GM and Chrysler Buyout Offers: Should Taxpayers Be Angry? 53 comments
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On Tuesday, several sources reported that GM (GM) and Chrysler intend to make a fresh set of buyout offers to their union employees (see "GM, Chrysler Set New Buyouts"). They plan to offer packages valued at around $50,000-$100,000 per employee. According to analysts, this action allows GM and Chrysler to circumvent rigid union rules regarding layoffs, and provides the firms a relatively quick way to lower overall compensation costs (replacing expensive, experienced union employees with cheaper, inexperienced employees at the reduced rate of $14 per hour).
Here’s what I don’t understand: Why should GM and Chrysler use money loaned by the U.S. Government to transfer wealth from U.S. taxpayers to exiting GM/Chrysler employees? It’s one thing if a firm does that with the capital of its private shareholders, but quite another if they use public money toward that end.
Granted, UAW employees at GM and Chrysler earn far less then your typical investment bank executive, but I’m not so sure paying those employees an exit bonus is, in principle, different from John Thain paying bonuses to exiting Merrill employees in advance of its acquisition by Bank of America (BAC).
As a condition for receiving funds from the U.S. Government, GM and Chrysler are required to produce a plan detailing how they intend to pay back those loans, and ultimately, achieve profitability. In my opinion, there are more effective ways than taking U.S. taxpayer money and funneling it to employees, to reduce labor costs and preserve capital: It’s through good old-fashioned layoffs, of the uncompensated kind. Most other firms have them. GM and Chrysler should be no exception.
The UAW, and by implication GM and Chrysler management, just don’t get it. The alternative to buyouts is bankruptcy followed by layoffs. In bankruptcy, the automakers could effectively repudiate the terms of their UAW contracts and fire just about anyone without consequence. The UAW (and GM/Chrysler management) should become wise to this alternative, and become more willing to consider layoffs instead of buyouts.
As I watch this episode play out, it is becoming increasingly clear to me that the best remaining option for the U.S. Government is to call its loans in March and allow GM and Chrysler to declare bankruptcy. The U.S. Government could step in ex post to provide DIP financing for GM, …but not for Chrysler (see "Pre-Packaged Bankruptcy," "Preventing Moral Hazard" and "Aid for Chrysler? Just say No!" for background on my position on the GM versus Chrysler, debate). Although I was initially supportive of offering government aid to GM (though not for Chrysler), the necessary provisions did not accompany the aid in order to stave off disaster. At this point then, I believe bankruptcy offers the last best chance to salvage GM, and the U.S. auto industry.
Bankruptcy protection would allow GM (and potentially Chrysler, provided it can find financing) to more quickly and efficiently streamline operations. It provides the degrees of freedom necessary to shutter plants, rationalize brands, layoff redundant employees, and reduce the number of dealerships. More importantly, it would finally allow for the wholesale sacking of management - a management seemingly insistent on squandering taxpayer resources.
Disclosure: No positions.
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This article has 53 comments:
I get the feeling they are either fretting for their own existence or still wet behind the ears. This is one of several articles I've read on this website from writers who are apparently selected to attract readers and build up traffic for the advertisers of this site. A good many of these "writers" may be freshly out of work from corrupt or defunct finance and banking outfits that had shady dealings. They do little if any research to get all the facts straight, let alone their own thinking.
In addition, I would agree that a reduction in wages and benefits seems logical and 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.
" It’s one thing if a firm does that with the capital of its private shareholders, but quite another if they use public money toward that end. "
". . .I’m not so sure paying those employees an exit bonus is, in principle, different from John Thain paying bonuses to exiting Merrill employees in advance of its acquisition by Bank of America (BAC). "
The first statement is an assumption. The money is not coming from US taxpayers. The money , last time in 2008, came out of the employees own pension reserves and didn't cost GM any money that wasn't already put aside by law for pension benefits. If anything, that was an unethical thing to do to current and future retirees. Almost like the US government raiding the Social Security fund for I.O.U.s.
Your second statement is a faulty analogy.This will be the 4th time since 1982 that GM and the Big 3 offered employees special attrition packages to reduce head count, so precedence has been made. It's not a "reward the rats jumping ship" sort of thing like the banks and finance shysters did. The special attrition program is just that. A means to open the door so the Big 3 can hire $14/hr employees.
This material is absurd. It displays the writer's complete ignorance of the subject, and his twisted point of view.
The problem with some of these young hotshot writer / analysts trying to make a name for themselves is they think that life started when they walked in. Years of history is not taken into consideration, no research is done, analysis should look at the issue from more than one prespective. How can someone compare theives and croocked investment bankers to auto workers is beyond reasonable expectation even for a controversial abstract point of view.
I can see the training on the first day - "American Bad, Japanese Good".
But at least this is a forum for comment. . .
They have, to an increasingly greater degree the last several years been less successful at posting a profit for their shareholders because they compensate their employees, both salaried and hourly, more money than they can afford to pay them, given the company's yearly revenue.
