And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to "improve" the short-term bottom line of the corporation. Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the lives of tens of thousands of hard-working Americans.
Or on the flip side GM gave countless Mexicans jobs. And if I had to guess I would say a Mexican without a job would probably be doing way way worse than an American without a job, otherwise you would have unemployed Americans sneaking across the border into Mexico, not the opposite.
Maybe, but then that's all just speculation. Maybe if U.S companies had done more to look after the workers instead of screwing them all these years, things may look slightly different now. But that's also just speculation.
screw its workers? thats absurd. the UAW are the highest paid, best taken care of employees in the world. when sales went down and the car market evolved, what did the Union say? fuck you pay me.
but whats hilarious is that you are all of a sudden you are a champion for America and its workers? ok. or maybe you dont understand the concept of a global economy
but whats hilarious is that you are all of a sudden you are a champion for America and its workers? ok. or maybe you dont understand the concept of a global economy
That's right Jlew, because I've clearly always been against America and it's workers, right? Because Conservative America and the warmongers represent America and the American people, right?
is it possible this is all a function of an economy that is based primarily on consumption? ... i mean - nobody in north america makes anything anymore ... factor in a lack of resources in the states ... you have a system that ultimately will always be on the brink of collapse as it requires people to keep buying and buying ...
the UAW are the highest paid, best taken care of employees in the world.
Yes Jlew, of course they are:
http://home.flash.net/~comvoice/42cUAW.html
August 2008
'...The workers struck against outrageous wage cuts and other concessions demanded by the auto parts capitalists at AAM. They held out defiantly and in good spirit for three months. As the strike proceeded, the lack of parts had forced many GM plants to close, and both AAM and GM were taking heavy losses. Yet at the end, they were forced to accept a contract that slashes wages in half, eliminates jobs, cuts benefits, hurts pensions, etc...And the result is that now UAW wages are declining to poverty-level...'
http://en.wikipedia.org/wiki/Flint,_Michigan
'In the 1980s, the rate of deindustrialization accelerated with local GM employment falling from a 1978 high of 80,000 to under 23,000 by the late 1990s. Many factors have been blamed, including Reaganomics, outsourcing and exporting jobs abroad and to non-union facilities, unionization, exorbitant overhead, globalization, and most recently, a dramatic decline in General Motors sales...
The last decade has opened on the final stages of large-scale General Motors deindustrialization. By 2002 Flint had accrued a $35 million debt. Unable to pay this and balance its budget, the state of Michigan placed the city into receivership late that year, with a financial manager effectively replacing acting mayor, City Administrator Darnell Earley...
Of the nearly 80,000 people that worked for General Motors in Flint during its peak years in the late 1970s, only about 8,000 are left after the most recent 2006 buyouts.'
Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D. (see graph above, click to enlarge), and 52.6% more than the average worker at Toyota, Honda or Nissan.
you want more evidence, do your own research. and I suggest you do, it sounds as if you know very little about the UAW.
Thursday, June 09, 2005
The General Motors Poverty Myth
Most of the mainstream newsmedia as well as the public is caught up in the myth of the sudden poverty of General Motors. On paper this corporation claims a loss of nearly $2,400 per automobile sold while other competitors such as Toyota and even Hyundai, who increasingly also manufacture automobiles in the United States, are showing profits of $1,300 to over $1,400 per automobile sold. In the case of Hyundai, the climb to solid profits as well as greatly improved product quality came after a new chief executive prevented other executives from using Hyundai as their personal "piggybank" and limited top salaries as well as a new company commitment to product quality.
But General Motors continues to operate similar to the old Hyundai. In 2002, former GM CEO, Charles E. Wilson earned $652,156 a year, but was later replaced with Richard Wagner, who made a major priority, huge pay increases for executives at GM. His salary was boosted to $8.5 million a year with all compensation figured in according to the reputable Forbes magazine. And many other executives also receive extremely high executive pay and compensation packages. And as bad as this is, Wagner is only the 141st highest paid executive in America, 140 other CEO's actually earn far more than the $8.5 million a year, limiting stockholder profits, dividends and company product development funds.
