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Valley leaders on edge, anticipating GM move today



Published: Mon, June 1, 2009 @ 12:04 a.m.

Failure of GM’s reorganization plan would be disastrous for the valley, observers say.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

Bert Cene hopes the safety net under General Motors holds — for the sake of the Mahoning Valley.

The former steelworker lived through the demise of the local steel industry 30 years ago, and now as a director of job training programs, he knows the area can’t afford another major industry to go under.

“It’s hard to say what the devastation would be, but it would be bad,” said Cene, executive director of the Mahoning Columbiana Training Association.

Valley leaders are on edge today because GM is expected to file for bankruptcy protection after months of trying to restructure on its own. Fritz Henderson, GM’s chief executive, is planning to meet with reporters at mid-day.

Unlike 30 years ago when area steel companies collapsed, the bankruptcy is not expected to be the end of GM because the federal government has been working to protect the automaker.

“We have to hope for the safety net,” Cene said.

The government has loaned GM $19.4 billion and plans to provide more financing if there is a bankruptcy. It also is offering money to the automaker’s suppliers and leaned on bondholders and unions to take concessions.

The automaker hopes bankruptcy will give it time to spin off its Chevrolet, Cadillac, Buick and GMC brands into a separate company with less debt and lower costs. That company could be on its feet in two or three months.

GM’s plan positions the company for success, but only if several conditions fall into place, said Don Constantini, chief executive of Falcon Transport and Comprehensive Logistics, two local GM suppliers.

Besides favorable rulings from the bankruptcy judge, GM also needs increased car sales in order to cover its costs, Constantini said.

Failure of GM’s plan would be disastrous for the valley, Cene said.

GM’s assembly and fabricating plants in Lordstown have 4,500 hourly workers, although both plants are starting a six-week shutdown today to reduce inventory. Throughout this spring, the complex was operating with just one shift and about 1,800 workers. The rest are hoping to be called back when the car market picks up.

The Youngstown/Warren Regional Chamber said last December that the Lordstown complex had a payroll of $479 million when it was operating at three shifts and that much of that money is spent at local stores and health-care facilities.

In addition, the chamber estimates that the GM complex creates 1.5 additional jobs for each worker.

Several hundred of those jobs are tied directly to the complex because suppliers have set up nearby plants to provide seats and other parts for the car.

Cene said the impact goes well beyond those plants because workers at GM and its suppliers spend their money at local stores and restaurants. If the GM payroll were to disappear, the impact on those businesses would be drastic, he said.

Constantini said he doesn’t know how his companies will be impacted by the bankruptcy because it isn’t clear if they will recover money that is owed by GM. A judge would decide whether GM has to pay debts that exist at the time of a bankruptcy filing.

Constantini added, however, that he is working on qualifying his companies for assistance from $4 billion that the federal government has set aside for suppliers. That money is designed to cover bills that automakers owe suppliers, he said.

Comprehensive Logistics has about 150 employees at its Austintown plant. It arranges parts from other suppliers so they can be sent to Lordstown in the order they are needed. Falcon has 1,100 drivers nationwide, including nearly 200 locally, who deliver parts to automakers and haul material for other customers.

The impact of a bankruptcy on retirees is crucial as well.

Cene said GM retirees make up a big part of the local economy because of their pensions and health care benefits.

While such benefits often are reduced in bankruptcy, GM just reached a contract with the United Auto Workers that eliminates dental and vision coverage for retirees but leaves pensions untouched.

The Lordstown complex has about 8,000 retirees.

In an attempt to cut more costs, GM is announcing more plant closings today, but industry analysts expect Lordstown to survive because of the scheduled Cruze launch.

Cene said he hopes the new car will help the valley avoid a repeat of the steel mill closings.

“It looks like they are going ahead with the Cruze and that’s definitely good for Lordstown,” Cene said.

shilling@vindy.com

SEE ALSO:Majority of bondholders support reorganization and White House: GM to file today for bankruptcy.


