There are no indications that the GM UAW is going to make any per hour concessions. GM has only been negotiating reducing the "overhead" costs of pension, health care, work rules and job banks. GM needs to eliminate the job banks at the next contract negotiations and allow plant closings.
GM doesn't need to close plants. The UAW I believe will be very flexible and through studies found it to be benefitual to the workers. This is the Way the UAW will see it and I'll explain. The UAW would rather be flexible and keep 4 plants open, than have tight rules and lose three. I believe GM sometime in my lifetime will build plants here in the United States if the UAW is willing to be flexible. I believe the UAW is smart enough of a membership to take notice in this global economy they are going to have to work like slaves to keep jobs here in the States. The Lansing Cadillac plant is just one example of the rules changes and as you've seen Chrysler and Ford are getting work rule changes to help make the plants more efficient and yes that includes a few less workers. But hey, it's better than nothing. If GM decides to build plants like the Transplants, then we might see a recovery in American jobs, but I'm not going to hold my breath yet on that happening. OTOH I'm optimistic and do hope it happens as I just said.
Yes, I am serious. They have to hire someone to handle the increased market share. The maccabre reality is that, I'm afraid both management and union members will move on to Toyota. That's probably the reason why the former Toyota head was talking about the need to keep GM alive.
Rocky, GM has already many closed plants that have workers in job banks. There are other plants already announced. I would hope there will be no more but that will depend on this years sales. With York GM has finally decided to bite the bullet and cut fleet sales and cut rate incentives. Market share will go down and be steady at some rate. GM has to get the remaining plants at capacity and cut the overhead (huge pension, health care, fully paid workers not working)
I agree pal. OTOH that's why both GM and Ford offered buy-outs to there employees. I'm not sure how many have signed up so far for the buy-out package ? My POPS is of course one of em'. It just gets my blood boiling 62' when GM will release a car like the POS Aztek and they hesitate on making the most awesome car in the world, in the Buick Velite. :shades:
I've had to remove a fair number of postings here because they were more about other members than about the topic. Postings with personal assumptions or assessments about other users are not approriate.
Pulling a line from someone's post to address a single point someone made and avoid confusion is fine, as long as it's not then used as a way to make a comment about the poster. That's where the problem comes in.
The whole idea here is to discuss the topics, not each other. Your cooperation on this is greatly appreciated.
We were indeed talking about NA market. BMW is one of the biggest success story in NA despite its not having any midrange sedan.
Toyota and Honda's meteoric rise in NA over the last decade has been due to their truck/SUV and luxury vehicle offerings . . . which are also the reason behind GM and Ford's decline, as vehicles like RAV4, RX, Highlander, MDX, Pilot and CRV put margin pressure on products that had been making Ford and GM gobs of money.
I just have to wonder why anyone thinks the elimination of the UAW will be some kind of miracle cure.
I don' think many are thinking that way at all. Most don't expect ex-cancer patients to decimate all other runners and win Marathon races just because they finally got rid of the tumor. On the other hand, not getting rid of a cancerous tumor does tend to eliminate any chances of winning at all (or meaningfully participate for that matter).
Personally, I do think the UAW will either make serious concessions at the last minute, or they will somehow be eliminated otherwise and autoworkers will be making $8/hr. And when that happens, it will be time for the execs to put up or shut up.
Agree on the last sentence, but I'm not as confident about its actually happening; ie. GM being allowed to exist with UAW somehow fading away, as much as I hope that's the case. If GM shuts down and gets liquidated, Toyota will be under tremendous pressure to absorb the capacity, especially personnel. Given the market share increase and current profits, there just might be sufficient political pressure to turn Toyota into another GM. The saga goes on, with only the old workers and retirees getting shafted and become wards of the taxpayers. Ultimately, taxpayers and old workers/retirees who are way too late in their careers to find new jobs get the short end of the stick . . . 30 years later, the same process all over again to catch up with today's young workers unwary enough to consign themselves to such a fate.
I doubt we'll see such low wages for auto workers, Fintail.
From the start, Toy/Hon/Hyun/BMW/MB's US factories have paid hourly wages similar to what UAW workers make.
They are also profitable while paying these higher wages.
The burden with the UAW is retirement costs, benefits and job bank programs. GM/Ford/Chrysler and the UAW have to work and figure a way to handle this.
I think I am the lone Japanese posting on this board....
Anyway, here is the perspective from Japan - Toyota is scared of GM going down (and the political backlash that would follow - We see the illegal immigrants marcing in LA, and know that in US it is not rational logic that rules) and will do some "behind the scene" deals for this not to happen (increase in pricing, delay of model releases etc). So no need to worry about Toyota dominance!
But coming back to the topic in question - And again, just the Japan perspective (I am representing Japanese Auto mags) - Brightness is right, if you sum up all the +ves and -ves - The legacy costs of GM are driving a behaviour that ultimately will result in something drastic. We are just coming back from a 15 yr recession, and while the western press refers to it as a lost decade due to muddles Japanese decision making, the fact is that labor costs have been axed dramatically, and companies have reduced their dependency on manual labor. The result? Even Japanese Steel companies, the dinosaurs to beat all Japanese dinosaurs, are recording the highest profits ever.
Of course, that results in the rich-poor gap widening, and an increase in the percentage of Japanese with no savings....but that is what Gen McArthur all about, wasn't he?
