · February 2006

Obviously you are misinformed about unions and believe the propoganda the yellow journalist print.

I am a union member, and yes I and my brothers and sisters are very proud, patriotic, hard working americans that try to do the best job for our company while at the same time get paid a livable wage so we can have more than heat, and spam for dinner.

My UAW father and family work there butts off at GM/Delphi, and offer money saving suggestions to the company so they can be even more competitive with foreign labor and non-union U.S. labor.

To say that UAW members like my father and grandfathers purposely would build scrap and sign off on it is a insult to them. I can't believe you would say something about a group of people you obviously don't know. You obviously have you mind made up and I'm not going to argue with you about it. However I'm sorry you feel this way.

Thanks,
Rocky

62vetteefp · February 2006

Most of the GM union are now doing good quality work. GM's plants are among the most efficient in the world now and the guys/gals on the line just do not have time to be goofing off. Yes there are problems and I will list the ones I can think of but most are hard working. I am not talking about DELPHI plants because I have not been in one in years. But lets talk about the GM union and what they could do to help GM survive.

1) Let GM fire the loafers or get them working. There are still a high percentage that take too many days off just to not work. They cause GM to have more people on the payroll than needed. The union has protected these idiots for too long.

2) Fewer work classifications in the skilled trades. It is much better now but the number can be reduced even more to make work more efficient

3) Help reduce health care costs. As a salary person I now know the high cost of Health care. I now pay the first $2100 in health care per year and then the insurance kicks in with copays. It is making my family much more frugal with out health care dollars. No one is dieing but we are saving GM and ourselves money.

4) Reduce pension cost by putting more of the retirement on the employee. Let the pension be a minimal back up plan like social security and let the employee invests in 401K. I started giving to 401's when they first started at GM and now have almost $750K in savings and I have another good 20 years of work if I wanted to. Even if GM stops or reduces the pension I am OK.

5) I did not say a thing about wage. Let it stand and do not increase. Put the hourly on a bonus plan and in profitable years take the profit. In bad years share the pain.

6) Drop the Job Banks. Give the ones on it now some training and then stop paying them to sit around. My brother was on it for years and he felt guilty but he took advantage of it to stay at home with the kids.

the above is my opinion but it still gives the union more money and perks and security than most anyone else in this country. Most of the above would have to be brought in slowly. Do not ask a 65 year old to not have a pension. He deserves it. But the 50 year old had better start saving because his pension will not be a big and the 25 year old (all 3 of them

) will need to start saving jsut like every other 25 year old.

fintail · February 2006

"Let GM fire the loafers or get them working."

Let's hold that standard to corporate suits as well. Not that I am debating they all do a fine job and are well worth their pay.

bobst · February 2006

Rocky, I am 60 years old and have been interested in cars since the 1960's. I recall looking at a new Chevy in the showroom in 1970 and seeing rust on the engine.

The first new car I purchased with my own money was a 1972 Datsun 510 which we drove for 13 years with very few problems. In the meantime, the American cars we could have afforded (Chevy Vega and Ford Pinto) were falling apart.

From my observation, the Japanese car manufactures made better products than the Americans.

We bought a Ford Taurus in 1987 and it was by far the worst car we have ever owned. By 70K miles it was on its third water pump. We have bought Japanese cars cars ever since, although all of our Hondas have been made in my home state of Ohio.

We live our lives based on our own experiences. I guess the current generation of UAW workers are suffering because their parents made poor cars and turned a lot of us against American manufactures. At least this is how it is with us, but it does hurt to say it.

dieselone · February 2006

62,

Great post and I agree with it 100%. While I've not worked in a union since a job I had in college, I do have friends and family that work under the Teamsters, USW, and UAW. So I've seen first hand and have heard stories of what people can get away with.

Like Rock mentioned, certainly not all union employees are deadbeats. I also agree 100% that the unions protection of the bottom 10% helps give a bad name for the rest.

I find it appalling that an employee can call off twice a week because he wants to golf or has a hangover and the company can't fire them. While that may sound excessive it does happen. A friend of mine that's a supervisor at what use to be Bethlehem steel showed me some time sheets that showed an employees absentee record. The list was quite long with the employees who had missed around 100 days of work over the past year. I guess I'd be pissed too if I was laid off from a job I didn't have to go to 1/3 of the time.

