That's a big assumption, but any way you look at it, it's a lot of money. I wonder how long it will take this round of layoffs to actually save them money.

Posted by: tim maguire at March 22, 2006 10:00 AM

Or, if I had paused a moment before hitting post, I would have rewritten that to say, I wonder how many more people had to be laid off to cover the cost of the layoffs and still achieve the needed savings.

Posted by: tim maguire at March 22, 2006 10:02 AM

So they are, in effect, proposing to buy their entire workforce out on their retirement plans? And then keep the majority of them on as non-pensioned employees?

Posted by: Mr. Bingley at March 22, 2006 10:45 AM

This may very well be an investment with a return significantly higher than anything other options before GM. Think of it this way; for a one time invest of $87,500, GM forgoes annual salary payments for these employees over the remaining expected length of employment. If the employee is paid salaries and benefits averaging $100,000+ annually, that's quite a return on their investment if an employee could be expected to be on the GM payroll for another 5 to 10 years.

I think GM is raising cash to do this very thing.

Posted by: Gary B at March 22, 2006 11:00 AM

Here's a little more info on the numbers. They basically want to get out of the healthcare costs, it seems.

Posted by: Mr. Bingley at March 22, 2006 11:53 AM

I read the report. GM will ditch current and future payroll as well as post-employment healthcare benefits. These are huge numbers. Accrued retirement benefits will remain intact since these have already been prefunded (I believe) in the trust that exists to pay retirees.

Posted by: Gary B at March 22, 2006 12:21 PM

I guess this is to encourage folks to volunteer for the 30,000 employees they want to shed.

Posted by: Mr. Bingley at March 22, 2006 01:41 PM

This represents the laws of economics coming home to roost. UAW workers are ridiculously overpaid for their skill and have been for years. Not that GM isn't at fault here as well. They were willing conspirators with the union to artificially inflate these folks wages. Now, they're both in a pickle. Serves them both right.

Posted by: Texican at March 22, 2006 03:30 PM

Good call Tex. I have been thinking that for years.

Posted by: Rebel Yell at March 22, 2006 03:48 PM

They should all take that money and invest a substantial portion of it into Nissan or Honda or Toyota - you know, companies that actually make quality vehicles.

That'd be terrific.

Posted by: Bob at March 22, 2006 09:05 PM

Fire them all, give them moldy bread and a kick in the butt.

Then turn around and hire:

25 million Illegals, they will work 20 hour days with no health care for $10.00 an hour.

Do that for a few years and GM will be the leader in the Automotive Industry again.

At our expense and our shame.

Papa Ray
West Texas
USA

Posted by: Papa Ray at March 23, 2006 07:20 AM

And it's not a "shame" to overpay non-productive coddled ignoramuses at the cost of losing the market entirely and at the expense of the taxpayer? Who could otherwise have competently made cars at internationally competitive prices?

Posted by: Robert Speirs at March 23, 2006 08:57 AM

Papa Ray,

You miss the point. Right now foreign car companies are using US labor to build cars in the US. The quality and consumer demand for these US produced foreign cars are better then what the Detroit based US automakers produce.

The problem is GM's managment and the UAW not the US worker.

Posted by: TJIT at March 23, 2006 10:02 AM

Overpaid coddled employees?

These are the same employees building the vast majority of Toyatas and Hondas in the US you know?

Heck I believe even Saturn had to drop it's card sized UAW contract.

And don't forget, airline in the US is more unionized than Southwest Airlines. Yet their market cap would swallow the top 3 airlines in America and they manage do something no other US airline can do. Consistently turn a profit.

There are plenty of valid criticisms of unions. But blaming unions because GM builds crappy cars seems to be a stretch.

Posted by: Davebo at March 23, 2006 11:47 AM

What kind of car do you drive Papa Ray?

Posted by: Gary Bezowsky at March 23, 2006 02:32 PM

Oh, you CAN blame them for GM making crappy cars. The UAW made a pact with the devil that said, we know our overhead - not so much the direct wages for productive workers and trademen - is costing the corporation money which could otherwise be used for product development. But to do the things necessary would be political suicide for them, because they would get voted out of their cushy union jobs and put back in the plant. Not something most of them had the back bone to risk.