Anyway, here is the perspective from Japan - Toyota is scared of GM going down (and the political backlash that would follow
That makes sense. Of course, Toyota is going to gun for the territory of its largest competitor -- it is easier to become stronger if your rival becomes weaker. Its segment choices reflect that, such as the Avalon competing for Buick's share, or the larger trucks looking to carve out a portion of the market for GM offerings. But on the whole, concern for a political backlash is well founded.
The legacy costs of GM are driving a behaviour that ultimately will result in something drastic.
Not really, these costs are already headed for the chopping block. The process of paring these down is already underway, it's just a matter of time before they are on par with every other company's.
GM management is simply hyping up the legacy cost rhetoric for a couple of core reasons: (a) it's a PR exercise meant to attack and disable the union, and (b) it's a distraction ploy intended to hide management's deficiencies from Wall Street, an effort to get analysts to believe that GM's problems can be solved by focusing on the company's cost structure.
Point A is a predictable exercise, and Point B ultimately won't work unless it can be combined with some hit cars that sell in volumes large enough to turn loss into profit. The business press and analysts are now fully coginizant of the fleet sales problem and retail market share erosion, and nobody with any common sense is going to believe that sustained high oil prices wouldn't have an impact on consumer buying habits that will work against the gas guzzler manufacturers. It won't be long before the analysts begin asking, "Enough beating of the legacy costs drum, when are you going to start selling successful cars?"
Aztek was not a POS. It just had some wierd a** styling. Those that bought love them.
Velite type vehicle at Buick is a possibility. If the Lucerne continues to be a hit and the Enclave also does well Buick may earn a $35k 2 seater NOT based on the Solstice.
I don't want a $35K 2 seater. I want a $45K 4-5 Seater like the Velite concept. I also want it to be filled with gadgets that would even impress Tiger Woods.
I can see Tiger Woods walking up the 18th Hole at the Buick Invitational, and a prize of a Buick Velite sitting there for the known Winner named Tiger
He knocks in his put for Eagle, and stands in front of the Velite with his hands in the air at the tune of Aerosmith's 'Dream On' song :shades: as the bulbs flash
Delphi Union members need to study the grocery clerks strike. When they went on strike against Von's (Safeway), Ralph's (Kroger), and Albertson's locked out the union employees. That could happen to GM employees if Delphi walks. They could just shut down the whole operation and start hiring non-union people and training them. How many union people would cross the lines if this happens?
The southern California grocery strike involving 70,000 United Food And Commercial Workers members from October 2003 to March 2004 was one of the most significant actions the U.S. labor movement took in the last twenty years.
What happened? The workers lost, betrayed by their union leaders. This defeat was devastating, setting up a spiral of attacks on the lives of people who must work to live, particularly on the minimal health benefits that a few working people still have. The old labor saw, "An injury to one just goes before an injury to all," is already felt in teacher-union contract negotiations.
What were the issues? The 70,000 plus grocery workers in Southern California, most but not all of them check-out clerks, struck to protect their wages, health benefits, pension funds, the hours and nature of the hours at work, and their union itself. Grocery clerks are not known as impatient militants. The workers fought because they had to fight. Cornered, they engaged in a battle that few of them fully understood. The sole thing that was retained after the end of a five-month strike was the right of their United Food and Commercial Workers Union directors to collect dues from the members.
The grocery owners, Vons, Ralphs, and Albertsons, claimed they had to have massive concessions from the union in order to stave off competition from Walmart, now invading their turf. The grocery bosses rightly said that Walmart's edge was not only in its ability to buy in bulk, but its cheap labor costs.
Problem wasn't at Vons, Ralph's and Albertson's, it was at Wal-Mart. Wal-Mart workers should organize so they can have the same pay and benefits as the others.
I don't disagree. It seems harder to pull off than breaking the other unions. As long as WalMart workers are not unhappy, it is hard to organize. The same could be said for all the Auto transplants in the USA. The UAW has tried to organize and come up empty. A friend was just over that went to work during the Von's strike at a local food chain here in San Diego. She had 11 yrs at Von's and will not go back. She makes less money and is happier than when she was at Von's.
Problem wasn't at Vons, Ralph's and Albertson's, it was at Wal-Mart. Wal-Mart workers should organize so they can have the same pay and benefits as the others.
The supermarket strike failed because it was limited to a local effort that failed to impact the stores at a broader level. It was foolish for the union to proceed without having first coordinating strikes that would have impacted these chains across their entire operations. Very poor gamesmanship, and a lesson about how not to coordinate a strike.
The transplant automakers have provided competitively paid jobs with benefits on par with the norm across the rest of the country. They also were wise to start operations in places where workers would be thankful for the jobs. And the use of team-based assembly methods should be better for morale.
GM management has sought to replace good management practice with paycheck/benefit-based labor relations. Giving someone a good insurance policy is not the same thing as providing a positive work environment with a common goal to win and earn profits.
The blame culture within GM simply never ceases to amaze me. I guess this is what happens when any company gets too big for its own good -- everyone, both workers and management, get too fat and lazy to keep their eyes on the ball, and begin to think that success is an entitlement, rather than something to be earned.