On paper, investors will see their GM stock as nearly dead in the water. The value will stay flat with little upward growth, or likely either drop somewhat with bad corporate profit news. Yet the value of the stock really goes nowhere. It is still in the hands of GM. And as executives increase their salaries, the investors stock value can well flow right into the backpockets of executives as they increase their salaries into the stratosphere.
Executives at Toyota, Hyundai and other highly profitable companies have salaries far closer to the workers who build the automobiles, than American executives whose main goal of running the corporation appears to be for salary increase potential rather than the development and marketing of new products or the health of the corporation. This hurts both the stockholders as well as limits new product development . While Toyota and Honda develop and market hot selling hybrid models, the huge salaries at GM limit the amount of development money, so less advanced, older technology American models are instead marketed, and are experiencing some failure in the marketplace as more American buyers purchase the more technologically advanced and higher mileage import models. Many American executives are far too concerned with the short term goals of the highest possible salary than the competitive place of their corporation in the marketplace. And sometimes marketing the same tired design year after year, may save the corporation development money, but sales wane as buyers tire of yesterday's designs being marketed year after year.
The Chevrolet division does have a few new interesting designs, but they are largely sales failures in the marketplace currently for several reasons. A sports car pickup truck design based on a showcar project was only intended to be sold to a very limited high end group of buyers. So with no pricing or intent for mass market sales, this model simply swallowed up company cash and brings in little revenues to cover development costs or offers the company any profits to work with. And a new subcompact has mileage far lower than comparable models from virtually all import makers, as well as the built-in buyer fear of previous small GM models like the Vega, Monza and Chevette, which had many product quality problems, although this new model looks far better assembled than these previous quality control limited models. So one part of the GM problems are a previous bad experience on some smaller cheaper models, although the larger GM models have a decent reputation for product quality. Yet with high fuel prices, it is exactly the smaller high mileage models that buyers want at this point, and with a head to head comparison, the small GM offerings come up short in the minds of many buyers compared to Toyota, Honda or even Hyundai.
Another problem is GM put too much production capability into the production of larger SUV models with little production capability to switch to other models as market conditions change. And as gasoline prices recently increased, sales suffered on larger GM models such as SUVs . Instead the ability to switch to models that the public wants should have been built into a more flexible production planning.
And since labor is a supply and demand commodity to the coporate mindset, the executives at GM will attempt to trim American high paying $27 an hour jobs with full health and retirement benefits and replace these with jobs in China at 24 to 40 cents an hour labor, or labor in mexico at $1.50 an hour, with lower labor costs and little or no company benefits. And this may result in cheaper materials as well, so quality could suffer unless strict quality control is carefully monitored. In addition American GM workers may be asked to give up benefits, such as retirement or health benefits. Yet it is doubtful any top executive at GM will cut their compensation or salary. The corporate view is the corporation runs for the enrichment of the executives first and building cars second is the philosophy that rots a big corporation like GM from the inside.
GM can survive their problems. But a better philosophy of executive commitment to the corporation's health and more concern for the worker's role as a vital link in the American economy, instead of merely a supply and demand commodity that can be easily be replaced with cheap foreign labor to enhance profits, as well a commitment to more reasonable executive salaries and more flexible and modern product development are all vital links. But unlike many successful foreign competitors, the American corporate vision is often short-sightedly based on the short term goal of extreme executive salaries. This has to change for the health of GM, which is equal to 1% of America's economy. And it should serve as a warning to other corporations of how to fail in a marketplace with far better managed foreign competitors.'
Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D. (see graph above, click to enlarge), and 52.6% more than the average worker at Toyota, Honda or Nissan.
you want more evidence, do your own research. and I suggest you do, it sounds as if you know very little about the UAW.
The average UAW worker with a high school degree? How many blue collar workers have degrees? I think what you're referring to are the over-inflated salaries of UAW executives.
The average UAW worker with a high school degree? How many blue collar workers have degrees? I think what you're referring to are the over-inflated salaries of UAW executives.
um no I'm not. I'm referring to the average UAW worker whos hourly rates are double that of GM's competitors. and when Gas prices went up, and people stopped buying SUVs, GM's revenue went to almost zero but still had to pay ridiculously high wage rates. the UAW refused to renegotiate their contract rates to keep up with competition. the result? Bankruptcy.