GM management is not blameless at all, particularly what was allowed to happen in the late 80's, early 90's. The company has been pretty serious since then in trying to turn around its portfolio and improve their plants. But old perceptions die hard. The best North American factories are often GM plants. Many of their new vehicles are as good or better than their import competitors, including Toyota. And for styling, Toyota produces the ugliest - albeit high quality - cars in the world. It can take an entire generation of car buyers to pass by before old grievances toward GM products, grievances which were rightly earned, will start to fade.

So GM is left with out the money necessary to spend enough on product development and improvement to speed up the time it will take to convince a substantial number of the population to give them a chance, because the union has draconian outsourcing and contracting rules, they pay way too much non-productive labor, they have benefit plans that are no longer even remotely competitive, and there are work rule fights over anything management might suggest to replace old featherbedding practices. That is the union's fault. They failed to realize that the future of organized labor is the providing of skilled labor to employers, not unlike what some trade unions have come to realize. Some locals I think understood the problem and did try to reach more reasonable accords and then the international would force the autos to do something for a very traditional location at the expense of the locals that were looking to the future. Once that happens a few times, how progressive do you feel a local will continue to be.

I don't suggest it would have been easy, it wouldn't. But the union primarily - although not exclusively - has failed to realize the world is a very different place from 20, 30 or 40 years ago. It was a nice ride, but they failed to grasp the seriousness of their problem until the money just ran out.

Posted by: JEM at March 23, 2006 02:55 PM

Perhaps I'm wrong in this instance (GM, car companies in general), but I have the feeling that contracts of the past few decades were based on salary concessions for benefits -- i.e., lower salary increases for higher benefit compensation (pensions, insurance, etc.).

Now it seems that the companies are trying to negate the benefits that were negotiated in place of higher salaries.

Also, I know it isn't a popular argument, but I think there has to be serious consideration of the rate of compensation for executives.

Posted by: cj at March 23, 2006 08:53 PM

cj - not quite. That is of course what the union said to its members who were dissatisfied with a lower wage increase than they were used to getting in the past. That is how they got the rank and file to approve the deals. Often times lumps sums were used to lessen the multiplier effect of higher wages on holiday, vacation and other benefit plans. The fact of the matter is that whatever lessor wage increase was accepted it was at the very highest end of the wage scale for jobs of that fashion. And while an employer will have less issue paying a premium wage to a skilled machinist, assembler, or skilled tradesman; they hate paying that inflated wage to general maintenance, fork lift drivers, and other non-productive employees. And the union ensures that they are not only overpaid, but that there are too many of them to boot. That is the blood left on the union bosses hands. Now comes payback. The money has run out.

Posted by: JEM at March 24, 2006 08:06 AM

And also as it pertains to executives. GM - like many autos - have too many of them. They have been cutting their ranks, but have more to go. As it it relates to pay, actually auto execs are paid significantly less than their comrades in other industries. A few of the top ones make a very nice dime no doubt, but less than they could make somewhere else. In general, getting an executive position at an auto is a lifelong climb, with benefit tie ins that reward longevity with the company. Since they frequently have not gone outside the company, their salaries are lower than what you would find elsewhere, even at the highest levels.

Posted by: JEM at March 24, 2006 08:12 AM

Impatience, bad management and lack of foresight on GMs part, pure greed on the UAWs part is what brought this state of affairs to a head.

In an effort to keep production going at any cost GM was willing to give in to union demands in almost all instances while Chrysler and Ford were not above allowing a walkout over an especially pricey demand.

GMs policy to keep production going at all cost brings them to the point where today, they lose $2500 for every vehicle they sell.

For decades they have refused to challange the rediculous demands of the union and now they are at the point where they have no option.

It's even worse than that for the "skilled" workers.
(It takes no skill to do those jobs. Sorry if someone gets offended, but it's a fact. And yes, I know personally.)