In Dayton the company kicked a union rep out when he stopped the line because a floor was wet and slick in an area because there haven't been custodians since May 1. This is the same time the strike vote is being taken. The vote is almost unanimous.
... >>> **The transplant automakers have provided competitively paid jobs with benefits on par with the norm across the rest of the country. They also were wise to start operations in places where workers would be thankful for the jobs. And the use of team-based assembly methods should be better for morale. ============================
Really....? ... is that how it works.??? ..l.o.l...
I've never been a fan of the UAW ... but let's be honest here, the "the transplant automakers" are paying 10cts on the dollar for the cost of their employee's ...
Japanese Cars, American Retirees Tom Uhlman for The New York Times Richard Baugh, 61, who plans to retire in January, inspects the paint on a Toyota Camry in Georgetown, Ky.
By EDUARDO PORTER Published: May 19, 2006 GEORGETOWN, Ky. — For the last quarter-century, Toyota, Honda and Nissan have strived to appear to American consumers like homegrown companies.
Skip to next paragraph
Tom Uhlman for The New York Times JoAnn Elbert, 45, works on the moon roof of a car on the Toyota assembly line in Georgetown, Ky.
They built a string of manufacturing plants in the South, employing tens of thousands of local workers. They hired American designers. They spent millions on ads to trumpet their growing roots in communities across the country.
"Being a good corporate citizen starts with hiring lots of good citizens," one Toyota ad says.
Yet as they built up their operations, the Japanese "transplants" have worked hard not to resemble an American car company in one vital respect: how they treat their retirees.
"We want to avoid commitments when we have no control over their costs," said Pete Gritton, the head of human resources for Toyota's United States manufacturing operations. "We can't build in things in such a way that we won't be able to keep our commitments later."
Until recently, the issue has mostly been academic for the Japanese car companies. Most of the American factory workers they started hiring in the mid-1980's are still working.
But age is creeping up on them. All three Japanese companies are anticipating that the ranks of retirees will swell over the next several years. Toyota's American arm, for example, has just 258 retired production workers (G.M., by contrast, has more than 400,000 retirees).
But things will change over the next five years. In 2011 and 2012, a combined 1,700 workers will be eligible for retirement at Toyota — about 6 percent of its current labor force.
Their retirement will contrast in a crucial way with their counterparts who have retired from the Big Three auto companies in that they will bear much more of the costs and the risks of retirement on their own.
This difference adds up to an important cost disadvantage for the Big Three as they fight to regain market share.
The benefit packages offered by Detroit's three carmakers to its blue-collar workers, negotiated over time with the United Automobile Workers union, pretty much fit a standard model. Retirees receive a pension check every month, which varies with the number of years served.
An average worker who reaches retirement age at G.M. will get a monthly pension check worth about $50 for every year of service, up to a maximum of about $1,500 a month, which accrues after 30 years of service, according to a G.M. spokesman, Jerry Dubrowski. Retirees with 30 years of service get a supplement that brings their monthly check up to about $3,000 until they reach 62.
Moreover, until last year, when General Motors and the union cut a deal for retirees to cover co-pays and deductibles, G.M. covered retirees' health care expenses.
With benefits like these, it's no wonder that G.M. was once known as "Generous Motors."
But these days, health care costs are causing enormous financial headaches for the Big Three. G.M. has an unfunded liability of $85 billion in today's money to cover future health care costs for workers and retirees. That is seven to eight times the market value of the whole company.
General Motors estimates that health care costs add about $1,500 to the cost of each vehicle it makes in the United States. Chrysler claims a health care cost of $1,400 per vehicle. Ford says its burden is $1,100.
G.M.'s pension plan has also been a drain. Since 1992, G.M. has plowed $56 billion in stock and cash into it. It is hoping to reduce its burden by offering all of its 105,000 U.A.W. workers buyout packages worth up to $140,000. It is still unclear how many plan to accept the offer.
"The higher legacy costs are reflected in a less modern product," said George E. Hoffer, a professor of economics at Virginia Commonwealth University who has studied the auto industry. "They had to cut costs somewhere else and they cut costs in retooling."
Japanese companies face little of this burden in Japan, where the government covers retirees' health care and pays a bigger share of workers' pensions.
Toyota expected to pay out about $700 million in pension benefits in fiscal year 2006, which ended in March. That's less than a tenth of what G.M. expects to pay on its pensions this year.
In the United States, retirees of the Japanese companies pay part of their health care costs. And the Japanese companies' pension obligations are a fraction of that of the American carmakers.
While G.M. paid $5.4 billion last year for the health care of its 141,000 workers, 449,000 retirees and their dependents, Toyota said in its 2005 annual report that its obligations to cover the health care expenses for its retirees "are not material."
At Honda, a 60-year-old retiree with 10 years of service would typically pay $345 a month for health care; a 62-year-old retiree with 25 years at the company would pay $70. Toyota also requires retirees to pay part of their premiums, based on years of service.
In general, these retirees are cut off from the company health plan when they turn 65, and receive instead a lump sum with which they can buy supplementary insurance to Medicare. Honda is alone among the big three Japanese carmakers to still offer a defined-benefit pension guaranteeing a monthly check to newly retired workers in the United States.
At Toyota, a worker's pension consists of an investment account in which the company deposits the equivalent of 5 percent of a worker's earnings each year, typically around $3,000 to $3,500. An employee can supplement that with a 401(k) plan, and the company matches contributions up to a maximum of 4 percent of the worker's income.
