Gotta Love Unions

[gear02]

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B693892B5%2D6C5D%2D4069%2D9323%2DC5F20706D913%7D&dist=rss&siteid=mktw&rss=1



GM31.99, +1.33, +4.3% ) said its net loss widened to $3.2 billion, or $5.62 a share, from $987 million, or $1.75 a share, in the year-ago period. GM said its loss included a total of $4.3 billion of one-time charges, including $3.7 billion for buying out 34,000 hourly union employees. Other charges included a loss related to the pending sale of 51% of its financing arm, General Motors Acceptance Corp. and a gain on the disposition of Isuzu stock.

$3.7 Billion divided by 34,000 = ~$109,000 PER PERSON (on average).

Hourly workers? $109,000 average? Damn...:throw:

[gwilks98]

Unions are definitely a cost center, applied in the end, to the consumer.

[InfiniteNothing]

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B693892B5%2D6C5D%2D4069%2D9323%2DC5F20706D913%7D&dist=rss&siteid=mktw&rss=1



$3.7 Billion divided by 34,000 = ~$109,000 PER PERSON (on average).

Hourly workers? $109,000 average? Damn...:throw:
That's not salary, that's the buy out. GM did that to save money in the long run

[LegendKiller]

Yeah, you figure thats about 2.5 years of salary, base, maybe 2 with moderate overtime, and about 1.5 for a overtime working senior union worker.

It'll be interesting to see how they fare in the next couple years. Can management utilize the lowered cost structure to compete quality wise with foreign manufacturers?

[cheapie]

plus any unemployment benefits as well paying for job training for other careers and placement assistance.

[Jeffbx]

Part of the reason that it's so high is because they offered a $140,000 buyout for employees with 10 years or more of service but who were not yet eligible for retirement. HOWEVER - in accepting that 140k, you give up all of your health care coverage that normally follows the employee when they retire.

Over the long run, it'll save them $$, and if the employee is smart, they'll be able to get by with no problems - they have until the money runs out to find another job with full health benefits.

Unfortunately, I've already been hearing of people who took the buyout who are planning on 'taking a couple of years off' before they try to get back into the working world. Those people are going to be screwed.

[zippyjuan]

Buyouts are used to get employes to retire early. They offer the employee a sum of money usually based on years of service up to a maximum but the employee agrees to sever relations with the company. Their pension is frozen at what they are presently qualified for (that may have increased for a worker if he stayed on and worked more years) and as Jeff says they give up any other retirement benefits like health insurance which they will now have to purchase on their own or use a spouse's plan. The company expects to make up the money by either not replacing the workers or hiring lower cost new employees. The one time charge results in both immediate and long term savings on labor costs for the company. I am not sure if the buyout is a deductable expense for the company. It does not necessarily mean that the employees were making that much money. The worker has the option to accept or decline the offer- it does not automatically force them to take it. A buyout is usually offered to the most senior employees (not all) since their salaries and retirement costs would be the greatest.

They will still need to make cars people will want to buy.

[redcolours]

i love em too, especially in soup!

oh wait. you said Unions.

[Showtime]

I understand why people are mad at the unions and are blaming them for the low quality/high priced services in America. It's easy to point at unions because those are people we come in contact with and hear about or witness acting stupid or lazy. I agree that the unions have helped mess things up with their demands and poor work ethic, but they are just a small part of the problem. CEO's are just as bad or worse and they set the tone for the whole company. When they get over, it's got to have a bad affect on all the people in the company. 3.7 billion dollar buyout is a lot, but is nothing compared to Pacific Cares CEO getting 1.6 Billion dollars worth of stock for basically setting up a poor merger. It's not just that he got it, it's how he got it. Unbelieveable. :disa: That merger will give the consumer less and cost them more. It's like we are paying to get screwed over.

http://www.sptimes.com/2006/04/24/Columns/CEO_pay_eclipses_ridi.shtml

[InfiniteNothing]

Also, even if it does cost more to the consumer it goes to a good cause: A living wage for your fellow American. I can't stand how much job security it gives the workers though.