For quick evidence of this, look at a chart of their stock over at least a ten year period over which it has gone from over $93 per share in Aug consistently and dare I say, dramatically down to the point that, being worth less than $5 per common share at less than $3 per share this week, I believe they can properly be called a "penny stock".
Their buisnes model is not working, or showing a profit, because they will not adjust their overall compensation packages in accordance with their lower revenue.
Instead, many of these highly compensated workers would evidently prefer , given their comments, that the 90% of the rest of us who also do work in factories in America and get compensated at a level that is dramatically less than they, should bail them out while they still continue to make far more in pay and in total compensation than us.
Well, at some point you have to raise the "B.S. flag".
My suggestion is that the company GM, like all other companies have done and are expected to do, cut all of its costs to what ever level is necessary to allow them to make a profit. Until they cut their costs to a level at which they can show a profit, without "faking the funk" with the numbers, it would be foolish for the rest of us to bail them out. Conversely, if they do cut their costs to this extent then I think we should bail them out, and expect the money back later when they have made it through and are profitable.
In the same vein, USER337608, I realize that it is not wonderful to work in a factory. It sucks. I worked as an electrician in a factory for three years as art of a union - USW. I became a union steward for my shift (3rd shift) and was Union Recording Secretary on the executive board for that last year there. The pay was very good,but I took a $2 an hour pay cut to get out of that environment because it sucks to be an employee in the "back end" of a factory. I went back to being a field service engineer and now visit approx 60 factories per year for two to four days at a shot. An entirely different thin because you get treated better - i.e. with a little respect. I still make a boatlaod of money because I work from 600 to 800 hours of overtime per year troubleshooting production lines across the country.
My favorite brother works at the local GM plant. While I love him I do resent the fact that he makes $33 per hour in pay alone as a tradesman there as of 2003, plus $1000 per year for each kid going to college plus his college money,plus money for self development for which he went to Thunder ranch to learn how to clear a house with a pistol and shotgun plus the fact that he can just about tell a manager there to "bite me" and still be just fine. Oh he also gets the "golden" pension plan and health care as well of course. I have to work approx 700 hours of overtime to barely exceed his base wage for 40 hours per week.
He and you-all, want to keep this special deal, and at the same time, because this has driven your company/golden goose to the point that without intervention, it seams certain to go bankrupt, you seam to unabashedly ask us lower paid folk.... to bail you out.
Utterly amazing.
I recognize that many/most employees of your company wish this special deal would continue for you, but in my opinion your union and management have cu deals over recent decades that have all but ensured the death of your golden goose. Neither salaried nor hourly employes could have done it alone. And they didn't they did it together. $24, $26 $28 and $30 per hor were not enough, mare and more like a glutten. Well, that wors to a point and then, at some point it doesn't. At some point the labor costs involved, per unit, make it so expensive to produce small lower cost higher mileage vehicles, that GM decides to focus on producing more trucks of various sorts right at the time in our lives when they know that China and India are growing, using more oil and making gasoline more expensive. That's real genius,
As for buying American. Does that just apply to autos in your mind? American vehicles are offered at mediocre quality, mediocre reliability and at higher costs than their competitors overall. Your costomers do not, on average, make enough money to clearly, knowingly take one for the gipper and sap resources for their own family so that their clearly overpaid "friends" can continue their special deal.
Hyundai, for example makes a mediocre car for a low price and offers a ten year warranty. This is your competition. This is your problem to figure out. If you (GM) can not beat them in the marketplace then it does not look good for you - even if we give you a bail out a year for the next three years. You need to fight and win in the marketplace by providing v a l u e to the c o n s u m e r, and not by asking for us to take one for the gipper and just pay more money for a lesser value just so you can keep your special deal.
As for Detroit's quality...they have won car or truck of the year three out of the last 4 years...Detroit quality's as good as any of the Asians autos!
cost? a 6cl.Toyota Camry cost $345 more then a 6cl. Chevy impala...as for warranties...many people don't keep cars for ten years beside the fact that it's a very limited warranty...like the one that promises to buy the car back if you lose your income within a year...the magic word is INCOME...if you lose your job you don't qualify because you'll be collecting unemployment for a year...and lets not talk about their bogus gas mileage, go to edmund.com and read about costumers complaint on their Asian auto's bogus gas mileage. so you see they convinced us that they are better the we are and we believe them!
I left that factory job as an electrician on good terms and don't worry about me - I make up for the $2 pay cut that I willingly took easily with my expense account for traveling over 200 per days on average per year. Listen if you will, and believe if you will - I took that factory job hating unions and ended up believing, very soon, that hey are a must have for any worker with self respect in a factory environment where they treat anyone in the back half of the building in a way that a reasonable person would not imagine.
Now, to the point, you just have a lot of work to do in telling me about the quality and reliability of GM's autos. Now I can tell you that when I travel approx 60 times per year and fly about 2/3 of those trips incuring the necessity of renting a car, and that maybe 3/4 of those trips that involve a flight I end up being provided with an American rental. It is not a joy to rent an Impala, or a Sonata, or many other bland mediocre cars.