The workers with their millionaire pension plans are going to have to re-negotiate or lose it all. Union or no union.

The union can't save your job if the company goes out of buisness.

That's where GM is heading if something drastic isn't done now, which is what this buyout amounts to.

As Gary B. said, this is an investment with a huge return for GM because the union pension plans is where the money pit is.

GMs financial situation is so bad that, had they not done this, and more later, those union employees WOULD be working for Toyota, Honda, Mitsubishi or any number of other companies, because within no more than 3 or 4 YEARS GM would be forced to close their doors.

Other manufacturing companies have known this for some time and are even now circling around GM like vultures, waiting for it to officially die.

When that happens "Factories For Sale, Cheap" will be GMs last motto.
It will be bought up in pieces.
The new companies, having a better grasp of buisness economics will not be as easily extorted as the former GM.

Whatever former GM employees that decide to work at the new companies will do so on the companies terms, not the unions.

The unions will have to start from scratch.

No 100 K a year job for doing a simple task.
No 30 days a year annual leave.
No frivolous union arbitration over company rules and guidelines.
No "Good Ol' Boy" system, (Cronyism).

In any buisness you either adapt to meet the changing times or you die.

Both GM and (especially) the UAW seemed to forget one crucial fact over the decades; Buisnesses exist for 1 reason, to make money.

When you forget or ingnore that fact, you're no longer a buisness but a charity.

I'd hate to see GM go down the drain, but they brought it on themselves.
As an example of how desperate they are financially look at some of their new models.
One looks EXACTLY like a PT Cruiser and their new Impala (I think it's an Impala) looks almost exactly like a Dodge Charger with a Chevy grill.

Posted by: Joatmoaf at March 24, 2006 08:26 AM

Hopefully this will workout. However, it doesnt solve the problem with the pensions GM already has to pay.

The UAW also needs to take a step back and realize they have helped to create this monster and not just act like they have been victimized by it.

Posted by: Josh at March 24, 2006 09:45 AM

Anyone been through Flint lately? They are all waiting around thinking they will get their job back. It's not the UAW or Management. The workers need to wake up and figure out they cant rely on someone else to give them a job when there aren't any. Gravytrain is over!

Posted by: pete at March 24, 2006 10:11 AM

The pension payouts to those currently retired can be absorbed over time as long as they stop the cash hemmorage by canging any future pension plans NOW.

GM will start becoming profitable at exactly the same time they stop being charitable to the UAW.

Unions had a place in America once. Those days are long gone. Now they're nothing more than mafia fronts for extortion.

Since union bosses seem to have lost their original vision due to greed, I say, Good riddance.

Posted by: Joatmoaf at March 24, 2006 10:11 AM

considering the effort to avoid a hat in hand episode such as Chrysler went through, GM might possibly be a good long term investment if your young and can find it for $5-10 in a couple years then hold on to it hoping it grows for a profit taking, but I doubt it'll ever be a substantial dividend provider in the likes of GIS, ZMH or XOM, etc. The gist of it boils down to why has Dana and so many other first tier suppliers found themselves in dire straights, catering to their major customer while ignoring the market. Reality bites... when the sugar daddy runs out of money, so does his honeys'

Posted by: Boss429 at March 24, 2006 06:23 PM

I’ll wager that the vituperative tone of this blog changes when it’s not the so-called ignorant UAW workers losing their jobs to 3rd world workers but the professional knowledge jobs being sent overseas for $16K per year with no benefits.

Posted by: BobbyV at March 24, 2006 07:30 PM

At our expense and our shame.
Papa Ray

Too true, too true... allowing America to squanders its middle class will extinguish the world’s greatest hope for universal democracy.

Posted by: BobbyV at March 24, 2006 07:43 PM

Bobby V.
Have you seen the new PT Cruiser looking GM vehicle? It seems the "professionals" are abandoning ship before it sinks, rather than after.

You and Papa Ray can harp all you want about the sad plight of the "middle class" workers who are all going to suffer at GMs downfall but it doesn't change facts or reality.

I'll wager that if there's a "middle class" worker at GM then the Union doesn't know about him.