[Freelance Superhero]

from what i understand, the GM people are actually optimistic about this, because although the net loss is $4.3 billion, if one were to discount the losses from the employee buyouts, GM actually made more profit than they did last year. as a matter of fact, if i remember correctly what i heard, stocks actually went up after the announcement. plus, by their own figures, GM expects this corporate move to be a money saver/maker for them in the long run. so they ain't necessarily cryin any rivers over this either...

[InfiniteNothing]

Everyone's optomistic. It caused a what, 10% jump in stock price?

[VTGreg]

from what i understand, the GM people are actually optimistic about this, because although the net loss is $4.3 billion, if one were to discount the losses from the employee buyouts, GM actually made more profit than they did last year. as a matter of fact, if i remember correctly what i heard, stocks actually went up after the announcement. plus, by their own figures, GM expects this corporate move to be a money saver/maker for them in the long run. so they ain't necessarily cryin any rivers over this either...

This is absolutely a good thing for GM. It allows them to lower their future operating expenses. They are buying out individuals that would have received a pension and benefits for life once they retired. These workers will be replaced by individuals that will not receive the same long term compensation/benefits and this will significantly lower their operating expenses.

This move will make GM competitive in years to come as long as they can manufacture quality cars that the public is excited about.

The unions need to get realistic about the future of manual labor in the United States. They need to except the fact that the future of these jobs include low pay and limited benefits or the US manufacturers are going to close down shop and move the plants overseas.

[InfiniteNothing]

I dunno, there must be a way to give so many Americans decent wages and still keep GM competitive. I think they should just focus on building what the consumer wants and improving reliability and then sell like mad.

[VTGreg]

I dunno, there must be a way to give so many Americans decent wages and still keep GM competitive. I think they should just focus on building what the consumer wants and improving reliability and then sell like mad.

The problem is that foreign manufacturers can build what the consumer wants and are more reliable yet they are less expensive than American made cars.

In addition, the margin that GM makes on each car is about 1/5 what foreign manufacturers make. A major component of this is the salaries of American union employees.

Unless Americans are willing to pay more for worse quality, GM will struggle to make a profit.

[InfiniteNothing]

The problem is that foreign manufacturers can build what the consumer wants and are more reliable yet they are less expensive than American made cars.

In addition, the margin that GM makes on each car is about 1/5 what foreign manufacturers make. A major component of this is the salaries of American union employees.

Unless Americans are willing to pay more for worse quality, GM will struggle to make a profit.

With margins like that, foreign competition does seem like it has an unfair advantage.

[Jeffbx]

With margins like that, foreign competition does seem like it has an unfair advantage.


They do have an advantage, but it's debatable whether it's unfair.

The primary reason for the advantage is that GM gave such generous salaries, medical benefits & pensions to their employees (they're not called Generous Motors for nothing!). These benefits are still ongoing for tens of thousands of retired workers - there are actually more retired workers than active employees who get full medical, dental, prescription drug, life insurance AND a pension. This is KILLING their profit margin.

Who's to blame? Well, themselves, of course, for handing out these 'benefits for life' back in the 50's & 60's. Then the unions for bullying them (and Ford & Chrysler) into continuing the coverage, and increasing them to make it difficult, if not impossible, to fire any workers or close any plants.

Long, long after GM could afford to do so, they were paying their workers exorbitant wages & retirement benefits. That's what put them in the position they're in today. Now they're trying to fix what should have been adjusted 20 years ago.

[InfiniteNothing]

They do have an advantage, but it's debatable whether it's unfair.

The primary reason for the advantage is that GM gave such generous salaries, medical benefits & pensions to their employees (they're not called Generous Motors for nothing!). These benefits are still ongoing for tens of thousands of retired workers - there are actually more retired workers than active employees who get full medical, dental, prescription drug, life insurance AND a pension. This is KILLING their profit margin.

