A New York Times article by Nick Bunkley on Friday targeted for print on Saturday about the status of contract talks between Ford Motor Company and the United Auto Workers piqued my interest in a previously neglected but important matter.
Ford and the UAW are apparently close to an agreement. In describing what Ford workers are being asked to give up, Bunkley wrote the following (bolds are mine throughout this post):
Ford executives have said the company needs more concessions to keep G.M. and Chrysler from having an advantage.
.... The deal that U.A.W. workers at Ford approved in March got rid of cost-of-living pay increases and performance bonuses through 2010 and eliminated the jobs bank program, which allows laid-off workers to continue receiving most of their pay. In addition to those concessions, G.M. and Chrysler workers agreed to work-rule changes and a provision that bars them from striking.
What? From press coverage at the time, you would have thought that unionized GM and Chrysler workers made ginormous, humungous, unprecedented sacrifices to enable their companies to get through bankruptcy and to emerge as lean, mean vehicle-making machines.
Uh, no.
What follows is a picture of the top portion of the first page of a "contract outline" presented by the union to its members shortly before the changes therein were ratified (full outline in PDF format is here; HT WSJ's Deal Journal blog):
Let me repeat the key sentences found inside the red box:
For our active members, these tentative changes mean no loss in your base hourly pay, no reduction in your health care, and no reduction in pensions.
.... Unfortunately, in this process our retirees are required to make difficult sacrifices as is explained later in the summary.
In other words, the UAW protected its currently working members, the ones who get to vote on contracts, from any meaningful sacrifice, while hosing its retirees, who don't get to vote.
How hard were retirees hit? This hard, according to a May local news report out of Detroit:
(UAW President Ron) Gettelfinger said the contract is a difficult one for the active members and retirees, who will give up some 25% of their health care benefits. "This was a matter of salvation as much as we possibly could for our retirees. I am regretful that we had to do anything and I think it's a disgrace we had to do anything," Gettelfinger said.
Spare us the pseudo-tough talk, Ron.
Even given the opportunity to cleanse all sins in bankruptcy, GM and Chrysler ended up doing very little to change their U.S. manufacturing day-to-day cost structure. Thanks to press coverage that has been almost completely derelict, almost no one knows this. Nick Bunkley's piece above continues in that truth-obscuring tradition.
What really happened between the two companies and the UAW confirms and extends what I noted last week (first item at link) when items about post-bankruptcy restructurings began to appear:
In each case, it looks like the bankruptcy plan really consisted of the following:
- “Let’s steal as much as we can from disfavored stakeholders.” In Chrysler’s case, with the help of government intimidation, first-lien non-TARP lenders were fleeced.” At GM, it happened to the unsecured bondholders.
- “Let’s cut things back just enough to make us look like we’re serious, but not enough to be able to emerge profitably.
- “Let’s hope for a miracle in the marketplace.”
It looks like retirees were treated by their UAW "brothers and sisters" as yet another set of "disfavored stakeholders."
Meanwhile, the marketplace miracle necessary for all of this to even have a chance of working is nowhere to be found, and tens of billions of our tax dollars appear to be headed for a big, fat write-off.
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
Editor at Large
Comments Policy
→ Thanks Tom
October 12, 2009 - 08:54 ET by Cool ArrowI always enjoy your take on the UAW.
I'm not feeling too sorry for the retirees, though. The Government has guaranteed their retirement funds for the most part.
Just another shovel-ready
October 12, 2009 - 08:57 ET by motherbeltJust another shovel-ready project for the media.
And they were ready, and stepped up to do their job.
It is simple
October 12, 2009 - 09:11 ET by sevenObama cancelled hundreds of dealers. The workers gave up a job. Now Saturn network is winding down. With GM and Chrysler sales down 45%, the workers without jobs will have to stabiolize down about 45%. The UAW will have 45% less dues collected and less for next years democrat donations. I still think when Obama shut down Chrysler and said he was saving jobs, no one took after him on it that all the jobs were gone for 90 days.
The teachers unions in Indiana lost millions on Debt write downs
→ FORD
October 12, 2009 - 09:15 ET by Cool ArrowThe "little engine that could" still rages against the political machine.
Sales are down 5%, but I'm still rooting for them.
Why oh Why
October 12, 2009 - 09:22 ET by richb313Why oh Why can Japanese and Eropean Automakers thrive in this country and our own homegrown Auto Industry goes bankrupt? Everyone knows it is the legacy costs imposed by union contracts. How about this, if you want a union to negotiate for you fine, then also let that union, through dues, also pay for healthcare and retirement and not saddle the comapnies with these costs. If a union goes kaput, no bailouts at all, it was a choice. It is impossible to run any company when the costs keep increasing and the upper limit is not able to be calculated. It is a sure recipe for failure.
There was a time when unions tried to look out for the safety and health of the workers but they have always been since the beginning of the union movement an arm of the communists. It is history and both sides might not like the history but it is true. Union officials in the beginning were all communists members. Workers of the world unite was and is still the mantra.
Any organization that masks itself for the good of its members when the real purpose has and always will be to gain political power and fundementally change this Republic should be understood for what it really is. I do not say outlaw them but I much prefer Organizations that set quality standards of its members before representing them. Registered Nurses have such an organization. They set the Standards to become a Registered Nurse and try to enforce them (too much Govt. and private interference).
I worked as an R.O.V. (Remotely Operated Vehicle) Supervisor here in Louisiana. Unions would regularly try to get us to join. We always rejected this because each of us made our own deals. If you were good you got paid more if not so good you did not last. The average income now for that position is $100,000.00 a year. No degree required. What is required is the ability to get the job done with the least expense and keeping the client happy.