100K isn't middle class despite whatever statistics someone drags out. It's above middle far enough to be in a different tax bracket.

100K is probably an understatement, especially considering all those plump juicy little retirement perks.

No, bad economics is what is destroying GM, NOT the economy.

"No Agency is better than its account exectutives." - Samuel Goldwyn.

I'm not trying to rag on GM employees, but facts are facts.
They have a cushy, easy job that is extremely lucrative.
They are way, way, WAY over paid, over compensated and over pampered.

Especially considering the type and QUALITY of the product they produce.
Bluntly put: They're not worth what they are being paid. Not even close.

You and Papa Ray seem so concerned about the middle class worker that you apparently failed to recognise what many see as the fundamental problem.

The Union.
"You have been weighed in the Balance and found wanting"

The party is over for organized labor. They will never have the clout that they once did.
Never.

When I go to buy a car I don't care one little bit about whether or not Middle class Joe will lose his job if I buy Foriegn.

What possible concern could I have for someone who makes twice as much as me for working half as long?
Why on Earth should I care if he loses his job or not depending on if I buy his product?

The way things work in a capitalist society is that consumers pay for a product or service the price it is worth TO THEM.
Why should we subsidize union extortion when we can just go across the street and get a better car cheaper?

If you guys are so concerned about MC Joe then maybe you should seek the source of his dilema and fix THAT.
The Union is the source.

In the late '80s and early '90s the Whirlpool palnt in Evansville, Ind. was always going through some very tough financial times.
Competition from Mexico and overseas had cut into their market share considerably and money was tight.

While Whirlpool was doing everything it could to keep the company afloat and that particular plant open, the union was doing everything IT could to squeeze as much money out of the company as it could.

It seemed like every year there was a strike which lasted at least 4 (usually more) weeks.

After each of those bargaining sessions the union got richer and the company got poorer while the workers got slightly better benifits.

At any rate they were being paid too much. Everyone knew it even the employees.
To make up for what they lost in those concessions Whirlpool would start another round of lay offs.

Very, very few employees worked a full year because at one point or another they were either on strike or laid off.

The union was driving them to bankruptcy and they didn't care.
Whirlpool on the other hand had started building another plant in Ft.Smith, Ar. and that plant wasn't going to be unionized.
In addition they were also building one in Mexico.

They had been telling the employees that something needs to be done or they would close the plant because they simply couldn't afford to keep it open.

What did the union do? Threats and intimidation. Walkouts, strikes, threats of strikes all in an effort to FORCE the company to remain with the status quo.

It got to the point that Whirlpool had the Ft.Smith plant all set up and they were moving equiptment and operations there and still the union wouldn't budge.

They seemed to think that THEY were in charge instead of the other way around.
However, the employees had been witnessing things from the begining and they saw the writing on the wall unlike the union.

Some dropped the union and signed on a salaried employees while the rest got angrier at their union reps.
The final straw came at the unions last call for a strike.
By then Whirlpool was in a position where they didn't need the union. Fully a third of their workforce was salaried and they could operate the plant with that.

So they told the union employees that if they strike again they would be replaced by non-union workers and not be hired back.

THAT was enough to cause the employees to vote the union out.
Now the union only has a token force there of about 20%, but when things get tight it's not the company man who gets sent home for a while it's the union man.

Unions are a communistic ideaology that are run by mobsters.
The only concern they have for an employee is how much dues he can pay.

They have outlived their usefullness and are now nothing more than a burden on manufacturing and society as a whole.

There is absolutely no reason why a guy who puts dashboards in cars all day should make more money than someone who rebuilds and maintains nuclear bombs.

NONE.

Posted by: Joatmoaf at March 24, 2006 11:00 PM

The workairs en France, they would not put up weeth this...

Posted by: richard mcenroe at March 24, 2006 11:16 PM

Non, non. Surely zey would NOT!

Posted by: Joatmoaf at March 25, 2006 02:42 AM

Bobby V-

That, my friend, is why I went to college.

For over 20 years, the automakerrs have been closing factories and laying off employees. TWENTY YEARS. Two decades.