Comments

1UnionForever(1470 comments)posted 5 years, 1 month ago

I just hope the Cruze stays in Lordstown. They could build it off-shore in China and Russia then import it. Holding my breath for my UAW union brothers in the valley.

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2cherie330(2 comments)posted 5 years, 1 month ago

This new contract will have a devastating effect immediately on the dentists and eye care providers in the Mahoning Valley. Little has been said about shoving the retiree’s under the bus with this agreement.

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3dmets(575 comments)posted 5 years, 1 month ago

You know the way the workers have been paid over the years is the big problem! when laid off they get 90% of their pay? Come on that is why there is unemployment, and it is good enough for everyone else! As for insurance, no copay pays, basically pay for nothing? No company insurance out there is like that! Just about everyone pays a copay whether it is 10, 20, or 30 dollars. I think greed got the best of GM and that is everyone in GM.

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4jimiohoh(86 comments)posted 5 years, 1 month ago

Has anyone ever been to the dentist or eye doctor and been asked if they have insurance? Two different services or just many add-ons for the insured. This is what is wrong with health care in this country

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5dmets(575 comments)posted 5 years, 1 month ago

Dentist and Eye are insurances that many companies do offer, but the employee has to choose to get it and pay for it. And yes when I go to the denstist they do ask if I have insurance!

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6MzVirgoLuv(157 comments)posted 5 years, 1 month ago

I have to agree with the comment of greed. That is why GM is in this situation. They pay their workers salaries that they don't deserve and they pay workers to sleep. They cut the pay of the little people, but those making high 5 & 6 figure salaries and not even doing the work they were hired to do still get to keep their pay and be laid off, but "on call". Now if that is not a crock I don't know what is. Unemployment is good for everyone and if they really wanted to see their company "restructured" then they should not take the pay and go on unemployment just like everyone else. I can't get 90% of my pay and I am a contracted worker that is set up at the Lordstown facility who took a 10% pay cut and 10% cut in hours months ago and am now truly laid off and having to depend on unemployment, and I already wasn't making what the guy counting screws was making. When will the real workers get to stop carrying those who hardly work-but have a degree-so they make more money-even though they are not smarter than a fifth grader folks?

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7DoctorGonzo(728 comments)posted 5 years, 1 month ago

"The government has loaned GM $19.4 billion and plans to provide more financing if there is a bankruptcy."
Well it was a loan in the beginning, but since GM didn't get their a** in gear and start making these changes months ago, it will likley be a gift from the taxpayers because the Chap. 11 proceedings will be lenient with what debt actually gets repaid, and as we all know, the American taxpayer is usually last on the list.

To correct one earlier post, the employees actually get 95% of their wages during periods of inactivity. So those who have not worked in months and will not work again until the end of summer are receiving 95% of their wages and are eligible to file unemployment for the other 5%. Why work at all under these circumstances...oh yeah the company itself will go under if things do not change...wait.

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8Erplane(474 comments)posted 5 years, 1 month ago

The Valley should be congratulated. The UAW here saw the light, the state of Ohio under Taft's administration went out of their way to make Lordstown an example of a well-run plant. One great thing about this country is a bankruptcy code that allows for restructuring with a chance for survival. Nobody wants people to lose their jobs, but nobody wants us to become France or Japan where we have propped up zombie companies that in the long run suck the country's resources dry. Lets hope this is the beginning of another century for GM.

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9dmets(575 comments)posted 5 years, 1 month ago

hopeforthevalley, you are barking at the wrong people here. My dad risked his life everyday at work as a firefighter in youngstown, and started out making less then someone who stands in a line and makes one motion or puts a book in the car. Guys who put in 30 yrs at GM vs 30 yrs as a firefight made more money too. As for benefits GM workers have the best insurance and pay minimal! I am a great American! All I know is that GM's demise is do to GREED! It is do to people expect more money for the same job. I understand the cost of living increase, but they got way more then that!

Erplane: I completely agree with you! I hope GM corp realizes what the workers here in our area have done, and do reward them with work! That they add back on shifts and give Lordstown the Cruze!

