GM scores big against union members! Slash health-care costs

[Wes Bucey]

So here's a squib on the continuing saga of the ultimate plan by American automotive OEMs to take away worker benefits.

GM emerged from weekend talks with the United Auto Workers with an agreement to slash health-care costs for retirees by $15 billion and cut its annual employee health-care expenses by about $3 billion a year.

As a result, GM's stock is soaring today, despite reporting a big loss. Apparently, investors LIKE a company that takes benefits away from workers.

Question in my mind is how much do the employees on the dirty end of this stick like GM? Are those employees going to feel a loyalty to assure GM's reputation is enhanced by higher quality goods and services?

[Marc]

GM's stock would really soar if they announced that all mid-level employees on down in the US will have pay reduced to align with pay scales in China.

Bottom line: GM is moving to China for all intents and purposes. I doubt GM employees will feel any loyalty at all after this - It will be every person for him/herself. Nor do I believe for a second any of this will lead to higher quality goods and services from GM (or Ford or DaimlerChrysler).

Of course, of note is the retirees are also getting screwed.

[Wes Bucey]

Originally Posted by Marc

GM's stock would really soar if they announced that all mid-level employees on down in the US will have pay reduced to align with pay scales in China.

Bottom line: GM is moving to China for all intents and purposes. I doubt GM employees will feel any loyalty at all after this - It will be every person for him/herself. Nor do I believe for a second any of this will lead to higher quality goods and services from GM (or Ford or DaimlerChrysler).

Of course, of note is the retirees are also getting screwed.

Retirees are the easiest target - they have no leverage. (What are they going to do? Strike? ) Sears did it to theirs and the airlines did it to theirs.

Yes, retirees always seem to get Special High Intensity Training from their former employers to prepare them for their golden years. [you supply the acronym!]

[diecuts]

The Unions are scrambling to save anything at this point. As mentioned in the WSJ, the Chinese GM folk relate GM-USA as to a sick mother with tumors, with her children worried but confident that the tumors will be removed or reduced in size.

There are more auto workers in the USA that ever before. Almost all new plants and workers are in 'Right to Work' States which do not require joining a union . Why?? Union workers work as hard as non-union. It is the details, like cross training, flexibility in schedules, and working together. I worked at Ford on the main line for a few years, the stories of wasted time and money are endless. "Why are you working so hard?" was a common complaint! Sound familar??

Unfortunately, the lower union wages mean more competition for my small, 20 person, non-union shop. Now, my employees will make more than UAW members if Miller has his way. My costs should be higher than a Union shop. Not to worry though. It will take quite awhile for all those union employees to learn cross training, computer skills, and work hard unsupervised. There is plenty of work out there, work that will stay in the USA just because of distance and complexity. My neighbor who is a great guy and has cleared $87,000 in 6 months belongs to the UAW. He works 7 days a week, 12 hours a day cleaning small parts on an inspection line, helping launch a new program. On a Sunday he makes more than any of my employees do in a week! Others stand around watching him work, they are not in his quality job classification. No wonder our cars cost so much!! Miller, It's about time!

[Marc]

No doubt unions are for all intents and purposes dead. And with them go many benefits such as health insurance and pensions, not to mention decent wages. Soon it will all be WalMart wages. As poverty in the US rises and wages decline, as the 'middle class' continues to shrink, we will all be affected.

It will take quite awhile for all those union employees to learn cross training, computer skills, and work hard unsupervised. There is plenty of work out there, work that will stay in the USA just because of distance and complexity.

You're dreaming. There isn't 'plenty of work out there' unless you consider WalMart greeting and fast food restaurants 'work'. As to work staying in the US because of distance and complexity, open your eyes. There is very, very little that cannot be outsourced to Mexico or over seas regardless of distance and complexity.

The US is declining into what we used to call a 'third world' country.

[Randy Stewart]

GM is asking the hourly (Union) workers to pick up a share of their med benefits similar to the salary (non-Union) workers.