Most of them rock like a boat when you perform a lane-change. I did like the Ford Mustang I rented from Nashville a few weeks ago, inspite of itself. It had a massive blind-spot - but by the third day I had it I just really liked it anyway because it was just cool. And it was very good at being very fast. The guage cluster was cool and nostalgic as well and when I stopped at a local general store the young lady behind the cash register asked if I was one of the "Ivy boys" ( I had the caar parked right out front).
I don't know what that means - but you guys need to do more of that. Similar experience driving the new Charger - haven't driven the new Camarro but if you want to keep making the money that you are making then you need - forgrt about me personally - you need to make more cars that Americans are willing to reach for thier wallet for and buy. And please just about forget about asking us to pay more money for an Impala when we can spend lass and get a Sonata with a ten year guarantee. I hope you quit doing that because it hasn't worked and it aint gonna work. Instead make the next mustang or camarro so to speak. Give us some value for our money. Relying on favors or partriotism - you just don't have to do it, and by the way I hope you don't either because we can obviously not afford it. Make a killer light pickup. Forget about 30 MPG, make a middle-weight that can get forty-something per gallon like you do and sell in Europe but sell it in the USA. What you may have to do though in order to make it sensible to do this is to cut your costs, including your compensation so that you can offer these products in the USA at a profit. That is what drives all of this unfortunately is that in order to do these neat things the company, eventually no matter how you cut it, is going to have to deal with forces such as supply and demand. Revenue and cost.
I
I believe that it would be correct to say that you are not aware, and shal remain unaware of my total wage for the year and how much I pay in taxes and likewise for me of your total wage and taxes paid.
Now that that is out of the way, as far as your statement that it is a loan, not a bailout one can not be so certain about it.as that.
What I mean is that to begin with it is not about $5 for gas money or something like that.
Of course we are talking about $17,000,000,000 already given from taxpayers lie me to your company mostly and a little of that to Chrysler, and more admittedly to come in March. More Billions are sure to come even after that because while Hyundai is making a profit right now evenas we speak, GM is loosing several billion dollars per month every month it still exists.
The way I see it, if we give you more money now so you can keep your special deal and get paid twice as much as us, then your company will fail, cease to exist, be reorganized under chapter 7 or 11 or some such and you will get very little pension under the PBGC, and our money will be effectively down the drain.
If we withold additional money untill your compensation is brought within that determined by market forces then we can lend the money with the expectation that your company will be profitable and will pay our money back.
I think I get it. I get the impression that you think that I and 99% of the rest of the country that do not work for GM owe it to you to lend you my money.
This is not owed to anyone. GM needs to demonstrate that they have brought costs, to include employees compensation and benefits, inline with revenue, in order to show something called a profit, before thay should expect to have a reasonable chance to get a financial transfer of wealth from the 99% of Americans who have a paycheck that does not say "GM" at the top.
The way this works for the vast majority of Americans when they lose their jobs is that they are asked into the boss's office and then after his or her spiel you are let go. That means you are to immediately put all of your things into a box and exit the building. And that is it.
I recognize that as part of your special deal between the union you are involved with and your company in the past sometimes over a hundred thousand dolars or more was given as severance.
What is different at this point in the game in my humble opinion, is that it is no longer just between your union and your company. Because both of the aforementioned have run your company into the ground to the point of bancruptcy, and have accepted I believe $9 Billion in assistance from the taxpayers ( so far), that this is no longer an inside issue because it is not the company's money to give to you. It is Our money. I believe that you should at this point be treated like us.
Workers at my old factory who were let go filed for unemployment. That is owed to you as it is to any American worker. We do not owe you tens of thousands of dollars as a payout. We do not owe you hundreds of thousands of dollars per worker either - that was between you and your employer before you guys collectively ran your company into the ground.
I guess the message I wish to convey is that there is such a thing as "enough".
If they ask for more and more each time from the spineless company that will be glad to sacrifice the future of all for this quarter's numbers to get a bigger bonus check, they will eventually kill the golden goose that has been GM.
On Feb 05 06:38 AM User 315814 wrote:
> This guy just does not get it he has been a anilist to long for just
> one week I woud like to see him work
You guys are all wrong and don't know what you are talking about. They should layoff all those expensive lazy stand around do nothing workers and save that money and pay some inexperienced who can do the same lazy stand around do nothing job for LESS. I'm glad I'm a business ownder in an "at will" state. I have a system that works great. I have the experienced train the inexperienced and when I think the inexperienced is experienced enough to take over the experienced job I "at will fire" the experienced making a lot more money. hahahaha
Get a better understanding of the facts before attempting an article you obviously have done little research on.