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10DoctorGonzo(728 comments)posted 5 years, 1 month ago

Erplane,
With Obama and the government taking control of the auto industry in this country we will see nothing but companies sucking our country's resources dry. These politicians have about as much business sense as the current GM management, I don't care how many MBA's are held in D.C.
Welcome to zombie land, where your tax dollars are thrown away everday.

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11cambridge(2965 comments)posted 5 years, 1 month ago

Does the dp in your user name stand for dip?

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12dmets(575 comments)posted 5 years, 1 month ago

dps9200: You are the moron! You are not better then anyone from the Youngstown area! You are also from the area! I can't stand people who are oringinally from this area, move away, and believe they are better then the people who still live there! You need to get a life if being on here and belittling people is the onle thing that make you fell like a bigger person!

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13dmets(575 comments)posted 5 years, 1 month ago

dps for your info I stay in a outside youngstown. I am very education, not on unemployment. Actaully my hubby makes enough money to be a stay at home mom, so we are able to raise our children ourselves. As for schools, my son goes to a very good school, actually scored an excellent on their state report card. So please quit stereotyping me. By the way, you have not even said where you moved to? You really are proud of where you live, right?
Lastly ,in my eyes, you are the scum and ignorant person, not myself!

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14Erplane(474 comments)posted 5 years, 1 month ago

Hey dps - Just curious, if your so happy that you abandoned the area, why are you here on the Vindy's website checking out whats going on? I would think because your so intelligent on having left the Valley 20 years ago, you would be so intelligent to not waste your time with us poor saps who actually want to have a decent discussion on the Mahoning Valley.

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15redvert(2046 comments)posted 5 years, 1 month ago

It seems to me that the Youngstown area started it's downward spiral with the demise of the steel industry. Other steel cities in this area suffered but in most cases seem to have come back to some extent. I am referring to Pittsburgh, Cleveland, Akron etc. Now I am not saying they are on top again but compared to Youngstown. they are.

Now, my question is, what is the reason that Youngstown lags behind. I know that Youngstown is and has been a one political party town since day one. I do not know about the others. Is this the only reason and if so why has nothing changed in close to 50 years? If there are other reasons, what are they? This could get nasty!

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16Erplane(474 comments)posted 5 years, 1 month ago

Redvert -

I dont know much about Akron, except that its almost considered a suburb of Cleveland, but I think there are 2 key differences b/t Ytown and Cleveland/Pittsburgh. First those two cities due to their size had simply more industries than just steel. Health care for one, with leading national hospitals, more prestigious universities that has research dollars that assisted local companies. Ytown was a one-horse show. Second, along the same lines the two big cities had deeper pockets from wealthier old families that helped give back. Ytown certainly had some, but not enough.

But I wouldnt say Cleveland is out of the woods by any means. Pittsburgh has done a better job.

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17xytown(63 comments)posted 5 years, 1 month ago

What a shame! Face it Mahoning Valley residents it's over... Even if the Lordstown facility is kept open it will not change the fact that GM is a dead and most people would not buy a GM car if their life depended on it. The new lower paid unskilled employees who lack any formal education or training building a vehicle that loses at least $2000.00 when you drive it out the showroom (with a lousy resale value). A bankrupt company who cannot compete because of legacy cost for retirees (which was not changed to date). You can throw all the tax payers money at GM but it's not going to work. The only hope is that Hyundai or Toyota takes over the facility, retools it and runs it like a real automaker. NUFF SAID!!!

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18TheLostPatrol(755 comments)posted 5 years, 1 month ago

All that remains are overpaid hog-trough-eating, Federal, State, and Local politicians....and all of their Family members that are too, on the Public Payroll. Wanna know what's sad, Bob Hagan, Ron Gerberry, Tim Ryan, and Jay Williams salaries total over $480,000/year; just their salaries, no benefits included, and that is just for four of these bottom-feeder's!

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19dmets(575 comments)posted 5 years, 1 month ago

If it is all over for the Mahoning county, then explain to me why GM is adding a second shift on at Lordstown? HMMMMM...

