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GM, UAW to discuss impact of cutbacks



Published: Tue, January 13, 2009 @ 12:08 a.m.

By Don Shilling

Expect the UAW to extend its pay freeze to ease GM’s cash crunch, one observer says.

General Motors is widely expected to continue slashing jobs, but less clear is whether union workers’ paychecks will be cut as well.

Negotiators from GM and the United Auto Workers are talking this week about how to meet federal authorities’ demand that union concessions be part of the automaker’s restructuring.

Don’t look for the UAW to agree to cut wages, said Sean McAlinden, vice president of research for the Center for Automotive Research in Michigan.

He predicted union leaders will agree to freeze pay until GM is able to pay back the loans that it is accepting from the federal government. He thinks the payback could take six to eight years but noted that union workers already have a pay freeze in place through 2011 under a contract signed in 2007.

A pay freeze would have to be ratified by union members.

Benefit concessions will be minimal, McAlinden said. The UAW already has said it will suspend its jobs bank, which pays laid-off workers once other state and company benefits expire.

Other concessions won’t affect workers as long as they remain on the job, McAlinden said. The union may agree to reduce supplemental benefits for laid-off workers, and it may accept noncash payments, such as promissory notes, for half the amount that GM is to pay to a new fund for retiree health care, he said.

UAW officials will deal with other issues with vague statements, such as the promise to talk to local union leaders about changing work rules, McAlinden said.

Another observer, Dennis Virag, president of the Automotive Consulting Group in Michigan, is not willing to rule out the possibility of pay cuts or reduced benefits.

“It’s too early to rule anything off the table,” he said.

UAW leaders want to protect pay and benefits, but they also know that the corporation must survive for union workers to have their jobs, Virag said.

He noted, however, that there are reports that UAW leaders are pushing for President-elect Barack Obama to remove demands for concessions from the UAW once he takes office. Also, House Democrats are supporting a bill that would strip concession demands out of the federal loan package.

Virag said he doesn’t think such efforts will succeed because lawmakers know that many nonunion workers are faced with cuts and expect the UAW to accept cuts as well.

“It’s a sore point for everyday American voters, and that causes a lot of pressure,” he said.

Under the terms of the $17.4 billion granted to domestic automakers last month, the companies have until Feb. 17 to find a way to bring their labor costs in line with those of foreign-owned auto plants in the U.S. GM and Chrysler need to include those concessions as part of restructuring plans they must submit by March 31. If the deadline is not met, the government can demand its money back.

McAlinden said Toyota pays workers at its older U.S. plants up to $26 an hour and Honda pays $25, while the UAW rate at auto plants is $28.

He also noted that workers at foreign-owned plants pay 20 percent of health-care premiums, while UAW workers pay 7 percent.

The foreign-owned plants also have fewer job classifications, which allows them to operate with fewer skilled-trades workers because they can be cross-trained for more jobs, McAlinden said.

Both McAlinden and Virag expect large reductions in the number of employees at the domestic automakers.

In coming years, McAlinden expects GM to reduce its hourly employment from 65,000 to 50,000. He said he thinks Ford will reduce hourly staff from 42,000 to 35,000 and Chrysler will cut its work force from 32,000 to 17,000.

GM has provided buyouts to workers twice in the past three years, but those will not be given now that the automaker is receiving federal aid, McAlinden said.

He said he thinks GM can reach a reduction of 15,000 people over four years through normal attrition.

The cuts mean a second tier that provides lower pay and benefits for new hires will not help the automaker, he said. Because of recent layoffs, few new hires remain employed, and there won’t be a need to hire more workers as the automaker cuts its staff, he said. The second tier was created in the 2007 labor contract.

shilling@vindy.com


Comments

1irighti(3 comments)posted 5 years, 8 months ago

It's not the hourly pat that the UAW has to get real with. It's paying more for medical coverage, reducing job classifications so you don't have to be an electrician to flip on the lights and the infamous job bank.

Who is the UAW trying to kid? The vast majority of people in the US hate unions and would NEVER belong to one. UAW members have to come to the realization that wages and rules have to allow the company to remain viable. If not, everyone loses including all of us taxpayers.

Do the right thing. Step up, be an American first, union worker second.