The average UAW worker with a high school degree? How many blue collar workers have degrees? I think what you're referring to are the over-inflated salaries of UAW executives.
um no I'm not. I'm referring to the average UAW worker whos hourly rates are double that of GM's competitors.
Seems like your graph has been well and truly rubbished:
http://mjperry.blogspot.com/2007/07/uaw ... arket.html
'...Active UAW workers are well-paid, but not $146,000 worth—that’s with unfunded liabilities included. They make about $100,000 a year counting everything (wages, insurance, retirement, workers’ compensation, FICA, tuition . . .). Part of this $100,000 is a fuzzy accounting term “other” on our yearly compensation reports. I was curious what “other” meant, so I emailed GM accounting and received a memo in return. Other includes janitorial services in the factories, so if you wish to compare our wages to yours, make sure you count the toilet paper your boss supplies you to wipe your butt. They count toilet paper in our total compensation, so to make an apples-to-apples comparison you must count it in yours, too.
Here's why such a high labor cost is reported by GM:
Burden or Manufacturing Overhead Costs
Typical Variable Accounts:
Indirect Labor
Material handling
Working leaders
Janitors & yardmen
Inspection
Set-up
Maintenance
Tooling labor
Laboratory services
Training
Other indirect labor
Non-Productive Labor
Diverted labor
Clean-up and breaks
Fringe Benefits (Hourly Work Force)
Shift differential
Paid lunch periods
Vacation pay
Holiday pay
Payroll taxes
Maintenance supplies
Tool supplies
Janitorial supplies
Power wash supplies
Group insurance
Workmen’s compensation
Employee education
Pension expense
Other benefits
Source: WWP: Supplier Cost Systems Overview 3-4
General Motors Corporation'
It’s too simplistic to look at wages /compensation alone and determine labor costs of an operation.'
'I hate to break this to you but the autoworkers do not make $73 dollars an hour or $150,000 a year. The hourly wage is about $28an hour for established workers and $14 for new hires. The fringe benefits are probably around 10 to 12 dollars and hour. So total hourly pay is about $20 to $40 dollars an hour, depending on seniority.
What most people hear about is a number that combines what auto workers really make along with pensions and health care costs for retirees who outnumber active workers by almost three to one. The companies, at least GM, adds the costs of retiree benefits to the wage package of the active workforce to inflate the compensation number for contract negotiations when the companies need the general public to side with them against the union. This is back-firing on the car companies now that they need federal help because Congressmen are looking at the $73/hour figure and saying that auto workers are over paid. The $73/hour number is as phoney as a three dollar bill.'
'So, basically, this whole article is a farse and should have never been posted. "Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D." Never mind. Looks like Forbes did get rid of it. I wonder why...'
General Motors Getting Eaten Alive by a Free Lunch
A free lunch can be the most expensive meal in the world. For living proof, look at General Motors. A big reason that GM has gotten into such trouble is that the pension and health care commitments it made to employees decades ago seemed to be a free lunch.
The United Autoworkers placed a high value on these benefits, but the accounting rules of the time placed no cost on GM's risk of providing them. So the UAW and GM made deals that were heavy on benefits, relatively light on wages.
Lower salaries meant that GM reported higher profits, which translated into higher stock prices -- and higher bonuses for executives. Commitments for pensions and "other post-employment benefits" -- known as OPEB in the accounting biz -- had little initial impact on GM's profit statement and didn't count as obligations on its balance sheet. So why not keep employees happy with generous benefits? It was a free lunch. Besides, GM's only major competitors at the time, Ford and Chrysler, were making similar deals.
Now, as we all can see, pension and health care obligations are eating GM alive. The bill for the "free" lunch has come in -- and GM is having trouble paying the tab. In the past two years, GM has put almost $30 billion into its pension funds and a trust to cover its OPEB obligations. Yet these accounts are still a combined $54 billion underwater.
"Any market economist would tell you that things that are 'free' are overconsumed," says Greg Taxin, chief executive of Glass, Lewis & Co. "That's true of pensions, it's true of OPEB, and it's true of stock options in the '90s." That's a lesson the SEC seems to have ignored, given last week's decision to let companies delay counting the value of options as an expense. But that's a topic for another day.
