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Long Strike Could Cost GM Billions
Tuesday, September 25, 2007 7:46 AM EDT
The Associated Press
By TOM KRISHER and DEE-ANN DURBIN AP Auto Writers

DETROIT (AP) — If the United Auto Workers strike against General Motors Corp. lasts longer than a week or two, it could cost GM billions of dollars and stop the momentum the company was building with some of its new models, according to several industry analysts.

A strike of two weeks or less would not hurt GM's cash position and would actually improve its inventory situation, Lehman Brothers analyst Brian Johnson said Monday in a note to investors. But a longer strike would be harmful, causing GM to burn up $8.1 billion in the first month and $7.2 billion in the second month, assuming the company can't produce vehicles in Mexico or Canada, Johnson wrote.

Initially, the strike wouldn't have much impact on consumers because GM has so much inventory, the analysts say. The company had just under 950,000 vehicles in stock at the end of August, about 35,000 less than at the same time last year.

But Tom Libby, senior director of industry analysis for J.D. Power and Associates, said even a short strike could hurt GM because its new crossover vehicles — the Buick Enclave, GMC Acadia and Saturn Outlook — are selling well and in short supply.

"The momentum they've established for those products would be interrupted if there's a supply interruption," Libby said.

GM had about a 65-day supply of cars and trucks as September began, versus a 71-day supply at the same time last year, said Paul Taylor, chief economist for the National Automobile Dealers Association. The Enclave, he said, is at a tight 24-day supply.

It was unclear what would happen to vehicles that were en route to dealers. The Teamsters transportation union said its 10,000 automotive transport members would not cross UAW picket lines.

The strike will cost GM about 12,200 vehicles per day, according to the auto forecasting firm CSM Worldwide of Northville. If the walkout goes beyond 36 hours, CSM expects vehicle production in Canada to be affected because of a lack of U.S.-built engines and transmissions.

The strike began at 11 a.m. EDT Monday when 73,000 UAW members at about 80 GM facilities in the U.S. walked off their jobs. Talks resumed a short time later as sign-carrying picketers marched outside plant gates, but weary bargainers stopped to rest around 8 p.m. Negotiators were to return Tuesday morning for their 22nd straight day of bargaining.

Union President Ron Gettelfinger said the company wouldn't budge on guarantees of new vehicles for U.S. plants that would preserve union jobs. But he said the UAW is willing to bargain on the issue of the union taking over retiree health care obligations.

"Job security is one of our primary concerns," Gettelfinger told reporters Monday after talks broke off and the strike began. "We're talking about investment and we're talking about job creation" and preserving benefits, he said.

Striking workers will receive $200 a week plus medical benefits from the UAW's strike fund, which had more than $800 million as of last November, according to the UAW's Web site.

The UAW, Gettelfinger said, is willing to talk about taking money from the company to form a retiree health care trust, something he said the union proposed and the company rejected in 2005.

GM wants the trust, called a Voluntary Employees Beneficiary Association, or VEBA, so it can move much of its $51 billion in unfunded retiree health care liabilities off the books, potentially raising the company's stock price and credit ratings. It's all part of GM's quest to cut or eliminate about a $25-per-hour labor cost disparity with its Japanese competitors.

"This strike is not about the VEBA in any way, shape or form," Gettelfinger said. "We were more than eager to discuss it," although he said no agreement had been reached.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said before the strike began that the UAW leadership may need a walkout to show members that it did all it could to get the best deal.

"They're in a bit of a box, in that they need some drama to get an affirmative vote on this," he said.

GM spokesman Dan Flores said the automaker was disappointed in the union's strike decision.

"The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company," he said. "We remain fully committed to working with the UAW to develop solutions together to address the competitive challenges facing GM."

GM shares fell 20 cents to $34.74 Monday.