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2ashleyg(3 comments)posted 5 years, 8 months ago

Although some of the benefits the UAW has seem excessive, people must remember that the union did not write their contracts alone... the companies AGREED to them. And Congress's dictate to reduce labor costs is embarrassing when it's the pay awarded to the top executives at these companies that's really causing harm. Bringing labor costs "in line" with foreign-owned companies means taking away wages that workers have earned through hard work and adherence to their contracts, while top-tier employees are given exorbitant bonus packages every quarter.
Additionally, contrary to what's been written, the NLRB found that 60% of Americans indicate they would join a union if they could. Although many are critical of unions, it easy to see that workers represented by a union are paid better and have job security. Contrary to the assertion above, I would say that though some Americans aren't completely supportive of what is going on in Detroit, the "vast majority" of workers are inclined to support unions in general.
Being "an American first" should mean fighting for the viability of the American Dream: work hard, and prosper. With employers shirking their responsibilities to their employees, labor unions are the only viable way to make sure American are rewarded for hard work and dedication.

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3apollo(1227 comments)posted 5 years, 8 months ago

The problem with unions is they dictate ridiculous work rules that hamstring a companies ability to change based on the economy. A contract might be signed and agreed to during an economic boom and then the company is stuck when the economy suffers. Also, the total money paid to executives pales in comparison to the dollar amounts that are paid to the workers so that excuse is invalid.

Most white collar workers are not union supporters and don't need unions to use strongarm tactics to get more than they're worth from the employer.

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4ashleyg(3 comments)posted 5 years, 8 months ago

Isn't it the company's responsibility to anticipate fluctuations in the market when negotiating contracts? Part of the problem with the auto industry now is the on quarterly numbers instead of the longevity of the company. The unions have a responsibility to the workers' interests, and the company needs to fulfill its responsibility to what? profits? shareholders? It seems they've done neither. It's too bad that they didn't negotiate better in the past, but that's not the workers' fault.
Once again, a governmental study has found that the majority of workers not only support unions, but would like to be a member of one.
AND let's not let this go unnoticed:
"More than they're worth?!" Are you implying that the people who physically make the vehicle that gets to work and back safely every day, the people who process the food you count on to be safe to eat, and who care for your loved ones in nursing homes and hospitals are in some way worth LESS than a company executive? I thought all men were created equal, but I guess I must have missed the revision to our country's founding principles. Now do we believe that a person's worth is dictated by his/her ability to attain a high-profile job? Not that I've heard.

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5JeffLebowski(953 comments)posted 5 years, 8 months ago

The company could have also better marketed their products and diversified during your described "boom." The fact that they failed to do so is the reason for the current situation and is far from something that employees can control, union contract or not.

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6irighti(3 comments)posted 5 years, 8 months ago

ashleyg

I don't know where you get your statistics but a recent study showed that fewer than 10% of American workers belong to a union and a lower percentage that that would want to join a union.

It obvious from your comments that you have no understanding about capitalism and risk-reward principles of wages and salaries.

Now you spout off that "all men were created equal" and then move right on to Marxist (communism)philosophy.

Dream on. The next time you want to turn on the lights at home..... call a union guy. You'll have to wait until after his break though.

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7JeffLebowski(953 comments)posted 5 years, 8 months ago

irighti-

Ashleyg's stats come from the National Labor Review Board, an independent federal agency...just like she cited in her post. Please cite which biased anti-labor group conducted the recent study you describe.

On second thought, don't; if we're not going to value the notion that all men are created equal and equate it to communism I don't think we should value your freedom of speech.

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8justsayin(42 comments)posted 5 years, 8 months ago

Ashleyg...let's say that a person starts his own company, risks his own money, hires people based on their talents and eventually needs a janitor to clean the place. Your logic says the "executive" that takes ALL the risk should be paid the same as the janitor scrubbing the porcelain. The same goes for big corporate execs. People are paid for the skills they bring to the table and always will be.

