Is GM's Worker Buyout Offer Insulting? 26 comments
February 04, 2009
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Should General Motors (GM) workers be annoyed at the latest buyout offer from the struggling automaker? The latest offer is $20,000 and a voucher for a free car worth $25,000. Some folks aren't happy. There are good reasons why:
- It's worse than last year, when GM offered a $70,000 cash package.
- It's lower than Chrysler's offer (currently $50,000 in cash and a $25,000 voucher.)
- Cars aren't the same as money. By giving workers a quickly depreciating asset at a time when auto sales are closing in on a 27-year low, GM and Chrysler look a little brazen. They get lower inventories, but workers get stuck with a car they'll have trouble unloading if times get even tighter.
The automakers have until Feb. 17 before they go back to Congress to justify their $13.4 billion in federal loans. It's clear both automakers and the United Auto Workers are being forced to make steep concessions on labor, so it's possible many employees are resigned to a less-than-ideal fate. But offering up an asset that won't go nearly as far as an equivalent amount of cash for already anxious workers will likely prove tough to swallow. In the meantime, GM shares were off nearly 5 percent yesterday.
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This article has 26 comments:
The GM people must be getting infuriated by the schizophrenic treatment that they receive. I hope they're keeping track for later.
" It's worse than last year, when GM offered a $70,000 cash package."
Umm.. you need to check your facts. The buyouts last year for most eligible workers at GM were $45K for line workers and $62 for skilled trade workers. $70 was available for people with at least 10 years who would sever all ties with GM. And not that many were willing to give up tenure, future medical coverage, and permanent pension reduction for $70K.
You make it sound as thought "every worker" was offered $70K. If you are going to write an article, please include ALL of the pertinent facts instead of making a blanket statement.
You make the best argument yet for taking the whole industry bankrupt. It's one thing for the Detroit 3 to have done this type of featherbedding on their own over the years (which would make even the Socialist Europeans blush!). Now that these offers are being made at the expense of the public's purse, the rest of us taxpayers should resent the hell out of it. And rightly so!
First they criticize D3 for having too many workers then for trying to get rid of them through buyouts then by not offering them enough in the buyouts....
I don't know if the UAW contract allows them to just sever them, but aren't there state laws that would kick in here if they did and give the workers money too? If so, there is no easy way to downsize....
I am kind of surprised.
"How about prison instead, which is where the rest of the criminals go. "
To make a blanket statement like this reveals a surprising degree of bias, ignorance, and class prejudice. How about some people happen to live where auto companies provided jobs and did the best they could? But I suppose being opportunistic in business or enterprise and beating the next guy is more ethical? Not everyone can be a CEO, entrepreneur, or business/finance guru. There has to be a lot more "indians" than "chiefs.
Most people worked at auto plants to provide for their family and obtain some semblance of well being. Most would not have thought of sabotage or damaging a vehicle. Even so, I have seen much greater damage to our country, economy, and people by ruthless, egotistic "haves" and "have mores" as George Bush referred to his political and social base. It's comments like yours that give me pause to accept your credibility. I will give you that NG would be a very viable alternative for fuel in vehicles as you promote in some of your other articles. I
On Feb 04 09:23 AM Tomas04 wrote:
> It's pretty sad times when people get excited over others mistreatment.
> We are all in for a very rocky ride and yes the union workers for
> the auto plants will get hurt in the end here but is that something
> to gloat about?
They need to get the higher paid older workers to retire or leave so they can bring in the new workers at the new lower wage tier ($14 or so) and less benefits. That is where the real savings comes from.
On Feb 04 07:59 AM John D wrote:
> Desperate times call for desperate measures - there was a larger
> offer on the table 6 months ago that any employee could have taken
> - their choice then & their choice now.
I regret that my comments about some UAW members offended your sensibilities. Well, the POLITICALLY inspired loans (ie. bailout) of our nation's dying auto industry offends mine, too.
As regards the issue of sabotaging assembly lines, it was widely reported during those years. And it didn't involve just a few embittered workers, either.
Unfortunately, it came at a critical time for the industry, as foreign automakers were only gaining a foothold here then. Millions of car buyers wouldn't touch a domestic vehicle as a result, even today.
As for the current buyout regime, it's ludicrous on its face. I can hear these spoiled workers now. "No, I don't want a Chevy. But I may go for it if you give me a Caddy instead."
And some people still wonder why Detroit's going away.
Direct labor costs go down swiftly under this plan. Eventually, all the workers will be Tier 2, and the buyout packages accelerate the transition.
There are sound business reasons supporting the use of the buyouts, but mostly it's a simple capital bugeting decision to offer them. The company makes an investment up front that pays a return over the long term in direct labor cost savings. The payback is less than two years in most cases, and sometimes the company gets its investment back in less than a year, depending on the package accepted by the former employee. Few other investments offer this rate of return, guaranteed.