The UAW picked GM as the lead company and potential strike target in labor negotiations with the Detroit Three automakers that began in July. An agreement between GM and the UAW would become the pattern for pacts with Ford Motor Co. and Chrysler LLC, which have indefinitely extended their contracts with the union.
 

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Closed union shops are an archaic, un-American dinosaur.

I read recently an argument that open shops are better for union workers than closed shops.

Why?

Well, if a person gets fired from a closed shop, his replacement will necessarily be a union dues paying member. He or she has no choice in the matter.

Therefore, regardless of whether or not the union is able to save that job, they really aren't going to be out any money.

But in an open shop, suppose the next guy that gets hired doesn't want to be a union member?

In which circumstance do you suppose a union will fight hardest for you?

I would very much like to see closed union shops consigned to the ash heap of history along with communism and other dinosaurs.

Citizen Carrier
Inactive Teamster's Union member
 

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Diamond with Oak Clusters Bullet Member
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Which ever one that gets them the most money
 

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Discussion Starter #4 (Edited)
Will This New Contract Save GM? We'll See In 4 Years

A Chance for Detroit To Turn the Corner
September 26, 2007 7:05 a.m.

The nearly 74,000 unionized American employees of General Motors are set to resume work today after the United Auto Workers and GM tentatively agreed on a new contract early this morning. And hopes of the entire U.S. car industry may be resting on what GM Chief Executive Rick Wagoner described as the pact's ability to "close the fundamental competitive gaps that exist in our business."

UAW President Ron Gettelfinger told an early morning news conference in Detroit that a deal was sealed just after 3 a.m. ET, and that production at most GM plants would resume this afternoon, while some workers will be reporting back even earlier. The union planned to take the agreement to its membership for ratification by the end of the week, with voting expected to start this weekend, and the UAW will likely decide by Thursday which auto maker it will start negotiating with next, he said.

Central to the agreement was the bid for resolution to the biggest financial burden holding back beleaguered American car makers: the legacy of promises made more than half a century ago to pay the health-care costs for a roster of retirees that have come to outnumber current workers in a much more automated and outsourced industry. For GM, that adds up to about $51 billion in unfunded retiree health-care obligations. For GM, Ford Motor and Chrysler together the total nears $100 billion. As the Detroit Free Press notes, those obligations are thought to add more than $1,000 to the cost of each vehicle manufactured by the Big Three, a factor that has helped slow the sale of their cars even as those of Toyota Motor and other foreign rivals accelerated. (Lagging fuel-consumption competitiveness and design problems in recent years didn't help.)

While GM this morning declined to give details of the tentative agreement, Mr. Gettelfinger said it will "secure the benefits of our retirees" with 80 years worth of funding for the independent trust that will mostly be funded by GM and overseen by the union. Under the agreement, GM would pay about 70% of its retiree health-care costs -- or 70 cents on the dollar -- into the so-called Voluntary Employees Beneficiary Association, the Associated Press reports. The UAW would invest the money and assume responsibility for the health care of some 340,000 retired GM hourly workers and their spouses. This deal is expected to set the pattern for negotiations with Ford and Chrysler.

The VEBA agreement had reportedly been reached earlier in the negotiations, which continued past the expiration of the previous UAW-GM contract last Friday and after the union decided to raise pressure on GM with a strike Monday morning. As of late yesterday, The Wall Street Journal reports, other key elements included: big changes likely to reduce the number of workers in a so-called Jobs Bank that allowed unemployed UAW members to get full pay for years without working; lower pay rates for some lesser-skilled new hires; the evolution to full-time of 4,000-5,000 temporary workers at the full, tier-one wage-and-compensation rate; an offer of substantial early-retirement buyouts for workers; a guarantee for GM that there will be no wage increases during the life of the contract; and a likely signing bonus for workers, plus lump-sum bonuses of 3%, 4% and 3% of annual pay over the last three years of the deal.
 

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I have a feeling, that considering the unfunded pension etc amount, both sides are looking for a way to dump it onto the taxpayers some years down the road.
 
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