Why can private industry can afford to pay such a handsome salary without Union Representation? It is easy, because private Industry competes for really good employees just as they compete for customers.
RICH
October 13, 2009 - 12:02 ET by Secret ConservativeNot just the legacy costs, but the work rules and the union interference in the manufacturing process. I read recently that one of the things that led to the downfall of Saturn is that, when the company was started originally, they were not subject to the union work rules, and the union did not get to decide how the plants were set up. Over time, this changed, and they ended up being just as inefficient as the rest of General Motors.
Also, in countries where GM does not have to deal with unions and can set up their plants however they want, they are automated (like the Japanese) and can produce cars profitably. It is only in the U.S. that this is not possible. Why? THE UNIONS!!!
Unions destroy the companies they invade.
And did anyone truthfully
October 12, 2009 - 09:23 ET by SnappyAnd did anyone truthfully expect any different? I fully expect another round of cash infusions to help shore up jobs, create stability in the market give our poor US auto industry (which appears to be limited to GM and Chrysler) the much needed boost to survive against the evil imports.
I wouldn't
October 12, 2009 - 09:32 ET by jessieHI wouldn't worry too much about GM & Chrysler. Anything the govt. touches turns to crap. Ford should make some sacrifices. I have never had a job where I got a paycheck for being laid off.
HR3200 Bailout
October 12, 2009 - 09:39 ET by slickwillie2001Let's not forget, the first Obamacare bill, HR3200, contained a $10B trinket for the UAW, which would likely supplement any minor loss of retiree pension benefits that the UAW might have given up:
Dems Bury Union Bailout in HR3200: http://www.lonelyconservative.com
Unions are full of
October 12, 2009 - 10:12 ET by mattmUnions are full of idiots. They support politicians and policies which weaken the economy and cause job loss, thereby weakening themselves to the point where the only "salvation" is a government take-over.
Now that they are the management they have to start operating the way the people they have hated for all these years, the capitalists, have had to operate - since you can't change the laws of economics. Hah!
(Don't expect them to learn the lesson, though)
"Idiots"?
October 12, 2009 - 11:07 ET by Willis_Leon_JohnsonUnited Mine Workers vote for democrats.
Democrat place ore bearing areas off limits to appease the envirnomemtalists and destroy mining jobs.
United Mine Workers vote for democrats that promise to make more mines shut down for various 'hate union employees' reasons.
democrats shut down more mines.
United Mine Workers vote for democrats that promise to destroy more mining jobs.
United Mine Workers complain and vote for more democrats.
The word "IDIOT" hardly covers the subject.
http://gjresult.com
I live near Bethlehem PA and
October 12, 2009 - 10:39 ET by Radical1979I live near Bethlehem PA and this whole thing is just a replay of the downfall of the steel industry. Both the unions and managment are killing the goose that laid the golden egg. There is not enough foresight to put capital back into the industry and tough it out. Let them fail.
That just seems like a
October 12, 2009 - 14:25 ET by mamabearThat just seems like a nasty spin on things.
Every union member voting for this plan recognizes that they will one day soon be a GM retiree. Yes, they could also have cut base pay or health benefits for workers, but operating costs weren't GMs biggest problem-- it was servicing their $58 billion debt! The UAW retiree health plan was one of their biggest creditors.
$20 billion was owed to the retiree health fund. The UAW will get half of that that was already in health trusts, and is basically letting the rest go in exchange for equity.
The union made a huge concession, and a concession that will affect every single one of them in the future. They also made the concession that would make the most difference to the struggling company. Annual operating costs for labor are $8 billion dollars. The UAW could have agreed to have all of it's workers work for free and never take a vacation, and it still wouldn't have made as much difference to the company as helping them bring down their debt.
Oh, and they also instituted changes that will save the company $1.5 billion a year in labor costs. I'd call that pretty helpful.
→ Crawfish
October 12, 2009 - 14:31 ET by Cool ArrowAre you claiming GM is operating at a profit now?
Are you claiming the retirement fund isn't getting a government bailout?
No
October 12, 2009 - 16:00 ET by mamabearNo
I'm not the one who "spun" it
October 12, 2009 - 15:51 ET by Tom BlumerThe pictured item is signed by Ron Gettelfinger and whoever the head UAW negotiator is for GM.
They're the ones bragging that current employees' core benefits (pay, health, and pension) aren't affected.
They're the ones recognizing that current retirees are taking it on the chin bigtime (oh well ...).
As to who and what it will affect in the future, current employees now operate under the hope/assumption that health care will get nationalized anyway, so they won't be any worse or better off than anyone else -- but I temporarily forgot that they will be better off because ObamaCare not only throws money at their plans, but also, in most current versions of the legislation, allows them to stay relatively gold-plated.
Given that over-generous UAW contracts in essence created a large portion of GM's debt, that giveback seems appropriate. But remember that the VEBA got wayyyyy more equity than it proportionately should have in relation to the size of its debt, while other creditors who were LEGALLY entitled to equal treatment ended up with relative crumbs.
I'll believe the $1.5 billion in labor costs saved when I see it. I'm already reading that they're not making the progress they thought they would make on getting rid of outmoded work rules.
Guess they've been going to
October 12, 2009 - 15:33 ET by RR GOPGuess they've been going to union meetings, looking around and saying, "Say, where the heck is everyone?"
One of the 34% who thinks George W. Bush was a great President. One of the 86% who wants to bring back the stock and pillory.