It is actually a smart move by the company, but it is politically and philosophically difficult to swallow in light of the government and taxpayer help given to the companies.
It is ironic, but if every Tier 1 hourly employee at GM and Chrysler took a buyout, the companies would quickly become viable again. This reduces the term that the government loans would be needed, and accelerate the payback of the loans.
The taxpayers would benefit from this, yet there is much grumbling going on about the buyouts. If you are logical and reasoned instead of emotional and irrational, you might hope that everyone eligible for the buyouts take them. The overall result would be positive for almost all the parties involved.
" As regards the issue of sabotaging assembly lines, it was widely reported during those years. And it didn't involve just a few embittered workers, either. "
I see you have formed an opinion in the past and have no problem applying it to today's circumstances. To whatever extent, that was then, this is now. It isn't the fault of employees that the Big 3 are having difficulties. You apparently want to ignore the economic climate brought about largely by unregulated or irresponsible banking and finance operations. If you were alive since WWII, then you should also realize that in the boom years afterwards, many, many companies had defined pension plans, profit sharing, medical insurance, etc. The buyout money is now being offered, again, to try and persuade people who have 10, 15, 25 years to give that up. Should they have gone the private investor route and formed their own retirement plan? Take a look at how many folks were ready to retire last year or this year and have had their plans changed for them. You seem to be one of those individuals that are critical of hourly workers trying to obtain a standard of living commensurate with the physical effort and health risks involved.
I can call to mind and bring up many more serious consequences the "haves and have mores" brought about to this country. How is it you completely ignored my mention of that item? The auto loans are just that... loans. Unlike the real bailout that congress bestowed on the finance and banking rascals. It is both revealing and interesting that you aren't so offended by hundreds of billions of giveaway cash to the very folks who brought about this failed economy, but are so critical of a loan to the auto companies of a very much smaller amount. Perhaps you are one of the "haves" that benefit in some way. I , and many more Americans, take offense at congress bailing out and rewarding those who got us into this mess. Typical of opportunistic "haves". Complain about taxes and regulations so as to put the most in their pockets, but be there with their hands out for grants, tax breaks, etc. All at the expense of the average person whose efforts made an industry it's profits. If companies were actually fair about compensation, unions, contracts, bargaining wouldn't be required.
" It is ironic, but if every Tier 1 hourly employee at GM and Chrysler took a buyout, the companies would quickly become viable again. This reduces the term that the government loans would be needed, and accelerate the payback of the loans. "
I would agree that your statement seems logical, and certainly, reduction in wages and benefits would reduce costs some degree. This would not result in any viable improvement in the short or even near term. Especially when the cost of labor at even the overstated 70 some dollar amount is only 5 to 10% the cost of an vehicle depending on what plant and company you are talking about. Wages and compensation have not been a major issue for years at the BIG 3 when it comes to profitability. Labor costs per vehicle and hours per vehicle produced have gone down significantly over the last 15-20 years. To put it into perspective, in Henry Fords heyday of the model T, his labor costs were approximately 15% of a vehicle. This includes the housing, schools, medical care, etc that Ford originally provided at his "Ford City" operations. And he was happy with that. If you don't believe labor costs are not so much an issue, take a look at Toyota and Honda. They have lower labor costs but what does that matter when sales are sluggish or greatly reduced.
One more thing. Labor was never really an issue at the Big 3, because they would happily have workers work overtime which really decreased the per unit cost of a vehicle. Over the last 20 years, the practice has been to reduce head count and then speed up the assembly line while having folks work 10 hr shifts 5 or 6 days a week.
On Feb 04 01:40 PM Paul Killinger wrote:
> Thadeus,
>
> I regret that my comments about some UAW members offended your sensibilities.
> Well, the POLITICALLY inspired loans (ie. bailout) of our nation's
> dying auto industry offends mine, too.
>
> As regards the issue of sabotaging assembly lines, it was widely
> reported during those years. And it didn't involve just a few embittered
> workers, either.
>
> Unfortunately, it came at a critical time for the industry, as foreign
> automakers were only gaining a foothold here then. Millions of car
> buyers wouldn't touch a domestic vehicle as a result, even today.
>
>
> As for the current buyout regime, it's ludicrous on its face. I can
> hear these spoiled workers now. "No, I don't want a Chevy. But I
> may go for it if you give me a Caddy instead."
>
> And some people still wonder why Detroit's going away.
>
> @ killinger- sounds like someone is a little jealous of people who are willing to fight for a good wage after all these guys aren,t going to dirty their hands they need us, at least they did until congress sold us all out with NAFTA the job killer. need I quote Ross Perot