After reading all of you rather long comments I can agree with some of what you say. However, like the majority of Americans, you need to look at what other countries are and have been doing for their businesses, people, and banks, not just now, but for YEARS. . In Japan, China, and especially Germany and other European countries the governments have been subsidizing their car makers for years. Since last Fall, Germany has been giving it's citizens a cash incentive to buy GERMAN made cars such as the now popular Opel Agila. When a $5K incentive is suggested here in the US all people can do is complain about how it's helping those lazy *#@$! auto workers and their companies. Other countries have always been protectionist. Ever since WWII the U.S.A. has been too much the worlds care taker. People here need to get past petty jealousies and prejudice when it comes to the well being of us all. There will never be a time when all of us get the same pay or benefits. I've always told my kids to make the best of what you have, live within your means, but keep your eye open for opportunity to better yourself by making efforts to do so. Not everyone has the same talents or academic abilities. If you keep looking at the other guy, making comparisons, and being competitive for money, you will either be unhappy or an arrogant blowhard that no one wants to be around (except others like you).
This country needs to take care of it's own as other countries have for years. Instead of criticizing and and forming narrow minded opinions, we need to see how the rest of the world is handling this financial crisis. And Kman, I applaud you for your moving into the electrical field. Ir does require a lot of sacrifice to travel and move around a lot. I have a friend that did electrical contract work as you are. But he decoded to eventually work for a local contractor for less pay and a weekly paycheck to be with his kids and family. We need to be mindful of other people's circumstances and respect their decisions.
You have nothing, no sense, no compassion and no understanding to make such a caustic charge. You and RUSTY LINTBALLS need to get a real job. So you can speak from experience instead of your backside.
I recognize that you stated that the severence payouts in the past came from GM's pension plan.
The things is, that since money is fungible, it ends up being the same result that I noted above i.e. that it ends up being our tax dollars going to you, to the tune of several tens to a couple of hundred thousand dollars to each of you, from all of us.
To illustrate roughly what money being fungible means here in this situation check this out. OK so GM does not pay this say $100k to you directly from accounts containing the $9,000,000,000 of our tax money we gave to them.
Instead, they take it from a separate pension plan account and pay it to each one of you who has already been paid lavishly for one or more decades.
Then, once per year at least GM's (or whomever has fiduciary responsibility for the pension plan)are obligated by law to assess the pension plan's balance of cash to ensure that it can theoretically make the payouts owed to you by contract. Here is the key, really, because when they note that this plan has made several thousand payouts in the past year of considerable size with the expected result that it is now under funded and needs to be topped-off by GM to, again to assure that it can fund the pensions the account owes to you by contract. So then GM must, because it is bound by federal law, it must take cash from any and all other accounts necessary, including the $9 Billion we gave you because the whole point of us giving it is that you were essentially out of money to begin with.
Basically being fungible essentially means that they take the money from one account named "Peter" (our $9B), when they need to off the account named "Paul" that they used to pay you a hundred grand with.
Just occurred to me that GM may have given the pension funds (some of it anyway) to the UAW to administer, along with all of the obligation to fund the pension payouts. If this is true then let me know (I trust that you will). Well I certainly hope that is not the case because if so I feel sorry for those counting on that retirement pension since it is doubtful that the union can keep it funded at the proper level with their main source of income being only that of union dues. If this is the case then the "Greatest Generation" has really hosed things up pretty good for all the rest of you there because they will pretty much use up all of the funds, and then it is gone.
Well, no worries, when you guys run your pension fund dry by giving yourselves 100k payouts, you are gonna want us to send you a big honking bailout for that as well. Hey, what the heck why stop at $100k severence for yourselves, you deserve it - my hard earned dollar - more than I do go ahead do $200 or $300k.
By the way, mine and my wife's house is worth 100k. You UAW guys seam to have no shame.
This was not caused by last year's gas price. Anyone can just look very quickly look at a stock chart of "GM" that includes at least ten years and verify this for themselves.
From their comments posted even just here in this thread, it is not hard to tell that GM's UAW hourly employees still, well they just seem to refuse to believe that they, along with the salaried GM employees have agreed a business model and labor agreements that, while legal, binding and in accordance with past practice and all, those very same things -their lavish labor agreements and business model are largely the only things that they can solely and directly control to impact whether or not they make a profit.
Clearly their past, and present way of doing business is what is responsible for them to consistently lose market share over the last thirty years. I think they used to have approx 50% market share in the USA, and now I believe they have barely 20%. There used to be 600,00 of them and now there are way less than 100k.
I address this to you all in the UAW. Guys, it ain't working. Whatever lavish sums were tossed around and paid in the past, I hope you can bring yourselves to realize that those people were lucky to get whatever they got. But if you do not quit doing these kooky pay agreements then you can expect the same result you have gotten every yaron averagefor e last few decades: your market share will continue to shrink and there will be less and less of you in the UAW.
The United Steel Workers union did the same thing to many huge steel companies. They negotiated lavish labor agreements that made their companies that they worked for, i.e. their own employer, to become non-competitive or barely competitive in the world market. As soon as the next time came that there was a rough time for steel prices the one huge steel company in particular tried to tell the USW negotiators that they needed more money for the business so they needed more concessions. The USW did give some concessions. The company said that without more, they would actually go bankrupt. The union stood their ground god bless them, giving all the normal justifications. They had given enough and drew a line in the sand and would give no more to their employer so that they could continue to employ them.