No doubt white collar workers slack off too, but generally if they get caught they get fired.

rockylee · February 2006

No doubt white collar workers slack off too, but generally if they get caught they get fired.

My fathers and grandfathers supervisor got hit with around 10 sexual harassment complaints before he was terminated. He was a very very smart man and I personally met him. I also went to school with his son and was a tragedy because he knew how to get the best out of people, but couldn't keep his personal feelings torwards "good looking" women to himself.

Rocky

george35 · February 2006

The International UAW, 5 Different Retirement Plans by Allen Nielsen

March 2000- March 2004 International Union, UAW and Staff Council Bargaining Agreement. Who knows what else our International has given themselves since then.

Anyone that can get or has the new March 2004 through probably 2008, International Union, UAW and Staff Council Bargaining Agreement, please contact me.

Excerpt from the last June 2002 UAW National Delegate Convention: Committee member Hill stated: At the last convention, we amended Article 11 to add a new Section 13, which gave the International Executive Board authority to bargain new agreements with the Staff Council any time rather than waiting for the convention. This actually happened and the Staff Council Agreement is still in effect.

Our International Union, UAW and Staff Reps now have 5 different Retirement Plans. And have had Cola on their pensions since 1978. CAW have had COLA on their pensions since 1986. The International UAW COLA formula was increased one cent over working UAW workers, to each .26 change in CPI-W (1967=100).

(1) Staff Retirement Plan. On $100,000 a year, $$183.33 a month X years of service. Extra 1/3 year credit per year between 45-60. An Int. Rep. With 20 years service and qualified 1/3 per year credit has 25 years credit. 25 X $183.33 = $4,583.25 a month or $54,999 a year on one pension. Int. Reps. can retire early, with annual redetermination of their retirement income based on wages increase and COLA they would be making until they reach 62. Retire with 15 or more years of service and are at least age 50, or have 10 or more years of service and are at least age 55, may retire with no reduction.

(2) Severance payout of $155,172-$183,929 over the course of 5, 10, 15 or 20 years or Lump Sum. Contributions from Participants are 4% and The International UAW shall contribute ten percent (10%) of each Participants Salary, reduced by the Contribution by Participants. In the March 2000-2004 Staff Council highlights, Pg 4, states: Due to the substantial over funding of our pension plan it was agreed that the International Union will have the option to waive funding for any year in which the over funding exceeds 100% of covered staff payroll.

(3) UAW Retirement.

(4) SS and Enhanced SS with lifetime supplement negotiated to address Social Security Age Creep.

(5) Self Directed 401-K

Our UAW International Union and Staff Council has demonstrated the ability to negotiate with themselves, superior retirement and medical benefits, which includes full paid medical insurance and annual paid physicals for Retirees.

lemko · February 2006

I would personally like to thank your father and grandfather for building the excellent GM vehicles that have faithfully served me over the long run.

rockylee · February 2006

They honestly deep down thank-you for buying them. They don't design them Lemko, but I can promise you my family builds the best parts the machines, and the material used, allows them. They honestly care about the Company and it's well-being. Many people want to point the finger directly at them for GM's misfortunes. You are a great patriot and I know GM/Delphi will continue to build you and I better and better parts and cars if allowed to survive. :shades:

Rocky

rockylee · February 2006

george, what are you trying to imply ???? Shouldn't folks with College Degrees in labor law, get to retire ????? I am not a UAW member, but many people in my family are. My father for one doesn't care if a UAW rep gets a fair retirement and health insurance for his/hers hard work.

Rocky

rockylee · February 2006

http://www.detnews.com/apps/pbcs.dll/article?AID=/20060214/AUTO01/602140343/1148- -

They are going to get hammered by a Judge. The UAW and GM and it's current workforce made the deal to help save GM. These 1400 retirees need to shut their mouths, because the impact is only $370 and a yr. or $750 a family They can gripe if GM starts becoming very profitable someday and it can be renegotiated.

Rocky

mirth · February 2006

The cold facts are that the days of guaranteed retirement support are quickly fading away. If you don't take control of your own retirement planning, though 401K's, IRA's, and Roths, you are likely going to be out of luck. I'm not even counting on social security being there for me.