For the company, these retirement packages carry no uncertainty. But they do for workers, whose nest eggs depend on their contributions and the financial markets.
Consider Richard Baugh. The 61-year-old worker, who applies sealant on Camrys, Solaras and Avalons in the paint room, is planning to retire next January after 17 years at Toyota's factory here, to tend his horses and teach at his local church in nearby Cynthiana.
His wife, Ruth, 58, will also retire after 14 years at the plant. With total savings of some $700,000, the Baughs feel ready for retirement. They were thrifty, plowing at least 12 percent of their wages into their 401(k)'s.
"After the stock market crash we stayed invested and kept buying, and our 401(k) roared back," Mr. Baugh said.
With less than 25 years at the company, they will have to pay a portion of their health insurance premium, which Mr. Baugh said would amount to some $300 a month.
Tim Garrett, vice president of administration at Honda Manufacturing of America, says talk of the Big Three's "legacy" problem is overblown. Had they set enough money aside when the workers were active, their retirement would not be costing them anything today. "Depending on your decisions you will have legacy costs or you will not have legacy costs," Mr. Garrett said. "We have no legacy costs."
To be fair, Detroit's car companies were no more shortsighted than many companies in other industries. From steelmakers to telephone companies, free health and defined pension checks were a staple of the retirement packages negotiated between America's industrial titans and their unions half a century ago.
When these companies were growing quickly, providing generous retirement benefits seemed cheaper than offering better pay, a future cost that often did not even have to be accounted for on the financial books.
From 1990 to 2005, G.M.'s payroll shrank by two-thirds, and its current work force is now just one-third the number of its retirees and their dependents.
Today, defined-benefit pensions are dwindling across industries, as companies force retirees and active workers to pick up part of their health costs. According to a survey by the Kaiser Family Foundation, only one out of three big companies now provide health care coverage for their retirees, down from two-thirds in 1988.
In 2003, 22 million workers were covered by some sort of defined-benefit pension, 8 million fewer than in 1980, according to the Center for Retirement Research at Boston College. And the number of workers in defined-contribution plans jumped to 52 million, from 14.5 million, over the same period.
Union contracts have limited what Detroit's car companies can do with their blue-collar workers, but they are paring back where they can.
G.M. eliminated health care coverage for its salaried, nonunion retirees hired after 1993. This year, it froze the salaried workers' defined-contribution pension plan. Chrysler made its salaried workers pay more for their health care starting this year.
Under an agreement last year with the autoworkers' union, retirees at G.M. and Ford will start paying part of their health care costs, up to $370 a year for an individual and $752 for a retiree's family.
With Detroit sagging under the burden of these "legacy" costs, it is unsurprising — even to executives at the Big Three — that the Japanese companies arriving in America chose to do things differently.
"These are well-managed companies," said Frederick A. Henderson, G.M.'s chief financial officer. "It is natural that they would look at our experience and say 'I don't want to do that.' "
Dad, was very enthusistic along with many of his co-workers last week when they found out they can leave earlier than what they thaught. I personally don't think Delphi will strike and think the Judge will somehow resolve the issues and most of the Delphi employees will flow back to GM if they were pre- 1999'. I see Delphi in 10 years not having very many plants in Noth America, but I also see General Motors not buying nearly as many parts from Delphi. I look for GM to buy from U.S. suppliers like Gentex, More from Johnson Controls, and look for company's like Dana Corporation to expand and take some buisness from Delphi.
Agreed. As part of the splitting off of Delphi GM made huge agreements to support Delphi untill they could be profitable on their own..Decisions were made to keep business at Delphi even though it was not the most profitable to GM such as keeping Delphi radios in some models.
Once Delphi gets past this bankruptcy it will have to stand on it's own. GM will buy from the best suppliers. Hopefully Delphi will offer products at competitive quality/prices.
IMHO, defined-benefit plans and carte blanche healthcare promises are not fair to workers at all. One has to remember that all promises are just that, promises yet to be delivered, and contingent upon bankruptcy. It is not fair to tie retired workers to a single company's fortune when such fortunes are predicatibly headed to the scrapper sooner or later because all such "generous" plans are little more than pyramid schemes . . . when the payroll shrinks, and it does eventually for every single company, the hapless retirees are screwed.
Defined benefits and carte blanche healthcare essentially make the company into an insurance business in addition to its core competence . . . Most managers are probably no good at running insurance business, and why tempt them with a giant nest egg that they could potentially raid/siphon to buttress the quarterly report?
Having to run an insurance company for its employees also creates a barrier to entry for newcomer companies that could potentially offer workers better pay.
Carte Blanche healthcare creates its own market externality when the benefitiary is entirely detached from the paying of bills. That's a major factor behind the rapidly rising cost of healthcare: third-party pay creating excessive demand coupled with AMA monopolistic control on supply.
Genral Electric's pension plan seems to be doing just fine. In fact it makes money. If GM's past management during the "golden years" would of funded the pension like GE did the pension legacy costs would be a non-issue. I do agree with you though presently tieing a persons future to a pension plan isn't healthy for the worker. OTOH a 401K is like playing slots with Vegas odds. Sure most people will have a little money in them, but "the promise" of being a millionaire like my management has darn near "promised me" is far from gauranteed to. I would still prefer a good defined-benefit plan offered by a multi-billion dollar corporation like GE vs. a 401K in my opinion. The 401K I agree is what the majority of americans have, but I don't see millions of americans in my generation retired in Florida with millions in the fund and living the good life.