Who's to blame? Well, themselves, of course, for handing out these 'benefits for life' back in the 50's & 60's. Then the unions for bullying them (and Ford & Chrysler) into continuing the coverage, and increasing them to make it difficult, if not impossible, to fire any workers or close any plants.

Long, long after GM could afford to do so, they were paying their workers exorbitant wages & retirement benefits. That's what put them in the position they're in today. Now they're trying to fix what should have been adjusted 20 years ago.
But like I said before, decent salaries and benefits aren't so bad. I think the problem is that we shouldn't measure success and worth solely in terms of dollars and cents but also in providing a decent quality of life. It's hard to put a number on what's excessive: it takes six figures to afford a decent house in San Diego these days. If GM decides to cut off the retireees then they are on welfare and we pay for them through there. Higher wages also turn into greater tax revenue.

[guiseppewv]

Also, even if it does cost more to the consumer it goes to a good cause: A living wage for your fellow American. I can't stand how much job security it gives the workers though.

A living wage? When you can make $100k+ "working" in a WV, KY, or PA coal mine with less than a HS diploma and no real skills or work ethic to speak of I say you are getting waaay more than a "living wage". These people are making a boat load of dough and not contributing much, if at all, to the industry.

[guiseppewv]

But like I said before, decent salaries and benefits aren't so bad. I think the problem is that we shouldn't measure success and worth solely in terms of dollars and cents but also in providing a decent quality of life. It's hard to put a number on what's excessive: it takes six figures to afford a decent house in San Diego these days. If GM decides to cut off the retireees then they are on welfare and we pay for them through there. Higher wages also turn into greater tax revenue.

Does GM have a plant in San Diego? B/c in MI, where most of their employees are, you can afford a really nice house on much less than that.

[bachviet]

If GM is going bankrupt, same thing will happen to the retirees.

[InfiniteNothing]

Does GM have a plant in San Diego? B/c in MI, where most of their employees are, you can afford a really nice house on much less than that.
I'm open to a quick analysis of what a living wage would be in Detroit. I'm really not sure if what they are getting is excessive or not. I was only making the point that what might sound excessive may actually not be excessive. In terms of HS diploma, I can think of a number of jobs that command a reasonable wage off a HS diploma. I don't think one should necessarily have to go to college to make a decent living because college is accessable and doable by all. Not only that but we have to have someone building the cars or mining.

[LegendKiller]

A living wage? When you can make $100k+ "working" in a WV, KY, or PA coal mine with less than a HS diploma and no real skills or work ethic to speak of I say you are getting waaay more than a "living wage". These people are making a boat load of dough and not contributing much, if at all, to the industry.

I would generally agree with you. However, I'd also need to see how many hours you are basing that off of. My father, a Teamster, could make a decent amount when he was working 70+ hours/wk during the "season" at Coke. Sure, he made a lot, but we hardly saw him. Same thing with my mother during the USPS season.

Many of those people work a crap-ton of hours to make that much and I have no problem with them doing it.

[guiseppewv]

I agree *if* they are actually doing work while they are at work. I worked 2 summers and 2 winters in the coal mines as a EE intern and let me just tell you that I saw an awful lot of sleeping going on. If someone was caught sleeping the union would defend them to the point that it was impossible to discipline them. When I say an awful lot of sleeping was going on, I mean probably 2.5-3 hours in a 10 hour shift, on average. That is being fairly conservative.

[Jeffbx]

Examples from the motor city -

In SE Michigan (where all of the auto HQ are located) - typical suburban 2000 sq. ft. house will run $200-250k, depending on the area. Cost of living is about 20% lower than say, LA or NYC.

Hourly rate for union employee at GM: $30/hr (actually, $29.75 but we'll round up for simplicity).