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9ashleyg(3 comments)posted 5 years, 8 months ago

justsayin:
Absolutely not. In his comment, though, Apollo mentioned that union workers are paid more than they're worth. This rhetorical slip-up is indicative of a sinister belief: that a person's worth as an individual is dictated by the monetary value of the services he performs. That thought, to me, is frightening.
And about this business start-up... I do not think that a janitor's work merits the same pay as an executive, but I do think the value of manual labor is consistently underestimated. In the instance of these auto workers especially, I am unable to agree with those who think the work of manager, accountants, and advertisers is any more "valuable" than the work done by the people who assemble the vehicles we rely on everyday.
And since it seems that fewer and fewer people can see this way, it's vital to bargain collectively, so that the people risking "their own money" remember who does the work when it comes time to compensate their employees.

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10babs68(58 comments)posted 5 years, 8 months ago

Wow....

First things first I work in a non-union plant as a Manager, and the workers here are paid a good salary based on 8hours of pay. They receive med/den/lif ins benefits for which they pay the state avg of 18%. They receive yearly salary reviews and are awarded there compensation according there performance. At the end of every year they receive a Christmas bonus, and they have 13 paid holidays off...they acrue vacation according to how many hours they work. When the company was not doing so well in 2001 EVERYONE (VP, DIR, MGR, Workers) took a 15% pay cut so that the company could survive. My case is this
When company has to survive everyone needs to step in and do there part.

GM UAW- Caring a cocky attitude that there should not be any concessions is ridiculous, and will eventually lead to GM going bankrupt. Companies have to have the flexibility to re-organize. The facts are this that GM is not making money and the bottom line is that if you care for the company that has been taking care of you for so long w/ these golden handcuff perks, benefits then it shouldn't be a big deal to make a sacrifice. If UAW forces GM's hand the decision will be made that it will be cheaper to file bankruptcy and re-organize w/out UAW choke holds. Solution: Give concessions so that you will have a job. If you chose not too...things will be worse off!

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11Morbidcherub(30 comments)posted 5 years, 8 months ago

raffyprjr8 is a prime example of the educational level of the typical UAW employee. I've seen elementary school students with better spelling, grammar, and general overall English skills. Enjoy your overinflated pay while it lasts, because when GM files for bankruptcy - and they WILL end up doing that - you will be reduced to the level of pay you deserve, that being minimum wage.

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12babs68(58 comments)posted 5 years, 8 months ago

mmmm...sir/mam...raffyprjt8...

I will be the first to say Quality is no where built in a GM car. Now I will give GM the benefit of the doubt on the Bed-trucks but as far as a car yeah right...and the SUV's are highly questionable. Owned 1-Tahoe..brand new was a piece of junk will never buy...oh yea and owned a GM car (buick/Pontiac-sunbird) same thing bad news...

In regards to your comment part of what you say is true that it isn't only the unions that have bankrupt GM the CEO and shareholders can take 50% of the blame as well. I don't won't to blame just the unions...As far as the unions helping me achieve I am sorry my education did, and my MBA helped me to achieve the edge. I understand the business model probably a little better than you do and can say this that if everyone doesn't put in there share to give back to help the company then GM will go down...watch for yourself...

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13JeffLebowski(953 comments)posted 5 years, 8 months ago

babs,

"Incoherent Writing" must be a course of study at the institution from which you received your MBA. It's good that you took it; clearly it is serving you well, particularly in the run-on sentence arena.

Eat it,
Duder

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14babs68(58 comments)posted 5 years, 8 months ago

Jeff,

Wow! I thought that this was a blog? I didn't know that blogging required writing in MLA or APA format. Perhaps it may do you some good to go back to a highschool level english class, and learn when to use a semicolon in the correct format. Perhaps starting at a 10th grade level would be more beneficial for you.

Now swallow it, It's great for the digestive system.

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15LLoyd(8 comments)posted 5 years, 8 months ago

Hey Guys and Gals,

Here's the problem for GM and all the other companies that think you can run a business on credit with interest only payments to make payroll and other services. You can't have 20-40 billion in loans and only make interest payments. I don't care if they do say they have 10 billion in cash on reserves. In my analysis in using accounting101 on paper their broke! Just like Citibank, BoA and the rest of these institutions that has hugh amounts of debt. American businesses need to go back to accounting101 and understand debits and credits. I'm not saying you shouldn't have credit, but only in case of an emergency backup fund. It's just like us as consumers we can't continue to used credit cards as a means of money. If a consumer extends/overwhelm themselves on credit and can't make the payments. What happens? They file for bankrupcy and this is same thing these auto and banking industries will do if they don't get the debt paidoff. When they/you make the decision to run a business on credit...please wake the hell up and realize that your in debt. I'm sorry to say at this point but GM has a hugh hole to get out of and that's just getting out of debt. So, for the UAW UNIONS and UPPER MGT: If you don't make concessions then I'm assuming (Generous Motors)I mean GM can't pay their debt down...and that means ya'll are toast. And that's plain old debits and credits.

