Senate and UAW just gave up a few minutes ago ..., tomorrow is gonna hurt ... Options

[T.O.Dillinder]

Bring a little levity to the situation:


(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree1.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree2.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree3.jpg)

THE RIGHT WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree4.jpg)

THE WRONG WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree5.jpg)

Did you know that when GM had the last round of plant closings, if the TOP THREE EXECS would donate their salary for one year, they could have kept all those plants going for another three.
Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour, and target the real Greed Problem. The Presidents and CEO's of Large Corporations, Banks, and even the National Executive Committee of the UAW.
Who the Hell needs a 8 to 10 figure salary a year with such an outragous "Golden Parachute"?
It seems some of you may have never worked at the ground level before.
Try it sometime and see if you can raise a family of five on $ 11.50 an hour.
Even my late cousin Gerald Knight (Fuel System Engineer for Cadillac that retired in the 80's) said that the "Newbs" probably never changed a spark plug in their life the way they were designing the vehicles.

[94bird]

Todd, I realize this can become a very emotional issue, especially when you have relatives who are factory workers, UAW, or the like. However, plant closings haven't been solely to lessen their labor costs. Plants closings have been frequent the past few years because the OEs need to shrink their capacity.

Also, I think you'll find the CEOs of the Big 3 don't have golden parachutes in their contracts. Other industries do, but I have heard nothing of this in the auto industry. Richard Wagoner testified as such in the grillings by Congress earlier this month. Granted, he did make $16 million last year. That may seem like an exhorbitant sum, but compare that with the CEOs of companies like Goldman Sachs and AIG and it's a paltry sum.

There are still issues with UAW contracts which hurt the competitiveness of the Big 3, but the gap became much less last year with the new UAW contract. Things like the jobs bank and VEBA funding are an issue, but they are being dealt with now, under Bush's terms for the bridge loan.

What are still left are:

1. Legacy costs for having approx. 1 million retirees with their pensions and healthcare. That's a much tougher issue to solve, since none of the transplants have such a "handicap".
2. Overall debt - last I heard GM owes about 66 billion dollars. My understanding is they have to reduce that by 2/3 by getting debtholders to accept equity and other bargaining chips for their debt.
3. Reducing dealerships by 33%. When GM stopped the Oldsmobile brand, IIRC, it took them about 3 years from when they made the first announcement to when they made their last Oldsmobile. This was largely because dealerships are independent franchises, with state laws protecting their franchises. Each dealership can demand a buyout from GM before they can be forced out of business. To close a plant, new negotiations with the UAW have to happen. By the time GM shut Oldsmobile down it had cost them almost $2 billion, almost 5 years ago. That would likely cost more now, if it weren't being done under the threat of bankruptcy. The theory is debtholders are likely to take pennies on the dollar to settle a debt rather than being left out in the cold if Chapter 7 is the result. We'll see if that works in this instance.

[marka]

Howdy,

Did you know that when GM had the last round of plant closings, if the TOP THREE EXECS would donate their salary for one year, they could have kept all those plants going for another three.
Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour, and target the real Greed Problem. The Presidents and CEO's of Large Corporations, Banks, and even the National Executive Committee of the UAW.
Who the Hell needs a 8 to 10 figure salary a year with such an outragous "Golden Parachute"?
It seems some of you may have never worked at the ground level before.
Try it sometime and see if you can raise a family of five on $ 11.50 an hour.
Even my late cousin Gerald Knight (Fuel System Engineer for Cadillac that retired in the 80's) said that the "Newbs" probably never changed a spark plug in their life the way they were designing the vehicles.

Did you ever hear the saying "Two wrongs, don't make a right"?

This is a great example of that, except that there's a lot more than "two" wrongs.

To me, as an outsider, it seems that everyone in the mess that is GM is currently engaged in pointing a finger at the other parts of the mess.

To me, as an outsider, GM shouldn't have the UAW involved at all since its nothing but overhead, and executive compensation shouldn't be at the stupid level.

Mark

[marka]

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

[94bird]

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

Good question. I don't know how it directly costs GM money. It certainly makes it harder for dealerships to make money, when they have so many competitors. I can also understand an argument that having too many dealerships dilutes the brand's image. Which looks better to a customer, having a thriving dealership with a lot of customers and frequent turnover of new cars, or having 3x that many dealerships that appear much more stagnant?

Last I heard Toyota has only about 2500 dealerships across the country and GM has about 6500. They both sell similar numbers of vehicles in the US each year. GM's factories and labor force are downsizing, but their dealership presence hasn't kept the pace.

[marka]

Howdy,

Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour

My wife is a college physics professor with tenture, PHD, etc. etc.

She makes ~$55k/year.

I'd been working as a hardware/software engineer for ~ 4 to 5 years, with a BS in 'computer engineering' (basically a cross between the digital side of EE and the core classes of CS) before I passed the $60k/year mark.