Overtime is time and a half - $45/hr
Holidays are double time - $60/hr

Full year with no overtime is about $60k

Add 10 hours of overtime per week and you're up to $82k. 20 hours of overtime, or throw some holiday pay in there, and you can top 100k easily.

So a high school educated laborer can pull down 60k without thinking about it, and 100k or more by working the kind of hours the typical salaried worker is there anyway. For this, we get cars with an extremely low quality image, and a much higher cost compared to Japanese imports.

I dunno about the rest of you, but when an uneducated worker can pull down six figures and someone has the gall to call that 'a living wage', it kinda bothers me. Michigan, Ohio and Indiana's entire economies are at a dead standstill, and people STILL argue that it's necessary to pay these kind of rates, give free healthcare for life and not close any plants. We're barely keeping our heads above the water, and you keep handing us bricks. Either something has to change, or something has to fail, and whatever happens, it'll be big.

[InfiniteNothing]

At $250,000 you're looking out housing payments of around $1700 use the rule of 3 and you get an income needed of around $60K. So, I guess if GM uses excess overtime that's poor management but I'm not going to blame a guy who wants to work a ton of overtime. I agree that GM has to get their quality image up but the prices is the price it takes to give 100K Americans a decent life. If Japan doesn't have the burden of giving Amercians a decent life, then they have an unfair advantage and we have two options: import tarrifs or exporting American jobs.

College, IMHO is a choice. In our society, not every position requires a college degree and as such one should take a college degree if the lifetime earnings are greater than the cost of the eduction and if where they want to work requires a college degree. But I don't think it's something people should have to do to make a decent wage. I agree things have to change. I think overtime might be a good place to hit. Close down plants if they aren't doing well economically--I'm fine laying off people if they are not needed.

[InfiniteNothing]

I agree *if* they are actually doing work while they are at work. I worked 2 summers and 2 winters in the coal mines as a EE intern and let me just tell you that I saw an awful lot of sleeping going on. If someone was caught sleeping the union would defend them to the point that it was impossible to discipline them. When I say an awful lot of sleeping was going on, I mean probably 2.5-3 hours in a 10 hour shift, on average. That is being fairly conservative.
I admit, something needs to be done about this. That's not fair either. Anyone have good ideas that don't involve union busting? I'd really side probuisness on this particular issue.

[guiseppewv]

It is def a sticky situation. If you remove the unions completely then the businesses run amok. If you leave them in place then you have a huge overhead that is put on the business and then it is hard for them to be competitive.

[LegendKiller]

I agree *if* they are actually doing work while they are at work. I worked 2 summers and 2 winters in the coal mines as a EE intern and let me just tell you that I saw an awful lot of sleeping going on. If someone was caught sleeping the union would defend them to the point that it was impossible to discipline them. When I say an awful lot of sleeping was going on, I mean probably 2.5-3 hours in a 10 hour shift, on average. That is being fairly conservative.

I certainly agree there. When I was working at the USPS during summers I saw drunk people driving forklifts, sleeping people sorting mail, and idiots running things.

It was quite disappointing. Even worse is that there is a culture that hard workers *must* become poor workers, or else they hurt the union by becomming too productive and eliminating jobs. I have seen people go from very hard, dedicated, and good workers to utter garbage because their "brothers" told them to fall in line.

At the same time, my mother was almost terminated by a rogue supervisor who had it out for her. The union stepped in and smacked the supervisor down, saving my mom's job. So I have seen the good and bad.

[guiseppewv]

It was quite disappointing. Even worse is that there is a culture that hard workers *must* become poor workers, or else they hurt the union by becomming too productive and eliminating jobs. I have seen people go from very hard, dedicated, and good workers to utter garbage because their "brothers" told them to fall in line.


That is the worst. Forcing hard workers into becoming slackers b/c they are too productive. :disa: It is sad but true. The union is there to generate and protect jobs not efficiency or productivity.