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16babs68(58 comments)posted 5 years, 8 months ago

LLoyd...I could not have said it better.
Great Job!

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17JeffLebowski(953 comments)posted 5 years, 8 months ago

babs,

You brought up the MBA thing, I just found it funny that someone who supposedly has a graduate degree could lack coherence in his/her writing, informal thread or not. If you in fact have a MBA where is it from?

(FYI-I never went to grad school, just undergrad.)

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18greek36(2 comments)posted 5 years, 8 months ago

hey morbid if it wassnt for gm and delphi we would be living in the dark ages, so quit blasting gm and union workers u may think we make all that money but think again.

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19greek36(2 comments)posted 5 years, 8 months ago

you people say that gm should file bankruptcy well u will be selling your 100,000.00 homes for less than 20 if that happens, obviously u dont understand the situation in this country. But the sad thing is they gave AIG billions and they put stipulations on the american worker who is trying to better him or herself,

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20babs68(58 comments)posted 5 years, 8 months ago

Lebowski..this is getting funny get over it already!(smile)
It is truely not that serious. I could correct you as well with your inconsistencies of your choice of words, but I want you to be able to blog and express. Have Fun!
I am glad that you completed your undergrade that is something to be commended on.
I am a Tarheel graduate myself; and if you know anything about a Tarheel we express ourselves in all styles formal or informal.....blog on.........hahaha....

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21dawgalong(86 comments)posted 5 years, 8 months ago

I am not a union member, but need to correct some of the comments made to this article. The current finacial crisis in the American auto industry was not caused by poor quality or inferior products, bad product mix, or failure to predict the market fluctuations. The LOAN that was secured from the biased government was due to the lack of funding or borrowing power caused by the banking industry collapse. Money is lent and returned to ALL major corporations on a regular basis. When you have to pay for components for any product when you purchase them, and the return on your product is 90 days away, you have to bridge that obligation. There are very few corporations that do not have a line of credit. When you can't borrow money, what do you do? The article above clearifies that the "union" wage paid by the American Manufacturers is not out of line to the industry average. The reason for that is that these type of jobs are extremely dangerous. The reality is that most assignments, if not carried out correctly can result in death. Toyota built a plant in San Antonio Texas that was scheduled to build 274K Tundras a year. It produced (sold) 80K by August then was shuttered because of lack of demand. Ask yourself, would anybody build a product that did not have a demand for the vehicle? NOBODY predicted this mess, did you? The current belt tightening is affecting everyone, not just the auto industry. Unfortunately though, in this town there has always been an underlying hatred for GM workers. I've said it before and I'll say it again, with several thousand employees, Lordstown is a direct reflection of our town and society itself. If anybody thinks that complex operates without some of the most intelligent minds in the country working there, that person would be a fool. To LLoyd, the concessions are coming at an alarming rate. Degreed folks with over 10 years of service are and have been "seperated from the company". Rest assured, the pain is and will be felt. To babs68, I spent 6 years in the deep south at one of our plants. I am very painfully aware that the South is still fighting the war of northern aggression and have absolutely no loyalty to anything associated with Yankee industry. But I wonder if you ever heard the quote from Carlos Gohn, the CEO of Nissan when questioned about the poor quality of the Nissan Titan pickup produce in Mississippi. He said " Quality has been an issue because we hired ignorant southern farmers to build our truck". Perception is an uneducated guess. Quality is perception. Style, power, and fuel economy are quantified measures. Prior to commenting on the perceived quality gap between the American manufacturers and the foreign brands, I would ask that you visit J.D. Power and the other industry analysts to help you in your opnions. Don't make decisions based on your contempt and hate for your idiot relative that happens to work for GM. Chances are, you'd hate him no matter where he worked.