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20TheLostPatrol(755 comments)posted 5 years, 1 month ago

Last year when they announced the Cruze being built at Lordstown, about three weeks later in a Saturday Vindy (small) article it was reported that GM was building a plant in Russia to build the Cruze there, too. Remember when they promised not to file for bancruptcy, when asking for Bailout No.1; do not trust anything corporate says. They wouldn't bat an eye to close the Lordstown facility, its only money. Ask yourself, what is an $800M investment in Trumbull County, when they took Billions of taxpayer dollars and blew that! Nothing is a guarantee once Chapter 11 was filed today. The stock this evening will be worthless in the morning when they go to the pink- slips and a new Ticker.

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21UnionForever(1470 comments)posted 5 years, 1 month ago

Lordstown dodged the big one today - thank the Lord !!!

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22electrician101(22 comments)posted 5 years, 1 month ago

DoctorGonzo wrote:

"Well it was a loan in the beginning, but since GM didn't get their a** in gear and start making these changes months ago, it will likley be a gift from the taxpayers because the Chap. 11 proceedings will be lenient with what debt actually gets repaid, and as we all know, the American taxpayer is usually last on the list."

YOU'RE WRONG!
The government owns 60% of GM stock in the "new" company. As GM becomes profitable they could sell the stock and get their money back, maybe even more than they loaned

Gonzo also wrote:

"To correct one earlier post, the employees actually get 95% of their wages during periods of inactivity. So those who have not worked in months and will not work again until the end of summer are receiving 95% of their wages and are eligible to file unemployment for the other 5%. Why work at all under these circumstances...oh yeah the company itself will go under if things do not change...wait.

WRONG! WRONG AGAIN!

Employees laid off receive state unemployment benefits just like anyone else who works in Ohio would if their company pays layoff insurance. GM pays the SUB or the supplemental unemployment benefit as was negotiated in the contract to make up the difference in pay minus $30 for the unemployment insurance. SUB does NOT get paid forever and there is no more "jobs bank". It now takes 20 years seniority to receive 52 weeks of SUB.
In other words if your weekly pay at GM was $700, depending on your dependents claimed, Ohio unemployment would pay a benefit of $350/week.
SUB would pay $315/week minus $30. Thats $665 (= 95% of your weekly pay) minus the $30 for a total of $635.

GM does NOT pay 95% and Ohio Unemployment pays 5% to equal 100% as you have so wrongly stated.

It's constant misinformation like yours, DocGon, that unjustly stirs up hatred for the UAW worker.

Next time try posting factual information please.

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23laddjd(15 comments)posted 5 years, 1 month ago

When as Americans are we going to start demanding from our government protection for everything we have worked hard to achieve. Why are we so eager to go back in time and lower ourselves to third world countries so corporations can compete. As I can see there has been no benefit for America with these ventures. We have massive job loss, high prices, record foreclosures. Middle class Americans drive this economy, by working and having the confidence to buy. If we do not work for a fair wage we will not spend so this country will not economically advance. We do not want government support and stimulus we need jobs that help us support our families and country.

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24Chief178(57 comments)posted 5 years, 1 month ago

What about Hummer being sold to a company in China?? Isn’t that where our military vehicles are made??

GM doesn’t care about the unions, or the American people they only care about the profit.

Lastly a third shift at Lordstown is only if the Cruse sells so don't get your hopes up. Today I'm getting rid of my 2008 GMC and buying a FORD.

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25dmets(575 comments)posted 5 years, 1 month ago

Chief178: Honestly why care about unions? They are one of the reasons big companies, like GM, are having problems. They are money driven, and at times keep workers jobs who have no business having a job!

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26tll3023(35 comments)posted 5 years, 1 month ago

What ever they get in unemployment it is to much, not fair, why work ? I am trading in my gm car for a ford also. They deserve all they get!

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27Stan(9923 comments)posted 5 years, 1 month ago

tll3023:

GM workers spread their wealth by spending in The Valley. So you do not want them to have any wealth to spend and help keep jobs here ?