[Jeffbx]

I agree that GM has to get their quality image up but the prices is the price it takes to give 100K Americans a decent life.

But what about every other worker out there? What incentive is there for them to support the vastly overpaid union worker? Why does the average joe with no college education making 25k/yr have to pay more for a car so that these union workers can make a 'living wage' of 60-100k? GM is not paying them that money - everyone who buys a car is.

At its base, it's legal extortion. Unions force & bully corporations into giving workers outrageous wages, and then launch a huge campaign to guilt people into buying 'union made' products. It's not about worker safety or fairness anymore - it's seeing how much money can be squeeed out of the company to overpay inefficient workers. And who pays for it? The consumer, not the company.

[InfiniteNothing]

Well, first I think with an income of 25K you're looking at the lowest 1/5 percentile. Their situation sucks but I don't see why they couldn't afford a used Chevy.

The consumer may or may not pay more for the car because of hidden costs such as the cost of welfare if GM were to cut retirement benefits or decreased tax base because people don't make as much on average. To be honest I think everyone needs to accept that a high quality of living for as many people as possible is expensive for everyone. The hidden benefits might be lower crime rates which could solve prison over crowding problems.

I'll be the first to admit unions aren't perfect institutions.

[guiseppewv]

Their situation sucks but I don't see why they couldn't afford a used Chevy.


I don't think anyone can afford a used chevy, cuz they require too much repair work. :P ;)

[InfiniteNothing]

Yeah, I guess they'd just end up taking the bus every other day either way ;)

[Jeffbx]

So they guy making $25k can buy a used chevy, but the union guy needs a minimum of $60k to live? And it doesn't matter if it's $25k or $40k - why does the consumer need to support the overpaid worker?

My point is that these expenses are killing our ability to compete. How many people here would be buying American cars if they were as reliable, as efficient and cheaper than foreign? That's what we should be selling. Instead, we have manufacturers staffed with overpaid workers who 1) are motivated to work slowly, 2) have no fear of being fired, and 3) take no ownership in their work.

Not only am I saying that unions are not perfect, but they're actually contributing to the desctruction of the entire American automotive workforce. Chrysler is now a German company; GM is looking to Nissan and Renault to bail them out - in time, I predict either Honda or Toyota will be snagging up Ford.

I see no redeeming qualities in automotive unions anymore. None whatsoever.

[InfiniteNothing]

I don't agree that at 60K they are over paid. Why does Joe American need to support Union Man, because supporting a living wage is the right thing to do.
I say the thing that's killing GM is primarily foriegn competition that doesn't have the same setbacks. Without foriegn competition, the big three are equal footing. There are also other factors killing GM, including poor management (leading to overtime and poor design/quality), and unmotivated workers (probably contributing somewhat to poor quality). I say leave that portion for GM to solve. As for foriegn competition, we simply need to accept that tarrifs need to rise to put everyone on equal footing or factories have to be exported. I don't think, "who can lower wages and squeeze their workers most" is a fair game to play. The fair game to play would be "who can inovate best and make each person count" is a better game to play. Think about it this way, you can hire cheap people to sew by hand vs if wages are forced high you have to invest in a sewing machine to make the person worth their rate.
I think, without the union, the workers would get trampled. LK had a good example. It prevents favoritism, ageism, and all other forms of discrimination not explicitly protected. Unions improve working conditions. They improve wages for everyone (if they guy below you makes as much as you, you might be inclined to ask for a raise). I can go on but I feel this is obvious.