I'd also be extremely surprised if the UAW worker contribution toward health care was anything like as costly as what she and I pay.

Don't go there.

Mark

This post has been edited by marka: Dec 27 2008, 04:43 PM

[marka]

Howdy,

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

Good question. I don't know how it directly costs GM money. It certainly makes it harder for dealerships to make money, when they have so many competitors. I can also understand an argument that having too many dealerships dilutes the brand's image. Which looks better to a customer, having a thriving dealership with a lot of customers and frequent turnover of new cars, or having 3x that many dealerships that appear much more stagnant?

Last I heard Toyota has only about 2500 dealerships across the country and GM has about 6500. They both sell similar numbers of vehicles in the US each year. GM's factories and labor force are downsizing, but their dealership presence hasn't kept the pace.

Yeah, I totally get how it would hurt individual dealerships, but it seems like the competition would drive dealership prices lower, which would tend to sell more cars in total compared to other brands, and all at no cost to GM directly?

People say this is an inefficency of GM, but I have yet to hear how its a GM problem, vs. a dealer problem. If anything, it seems like it would help GM a little, unless they're financially supporting their dealerships in some manner.

Mark

[BigEnos]

Howdy,

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

Good question. I don't know how it directly costs GM money. It certainly makes it harder for dealerships to make money, when they have so many competitors. I can also understand an argument that having too many dealerships dilutes the brand's image. Which looks better to a customer, having a thriving dealership with a lot of customers and frequent turnover of new cars, or having 3x that many dealerships that appear much more stagnant?

Last I heard Toyota has only about 2500 dealerships across the country and GM has about 6500. They both sell similar numbers of vehicles in the US each year. GM's factories and labor force are downsizing, but their dealership presence hasn't kept the pace.

Yeah, I totally get how it would hurt individual dealerships, but it seems like the competition would drive dealership prices lower, which would tend to sell more cars in total compared to other brands, and all at no cost to GM directly?

People say this is an inefficency of GM, but I have yet to hear how its a GM problem, vs. a dealer problem. If anything, it seems like it would help GM a little, unless they're financially supporting their dealerships in some manner.

Mark

More dealerships does drive the cost per unit down, which in turn drives the profit down for both entities. When you have 4 Chevy dealers in a 10 mile radius (which in some areas around here we do) you can certainly go from place to place and hammer them on price. Also, each franchisee is entitled to some support from the mother ship which means that you either just spend a ton and fully support them all, or you dilute your funds and settle for less effective marketing, branding, etc. Then you have delivery costs, a lot more dealer rep's for sales, service, marketing, etc.

Ford just bought out a local dealer in my area which was extremely saturated. Oddly enough it was a profitable store, but it was also on a small pad and couldn't really expand.

[marka]

Howdy,

More dealerships does drive the cost per unit down, which in turn drives the profit down for both entities. When you have 4 Chevy dealers in a 10 mile radius (which in some areas around here we do) you can certainly go from place to place and hammer them on price. Also, each franchisee is entitled to some support from the mother ship which means that you either just spend a ton and fully support them all, or you dilute your funds and settle for less effective marketing, branding, etc. Then you have delivery costs, a lot more dealer rep's for sales, service, marketing, etc.

I don't see why extra dealerships means the _factory_ would lower the price on a vehicle.

It makes sense that the dealer would need to sell the vehicle closer to the factory price, but the factory is in competition with toyota/ford/whatever, not another chevy dealer.

What support does each dealer get from the factory? The only thing I know of is per vehicle sale incentives, and that's going to be based on volume sold in total, not volume per dealer.

Mark

[robz71lm7]

http://findarticles.com/p/articles/mi_qn41...s_/ai_n19342425

I'll say one thing we only have a couple Toyota dealers in the area, both of which are astounding in size. GM dealers? Too many to count and most are pretty small. It will also cost GM a pretty penny, depending upon state franchising laws, to close some of the smaller dealers.

Also see the 3rd paragraph of this:

http://online.wsj.com/article/SB122688631448632421.html

It's like mom and pop competing against Wal-mart.

[marka]

Howdy,

Both of those articles blur the line between what's bad for the dealer and what's bad for the automaker...

I'd still like to see something that talks about costs to GM per dealer that would be cut if the dealer network was reduced. I don't buy that sales would increase with less dealers... I think if anything they'd shrink. Using Mini as an example (which is at the far end of the other extreme, with a very limited dealer network), I will not buy a Mini because I will not deal with Mini of Pittsburgh and there are no other dealer options other than going all the way to Cleveland.

I think reducing the dealer network makes sense in terms of overall "that seems silly" stuff, I just don't understand how reducing the dealer network will help GM itself and every article I've read has focused on things like dealer oversaturation, rather than how that oversaturation affects GM vs. the dealer franchises themselves.

