I’m not really sure what to say about the whole GM/auto industry mess. I’m working on some thoughts but I’m not sure it’ll amount to much. In the mean time, I thought I’d post a few random thoughts and facts. Some things to help you frame your opinion.
The UAW responds that senior UAW workers at the Big Three make about $28 an hour before benefits.
Who’s right? What accounts for the different numbers? Retirees. The companies lump all labor costs in together when they give you the figure. The UAW separates it out so that you’re only hearing what an active worker makes.
The UAW and GM cut a big labor deal in 2007 which was designed to reduce labor costs for GM in the future. For the first time, the UAW allowed for a two-tier wage structure at the Big Three. Wages could be as low as $15 an hour, but the new wage structure would apply to new hires, not current workers, and won’t be in effect until 2010 or later as more current workers retire.
With much of the Big Three’s workforce retiring over the next few years, they have essentially agreed to let future generations have lower wages without any wage reductions for themselves.
For the first time, makes the UAW responsible for the health-care benefits of the 340,000 GM retirees (or surviving spouses). More accurately, for the first time, the union and not GM will assume the risk that future health care benefits are not properly funded.
GM was to provide funding equal to more than 60% of its health care retiree liabilities. GM was supposed to contribute about $34 billion to the VEBA which would then assume $47 billion worth of health care liabilities. Ford is supposed to pay $13.6 billion out of $23.7 billion in health care liabilities; Chrysler will pay $9.8 billion.
The current crisis has prevented the Big Three from funding the VEBAs.
If it costs Ford two thousand dollars more in wages to build a Taurus than it does Honda to build an Accord, Ford has a problem. It can (a) price the Taurus $2,000 higher than the Accord, (b) cut $2,000 in amenities (lesser quality seats, tires, etc.) (c) or be less profitable. Ultimately it does some combination of the three.
What do you think?