OTOH a 401K is like playing slots with Vegas odds.
That is exactly what an employer does with money in a retirement fund. They invest in stocks and bonds. At least with the 401K you have some control over where the money is invested. Unless of course you worked for Enron. There are funds that plug along making 2-5% year after year and are as safe as any retirement plan. Just keep control of your finances. Just read an article of a husband and wife that are retiring from Toyota. They have together in their 401K approximately $700k dollars. That is more than is in my Teamsters account after 36 years.
My Uncles Teamster pension if he only lives 20 years after retirement, will pay him approx 840,000 and that doesn't iclude any years he lives beyond 20 years or years his spouse will be alive. These figues are off of todays figures, and of course they periodically get pension raise increases,
That is true I get much more back than my employer paid in. I think my account after 36 years was about $190,000 contributed by my employers. I get $4480 per month. If I live a long time I get a lot more than contributed. If I die in a year, that's it.
My Uncles Teamster pension if he only lives 20 years after retirement, will pay him approx 840,000 and that doesn't iclude any years he lives beyond 20 years or years his spouse will be alive. These figues are off of todays figures, and of course they periodically get pension raise increases
DB pension plans are unsupportable in today's competitive world. There are too many unknowns.
Me personally, I feel much more comfortable in knowing I can control where to invest my retirement money. Any moderately diversified investment would produce 7% over the long term. Gary's 2-5% is pretty conservative. I'd rather not depend on my employer's DB plan to support my retirement - and risk bankruptcy/fraud on their part.
That is true. It would be for someone with no sense of adventure. My 401K which has done real well up until the last couple weeks, had about 12% for the year to date. I am afraid to pull it up after the last several sessions. I used to get nervous about the Teamster Trust as well. Fortunetly it is a separate plan for Alaska Teamsters. I also have a close friend on the board that keeps me up on the condition. Nothing is 100% safe.
Comments
Rocky
You can't be serious. :surprise:
Rocky
I agree pal. OTOH that's why both GM and Ford offered buy-outs to there employees. I'm not sure how many have signed up so far for the buy-out package ? My POPS is of course one of em'. It just gets my blood boiling 62' when GM will release a car like the POS Aztek and they hesitate on making the most awesome car in the world, in the Buick Velite. :shades:
It just makes me...
Rocky
Pulling a line from someone's post to address a single point someone made and avoid confusion is fine, as long as it's not then used as a way to make a comment about the poster. That's where the problem comes in.
The whole idea here is to discuss the topics, not each other. Your cooperation on this is greatly appreciated.
Toyota and Honda's meteoric rise in NA over the last decade has been due to their truck/SUV and luxury vehicle offerings . . . which are also the reason behind GM and Ford's decline, as vehicles like RAV4, RX, Highlander, MDX, Pilot and CRV put margin pressure on products that had been making Ford and GM gobs of money.
I just have to wonder why anyone thinks the elimination of the UAW will be some kind of miracle cure.
I don' think many are thinking that way at all. Most don't expect ex-cancer patients to decimate all other runners and win Marathon races just because they finally got rid of the tumor. On the other hand, not getting rid of a cancerous tumor does tend to eliminate any chances of winning at all (or meaningfully participate for that matter).
Personally, I do think the UAW will either make serious concessions at the last minute, or they will somehow be eliminated otherwise and autoworkers will be making $8/hr. And when that happens, it will be time for the execs to put up or shut up.
Agree on the last sentence, but I'm not as confident about its actually happening; ie. GM being allowed to exist with UAW somehow fading away, as much as I hope that's the case. If GM shuts down and gets liquidated, Toyota will be under tremendous pressure to absorb the capacity, especially personnel. Given the market share increase and current profits, there just might be sufficient political pressure to turn Toyota into another GM. The saga goes on, with only the old workers and retirees getting shafted and become wards of the taxpayers. Ultimately, taxpayers and old workers/retirees who are way too late in their careers to find new jobs get the short end of the stick . . . 30 years later, the same process all over again to catch up with today's young workers unwary enough to consign themselves to such a fate.
From the start, Toy/Hon/Hyun/BMW/MB's US factories have paid hourly wages similar to what UAW workers make.
They are also profitable while paying these higher wages.
The burden with the UAW is retirement costs, benefits and job bank programs. GM/Ford/Chrysler and the UAW have to work and figure a way to handle this.
Anyway, here is the perspective from Japan - Toyota is scared of GM going down (and the political backlash that would follow - We see the illegal immigrants marcing in LA, and know that in US it is not rational logic that rules) and will do some "behind the scene" deals for this not to happen (increase in pricing, delay of model releases etc). So no need to worry about Toyota dominance!
But coming back to the topic in question - And again, just the Japan perspective (I am representing Japanese Auto mags) - Brightness is right, if you sum up all the +ves and -ves - The legacy costs of GM are driving a behaviour that ultimately will result in something drastic. We are just coming back from a 15 yr recession, and while the western press refers to it as a lost decade due to muddles Japanese decision making, the fact is that labor costs have been axed dramatically, and companies have reduced their dependency on manual labor. The result? Even Japanese Steel companies, the dinosaurs to beat all Japanese dinosaurs, are recording the highest profits ever.