GM began its slide down the slippery slope in 1950, when it began picking up costs for medical insurance, pensions and retiree benefits. There was huge risk to GM in taking on these obligations -- but that didn't show up as a cost or balance-sheet liability. By 1973, the UAW says, GM was paying the entire health insurance bill for its employees, survivors and retirees, and had agreed to "30 and out" early retirement that granted workers full pensions after 30 years on the job, regardless of age.
These problems began to surface about 15 years ago because regulators changed the accounting rules. In 1992, GM says, it took a $20 billion non-cash charge to recognize pension obligations. Evolving rules then put OPEB on the balance sheet. Now, these obligations -- call it a combined $170 billion for U.S. operations -- are fully visible. And out-of-pocket costs for health care are eating GM alive.
GM spokesman Jerry Dubrowski says the company expects to pay $5.6 billion in health care costs this year for 1.1 million people covered by its plans. That's up from the $3.9 billion it shelled out in 2001 to cover 1.2 million people.
"At the time GM began offering these benefits, no one had any idea that the costs for prescription drugs and medical services would explode the way they have," Dubrowski said. True. But the UAW was astute (or lucky) enough to push the risk of covering these costs onto GM.
GM's pension funds are in pretty good shape, thanks to an $18.5 billion infusion two years ago. GM got this cash by selling bonds at relatively low rates, hoping to resolve its pension problems once and for all. This maneuver has been successful so far, but funding the pension plans has consumed much of GM's borrowing power and strained its balance sheet.
At the end of last year, GM says, its U.S. pension funds showed a $3 billion surplus. GM's pension accounting, which assumes that the funds will earn an average of 9 percent a year on their assets, is highly optimistic. But things are under control -- as long as GM stays solvent.
By contrast, OPEB is out of control. At year-end, OPEB was $57 billion in the hole, even though GM threw $9 billion into an OPEB trust in 2004. The company has no legal obligation to pre-fund these costs, but it's trying to show the financial markets and its workers that it's dealing with them. The OPEB trust has a hefty $20 billion of assets -- but GM calculates its obligations at a staggering $77 billion.
What's more, GM says they're rising at 10.5 percent a year. Thus, even though President Bush's Medicare prescription drug benefit whacked $4 billion off GM's OPEB obligation last year -- thanks, George -- it covered barely half the year's increase in the liability.
If GM were making lots of money selling vehicles, this would all be manageable, sort of. GM could buy enough time for demographics to bail it out, as more retirees begin getting Social Security and Medicare, reducing GM's costs, and other retirees die off. Its ratio of retirees to workers, currently 2.5 to 1, would shrink. Alas, GM's vehicle business is in the tank. Unless GM starts making money on vehicles or gets a break from the UAW or the federal government, things are going to get really ugly. I hope that doesn't happen, but it easily could.
The bottom line: Whenever you offer someone a free lunch, make sure that you'll be able to pay the bill when it comes in.
i think expecting to get paid 35hr to push a robot holding a piece of something into place and pressing a button on an air powered screwdriver is ridiculous. maybe if vehicles didnt break so damn much it would seem a lil worth it,
i think expecting to get paid 35hr to push a robot holding a piece of something into place and pressing a button on an air powered screwdriver is ridiculous. maybe if vehicles didnt break so damn much it would seem a lil worth it,
when GM was selling boat loads of SUV's, $35/hr as well as well as all the benefit expenses were affordable. but then gas went to $4 and people stopped buying those SUVs and GM didnt have enough time to adjust to the volatile Oil market and consumer demands. thats a mgmt problem..but their hands were tied because they still had to pay those high wages and benefits even with no money coming in.
the logical thing would have been to cut costs since revenue was not coming in. but the UAW decided otherwise.
ok what about it? why are you not understanding that GM could no longer afford to pay the high UAW costs? its pretty simple really.
what about the part that says GM executives make substantially more than executives at other car companies? $8.5 million a year to be a CEO? ... how many $65,000 a year jobs are that?