The sad thing is that it's not the fault of these companies that pensions and guaranteed benefits are going out the window - it's out of control health care costs. Even the platinum benefits that GM promised its workers would be manageable if health care were equivalent to what they were even 10 years ago. Everyone is calling GM and Ford a bunch of whiners when they complain about health care - but to those people I say - do you love double-digit health care cost increases every year? How about paying for a Medicare drug program that the White House is not estimating in the $750 billion dollar range over the next 10 years alone? This is not a Detroit issue - it's an American issue. How can your average person afford to retire when they have to pay $10-12K per year just for coverage (God forbid you have to use it - that's extra)?

george35 · February 2006

DETROIT (Reuters) - As the deadline for Delphi Corp. to ask a court to void its union contracts edges closer, analysts worry a strike at the auto parts maker -- General Motors Corp.'s (GM.N: Quote, Profile, Research) largest supplier -- would deepen the financial crisis at the automaker.

Bankrupt Delphi Corp. (DPHIQ.PK: Quote, Profile, Research) has threatened to ask the court to void its contracts with the United Auto Workers union if it cannot reach an agreement by Friday to lower labor costs.

This could result in a strike, which could shut down plants and force GM to burn through billions of dollars, according to analysts.

"A work stoppage that shuts down GM's North American operations would result in cash burn of around $5 billion per month," JP Morgan analyst Himanshu Patel wrote in a research note.

"The working capital outflow could begin to diminish after the first month, but GM's desire/ability to sustain a strike beyond a month seems low."

In November, UBS analyst Rob Hinchcliffe said a strike at one or two strategic plants would force GM to use up $19 billion in cash and liquid assets in about 10 weeks. Deutsche Bank analyst Rod Lache also said that month that GM may burn through $13 billion in cash if a strike were to last a quarter.

Some analysts said GM is considering offering buyouts to Delphi workers.

GM, which spun off Delphi in 1999, has said it could be on the hook for as much as $12 billion in contract obligations to its former employees as Delphi demands deep pay and benefit cuts from the union.

The world's largest automaker lost $8.6 billion in 2005 due to high labor and commodities costs, loss of U.S. market share to foreign rivals and sluggish sales of sport utility vehicles.

As part of a broader restructuring effort, GM has said it plans to slash 30,000 jobs and close a dozen facilities through 2008.

If talks fail and a bankruptcy court tosses out Delphi's labor contracts, union workers could strike the auto parts maker -- a move that would halt GM production quickly, hampering new vehicle launches critical to GM's success.

GM is currently ramping up production of the critical T-900 series -- redesigned SUVs that are more fuel efficient.

"We believe a protracted strike which affected this launch should be viewed as a significant "opportunity cost" for the company," Patel said.

A 1998 strike at Delphi essentially halted GM's North American operations for nearly two months.

GM spokesman Jerry Dubrowski said the three parties are in talks.

"We continue to be in discussions with Delphi and the UAW, to reach an agreement that would allow Delphi to emerge as an important supplier to GM, but also that would make sense for GM and its stockholders," he said.

A UAW spokesman said the talks were "ongoing," but refused to disclose any details.

"(An agreement) is very complicated, but doable," David Cole, chairman of the Center for Automotive Research, said in reference to the possibility of Delphi, GM and the unions eventually reaching an agreement on cost cuts.

It is in the interest of the judge and the parties to work this out and they are making some progress, he added.

To compound matters, GM is in talks with potential partners to sell its finance arm, General Motors Acceptance Corp., in an effort to restore an investment-grade rating to GMAC.

"One of the likely sticking points in the pending sale of GMAC may well be resolution on Delphi, further emphasizing GM's interest in avoiding a labor dispute," Patel said.

The industrial arm of the Communications Workers of America, which represents about 8,500 Delphi workers, is also involved the discussions.

IUE-CWA spokeswoman Lauren Asplen said there had been little interaction with Delphi so far, but the union expects to continue talking even if Delphi files the motions on Friday.