Anyone who sterted working for GM in the past 20 years or so did this KNOWING that at any moment, the plant could close down and thier job could disappear.

What does that make them? STUPID. If those fools are "shocked" and "stunned" by these cutbacks -- it's their own damn fault! How could they not have known this is coming?

I have lost my job many times and have much sympathy for anyone who is out of work. However, anyone who chooses to work at GM -- and yes, it is a choice, my whole family consists of blue collar workers and no two have the same job, there are many different blue collar occupations in this country -- made a pretty stupid decision. Many of them did it becuase it offered easy money quickly and did not reuqire the self-discipline of, going to college or apprenticing for a trade that requires real knowledge and real skill.

And if I get outsourced? I'm ready for it. You see, I wasn't "given" my college degrees and my white-collar job. I EARNED them. If someone in India can do a better job than me, and for less, then he deserves to have my job. I will go out and bust my ass to get a new one, not whine about how big corporations are selling the American middle class down the river.

Posted by: Joe Schmoe at March 25, 2006 06:18 AM

You tell 'em Joe.

I know enough to wear several of many different hats if I were to lose my job.
In fact, my Position Description calls for at least 3 different, specific skills.

I had a job before I came here, and if for some reason I have to leave early, I can easily find another job.

Anyone who says they can't find a job in America is lying, because they aren't really looking.

If they are too good to flip burgers for a while, then I guess they should starve. The "furriner" will take it and be glad for it.

Jobs are plentiful. but many Americans seem to think that someone OWES them a job because Mom or dad or Uncle Joe Worked at the Cushy-Job Factory.

Sorry, but it doesn't work like that anymore.

Cronyisn, like Unions, is a prehistoric abberation, a thing of the past, and companies have come to realize that they simply cannot afford such in-efficient practices.

I'm not against a person making a nice decent wage. But I am against it if it means driving the company into bankruptcy.

If Middle Class Joe is too stupid to realize that in his greed he is arbitrating himself out of a job, then piss on him.

He deserves anything he gets for it. I can find no sympathy for a greedy moron.

I work for what used to be considered one of the most buraucraticly bound, monolithicly cumbersome and inefficient orginizations in the world.

My Rich Uncle Sam (U.S. Gubbmint)
But even here there is no such thing as job security.

30 or even 20 years ago, if you came to work for Uncle Sam in ANY capacity, you were set for LIFE.

You had a job for life and a guarenteed decent retirement but those days are gone.

No longer can you go into a government office staffed by family members, and no longer can you hold a job you can't do.

It really started getting serious under Bush, but I'm glad to see it happen because in one fashion or another ALL of the Lazy Bum Good Ol' Boy crowd have been weeded out.

Folks like those had an attitude of indifference, and their lack of qualifications and effort caused the rest of us who WERE qualified some anxiety.

Even though they were unskilled, unqualified bums who thought the government OWED them a job, and even though they never hit a lick of work (unless brass was around) their job STILL had to be done.

What that means is that we, the skilled, gruntled (as opposed to - dis-gruntled) employees had to carry their load.

More than half had that "entitled" attitude.
All of them are gone now. I say good riddance and get the hell out.

We are doing the same job, with the same workload (higer actually due to war) that we had when I came onboard in '98, and we are doing it with 25% of the original workforce.

THAT'S how we got efficient.
Why have 4 people on the payroll when only one of them is doing all the work?

Three out of every 4 people are gone. Yet things seem to run much more smoothly without them.

I still see many of them out in town from time to time and even though I love my neighbor/brother as I'm told, that doesn't mean I have to LIKE them.

They all have jobs (except the retirees) and they all have to actually WORK.
No more free ride. No more croynism gravy train.
It's either work or don't eat.

They miss their old jobs and most of them realize they were foolish to be so cavalier about it and not take it seriously.

They lost their jobs because they couldn't compete against more QUALIFIED and SKILLED candidates such as myself.

Their indifference and attitude of entitlement put them where they are right now and they can't blame Bush, the government, the economy or any number of other reasons other than their own irresponsible attitude and actions.