The result of this is that the company, having run out of money, declared bankruptcy. The building that those union employees used to work in still is producing steel today even now as I am writing this. Only those union employees are not working there. The building was purchased by different huge steel company only now there is no union, and this company can actually produce something called a profit. It pays taxes to the US Treasury.
I think this is what the future holds for the GM plants' current employees. The unions will run the business into default )because of their mind-set where they believe that they are entitled to lavish pay or owed a job at all), once we have gotten fed-up with bailing them out so they can keep their special deal and lavish pay. Then some of the several other car companies will purchase the car plants and may have the chance to make all manner of autos at a profit by paying compensation that does not ignore the laws of supply and demand, and by providing value to the consumer by making cars that are both higher quality and lower cost than their competition.
You obviously can not force people to buy your product, or your company's stock. If you make a better product at a lower price then you won't have a need to want to (force them that is). It a thing called a market, capitalism and all that stuff.
Nice try. You use many words to say little if anything of substance or that is valid. You have too much time on your hands to write this much nonsense and are apparently miffed at what auto workers get for compensation. You didn't like factory work by your own admission, and now find auto workers, the union and GM/Chrysler the target you wish to vent on. You have ignored most, if not all, what I said . Do you really want GM and Chrysler to go bankrupt, empty out the pension funds, etc? Then you would be complaining how the PBGC ( government and your tax $$) has to take on all the underfunded or depleted pension funds.You have just shown you are among the narrow minded folks who can't cope with others choices. And where do you get $100K? Never mind, I really don;t care to know.
If you, and people like you, can't understand how much more other countries have done, and are doing, for their own people and businesses, than the US government is doing for us; we are doomed because of you attitudes. Listen to or watch DW-TV, the BBC, CC-TV, etc. These broadcasts would enlighten you to how what countries have done for Opel, BMW, VW, Audi, Toyota, Nissan, Honda, Fiat, and many more. Your comments reveal what sort of person you really are. I won't waste any more of my time or words on someone like you.
back in the 80s a president by the name of Ronald Reagan had an agenda...to bust unions...he invited the asian auto makers to build their product in USA...Very good idea you say right?...wrong!
you see there is a market in this country for so many vehicles whether it is 10 or 15 million...you see for every non union Asian transplant...( be it Toyota, Honda or KIA)... with no pension benefits and little health care benefits...for every one of them... one of our shuts down. thus cutting in Detroit market share and profits...As market shares come down profit get thiner...as they open factories with billions of $in tax breaks from the Toyota republicans... our own shut down!then came the $4 a gallon gas and the end of Detroit profitable SUVs...remember all those shut downs? a lot of those workers retired early thus creating a bigger burden for Detroit! don't forget also that the Asians don't have the retiree cost that Detroit has, their workers don't have a pension plan...when they retire you and I will have to take care of them!
The union busting politicos in Washington are destroying this country...not the union workers...the only thing the union is guilty is obtaining good wages and benefits for its workers...with out the unions you'll have business people like REVINHOOD above!
"Nice try. You use many words to say little if anything of substance or that is valid. "
What, specifically are you talking abut here. I made an attempt at a reasoned discussion with some supporting fact thrown in, moreso even than the average posted has done on this thread. I am trying to keep the discussion civil. If I have offended you then I regret that, and at the same time I think that we can respectfully disagree with each other.
"You have too much time on your hands to write this much nonsense"
Yes, today and last night I have a lot of extra time. Took too much time giving my thoughts on this topic, but they are my genuine thoughts. You are certainly under no obligation to read them and would probably be wise not to do so if you are honest in stating that in your opinion I have been talking nonsense.
"and are apparently miffed at what auto workers get for compensation."
Yes I am. I have already clearly stated something to that effect at least once. It has bothered me always, but far more severely since now your company has gone to Uncle Sam and asked for and gotten $9 Billion of our tax money to support your lavish compensation packages, without cutting down the high pay. Basically now I am paying you your exceedingly high pay. I am definately not happy to do that.
"You didn't like factory work by your own admission,"
That is correct. I believe I stated that from my own personal experience it "sucks" to work in a factory. The pay was good but I did not enjoy it, so I left as I have a very marketable skill repairing production lines when the in-house electricians either do not have the time or they may need help with a problem. When I go to GM plants or Ford plants many of the maintenance men and operators there have told me that it sucked so bad in their opinion that though they felt trapped there because they make so much money, they would not want their sons to work in a factory. By the way, I haven't heard you yet disagree with me by claiming that it does not in fact "suck" to work in a factory.
"and now find auto workers, the union and GM/Chrysler the target you wish to vent on."