[VTGreg]

I don't agree that at 60K they are over paid. Why does Joe American need to support Union Man, because supporting a living wage is the right thing to do.
I say the thing that's killing GM is primarily foriegn competition that doesn't have the same setbacks. Without foriegn competition, the big three are equal footing. There are also other factors killing GM, including poor management (leading to overtime and poor design/quality), and unmotivated workers (probably contributing somewhat to poor quality). I say leave that portion for GM to solve. As for foriegn competition, we simply need to accept that tarrifs need to rise to put everyone on equal footing or factories have to be exported. I don't think, "who can lower wages and squeeze their workers most" is a fair game to play. The fair game to play would be "who can inovate best and make each person count" is a better game to play. Think about it this way, you can hire cheap people to sew by hand vs if wages are forced high you have to invest in a sewing machine to make the person worth their rate.
I think, without the union, the workers would get trampled. LK had a good example. It prevents favoritism, ageism, and all other forms of discrimination not explicitly protected. Unions improve working conditions. They improve wages for everyone (if they guy below you makes as much as you, you might be inclined to ask for a raise). I can go on but I feel this is obvious.

There are laws to prevent favoritism, ageism and all other forms of discrimination in the workplace.

Unions actually hurt many workers because they base virtually all compensation on time served instead of merit.

You are looking at this issue in a box. Business is a world affair now. No one will pay more for a product that is lower quality. If tariffs are raised on goods coming into our country then this also impacts goods going out of the country as other countries follow suit in protest. Then you have investors in all of these companies that take money elsewhere when American companies cannot compete and make less money resulting in corrections in stock prices.

Automotive unions (and most other unions for that matter) no longer serve a process. They celebrate mediocrity and bureaucracy and are a drain on the American economy. If workers want a better life, they need to go back to school, receive an education and change their career path. We no longer have textile mills in this country because it can be manufactured much cheaper in other countries. Those textile workers found new jobs.

In the end, workers who's career's are in manual labor must either find a niche (plumbers, electricians, etc.) or find a new career if they want to maintain a middle class lifestyle.

[zippyjuan]

Jobs that can support a middle class lifestyle are disappearing in this country. Job growth is primarily in the low wage, little or no benefit service sector. If the citizens do not make enough to buy a new car, then the car industry will not be able to sell as many new cars. Henry Ford realized that and made sure his workers earned enough to buy one of the cars they helped build- salaries higher than most other occupations at the time were paying. And it helped him sell more cars. As all businesses try to improve their bottom line by reducing their costs (labor) the economy as a whole has less to spend on items the businesses are producing. A healthy middle class means a healthy economy and usually more stable social situations (lower crime, etc).

[InfiniteNothing]

I'd like you to show me the law against favoritism. I know a number of ununionised people with no grevience process that could use the citation. In terms of ageism, the law says employers are free to discriminate below 40years old. Think about cassino dealers who get crap jobs because their looks are fading. Unions pick up where the law ends: burden of proof. Just because someone doesn't have the resources (huge lawyer, investigation, etc) to prove discrimination doesn't mean discrimination doesn't exist. Unions help balance this equation.

Tarrifs won't hurt in the other direction... about the only thing we export is jobs. ;) It may be a global economy but, I find the game of "who can squeeze the worker most" unacceptable. Lets take the high road on this. Perhaps, a tax break is in order to Americans who buy American made cars over 30 MPG. Mabye the US should invest into Automaker research. I honestly believe you can substitute innovation for man power (see sewing example. It seems to be a worthy subsidy since it seems to help so many people.

[Jeffbx]

Perhaps, a tax break is in order to Americans who buy American made cars over 30 MPG.

What's an American made car?

Anything with GM or Ford nameplates on it?
The Toyota that was manufactured in Kentucky?
The Ford that was designed in Japan but built in Michigan?
What about Dodge? Is that American or German?
What about a Japanese nameplate on an American built car that was assembled by non-union workers?
How 'bout the Saturn - designed here, built here, but has a Honda engine?

We're a global economy these days - there are no more 'American' cars in the traditional sense of the word. This is another HUGE problem with US unions - they can't grasp this simple fact. There is still a big 'us vs. them' complex going on, but they don't realize there is no more 'them'. It's all 'us' now, and 'us' encompasses US, European and Asian manufacturers, engineers & laborers.