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Wednesday, September 26, 2007

GM And UAW Settle?

Of course, it will have to be ratified and I don't know the details, and in the press conference Gettelfinger declined to discuss them:
General Motors Corp. reached a tentative contract agreement with the United Auto Workers, ending a two-day strike and winning a retiree health-care fund that offloads about $50 billion in future obligations.
UAW rep says that they did win job protections:
``We got the job security guarantees we were looking for,'' Gettelfinger said. These include a modified version of the ``jobs bank'' program that allows UAW members to receive paychecks even if there was no work for them to do, he said.

Gettelfinger predicted that at the end of the four-year contract, the union's membership will be roughly the same as it is today, assuming the company can maintain its current sales volume. The union represented 73,454 active employees at GM when talks began in July.
Here's hoping that it really is a decent settlement.

I would think that if a company had "job bank" obligations to pay workers--regardless of whether or not there is any work for them to do--said company would want to enter related and labor-intensive businesses to take advantage of this essentially "free" labor pool. Yet GM seems to be doing the opposite. A couple of years ago, for example, it sold off GM Electromotive (the diesel-electric locomotive manufacturer, which is the primary competition to GE in that market) Wouldn't it have been smarter to move some of the EMD production to Detroit and apply an unused labor pool to a growing market?
A good point!

Perhaps some of the problem is that GM really has a negative book value. Take just the additional commitments from the financing companies.... They've been selling off assets to cover losses.
The ugly details are leaking out. Primary is the union takeover of the health plan. Yep, another layer of bureaucracy and corruption is sure to fix the problem. Union administers a "Trust Fund" that is capitalized by GM.

I don't know about you but my wallet feels lighter.
They'd be lynched if they messed that up. Here's hoping they don't invest it in subslime MBS!
The offloading of medical expenses to a 'trust' is just a shell game. The problem is that the benefits cannot be paid, but there is no political good way to say that. I think they are hoping for a national medical plan.

"For the UAW, the proposed independent trusts represent both a risk and an opportunity. If Ford and GM strike similar deals, and all three funds are merged into one, the health-care fund could contain $60 billion to $70 billion. That would make it equal to the 20th-largest pension fund in the country, says Global Proxy Watch.

The UAW's biggest risk is that the fund's liability is likely to grow. A previous health-care trust negotiated by the UAW with industrial giant Caterpillar Inc. collapsed in 2005 after about seven years, in part because of runaway health-care costs. Caterpillar, its retirees and the UAW now are embroiled in litigation over who was at fault."

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