That is just about correct except I am giving my best attempt at reasoned explanation as to why I am not pleased and should not reasonably be expected to be pleased to have to financialy support GM's largesse while they refuse to cease paying their workers lavish compensation with my money. Of course I actually also include Ford as well, although they have not actually gotten any of my hard-earned dollars, yet. If you prefer to think of all of these companies and their lavish labor agreements as my "targets" then you and I may just process information and frame things in a different manner. I did not seek these parts of these three auto companies out and, without cause, make them my targets. They came, asked for, and got huge sums of money and guarantees of money from us taxpayers. They came to us, and should not reasonably expect to keep being given more Billions by us without me experiencing some consternation.
"You have ignored most, if not all, what I said . "
No, sir or ma'm I did not ignore you. What has transpired is that I disagree with most of your comments. I do respect your opinion and have responded to you, it is just that I am entitled to my own thoughts as are you. It is alright to honestly disagree in my opinion as long as it d/n just become an argument. I prefer a discussion.
"Do you really want GM and Chrysler to go bankrupt, empty out the pension funds, etc? "
I have pasted in a portion of my earlier post concerning precisely this immediately below in double quotations.
" "My suggestion is that the company GM, like all other companies have done and are expected to do, cut all of its costs to what ever level is necessary to allow them to make a profit. Until they cut their costs to a level at which they can show a profit, without "faking the funk" with the numbers, it would be foolish for the rest of us to bail them out. Conversely, if they do cut their costs to this extent then I think we should bail them out, and expect the money back later when they have made it through and are profitable.""
End of my quote.
"Then you would be complaining how the PBGC ( government and your tax $$) has to take on all the underfunded or depleted pension funds."
That is completely accurate. This is what will likely happen though. It is certainly not something that I have any control over.
"You have just shown you are among the narrow minded folks who can't cope with others choices. "
Man, please save the insults for the bar.
"And where do you get $100K? Never mind, I really don;t care to know."
If you don't want to know then why raise the question? At any rate, I believe that GM has paid many thousands workers greater than $100,000 to quit the company's employment. They made no secret of it. Anyone can prove or disprove it easily with a search on Google.
"If you, and people like you, can't understand how much more other countries have done, and are doing, for their own people and businesses, than the US government is doing for us; we are doomed because of you attitudes."
We just actually gave GM $9 billion dollars. This was a recent as December. How much do you want us to give GM? They have already "burned through it", or in plain language they will have lost approx the entire $9 B that we just gave them several weeks ago - they will have lost it and have publicly stated that they will be asking for many more Billions of our money in late February which is this month. Yet you seem to be claiming that we have not done enough for GM. Is there any limit that you have in mind as to what GM can reasonably ask for. I do not think that there is actually a limit, to what they will in fact ask for, but I am soliciting your opinion as to a figure or sum that you think that they can reasonably ask for. My guess is that GM employees think that we should give you whatever you ask, without limit.
"Listen to or watch DW-TV, the BBC, CC-TV, etc. These broadcasts would enlighten you to how what countries have done for Opel, BMW, VW, Audi, Toyota, Nissan, Honda, Fiat, and many more."
Thank you for the recomendation for news. As you, I have my own favorite sources of news. The BBC is about my most favorite TV, as well as Foxnews and CNBC. I prefer a magazine called "The Economist". As far as papers I read the WSJ once in awhile. There is a good radio commentator - you can get his podcasts at " JohnBatchelorshow.com. As for "enlightenment" I prefer the classic stuff, some of which from that period.
"Your comments reveal what sort of person you really are. "
They are really intended get my point out to others such as yourself, and I am actually kind of comfortable with it if they give a little window into who I am to you. Hey, I disagree with you, but have every reason to beiieve that you have the same needs that I do and until proven differently are probably a good dude.
"I won't waste any more of my time or words on someone like you."
Of course, that is that. That has always been your choice, completely. If you actually think about it though, if you work for GM and want more billions of dollars in our money to bail you out, then it might be a more wise choice for you to actually make your case, arguably to people "like you.", or , actually those in a position such as myself.
I enjoyed reading your post about the way things have gone in the auto industry since approx 1980. President Reagan did support free trade and this did make it harder for GM Ford and Chrysler to compete. It also, through competition, kept the average cost of all normal cars lower for all Americans.
I do want to note that Reagan's signature is not to be found on NAFTA. The President who signed it into law is a Democrat, that of William Jefferson Clinton. That is a fact. The world has become more and more of a marketplace. Republicans and Democrats have both urged this on. Argue over who has done more = that is fine.
This certainly makes it hard for GM and the other two to compete. Accepted. This is in large part because of the pension and other costs that you noted, that GM's cometetors, have but - some of them - to far less of a degree. I accept that as the case.
GM has these large costs. OK, Why do they have them? Partly demographics, but not all companies are going bankrupt, that is a fact. They have these costs because they decided to deliver this pay and these benefits to their workers. Why did they do that when they could see that it would kill the company sooner or later? Well I suppose management may have done it in or to get a big bonus check on their watch, and the unions did it because they could - management agreed to give them these lavish benefits so what are they going to say , No?