ok what about it? why are you not understanding that GM could no longer afford to pay the high UAW costs? its pretty simple really.
what about the part that says GM executives make substantially more than executives at other car companies? $8.5 million a year to be a CEO? ... how many $65,000 a year jobs are that?
according to my math...139. considered GM's 20,000+ UAW workers....not a big deal.
ok what about them? I'm not giving them a free pass. they were grossly overpaid as well.
ok what about it? why are you not understanding that GM could no longer afford to pay the high UAW costs? its pretty simple really.
what about the part that says GM executives make substantially more than executives at other car companies? $8.5 million a year to be a CEO? ... how many $65,000 a year jobs are that?
according to my math...139. considered GM's 20,000+ UAW workers....not a big deal.
ok what about them? I'm not giving them a free pass. they were grossly overpaid as well.
well ... that's just the ceo - how many make up senior management? ... say you feel the gm workers should be paid $45,000 and that $1 million is reasonable for ceo ... well - that makes one overpaid executive = 3,750 overpaid workers ...
the UAW are the highest paid, best taken care of employees in the world.
Yes Jlew, of course they are:
http://home.flash.net/~comvoice/42cUAW.html
August 2008
'...The workers struck against outrageous wage cuts and other concessions demanded by the auto parts capitalists at AAM. They held out defiantly and in good spirit for three months. As the strike proceeded, the lack of parts had forced many GM plants to close, and both AAM and GM were taking heavy losses. Yet at the end, they were forced to accept a contract that slashes wages in half, eliminates jobs, cuts benefits, hurts pensions, etc...And the result is that now UAW wages are declining to poverty-level...'
No SHIT! This was last fall when GM was desperately trying to stay solvent and keep operating. But when it's clear they're going under, is the union willing to compromise? Hell no, they say "fuck you", go on strike, and hurt the company even more. Great way to keep your job there... cause the company barely staying afloat even greater losses in the worst economy in 100 years because you don't want to take a pay cut like everyone else in America.
well ... that's just the ceo - how many make up senior management? ... say you feel the gm workers should be paid $45,000 and that $1 million is reasonable for ceo ... well - that makes one overpaid executive = 3,750 overpaid workers ...
I suppose you think Sr mgmt should make the same as plant workers or secretaries? yes, I think the mgmt should have taken a pay cut....and most of them did in the last few years. but they are not bound by a Union contacts. Executives do take pay cuts during restructuring, the UAW did not.
I'm sure you know about the ones who took government money, like AIG and Citi..those CEO salary's is $1.
I suppose you think Sr mgmt should make the same as plant workers or secretaries? yes, I think the mgmt should have taken a pay cut....and most of them did in the last few years. but they are not bound by a Union contacts. Executives do take pay cuts during restructuring, the UAW did not.
I'm sure you know about the ones who took government money, like AIG and Citi..those CEO salary's is $1.
in my example - i gave the ceo $1 million - how much do you think they should make? ... i am not disagreeing that the union played a role here - but they seem to be the easy target here ... these executives are making large amounts of money - and their compensation is not always in salary - there are bonuses and perks that union workers don't get ...
for every story about the so-called compassionate ceo - there is a story of executives who are throwing lavish parties with bailout money ... let's face it - the sense of entitlement exists on both sides of the fence - the difference is that $value of that entitlement is far greater on the executive side ...
I suppose you think Sr mgmt should make the same as plant workers or secretaries? yes, I think the mgmt should have taken a pay cut....and most of them did in the last few years. but they are not bound by a Union contacts. Executives do take pay cuts during restructuring, the UAW did not.
I'm sure you know about the ones who took government money, like AIG and Citi..those CEO salary's is $1.
in my example - i gave the ceo $1 million - how much do you think they should make? ... i am not disagreeing that the union played a role here - but they seem to be the easy target here ... these executives are making large amounts of money - and their compensation is not always in salary - there are bonuses and perks that union workers don't get ...
for every story about the so-called compassionate ceo - there is a story of executives who are throwing lavish parties with bailout money ... let's face it - the sense of entitlement exists on both sides of the fence - the difference is that $value of that entitlement is far greater on the executive side ...
its irrelevant to why GM failed. but its good to know you dislike executive pay and benefits. no one cares.