If even the U.S. Government has become money concience, then that fact alone should be warning enough to privately owned companies that the Golden Age of Union Utopia is long past.

Too much compition.

Posted by: Joatmoaf at March 25, 2006 09:07 AM

--knowledge jobs being sent overseas for $16K per year with no benefits.--

The citizens of most countries would jumap at the chance of $16K US. They'll be able to afford their own bennies.

---

Around 1985-86, IIRC, the Japs were flying high. The yen was strong and the US prices on their cars reflected it.

What did 1 of the big 3 do? Either suggested raising their prices to be competitive or did it.

Can someone please tell me what's wrong w/that picture?

Posted by: Sandy P at March 25, 2006 09:40 AM

Joatmoaf, wow, did you get chewed up at the Whirlpool plant or what?

At the risk of being too preachy, a few corrections. GM did try to stop the madness in Flint in the late 90's. Too late. They never recovered the market share the union's strike cost them. It does not forgive them the stupidity in the years leading up to that point. Ford and Chrysler were smart in that when they were in deep truoble late 70's and early 80's, they didn't hire everyone back. GM did - to their lasting foolishness. Then, since they were smaller and more efficient, Ford and CHrysler created bargaining unit contract patterns that forced GM closer to their demise. The UAW didn't realize it of course, but their largest employer, who hired back more of its members after the aforementioned times of difficulty, was being done in by the UAW contracts. Ironic isn't it.

GM design mistakes were responsible for a number of forgetable models. Once the design issue was fixed it was just too late. The Impala just redesigned is terrible, it looks like nothing. But most of their newer stuff has been pretty good. Although I am trying to recall what they have done that looks like a PT Cruiser.

Don't let government's off the hook either. State government's decision to allow unemployment payment to UAW plants that ended up shut down due to their brothers actions at another plant, allowed the UAW to cripple GM's revenues while their members got a freebie from the government.

Workers are not really paid all that much out of line. Look at wage rates at foreign makers in the US and they are pretty comparable to what the big three pays. Their benefits are streamlined and they have almost no retirement costs at this point to speak of,and their plans are designed to insure they are always manageable.

The ASians have had very sympathetic governments making it difficult to sell in their countries, while manipulating their currencies to maintain price superiority. China hasn't been a problem yet, but wait they are starting to desire to export so another hit is coming.

I will agree wholeheartedly with your basic premise. The UAW got caught up in their own little world of games and in biting the hand that fed them, finally bled the hand to death. The UAW is finished as a political force, in fact without the public sector representation they would be finished period.

Posted by: JEM at March 25, 2006 03:21 PM

JEM

I never worked at Whirlpool.

The only time I ever worked for a union was when THEY called ME and asked if I would lead a crew on a pipeline installation.

It wasn't the local chapter but the international one out of Pittsburg (I think).

And I have absolutely no idea why they asked me.I'm not union.

At that time, even though they were building the Toyota plant, the local chapter still had its own members who were out of work.

I never found out why. I took the job, didn't pay any initiation or union fees and the steward from the Illinois shop who was part of my crew Would-Not-Stop-Bitching.

It was good pay, and the union pipeline company I worked for was a good outfit, but I'll never be a union man.

The Government part of my example only applies to where I work at, I can't speak for them all.

Some are better, some are worse but my orginization is slim and trim right now and we get the work done.

Posted by: Joatmoaf at March 25, 2006 04:10 PM

The big union supporters are the big bitchers normally. And they get everyone riled up, win an election and then get themselves backed into a labor mess they cannot begin to extracate themselves from. The only way unions will survive outside the government sector is by refashioning themselves as the provider of qualified labor. That means they do the basic training, the drug screening and they fire the absentee clowns. For that they would provide superior output for a premium wage to their members. The security for life model is dead.

Posted by: JEM at March 26, 2006 04:39 PM

Joatmoaf,

You know I am just smiling thinking of your Illinois "bitching" steward! what a beauty.

Posted by: JEM at March 26, 2006 04:41 PM