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28timOthy(802 comments)posted 5 years, 1 month ago

Stan so Lordstown is going to keep the wealth in the Valley . What a joke ! The Rats will do what they always do take care of their Geedie self. How many new homes do they buy ? Or better question who builds or does their work in their homes or builds them. Then lets go to Electric and Pluming who does that ? They are the BIGGEST SCABS. Look who uses foreign steel. Non-Union Plastic too. I'd like to have all of them on the IRON . I'd bet the farm they all are WHITE KNUCKLERS . If you people would only get a grip of others people's needs and wants and compare them to yours . You'd see how wrong you are. I'm a TRADESMAN and you people couldn't bring us a glass of water ! It's BUTTS and ELBOWS on our jobs. Not COFFEE BREAK. and I don't mean the dog either. Well sorry for your Greed I'm buying a TOYOTA SCABS !

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29VINDYAK(1799 comments)posted 5 years, 1 month ago

There is growing chatter that the Chrysler dealers who lost their franchises were NOT Obama contributors. Most of the dealers being cut contributed to the GOP, to Hillary, or to Edwards. When Chrysler leadership was asked about the list, they said they had no say in choosing which dealer would be cut.

Is this process now working its way through the GM dealerships?

Why is everything so hush, hush?

Why isn't Congress reviewing this selection process?

If this report is true, this could be huge.

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30Erplane(474 comments)posted 5 years, 1 month ago

Chief1178 - Hummer is a marketing brand. The actually military Humvees were designed and made by a company called AM General (I think), which is owned by Renco. They only licensed to GM the Humvee names for its Hummer brand. H2 and H3 were never military vehicles.

You also say GM didnt care about the unions. Did the Unions care about GM? If so why did they agree to contracts that knowingly hurt GM's profitability long-term? And yes, they knew..

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31cambridge(2965 comments)posted 5 years, 1 month ago

Erplane.....If whoever you work for gives you a raise or a benefit that cuts into their profitability long term. If they give you a dime that's one less dime they have. If CEO's can make 10's of millions in the name of capitalism that same logic should apply to everyone that works for a living. Everyone has the right to look for the best deal they can get. Not just the people at the very top. "What's good for the goose is good fro the gander."

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32Erplane(474 comments)posted 5 years, 1 month ago

Cambridge - I am not against unions, for one (my dad was USW). They need to exist to protect the worker. And I also fault GM for signing fat contracts with the UAW in the first place. But I do have a reservation against the UAW of the past for taking too much and not giving back a proportionate amount in return.

Yes, I have been given a few raises here and there. And it was mainly due to my performance which positively impacted the bottom line. So I can argue my company had a positive return on their investment. CEOs who also positively impacted their companies by taking them through a period of sustainably growth should be rewarded. And yes the market for that is the 10s of millions.

Now am I for CEOs getting golden parachutes after they destroyed value? Absolutely not, it sickens me to see what people get for not earning it, esp executives, some of whom dont even know the locations of their plants.

I worked one summer in a steel factory while in college. I saw a distinct generational difference in how workers treated the union and their job. The older generation worked hard, clocked in on time, and had an attitude of gratefulness that their job helped put a kid through college. The younger generation used the union as a shield to get away with everything (there were exceptions of course).

Everybody DOES have the right to look for the best deal they can get. But everybody should also have the consideration to think they shouldnt bite off the hand that feeds them. That applies to unions and CEOs.

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33cambridge(2965 comments)posted 5 years, 1 month ago

Erplane....If I had to pick between your last to post I would say the second one is what the kids call "Fair and Balanced".

That's all I'm asking for. Labor has never had the upper hand over management. As it should be. That's why they're called management. But that is also where the buck stops.

Labor doesn't have access to the books. It's up to management to look to the future and understand the impact of a contract they signed. If you offer benefits as part of a wage package and when it comes to pay up you shouldn't be able to renege on a legal contract and then blame the other party.

Take the union part of it out of the equation. Just consider it a legal contract between two parties. There's no mercy rule. If you sign a contract with someone and held up your end and they didn't you and your lawyer would be all over it. Instead in this example the injured party gave all kinds of concessions and are still viewed as the villains.

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