Of course, that results in the rich-poor gap widening, and an increase in the percentage of Japanese with no savings....but that is what Gen McArthur all about, wasn't he?
That makes sense. Of course, Toyota is going to gun for the territory of its largest competitor -- it is easier to become stronger if your rival becomes weaker. Its segment choices reflect that, such as the Avalon competing for Buick's share, or the larger trucks looking to carve out a portion of the market for GM offerings. But on the whole, concern for a political backlash is well founded.
The legacy costs of GM are driving a behaviour that ultimately will result in something drastic.
Not really, these costs are already headed for the chopping block. The process of paring these down is already underway, it's just a matter of time before they are on par with every other company's.
GM management is simply hyping up the legacy cost rhetoric for a couple of core reasons: (a) it's a PR exercise meant to attack and disable the union, and (b) it's a distraction ploy intended to hide management's deficiencies from Wall Street, an effort to get analysts to believe that GM's problems can be solved by focusing on the company's cost structure.
Point A is a predictable exercise, and Point B ultimately won't work unless it can be combined with some hit cars that sell in volumes large enough to turn loss into profit. The business press and analysts are now fully coginizant of the fleet sales problem and retail market share erosion, and nobody with any common sense is going to believe that sustained high oil prices wouldn't have an impact on consumer buying habits that will work against the gas guzzler manufacturers. It won't be long before the analysts begin asking, "Enough beating of the legacy costs drum, when are you going to start selling successful cars?"
Strong competition is a wonderful driver of innovation.
I also hope lawmakers avoid giving loans, guarantees, tarrifs or other artificial support to the US auto industry.
Surely management of the big 3 should be hearing what the marketplace is saying loud and clear right now.
Velite type vehicle at Buick is a possibility. If the Lucerne continues to be a hit and the Enclave also does well Buick may earn a $35k 2 seater NOT based on the Solstice.
I can see Tiger Woods walking up the 18th Hole at the Buick Invitational, and a prize of a Buick Velite sitting there for the known Winner named Tiger
He knocks in his put for Eagle, and stands in front of the Velite with his hands in the air at the tune of Aerosmith's 'Dream On' song :shades: as the bulbs flash
Rocky
P.S. I have quite an imagination don't I :P
Toyota and Honda are making their profits in the $16,000 to $26,000 range with well designed, plain vanilla, reliable cars that get high gas mileage.
That is the market the big 3 have to get serious about. Profits from the bread and butter lines can fund cars like the Velites, GTs, Vipers and Z06s.
Rocky
http://www.businessweek.com/ap/financialnews/D8HCIJT01.htm?campaign_id=apn_home_- - - up&chan=db
This strike will be a gift to Toyota, Honda, Hyundai and other competitors.
Shutting down GM hands them an open market, while allowing them to raise prices and increase profits.
I hope UAW membership considers all this on voting day.
The southern California grocery strike involving 70,000 United Food And Commercial Workers members from October 2003 to March 2004 was one of the most significant actions the U.S. labor movement took in the last twenty years.
What happened? The workers lost, betrayed by their union leaders. This defeat was devastating, setting up a spiral of attacks on the lives of people who must work to live, particularly on the minimal health benefits that a few working people still have. The old labor saw, "An injury to one just goes before an injury to all," is already felt in teacher-union contract negotiations.
What were the issues? The 70,000 plus grocery workers in Southern California, most but not all of them check-out clerks, struck to protect their wages, health benefits, pension funds, the hours and nature of the hours at work, and their union itself. Grocery clerks are not known as impatient militants. The workers fought because they had to fight. Cornered, they engaged in a battle that few of them fully understood. The sole thing that was retained after the end of a five-month strike was the right of their United Food and Commercial Workers Union directors to collect dues from the members.
The grocery owners, Vons, Ralphs, and Albertsons, claimed they had to have massive concessions from the union in order to stave off competition from Walmart, now invading their turf. The grocery bosses rightly said that Walmart's edge was not only in its ability to buy in bulk, but its cheap labor costs.
http://www.imdb.com/title/tt0473107/
The import plants all pay about the same wages, benefits, etc. as the big 3.
That is why unions have had no success recruiting employees at Toyota, Honda, Hyundai, BMW plants in the US.
The supermarket strike failed because it was limited to a local effort that failed to impact the stores at a broader level. It was foolish for the union to proceed without having first coordinating strikes that would have impacted these chains across their entire operations. Very poor gamesmanship, and a lesson about how not to coordinate a strike.
The transplant automakers have provided competitively paid jobs with benefits on par with the norm across the rest of the country. They also were wise to start operations in places where workers would be thankful for the jobs. And the use of team-based assembly methods should be better for morale.
GM management has sought to replace good management practice with paycheck/benefit-based labor relations. Giving someone a good insurance policy is not the same thing as providing a positive work environment with a common goal to win and earn profits.