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22Morbidcherub(30 comments)posted 5 years, 8 months ago

Greek, please go back to school and learn to write. I just lost 10 IQ points reading your run on sentences.

Secondly, when your wages and benefits are more in line with the norm and the 'union contract' isnt a zillion pages long and ridiculous, then you can talk about how 'unfair' things are getting. Welcome to the real world, where there is at-will employment, no jobs bank, no 90% paid benefits, and wages that are a direct reflection of your education, skills, and experience. I do not feel one iota of sympathy for you.

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23babs68(58 comments)posted 5 years, 8 months ago

Dawgalong, although some of your comments where a bit difficult to put together I will say that in some instances you are incorrect. You are incorrect at stating that, "I spent 6 years in the deep south at one of our plants. I am very painfully aware that the South is still fighting the war of northern aggression and have absolutely no loyalty to anything associated with Yankee industry." I don't know where you were located but I am in Raleigh, NC (org frm Ohio); and believe me there are no shortages of Northern jobs relocating to RTP. I have been to visit clients in Columbia and Greenville SC, and there are no shortages of relocated plants from the North.
PS... I am well aware that some GM cars are making a considerable comeback in quality, years later. I am also aware that GM for the first time in 70 years has lost its title of Top Dog. So getting back to brass tactics, they are a day late and too many dollars short. When I spoke about concessions, again I state that all have to partcipate.

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24JeffLebowski(953 comments)posted 5 years, 8 months ago

We agree to disagree babs but I like you. I like dawg, too. Although there are still plenty of pure haters that post on these threads it is refreshing to see more thoughtful posts where this matter is concerned.

el Duderino

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25LLoyd(8 comments)posted 5 years, 8 months ago

OK,

This is for you so called loyal GM workers. Their stock is around: $3.46 so (Start buying it to help out GM...like the bailout is doing) matter of fact you should stop diversification in your 401k and buy all GM stock if you feel that strong and supportive of Generous Motors and that thier on the right track. Investers say the best time to buy is when the stock is down, So, put your money where your mouth is or shut the hell up about GM is so great! This was the same attitude that Nortel had and guess what happen to them....bankruptcy. Go figure

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26mactavious(2 comments)posted 5 years, 8 months ago

I will make this short because your ignorance continues to infuriate me. So many of you know little or nothing about the workings of an manufacturing plant and if you do its just pure jealousy that cause you to criticize. You try standing for ten hour days working for fifty-seven minutes out of every hour doing the same thing over and over four to five hundred times, because that is what is required of an auto plant assembly worker. The benefits we have were negotiated with management and the jobs bank was created by management themselves, so in the event of a slow down in sales, they could retain a trained workforce. All other benefits were attained instead of a pay increase which we have'nt had in eight years. Our insurance is nothing like it use to be, because we gave that up along with wage increases to our retired workers. But what you don't seem to relize is that the only thing that props up your wages, what ever they may be, our union wages as ours go down yours are sure to follow. If you need evidence of that just check into what is happening to the Maryville, Ohio auto plant, where incidentally the make thirty dollars an our. When we signed our last two tier, two classification contract in 2007, Honda sent around a memo that they wre going to lower thier wages to what the other area plants were paying. If your having a hard time getting by on ten dollars an hour, try six. As far a legacy cost go, something transplants will never have, because they keep their employees on the same job until they can't do it anymore, then they let them go. No legacy costs, which for those who don't know are pension cost something you earn, by putting in thirty hard years on the line. The uaw will find you a different job using different muscles and motions so you can get those thirty years and retire in dignity. This is what made this country the envy of the world, these kind of benefits. Now you fools what this to be a third world country with low wages for all but the wealthy the inability to afford a car or home and the inability to put your kids through college. They have suckered you all in. I hope you enjoyed the life you have, because its about to become much worse. Don't always believe what you read, thats how we got into this mess in the first place. It sure wasn't the UAW or the Big Three that created this recession. Wake up a union is the only thing that can save the lower class.

the

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27mactavious(2 comments)posted 5 years, 8 months ago

One thing I forgot to mention. The foriegn car plants don't lay off their workers they pay them thier full wages, as they did for three months at the toyota truck plant in San Antonio, Tx., because they wanted to retain their trained workforce. Sounds like a Jobs Bank to me!

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