I suppose you think Sr mgmt should make the same as plant workers or secretaries? yes, I think the mgmt should have taken a pay cut....and most of them did in the last few years. but they are not bound by a Union contacts. Executives do take pay cuts during restructuring, the UAW did not.
I'm sure you know about the ones who took government money, like AIG and Citi..those CEO salary's is $1.
in my example - i gave the ceo $1 million - how much do you think they should make? ... i am not disagreeing that the union played a role here - but they seem to be the easy target here ... these executives are making large amounts of money - and their compensation is not always in salary - there are bonuses and perks that union workers don't get ...
for every story about the so-called compassionate ceo - there is a story of executives who are throwing lavish parties with bailout money ... let's face it - the sense of entitlement exists on both sides of the fence - the difference is that $value of that entitlement is far greater on the executive side ...
I agree with all but the last sentence. The combined value of the entitlement of a 600,000 worker company with inflated wages means that the labor side is a much huger company hit than even 2-3 huge lavish CEO parties. Though you are correct that BOTH need to stop. These frivolous, back-slapping perks of executive life are so out of touch with reality that it's disgusting. But that doesn't mean the biggest monetary problem these companies face is not inflated wages. They could drop those lavish parties and the company is still going to go under because it's a drop in the bucket compared to the costs they incur from their pension plans and inflated worker salaries.
I suppose you think Sr mgmt should make the same as plant workers or secretaries? yes, I think the mgmt should have taken a pay cut....and most of them did in the last few years. but they are not bound by a Union contacts. Executives do take pay cuts during restructuring, the UAW did not.
I'm sure you know about the ones who took government money, like AIG and Citi..those CEO salary's is $1.
in my example - i gave the ceo $1 million - how much do you think they should make? ... i am not disagreeing that the union played a role here - but they seem to be the easy target here ... these executives are making large amounts of money - and their compensation is not always in salary - there are bonuses and perks that union workers don't get ...
for every story about the so-called compassionate ceo - there is a story of executives who are throwing lavish parties with bailout money ... let's face it - the sense of entitlement exists on both sides of the fence - the difference is that $value of that entitlement is far greater on the executive side ...
its irrelevant to why GM failed. but its good to know you dislike executive pay and benefits. no one cares.
??? ok ... our public radio station is talking about executive pay and bonuses right now ... i guess some people care - clearly not you ...
I agree with all but the last sentence. The combined value of the entitlement of a 600,000 worker company with inflated wages means that the labor side is a much huger company hit than even 2-3 huge lavish CEO parties. Though you are correct that BOTH need to stop. These frivolous, back-slapping perks of executive life are so out of touch with reality that it's disgusting. But that doesn't mean the biggest monetary problem these companies face is not inflated wages. They could drop those lavish parties and the company is still going to go under because it's a drop in the bucket compared to the costs they incur from their pension plans and inflated worker salaries.
i just meant on a per person basis - ie to save $7.5 million - you need to cut labour costs for 3,750 workers or 1 ceo (obviously rough and guestimated numbers) ... at the end of the day - there is much larger problem here that goes beyond executive pay and labour costs ... toyota i believe turned in a loss here as well so, even if GM were in line with other people in the same sector - they'd still be in deep shit - and that's on the executive and labour side ...
??? ok ... our public radio station is talking about executive pay and bonuses right now ... i guess some people care - clearly not you ...
again, this thread is about GM. executive pay at GM had nothing to do with its collapse. if you want to cry about executives being more successful then you, make a new thread.
??? ok ... our public radio station is talking about executive pay and bonuses right now ... i guess some people care - clearly not you ...
again, this thread is about GM. executive pay at GM had nothing to do with its collapse. if you want to cry about executives being more successful then you, make a new thread.
i'm not crying about anything but thanks for your concern ... just trying to engage in a thoughtful discussion
Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D. (see graph above, click to enlarge), and 52.6% more than the average worker at Toyota, Honda or Nissan.
you want more evidence, do your own research. and I suggest you do, it sounds as if you know very little about the UAW.
labor costs didn't ruin GM, you're the only one I know of even suggesting that.