The blame culture within GM simply never ceases to amaze me. I guess this is what happens when any company gets too big for its own good -- everyone, both workers and management, get too fat and lazy to keep their eyes on the ball, and begin to think that success is an entitlement, rather than something to be earned.
http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20060504/AUTO01/605040395/- 1148/AUTO01
Rocky
:sick:
http://www.philly.com/mld/philly/news/local/14503549.htm
Management GM or Union !
http://unionfacts.com/
http://msnbc.msn.com/id/12678094/
http://www.thecarconnection.com/Auto_News/Auto_News/Industry_Report_May_8_2006.S- 175.A10387.html
http://online.wsj.com/article/SB114687835100345662.html?mod=googlenews_wsj
2014 Malibu 2LT, 2015 Cruze 2LT,
2014 Malibu 2LT, 2015 Cruze 2LT,
http://www.detnews.com/apps/pbcs.dll/article?AID=/20060520/AUTO01/605200422/1148-
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Really....? ... is that how it works.??? ..l.o.l...
I've never been a fan of the UAW ... but let's be honest here, the "the transplant automakers" are paying 10cts on the dollar for the cost of their employee's ...
Japanese Cars, American Retirees
Tom Uhlman for The New York Times
Richard Baugh, 61, who plans to retire in January, inspects the paint on a Toyota Camry in Georgetown, Ky.
By EDUARDO PORTER
Published: May 19, 2006
GEORGETOWN, Ky. — For the last quarter-century, Toyota, Honda and Nissan have strived to appear to American consumers like homegrown companies.
Skip to next paragraph
Tom Uhlman for The New York Times
JoAnn Elbert, 45, works on the moon roof of a car on the Toyota assembly line in Georgetown, Ky.
They built a string of manufacturing plants in the South, employing tens of thousands of local workers. They hired American designers. They spent millions on ads to trumpet their growing roots in communities across the country.
"Being a good corporate citizen starts with hiring lots of good citizens," one Toyota ad says.
Yet as they built up their operations, the Japanese "transplants" have worked hard not to resemble an American car company in one vital respect: how they treat their retirees.
"We want to avoid commitments when we have no control over their costs," said Pete Gritton, the head of human resources for Toyota's United States manufacturing operations. "We can't build in things in such a way that we won't be able to keep our commitments later."
Until recently, the issue has mostly been academic for the Japanese car companies. Most of the American factory workers they started hiring in the mid-1980's are still working.
But age is creeping up on them. All three Japanese companies are anticipating that the ranks of retirees will swell over the next several years. Toyota's American arm, for example, has just 258 retired production workers (G.M., by contrast, has more than 400,000 retirees).
But things will change over the next five years. In 2011 and 2012, a combined 1,700 workers will be eligible for retirement at Toyota — about 6 percent of its current labor force.
Their retirement will contrast in a crucial way with their counterparts who have retired from the Big Three auto companies in that they will bear much more of the costs and the risks of retirement on their own.
This difference adds up to an important cost disadvantage for the Big Three as they fight to regain market share.
The benefit packages offered by Detroit's three carmakers to its blue-collar workers, negotiated over time with the United Automobile Workers union, pretty much fit a standard model. Retirees receive a pension check every month, which varies with the number of years served.
An average worker who reaches retirement age at G.M. will get a monthly pension check worth about $50 for every year of service, up to a maximum of about $1,500 a month, which accrues after 30 years of service, according to a G.M. spokesman, Jerry Dubrowski. Retirees with 30 years of service get a supplement that brings their monthly check up to about $3,000 until they reach 62.
Moreover, until last year, when General Motors and the union cut a deal for retirees to cover co-pays and deductibles, G.M. covered retirees' health care expenses.
With benefits like these, it's no wonder that G.M. was once known as "Generous Motors."
But these days, health care costs are causing enormous financial headaches for the Big Three. G.M. has an unfunded liability of $85 billion in today's money to cover future health care costs for workers and retirees. That is seven to eight times the market value of the whole company.
General Motors estimates that health care costs add about $1,500 to the cost of each vehicle it makes in the United States. Chrysler claims a health care cost of $1,400 per vehicle. Ford says its burden is $1,100.
G.M.'s pension plan has also been a drain. Since 1992, G.M. has plowed $56 billion in stock and cash into it. It is hoping to reduce its burden by offering all of its 105,000 U.A.W. workers buyout packages worth up to $140,000. It is still unclear how many plan to accept the offer.
"The higher legacy costs are reflected in a less modern product," said George E. Hoffer, a professor of economics at Virginia Commonwealth University who has studied the auto industry. "They had to cut costs somewhere else and they cut costs in retooling."
Japanese companies face little of this burden in Japan, where the government covers retirees' health care and pays a bigger share of workers' pensions.
Toyota expected to pay out about $700 million in pension benefits in fiscal year 2006, which ended in March. That's less than a tenth of what G.M. expects to pay on its pensions this year.
In the United States, retirees of the Japanese companies pay part of their health care costs. And the Japanese companies' pension obligations are a fraction of that of the American carmakers.
While G.M. paid $5.4 billion last year for the health care of its 141,000 workers, 449,000 retirees and their dependents, Toyota said in its 2005 annual report that its obligations to cover the health care expenses for its retirees "are not material."
At Honda, a 60-year-old retiree with 10 years of service would typically pay $345 a month for health care; a 62-year-old retiree with 25 years at the company would pay $70. Toyota also requires retirees to pay part of their premiums, based on years of service.