Mark

[trackbird]

Howdy,

If an OE goes into bankruptcy, customers won't buy from them. End of story.

Bull. If anything has been proven, its that the American consumer buys the cheaper product, all else equal and often all else NOT equal. One of the saddest thing about this whole mess is that the OEMs have managed to convince folks of this particular fallacy.

Two-thirds of those polled said they would be less likely to buy a car from an auto company in bankruptcy.

From here:

http://www.cnn.com/2008/POLITICS/12/22/pol...lout/index.html

WASHINGTON (CNN) -- A new national poll Monday finds a majority of Americans approve of recent loans to big U.S. automakers, but less than 3 in 10 would support additional assistance.

Flags fly outside of the General Motors Corporation in Detroit, Michigan.

Sixty-three percent of those questioned in a CNN/Opinion Research Corp. survey support the White House loaning more than $13 billion to American automakers Chrysler and General Motors, while 37 percent opposed the move.

In exchange for the loans, the deal calls for the auto companies to show by the end of March plans for viable new business models.

The poll numbers out Monday are drastically different from a similar poll from early December.

Sixty-one percent of those questioned in a CNN/Opinion Research Corp. survey out December 3 were against the federal government providing billions of dollars to the automakers, with 36 percent favoring such a bailout.

Monday's poll shows 53 percent of Americans don't think government assistance for the automakers will help the U.S. economy.

But just 28 percent said they would approve providing the automakers with more money, while 70 percent said they would prefer to let them go bankrupt.

"The opposition to any additional assistance may be a reluctance to spend more money that they think the government may never see again," Holland added. "Only 28 percent say the auto companies involved in the current program will be able to pay all or most of the $13 billion back; one in five say they will not be able to pay any of it back to the government.

"This perceived lack of ability to pay taxpayers back may be one reason why the poll indicates auto executives are not very popular with Americans. Eighty-two percent of those questioned have a negative view of auto executives."

Union leaders don't fare well either: Sixty-one percent of those polled have a negative view of them.

Two-thirds of those polled said they would be less likely to buy a car from an auto company in bankruptcy.

The CNN/Opinion Research poll was conducted Friday through Sunday, with 1,013 adult Americans questioned by telephone. The survey's sampling error is plus or minus 3 percentage points.

[marka]

Howdy,

I'd need to see the exact poll (and who paid for it, given the automakers wailing about it in the congressional hearings) before I put any credence into the result. Even taking it at face value "less likely" doesn't mean a heck of a lot. I'd be less likely too, all else equal.

The point is to make sure all else _isn't_ equal.

I wonder how many of those polled would be less likely to buy a domestic car vs. an import? Or who'd be less likely to buy a GM vs. a Ford?

And again, despite what anyone might want to believe, the success of walmart, Harbor Freight, and others proves that we as consumers will buy the lower priced option, even if it doesn't work as well, the customer service is worse, etc.

Mark

[robz71lm7]

It's a CNN poll paid for by CNN:

"The CNN/Opinion Research poll was conducted Friday through Sunday, with 1,013 adult Americans questioned by telephone."

Of course the sampling size is non-scientific IIRC and who knows how the questions were phrased.

I think the example of Mini, as you admitted is too far in the other direction. Mini is very stretched it sounds like, whereas in my hometown you could eliminate 1/2 the Chevy dealers and still have more than twice as many Chevy dealers as Toyota dealers.

The costs to buy out the dealers varies state to state and as of this time I haven't seen any numbers on what that might cost. However, with no capital up front it's not something they could've pursued.

[robz71lm7]

Howdy,

Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour

My wife is a college physics professor with tenture, PHD, etc. etc.

She makes ~$55k/year.

I'd been working as a hardware/software engineer for ~ 4 to 5 years, with a BS in 'computer engineering' (basically a cross between the digital side of EE and the core classes of CS) before I passed the $60k/year mark.

I'd also be extremely surprised if the UAW worker contribution toward health care was anything like as costly as what she and I pay.

Don't go there.

Mark

I strongly agree with what Mark has said here. The problem is many of these UAW workers are unskilled and wouldn't have a chance of making that much on the open market. Where I work we employ union mechanics, I/E techs, and operators who make about the same pay. I think it's fair because our union employees are actually worth that much. They could find a job on the open market with comparable compensation. FWIW, with a bachelors and masters in mechanical engineering I make about half of what union employees at our plant make-and I have authority over them.

My point is the UAW really is a unique situation here and is costing GM more than it should for labor.

[94bird]

My point is the UAW really is a unique situation here and is costing GM more than it should for labor.