??? ok ... our public radio station is talking about executive pay and bonuses right now ... i guess some people care - clearly not you ...
again, this thread is about GM. executive pay at GM had nothing to do with its collapse. if you want to cry about executives being more successful then you, make a new thread.
i'm not crying about anything but thanks for your concern ... just trying to engage in a thoughtful discussion
labor costs didn't ruin GM, you're the only one I know of even suggesting that.
LOL I'm the only one huh?
Labor costs are one of many factors for its failure. to say its not is pure ignorance. as of their filing, GM had $173 Billion in debt and $82 Billion in assets. (that is not a good thing in case you dont know). the majority of their debt was to pay the Unions.
Comments
Or on the flip side GM gave countless Mexicans jobs. And if I had to guess I would say a Mexican without a job would probably be doing way way worse than an American without a job, otherwise you would have unemployed Americans sneaking across the border into Mexico, not the opposite.
screw its workers? thats absurd. the UAW are the highest paid, best taken care of employees in the world. when sales went down and the car market evolved, what did the Union say? fuck you pay me.
but whats hilarious is that you are all of a sudden you are a champion for America and its workers? ok. or maybe you dont understand the concept of a global economy
Where's your evidence?
That's right Jlew, because I've clearly always been against America and it's workers, right? Because Conservative America and the warmongers represent America and the American people, right?
Yes Jlew, of course they are:
http://home.flash.net/~comvoice/42cUAW.html
August 2008
'...The workers struck against outrageous wage cuts and other concessions demanded by the auto parts capitalists at AAM. They held out defiantly and in good spirit for three months. As the strike proceeded, the lack of parts had forced many GM plants to close, and both AAM and GM were taking heavy losses. Yet at the end, they were forced to accept a contract that slashes wages in half, eliminates jobs, cuts benefits, hurts pensions, etc...And the result is that now UAW wages are declining to poverty-level...'
http://en.wikipedia.org/wiki/Flint,_Michigan
'In the 1980s, the rate of deindustrialization accelerated with local GM employment falling from a 1978 high of 80,000 to under 23,000 by the late 1990s. Many factors have been blamed, including Reaganomics, outsourcing and exporting jobs abroad and to non-union facilities, unionization, exorbitant overhead, globalization, and most recently, a dramatic decline in General Motors sales...
The last decade has opened on the final stages of large-scale General Motors deindustrialization. By 2002 Flint had accrued a $35 million debt. Unable to pay this and balance its budget, the state of Michigan placed the city into receivership late that year, with a financial manager effectively replacing acting mayor, City Administrator Darnell Earley...
Of the nearly 80,000 people that worked for General Motors in Flint during its peak years in the late 1970s, only about 8,000 are left after the most recent 2006 buyouts.'
http://mjperry.blogspot.com/2007/07/uaw ... arket.html
Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D. (see graph above, click to enlarge), and 52.6% more than the average worker at Toyota, Honda or Nissan.
you want more evidence, do your own research. and I suggest you do, it sounds as if you know very little about the UAW.
http://progressivevalues.blogspot.com/2 ... -myth.html
Thursday, June 09, 2005
The General Motors Poverty Myth
Most of the mainstream newsmedia as well as the public is caught up in the myth of the sudden poverty of General Motors. On paper this corporation claims a loss of nearly $2,400 per automobile sold while other competitors such as Toyota and even Hyundai, who increasingly also manufacture automobiles in the United States, are showing profits of $1,300 to over $1,400 per automobile sold. In the case of Hyundai, the climb to solid profits as well as greatly improved product quality came after a new chief executive prevented other executives from using Hyundai as their personal "piggybank" and limited top salaries as well as a new company commitment to product quality.
But General Motors continues to operate similar to the old Hyundai. In 2002, former GM CEO, Charles E. Wilson earned $652,156 a year, but was later replaced with Richard Wagner, who made a major priority, huge pay increases for executives at GM. His salary was boosted to $8.5 million a year with all compensation figured in according to the reputable Forbes magazine. And many other executives also receive extremely high executive pay and compensation packages. And as bad as this is, Wagner is only the 141st highest paid executive in America, 140 other CEO's actually earn far more than the $8.5 million a year, limiting stockholder profits, dividends and company product development funds.