In general, these retirees are cut off from the company health plan when they turn 65, and receive instead a lump sum with which they can buy supplementary insurance to Medicare. Honda is alone among the big three Japanese carmakers to still offer a defined-benefit pension guaranteeing a monthly check to newly retired workers in the United States.
At Toyota, a worker's pension consists of an investment account in which the company deposits the equivalent of 5 percent of a worker's earnings each year, typically around $3,000 to $3,500. An employee can supplement that with a 401(k) plan, and the company matches contributions up to a maximum of 4 percent of the worker's income.
For the company, these retirement packages carry no uncertainty. But they do for workers, whose nest eggs depend on their contributions and the financial markets.
His wife, Ruth, 58, will also retire after 14 years at the plant. With total savings of some $700,000, the Baughs feel ready for retirement. They were thrifty, plowing at least 12 percent of their wages into their 401(k)'s.
"After the stock market crash we stayed invested and kept buying, and our 401(k) roared back," Mr. Baugh said.
With less than 25 years at the company, they will have to pay a portion of their health insurance premium, which Mr. Baugh said would amount to some $300 a month.
Tim Garrett, vice president of administration at Honda Manufacturing of America, says talk of the Big Three's "legacy" problem is overblown. Had they set enough money aside when the workers were active, their retirement would not be costing them anything today. "Depending on your decisions you will have legacy costs or you will not have legacy costs," Mr. Garrett said. "We have no legacy costs."
To be fair, Detroit's car companies were no more shortsighted than many companies in other industries. From steelmakers to telephone companies, free health and defined pension checks were a staple of the retirement packages negotiated between America's industrial titans and their unions half a century ago.
When these companies were growing quickly, providing generous retirement benefits seemed cheaper than offering better pay, a future cost that often did not even have to be accounted for on the financial books.
From 1990 to 2005, G.M.'s payroll shrank by two-thirds, and its current work force is now just one-third the number of its retirees and their dependents.
Today, defined-benefit pensions are dwindling across industries, as companies force retirees and active workers to pick up part of their health costs. According to a survey by the Kaiser Family Foundation, only one out of three big companies now provide health care coverage for their retirees, down from two-thirds in 1988.
In 2003, 22 million workers were covered by some sort of defined-benefit pension, 8 million fewer than in 1980, according to the Center for Retirement Research at Boston College. And the number of workers in defined-contribution plans jumped to 52 million, from 14.5 million, over the same period.
Union contracts have limited what Detroit's car companies can do with their blue-collar workers, but they are paring back where they can.
G.M. eliminated health care coverage for its salaried, nonunion retirees hired after 1993. This year, it froze the salaried workers' defined-contribution pension plan. Chrysler made its salaried workers pay more for their health care starting this year.
Under an agreement last year with the autoworkers' union, retirees at G.M. and Ford will start paying part of their health care costs, up to $370 a year for an individual and $752 for a retiree's family.
With Detroit sagging under the burden of these "legacy" costs, it is unsurprising — even to executives at the Big Three — that the Japanese companies arriving in America chose to do things differently.
"These are well-managed companies," said Frederick A. Henderson, G.M.'s chief financial officer. "It is natural that they would look at our experience and say 'I don't want to do that.' "
I never said it was fair ...
Terry
http://www.latimes.com/business/la-fi-gettelfinger21may21,1,6151395.story?coll=l- a-headlines-business&track=crosspromo
http://www.tribune-chronicle.com/news/articles.asp?articleID=4144
Rocky
Once Delphi gets past this bankruptcy it will have to stand on it's own. GM will buy from the best suppliers. Hopefully Delphi will offer products at competitive quality/prices.
Defined benefits and carte blanche healthcare essentially make the company into an insurance business in addition to its core competence . . . Most managers are probably no good at running insurance business, and why tempt them with a giant nest egg that they could potentially raid/siphon to buttress the quarterly report?
Having to run an insurance company for its employees also creates a barrier to entry for newcomer companies that could potentially offer workers better pay.
Carte Blanche healthcare creates its own market externality when the benefitiary is entirely detached from the paying of bills. That's a major factor behind the rapidly rising cost of healthcare: third-party pay creating excessive demand coupled with AMA monopolistic control on supply.
Rocky
That is exactly what an employer does with money in a retirement fund. They invest in stocks and bonds. At least with the 401K you have some control over where the money is invested. Unless of course you worked for Enron. There are funds that plug along making 2-5% year after year and are as safe as any retirement plan. Just keep control of your finances. Just read an article of a husband and wife that are retiring from Toyota. They have together in their 401K approximately $700k dollars. That is more than is in my Teamsters account after 36 years.
Rocky
DB pension plans are unsupportable in today's competitive world. There are too many unknowns.
Me personally, I feel much more comfortable in knowing I can control where to invest my retirement money. Any moderately diversified investment would produce 7% over the long term. Gary's 2-5% is pretty conservative.
I'd rather not depend on my employer's DB plan to support my retirement - and risk bankruptcy/fraud on their part.
That is true. It would be for someone with no sense of adventure. My 401K which has done real well up until the last couple weeks, had about 12% for the year to date. I am afraid to pull it up after the last several sessions. I used to get nervous about the Teamster Trust as well. Fortunetly it is a separate plan for Alaska Teamsters. I also have a close friend on the board that keeps me up on the condition. Nothing is 100% safe.