GM's recent move to early retire their skilled labor is a great example of labor arbitrage by nation-states. The reason is so they can match labor costs to Mexico for manufacturing a new car in the United States. Remember all of that talk about fixing NAFTA?
I suppose that this shouldn't be a surprise given the number of "Chicago Boys" in the Obama administration.
Washington -- General Motors Corp. won't terminate its hourly pension plan, the United Auto Workers union told its members today -- a move that could have cost retirees thousands of dollars in lost benefits.
The New York Times is reporting Chrysler has made a deal with the UAW and is headed to a Chapter 11, pre-arranged bankruptcy that is not a liquidation.
The deal includes Fiat, the Italian automaker with which Chrysler was ordered by the government to form an alliance before Thursday.
Neither the United Automobile Workers union nor the company released details of the tentative agreement, which would modify the union’s 2007 contract and reduce the amount of money Chrysler must pay into a new health fund for retirees.
Some of the terms, which are not officially released are:
Anyone else notice that most of these negotiations from the auto industry involve squeezing the workers? Nothing about modifying trade agreements or bad cars or their supply chain.....
People close to the talks, however, said the union’s health care trust would most likely end up owning more than 20 percent of Chrysler.
That could make the trust, for a time, the single-largest stakeholder in the automaker.
The proposed alliance with Fiat would give the Italian firm an initial 20 percent stake in Chrysler, with an opportunity to increase its ownership to 35 percent.
The union is also in talks with General Motors about a similar arrangement to allow G.M. to contribute stock to finance half of a $20 billion health care trust for its retirees.
President Barack Obama's auto industry task force was expected to offer additional aid to General Motors Corp. and Chrysler LLC while setting firm deadlines for the companies to get concessions from their stakeholders.
Buried deep in the article detail paragraphs is this:
Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The loan agreement also called for executive pay cuts and labor costs that are competitive with Japanese automakers with U.S. operations.
In other words, going to almost Walmart wages for advanced manufacturing jobs.
I find nothing more irritating than dealing with people who think that the collapse of GM isn't going to affect them. Even worse are the people who believe that they market will sort it out.
The biggest irony is that the Just in Time (JIT) production system employed by Toyota and the other transplants is extremely vulnerable to any supply disruption. And because GM and Toyota share a common supplier base, a collapse at GM would put workers at Toyota's North American operations out on the streets. Because a GM collapse would cut Toyota's supply chain.
The UAW, the auto workers union, is looking to get a seat on the board of GM.
The United Auto Workers union wants a seat on General Motors Corp.’s board in exchange for money- saving concessions to help U.S. carmakers win federal aid, a local president said.
I personally would not want to see anything that would result in a consolidation. That would mean the elimination of additional jobs," Gettelfinger said on a political webcast run by WWJ-AM in Detroit
From a local Indiana station, they interviewed workers and one can see the main issue as to why people are not buying cars:
We haven't committed to buying a car yet because we don't know where the economy is going to be and we don't know if the finances are going to hold out to buy a new car
Remember the old adage where Henry Ford knew he had to pay his workers enough to afford the products they were making?
Finally a reasonable move by GM. Today they announced a new 40+ MPG car and are retooling a plant in Ohio to make them.
About time. How long have people been screaming for fuel efficient cars where the technology has been around for 40 years plus hire US citizens to make them?
GM offers buyouts to 74,000
Auto giant aims to replace much of U.S. workforce with lower-paid new hires, dangling $140,000 buyouts to UAW members to stem North American losses
In an effort to shave ongoing losses, General Motors offered lucrative buyouts Tuesday to 74,000 employees - its entire U.S. hourly workforce.
The nation's largest automaker announced the latest round of buyouts as it reported another loss on its core auto operations in the fourth quarter, which combined with charges taken earlier in the year left GM (GM, Fortune 500) with a company-record $38.7 billion net loss for 2007.
To try to stem automotive losses that have dogged the company since 2005, the company is making a range of offers, up to cash payments of $140,000 to the remaining 74,000 GM workers represented by the United Auto Workers union.
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