Look at what happened to the NHL and the Players Association. The owners won a big one there. Will the B3 follow suit?

[Wes Bucey]

I note several things cropping up in the news aftermath of the GM blitzkrieg against its unions. Here's an example:

1. Delphi officers and top managers propose to take a 10% cut in pay until the bankruptcy runs its course, then they will get bonuses for having stuck with the company during its "trouble" and resume original pay scale.
2. Meantime, Delphi asks wage earners to take more than 50% cut, no bonus if and when Delphi comes out of bankruptcy, and the wages will remain low thereafter.

There are more auto workers in the USA that ever before. Almost all new plants and workers are in 'Right to Work' States which do not require joining a union . Why?? Union workers work as hard as non-union. It is the details, like cross training, flexibility in schedules, and working together. I worked at Ford on the main line for a few years, the stories of wasted time and money are endless. "Why are you working so hard?" was a common complaint! Sound familar??

Some managers at automotive OEM must have thought there was sufficient money to pay union workers the wages they requested. So, if the money is no longer there, how come the union guys take it in the neck and not the top managers who OK'd the original deal? If they go around and diminish all the union retiree benefits retrocatively, will they also go around and change some of the golden parachutes of the executives to black crepe? Why can they renege on the contract with unions, but not on the contract with retired executives?

In my mind, the argument is not whether unions were greedy (so what?) The argument is about the basic unfairness of the way the employees (blue or white collar) get hammered while the executives pick up millions in bonuses. If the wage earners get dropped 50% in wages, then executives should ALSO get dropped 50%.

Remember, I'm one of the executives, a "suit" who prowled the C-level suite for years. If I made a pension deal for employees, I funded it fully right from the beginning. If I couldn't afford it, I didn't make the deal. I didn't lie to employees that we'd pay and wink at my investors that we'd unwind the deal before we had to pay REAL money.

Somehow, many so-called "entrepreneurs" think it is OK to screw over employees to line their own pockets. Worse, the "wannabes" who work in middle management think they enhance their position by crushing the wage earners below them in the hierarchy. (Think "slaves put in charge of other slaves who were more cruel to the ones under their control than even the masters were.")

These middle level folk are the ones who write in to the Cove saying, "Our employees are worthless." It's as if W. E. Deming never existed. I get a wave of nausea each time I read some post where the writer wants to know how to discipline low level staff because they can't follow instructions.

For everyone who thinks unions took advantage of corporate America, let me remind you of 40-year old advice from the columnist, Ann Landers:
"No one can take advantage of you without your permission." Were the managers blind when they agreed to those featherbedding contracts? Why is the blame only the union's?

I operate under the philosophy "every workman worthy of hire is worthy of pay." Agreeing to pay one wage, getting the work, then stiffing the workman's pay is felony theft in my lexicon. Taking away an agreed pension benefit is the same as shorting the paycheck - it's theft!

If you stiff a cabdriver after you get your ride, he can and should press charges against you. Where on earth are the prosecutors who are charged with protecting their constituents from criminals who steal their benefits?

[Don Palmer]

Originally Posted by Wes Bucey

Some managers at automotive OEM must have thought there was sufficient money to pay union workers the wages they requested. So, if the money is no longer there, how come the union guys take it in the neck and not the top managers who OK'd the original deal? If they go around and diminish all the union retiree benefits retroactively, will they also go around and change some of the golden parachutes of the executives to black crepe? Why can they renege on the contract with unions, but not on the contract with retired executives?

In my mind, the argument is not whether unions were greedy (so what?) The argument is about the basic unfairness of the way the employees (blue or white collar) get hammered while the executives pick up millions in bonuses. If the wage earners get dropped 50% in wages, then executives should ALSO get dropped 50%.

IMO, 'Top Managers' will never take it in the neck. They are sworn to protection of one another and to secrecy. Retired/active top executives will not be reneged on, nor take a 50% drop in compensation, because their contract binds their tongues even to the grave.