OK, now, to me now that we have gotten through that part of the history of this mess,largly and honestly agreeing, let me ask you a question.
What next? What are we to do now, at this point and forward?
(Call this "option #1") Are we going to as a country just keep paying bailout money to support rediculously lavish compensation packages for all auto workers for years to come?
Call this option #2 broadly speaking. Or, is it more efficient, for the country, our USA, as a whole, to decide that it is the more rational choice to, as a condition of receiving our tax /bailout money, bring their costs in line with that of their competition so that they no longer need additional bailout cash from us for years on?
What do you honestly think we, as America now, should do / how to handle this?
I can report to you that, having just checked into your, inquiry, well,
No, I am not presently Rush Limbaugh.
I will give no further denials though because after eliminating 289,999,999 more you will certainly have me.
Hehehe.
As for the competition...they should be treating their workers with the same rights as UAW workers...with health care and pensions...but of course now a days workers don't have rights...corporate America. wall street and Washington have a new motto...it's...USE THEM AND THROW THEM AWAY!
If you have a pension, then you only really have that while the company exists and never goes bankrupt. The problem is that many companies do in fact eventually have a rough period, for whatever reason who cares - it happens, and then they need bankruptcy to re-organize their assets in line with their on-going liabilities. Well , nothing lasts forever, at some point this happens the do this so that they can continue doing business. Problem is, when it happens, typically, the company is no longer obligated ny law to the agreements, including labor and pension agreements that it made before the bankruptcy. That is the whole point of doing a bankruptcy to begin with. So what this means is that they don't pay you a pension after all then do they? You would get a small pension from the Pension Benefit Guarantee Corporation but while thank god it is there, it is small.
If you had a 401K instead then your employer could completely cease to exist and it would have zero impact on your 401K. You can transfer the balance into an IRA or roll it over to the 401K for your next employer.
Does anyone know why most unions including the UAW and USW are very much opposed to 401K's? Their members, in my opinion, are getting hosed.
Many large companies that were started 80, 90 or 100 year ago and have done well have, in my lifetime alone, had some CEO get in there, make changes needed to fake the funk with the numbers to get some good short term results so they can get ludacris millions in bonus from thier buddies on the board of directors, and the a few years after they leave with a nice parachute bonus, the company goes bankrupt because it was organized to get that nice "pop" for the short run.
Recognizing that this tends to happen, and has happenned, I hope for your own sake that you guys still in the unions figure this out and forget about these kooky promises of a fat pension. I would not trust this promise. Give me a 401k now, that will grow on average and have nothing to do with my employer as far as equity positions.
Every customer makes their own decision as to what vehicle they like, the quality it has(such as will it break down), the qualities that it has ( such as better handling and feel - i.e. does it make you want to put on a pair of driving gloves?), features list, and price. UAW types may make enough money that they can walk into a show room and just get what they please, with cost and value as a close third priority. This may prevent them from understanding what it is like to walk into that showroom making half of what they make. Now for most Americans that make on average 44 G's total incl overtime per year and have two or three kids and a wife, they are not in a position to "take one for the gipper". They have to figure in cost and value as pretty close to top priorities.
When that dude goes in because he or she needs a new car, GM used to have a 54% chance that they would be chosen. Now they have a approx 21% chance to be chosen by the customer.
GM and thier employees really need to cease and decist their normal standby rants about Detroit, Washington, The Company, America, the American worker, buying foreign, transplants, government not giving enough of a handout to them, and anything else that they may be used to saying that everyone owes them.
They need to beat their competition by making a better product (judged so by the customer), at a lower price than their competition.
OK, some people like to hear it in terms of a sports analogy. So, If you keep losing the football game, time after time, by two or three touchdowns, every time for ten seasons.... then, you can stand there and rant about the weather, the league, the turf, the whatever, your childhood, or even still claim that you are great, but if the season scoreboard behind you shows zero-for-ten for ten seasons, then while I may believe that you believe what you are saying, I am convinced by the results of your actions as a team that most of you need to go, In that case I would not have much time at all to hear excuses.
These companies's American based factories that directly employ 200,000 to 300,000, inside the walls of the plants not including "supporting jobs", that UAW types call "transplants" happen to employ 100% more American hourly workers than GM does. They are also profitable.
GM management and employees would be more wise to drop this idea that everyone owes them something because it hasn't worked for them too well in the past, and begin to respect and learn something from their competition.
I believe My bro' and the tradesmen at GM are making somewhere between $33 (as of year 2003) and $40 per hour now, before overtime. That means that their base bay is between $68k and $88k, before overtime. He told me this himself, and further stated to me that with his pay and benefits he figures he has got "The brass ring". This goes for all of the tradesmen; electricians, millwrights, plumbers, machine repair, tool and die, machinist. He stated that they all get paid by the union contract to within about fifty cents of each other, and that with just a little overtime they make over $100,000.
These guys are overpaid.
They are wrong to think, as your comments seam to indicate, that I owe it to them or the UAW or GM to support them.
