GM-UAW reach deal to end strike

[krispos42]

Source: CNN.com

GM-UAW reach deal to end strike

Marathon bargaining session reaches agreement to end two-day old strike at No. 1 U.S. automaker; union to assume more than $50 billion in retiree health care costs.

By Chris Isidore, CNNMoney.com senior writer
September 26 2007: 4:57 AM EDT


NEW YORK (CNNMoney.com) -- Negotiators from the United Auto Workers union and General Motors reached a tentative agreement on a deal early Wednesday to end a two day old strike by 73,000 workers, according to the union and the company.

Terms of the agreement were not immediately available, but the statement from the company said the deal does include the establishment of a union-controlled trust fund that will assume responsibility for future retiree health care costs from GM (Charts, Fortune 500), the nation's No. 1 automaker. Getting agreement for that shift of costs, estimated at more than $50 billion, was the key bargaining goal of the talks for GM.

<snip>

But Gettelfinger said Monday the union needed job guarantees for its members before it could agree to the cost-savings sought by the company to return its operations to profitability. The details of such guarantees, whether in the form of promises to invest in U.S. plants and build new vehicles at domestic plants, or the type of income guarantees that were were present in past contracts, were not immediately known.

The shedding of retiree health care costs by GM will be a major step towards to the company's effort to close the competitiveness gap with nonunion automakers such as Toyota Motor (Charts) and Honda Motor (Charts). But it will not come cheap for GM. The automaker will have to come up with tens of billions of dollars of cash, stock and debt to cover those future costs.

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Read more: http://money.cnn.com/2007/09/26/news/companies/uaw_gm_deal/index.htm?postversion=2007092604

[gateley]

1. This is great news -- thank you for posting it! nt

[liberal N proud]

2. Here's hope that the workers received a fair deal

Thankfully they were not out of work for long.

[tkmorris]

3. Waiting for the details, but

Initial reports are positive. I see no evidence that the UAW was forced to back down.

[cyclezealot]

4. But will the health care fund be adequately funded

With Catepillar it was not. My mom's daily pill budget comes to over 20 dollars as a Ford Retiree.

[madmom]

6. from what I understand this was one of the sticking points,

UAW wanted more than GM was willing to give.

[cyclezealot]

11. long term this is not a good turn

we have an lousy employer based health care system. Unions are only mean't to negotiate employees concerns. Without some funding formula from the employer, it only prolongs the agony.

[erpowers]

5. Cost of Building a Car

Many people have talked about how the cost of health care causes the prices of American made cars to raise higher than foreign cars. As far as I know American car companies pay their CEOs large salaries each year. Do foreign companies pay their CEOs as much as American companies?

[NMDemDist2]

7. a quick Google shows that GM's CEO took a 25% cut

Ford's new guy (from Boeing) made $28.8

but Toyota's guy is #4 on the list of the 25 top CEO salaries in the world

http://www.manifest.co.uk/news/2004/20040510Forbes.htm

[9119495]

8. National health care will save both our unions and our corporations

So get on the ball America.

[Massachusetts]

9. Bingo!

[sarcasmo]

10. Kick and Nom. My Dad who is sixty said the Corporation would have folded if the strike lasted

over a month. I believe him since he has worked at GM for 37 years. Good on them for standing up to Corporate America.

[Psephos]

12. There's another way to look at it

besides the Evil Corporation/Greedy Union dichotomy. I hear that stuff and I think about Bush and his Axis of Evil. Ideology does not improve one's ability to comprehend complexity and intertwining interests.

GM provided a solid middle class life to millions of people for many decades. UAW provided a reliable, skilled bank of labor to GM for many decades. Both have a common interest in a working relationship that allows GM to produce cars for costs on par with their competitors.

If GM's labor allocation continues to cost it $2000 more per car its competitors, it will go the way of Xerox and Polaroid and RCA. Its CEO could be paid $1 per year and it wouldn't make a lick of difference on the way to the dustbin. I realize this is an emotional issue, and an important one, but on the ledger sheet, medical costs are the bank buster.

One new car plant costs about $3-5 billion dollars. GM is obligated for more than $50 billion in medical costs for families and retirees. The system was good when people bought lots of American cars, but now many buy cars from other companies without these obligations to their workers. Something has to give. GM funds new plants out of profits. No profits, no new plants. That's the way it works.

I come from a GM family, btw.

[madmom]

14. so what about the new plants they are building outside the US? I heard

they just opened a new plant in China shortly before negotiations started and the UAW took this as a slap in the face.

[Psephos]

16. GM sells more cars out of North America than in

GM uses the profits it makes globally to subsidize its money-losing North American operations. It's nearly impossible to profitably market cars globally that carry the additional cost burden of North American manufacture, and GM has shown it doesn't have the answer to that problem.

This is tough to understand at first, but consider that the competition that actually determines the future of North American car manufacturing is not between car companies, but between their workers. Globalization's strongest effects are upon workers who were formerly insulated by national boundaries and obsolete logistical constraints. A typical UAW autoworker is making $60 or $70 an hour (including benefits and future obligations). His global counterparts make half that (Japan) or a fourth that (Korea) or a tenth that (China). The math is not difficult, and it leads inexorably to an uncomfortable political realization.

Meanwhile, it makes no financial or logistical sense to build cars in North America for the Chinese market. Because of North American production costs, no one there could afford them if they were available, and they aren't generally available anyway, because the Chinese market is not open. The government protects that market with major tariffs and regulations. The only entry is through local partnership, by building domestic car plants to produce local product. It's a Hobbesian choice for car companies, because the potential Chinese market is Earth's largest. So they suck up and do what they're told for now, so that they can keep a foot in the door for the future. That's why GM is building plants in China. The cars produced there will not be sold here.

I don't see much of a future for American car builders stuck with old cost structures.

[Blue_Tires]

13. k+r

[davsand]

15. Gee, with universal health care this strike might never have happened.

I am very happy for the UAW on this one, but you have to know that I keep thinking that if Universal Health Care was a reality in this country, this entire strike would never probably have happened. Similarly, I think the majority of contract negotiations would be much smoother if health care wasn't an issue any more.

You have to wonder when GM, Ford, and other corporations will start working to support universal health care so they can quit fighting with the unions about it.



Regards!


Laura