I think everyone agrees with that, which is why the contract signed with the UAW last year allows the OEs to bring in new workers at about $14/hr, instead of the current $30/hr average. Problem is buying out a large percentage of the workers who are working at a higher wage, is costing $50K-$100K per worker. That's a boatload of money that the OEs thought they could afford, and now realize they couldn't. It's also getting very hard to find more takers, as many of the workers who took buyouts are still unemployed, or are working at minimum wage a year or more later. A "retired" auto worker can burn through that kind of cash very quickly if he's working at near minimum wage with very limited or no benefits. That reality is now common knowledge with current workers. Many of them are staying put and taking their chances that the Detroit 3 will make it out of this mess, and they'll be better off than taking a buyout. Of course, with these new terms for company viability, may come the end of buyouts as we have known them for the past few years. We'll see how many strings are attached to layoffs of workers after March 2009.

OTOH, as a salaried engineer at GM, if they want to lay me off, they don't have to give me anything. As a courtesy they might give me one month's pay for every year I've worked there. Many of you may have heard that Chrysler's plants are shut down until Jan. 19. The UAW workers will get paid about 95% of their normal wages through collecting unemployment and getting Jobs Bank money from the UAW, or so I've heard on the news. The salaried workers like engineers and other plant employees will have to burn through vacation time or just not get paid. The disparity isn't lost on me, believe me.

[StanIROCZ]

The salaried workers like engineers and other plant employees will have to burn through vacation time or just not get paid. The disparity isn't lost on me, believe me.

I work for a tier 1. GM and Chrysler's releases to us are down to ZERO for the month of January. In response, we had to shut down completely, that means even the Engineering office that is located 800 miles away shuts down. I'll be at home collecting unemployment, and hopefully use my time off to put a cage in my car. I'm not totally bummed out about it since it is only one month and I'll be ok, assuming I go back to work and stay employed etc etc, but I don't get 95% of my salary while I sit at home are you freaking crazy?

Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour, and target the real Greed Problem.

A very good percentage of those people made over 100k for many years after they work a little overtime at 1.5x, 2x, and 3x. I’ve even heard of a couple people making over 200k/year.

I don’t care too much about how much they get paid / hour. It is higher than it should be, but my biggest gripe is how big of a pain in the ass it is to work with the UAW and Skilled trades. Its one thing for them to get paid a lot and be hungry for work and high degree of respect and professionalism and quality, but they don’t. Many of them are spoiled brats.

I worked in a UAW plant for a couple years and this is just a sample of some things that I remember coming from them:
“I’m not doing it, that’s not my job”
“I’m calling my committee man”
“Can’t you see that I was busy sleeping… reading the newspaper…etc, don’t bother me” (wasn’t actually said, but definitely implied)
“why should I bust my ass and finish this job? I need to milk this so I have to come in on Sat and Sunday and get paid 2x or 3x or whatever” (wasn’t actually said, but definitely implied)

You are getting paid a crap ton of money, QUIT YOUR BITCHING AND DO YOUR FREAKING JOB!! This isn’t true for everyone, but it is for a decent percentage. Many of the people aren’t concerned about making good product or making/saving the company money. Only concerned about extracting as much money as possible, do as little work as possible, and be a pain in the ass the whole time. And because of the foot hold that the Union has these bad apples can get fired but will come back to work after a short time.

How can union company be competitive with this mindset?

A friend of mine and my father-in-law are both in skilled trades, and they aren't bad apples. But they are getting hurt by this.

The Presidents and CEO's of Large Corporations, Banks, and even the National Executive Committee of the UAW.
Who the Hell needs a 8 to 10 figure salary a year

I agree with this too. John Wagner, your company is in the hole, you don’t deserve your 8 figure salary and you certainly don’t need that much to live.

There isn’t just one problem, there are many.

Hopefully I don't ruffle too many feathers here.

[00 Trans Ram]

I'm rapidly getting out of my element here, given that no one I know is employed by a union, and (living the Deep South) am very unfamiliar with the intricacies of the situation.

However, let me focus on one thing I've seen a few times. I've read that some of the workers make upwards of $100k by working overtime. This means that GM has to pay them at least time-and-a-half, and perhaps more (if it's a holiday or whatnot). That sounds AMAZINGLY inefficient.

I realize that the factory may need workers at some times and not others. But, paying 150% salary is not the answer. They should do what the healthcare industry does - hire part-time, on-call workers. We have PRNs that are nurses. They are not full time, so they get no benefits. They come to work when we are busy and need extra staff. Then, they go home when it's not busy. They are usually inexperienced and therefore get less $$ per hour.

[StanIROCZ]

hire part-time, on-call workers. We have PRNs that are nurses.

Wouldn't that be great. If an engineer or any non-Union individual even touches a wrench, a grievance can be filed. It is different in every plant, but I've seen / heard of it happening.

[rpoz-29]

By federal law, hours over forty in a work week are compensated at 1.5 times regular pay.