Instead of wasting many people's time worrying about "who should support whom", why don't you guys focus on being more competitive in the marketplace and offer a few more products that your potential customers see as a better value by being higher quality and lower cost than the competition?
One more request. Please avoid using all capitals in your posts. Just a request, as it makes the post easier to read, in my opinion.
It might also mean more if we could believe that this stuff doesn't just come from off the top of his head, or worse, the other end.
I thought this forum was for comment about GM, and not about an attempt to insult someone such as:
""hits the bottle" quite a bit " and "misplaced anger, jealousy, confused thinking process, and misguided opinions using selective and dubious information. "
Besides your personal attacks on someone, what point have you made about General Motors that a reader might find interesting?
Noticeably absent from your post was any pertinent comment or news such as that Bob Lutz anounced his retirement from his position at GM today, into some advisory capacity. That is too bad because he was quite a visionary in the industry.
I actually realized today that the 70,000 or so GM workers can do somewhat of a bailout themselves of their own employer. If they could stoop to take a benefit package worth $65 per hour instead of $72, then this savings of $7 per hour times 2080 hours per year times 70k workers equals a one billion dollar savings of bailout for their employer, every year. This way the UAW guys would be able to put your money where their mouth is and "support our own".
Also, this mention that the labor cost involved in an auto is 10 to 15%, well OK, what is the profit that GM makes on each auto - in a decent year - maybe 5%? So if that is the case then if they could cut their labor costs by five percent then they their profits would go from five percent, with five more added, to ten percent. In other words this would double their profit. Or instead they could choose to keep their profit steady at around five percent per auto and lower their prices to take back some market share to "Beat Toyota" as they have claimed that they want to do for a few decades. Or of course they could do some combination of the two strategies.
They really need to do something though as Toyota, or their Lexus division have been the top brands for quality for several decades. As a trivia question, I would like to know if, in the last 30 years, GM, biggest car company in the world until Toyota just sold more than them this year, has ever won the number one spot for quality. I am not talking about something like "car of the year", I mean the number one spot for quality.
Well, that's enough. Thadeus III, may now resume your insults.
You certainly enjoy dishing out insults and seem taken aback when you are on the receiving end. We all know GM has alot of work ahead of them but give them a chance. They are not the only ones struggling right now,(many sectors are) their employees are very aware cuts are coming and already feeling the cuts that have taken place ( maybe you should talk to the workers who have already lost their jobs, or the ones that know it is just around the corner). I am sure they will have to STOOP for less. We are just waiting the see what is ahead and don't need people like you picking apart everything from the past and every word we put out there for others to read. Okay we get it you resent GM employees.
Richard Wagoner in 2007 was compensated approx 1.5 million dollars by GM, in direct pay, plus 12.9 million dollars in stock options and other compensation. This totals $14,400,000 that he was paid.
Amazing, given the company's performance under his direction. Under him the price per common share of GM stock has gone down by approx 95%.
So the following year, 2008, the company has been run into the ground and now he wants us regular guys to give him our money as a bailout.
I believe he has earned a bachelors in economics from Duke in 1975, and an MBA from no less than Harvard Business School two years later. Why, recognizing that they have been paying him the big money as CEO since June of 2000, did he not trim the company to a size that works back near then? Then the cuts necessary would have arguably been not nearly so drastic. I just don't get it... because that is exactly what the MBA types are supposed to do, i.e. come in, "properly size" or "right-size" the business to make it healthy for some time to come. It is truly a shame that his grand strategy, evidently was to mostly keep business as usual right up into the point that his company runs into the wall so to speak, and then to ask for a bailout.
He should have been willing to play the bad guy much earlier, several years ago, and just didn't.
Now, I would normally say something like this to cut the man some slack ; "I believe that he believed that Brazil, Russia, China and India were not growing like weeds, consuming increasing amounts of oil yearly", but that would be a barking mad thing to say. Of course he should have in my opinion, as CEO of General Motors, been expected to know the implications of that. So then, under his direction, his company decided to continue focus on producing large petrol-thirsty trucks and SUV's for the auto consumer.
Utterly amazing. Wat do you say at this point?
Well, I do feel bad for the many thousands of workers who have lost their jobs. Their's and their families' lives have tken a turn and it will likely be hard to adjust. They are all highly skilled though, I know that especially all of the tradesmen are all Journemen or some even Masters in their respective trades so I do wish them well and think they will do well in the job market. Your electricians at your plants have always been nicer to me than they have to. We still do have over 92% employment,or 7 point something percent unemployment rate. Bad but not terrible. I have been there personally and know what it is like. If yoou get/got laid off then here is your chance to decide that your next chapter that you write in your life will be something you can control and make a difference somewhere and be successfull in a new thing.
I am not mad at anyone in particular in this hosed up situation (with the sole exception of Richard W.), I am mad to be paying for it, which I am sure I will have to do.
Please go see a doctor your deep rooted problems are showing on the surface.