The union would not be free to strike until the contracts were tossed out by the bankruptcy court, something that would be many weeks away, but a filing would add "unnecessary pressure," Asplen added

62vetteefp · February 2006

As I said before it is very, very doubtful that Delphi will strike and if it does it will be very short. The UAW represents both GM and Delphi hourly workers. UAW has seen the GM books and knows that GM is not cooking the books and the losses are real. They know if Delphi goes on strike and shuts GM down for an extended period it could cause GM to go Bankrupt. So these talks between GM, Delphi and the UAW are proceeding. Latest is the offer to offer the huge number of GM hourly the opportunity to retire (something like 50% of GM UAW are retirement age)with some type of bonus. DElphi employees with the GM seniority would be able to transfer back to GM and backfill those positions and then Delphi would hire new workers at competitive wages to keep them solvent. The only problem is that GM hourly guys have a very hard time retiring. the mindset for most is they are hooked to the good money like a drug addiction. When I was hourly everyone wanted to work as many day/hours as possible to bring in the big bucks to support their toy and living lifestyle. Still that way today with my friends and family. Even with the great pension and health care and ages in the 70's they cannot stop working.

bobst · February 2006

Do you keep an older car and fix it up or do you get rid of it and buy a new car?

Do you keep Delphi and GM as they are and try to patch them up with a modified labor agreement or do you let them both go bankrupt and luquidate, and then start over from scratch?

lemko · February 2006

...those UAW members know that going on a protracted strike is like using nuclear weapons to bomb your next door neighbor. You will destroy him, yourself, and everybody around you for fifty miles.

imidazol97 · February 2006

What concerns me is that one solution is GM having their older workers accept buyouts to retire and moving Delphi's ranking, higher seniority and age, workers to GM. GM still has the problem and Delphi is left with newer workers.

Oh maybe the Honda and Toyota plants in the area will hire the out-of-work GMers. Heh, heh. They wouldn't even employ them when they built the plants decades ago because they are afraid of getting prounion people into their workforce.

lemko · February 2006

I'm sure they won't. Those guys are all wearing Scarlet uAw's! Well, maybe a Wal-Mart supercenter is going up somewhere.

imidazol97 · February 2006

The local paper makes it sound like a strike by Delphi's UAW members is likely unless they "get what they want" in negotiations before Friday. The IUE portion may not be so rash.

socala4 · February 2006

...several years ago, while I was a college student, I had a summer management internship with GM, which included working in a parts distribution center (large warehouse facility that stored parts that were sold to dealers in the region.) The facility included several managers, and dozens of workers on a UAW contract.

To make a long story (somewhat) short, the experience taught me that I would hope for GM's sake that this facility wasn't representative of the entire business:

-Both labor and management were hostile to one another. Seperate break rooms, seperate parking lots, and an overall atmosphere of mistrust, complete with memories by the old timers about the nasty strikes of an earlier era. More like a Cold War than a place designed to help the company make money.

-The work rules were onerous, serving neither the workers nor the managers. On one hand, the rules seemed better designed to create bureaucracy than efficiency, i.e. moving labor employees from one department to another in order to cover absences or gaps could take the first 1 to 1 1/2 hours of an eight-hour workday, a highly inefficient and tedious daily routine. On the other hand, management could be petty over trivial matters -- one worker was tossed out of the plant for sitting down for a moment while having a conversation with a manager (I guess standing while having the same conversation is inherently better?), while an employee who was even one minute late was subject to punishment. While the labor contract could be a joke, eliminating it would have simply made things worse for the employees.

-Neither labor nor management was terribly happy, with neither understanding or focusing basic company goals, such as delivering a high quality product or service. Workers were counting the days until getting their pensions; managers were alternately trying to climb the ladder out of the facility, or else were resigned to their fate. And the few people who did have any vision at all were fairly powerless to do anything about it.

In other words, the entire culture was simply not conducive to creating a profitable business with a customer orientation. Upper management seemed not to understand that they were peddling a second-rate product, even though quite a few of the UAW guys had Toyotas and Nissans parked out in the(ir seperate) parking lot. (It was an unwritten rule that managers were expected to drive GM products -- good luck trying getting a promotion if you didn't drive one, and no apologies offered if the car proved to be less appealing than a competitor's.)

The union wasn't exactly fantastic, but eliminating the union would not have solved the basic problems of the business. Managers devoted their efforts to blaming the union, the economy, the consumer, the Great Japanese Conspiracy, the weather -- everybody but themselves and their uninteresting products. Even if they could have fired every UAW employee that same day, they would have been still left with bloated Camaros, dull Cavaliers, and tinny Sprints that were all overwhelmed by more reliable and interesting competitors. Union bashing is convenient and fun, but it doesn't even come close to addressing the problem.

bobst · February 2006

Socal, thank you for the very, very informative post.

62vetteefp · February 2006

How many several years ago was this?

The UAW and Domestic Automakers

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