On paper, investors will see their GM stock as nearly dead in the water. The value will stay flat with little upward growth, or likely either drop somewhat with bad corporate profit news. Yet the value of the stock really goes nowhere. It is still in the hands of GM. And as executives increase their salaries, the investors stock value can well flow right into the backpockets of executives as they increase their salaries into the stratosphere.
Executives at Toyota, Hyundai and other highly profitable companies have salaries far closer to the workers who build the automobiles, than American executives whose main goal of running the corporation appears to be for salary increase potential rather than the development and marketing of new products or the health of the corporation. This hurts both the stockholders as well as limits new product development . While Toyota and Honda develop and market hot selling hybrid models, the huge salaries at GM limit the amount of development money, so less advanced, older technology American models are instead marketed, and are experiencing some failure in the marketplace as more American buyers purchase the more technologically advanced and higher mileage import models. Many American executives are far too concerned with the short term goals of the highest possible salary than the competitive place of their corporation in the marketplace. And sometimes marketing the same tired design year after year, may save the corporation development money, but sales wane as buyers tire of yesterday's designs being marketed year after year.
The Chevrolet division does have a few new interesting designs, but they are largely sales failures in the marketplace currently for several reasons. A sports car pickup truck design based on a showcar project was only intended to be sold to a very limited high end group of buyers. So with no pricing or intent for mass market sales, this model simply swallowed up company cash and brings in little revenues to cover development costs or offers the company any profits to work with. And a new subcompact has mileage far lower than comparable models from virtually all import makers, as well as the built-in buyer fear of previous small GM models like the Vega, Monza and Chevette, which had many product quality problems, although this new model looks far better assembled than these previous quality control limited models. So one part of the GM problems are a previous bad experience on some smaller cheaper models, although the larger GM models have a decent reputation for product quality. Yet with high fuel prices, it is exactly the smaller high mileage models that buyers want at this point, and with a head to head comparison, the small GM offerings come up short in the minds of many buyers compared to Toyota, Honda or even Hyundai.
Another problem is GM put too much production capability into the production of larger SUV models with little production capability to switch to other models as market conditions change. And as gasoline prices recently increased, sales suffered on larger GM models such as SUVs . Instead the ability to switch to models that the public wants should have been built into a more flexible production planning.
And since labor is a supply and demand commodity to the coporate mindset, the executives at GM will attempt to trim American high paying $27 an hour jobs with full health and retirement benefits and replace these with jobs in China at 24 to 40 cents an hour labor, or labor in mexico at $1.50 an hour, with lower labor costs and little or no company benefits. And this may result in cheaper materials as well, so quality could suffer unless strict quality control is carefully monitored. In addition American GM workers may be asked to give up benefits, such as retirement or health benefits. Yet it is doubtful any top executive at GM will cut their compensation or salary. The corporate view is the corporation runs for the enrichment of the executives first and building cars second is the philosophy that rots a big corporation like GM from the inside.
GM can survive their problems. But a better philosophy of executive commitment to the corporation's health and more concern for the worker's role as a vital link in the American economy, instead of merely a supply and demand commodity that can be easily be replaced with cheap foreign labor to enhance profits, as well a commitment to more reasonable executive salaries and more flexible and modern product development are all vital links. But unlike many successful foreign competitors, the American corporate vision is often short-sightedly based on the short term goal of extreme executive salaries. This has to change for the health of GM, which is equal to 1% of America's economy. And it should serve as a warning to other corporations of how to fail in a marketplace with far better managed foreign competitors.'
The average UAW worker with a high school degree? How many blue collar workers have degrees? I think what you're referring to are the over-inflated salaries of UAW executives.
um no I'm not. I'm referring to the average UAW worker whos hourly rates are double that of GM's competitors. and when Gas prices went up, and people stopped buying SUVs, GM's revenue went to almost zero but still had to pay ridiculously high wage rates. the UAW refused to renegotiate their contract rates to keep up with competition. the result? Bankruptcy.
Seems like your graph has been well and truly rubbished:
http://mjperry.blogspot.com/2007/07/uaw ... arket.html
'...Active UAW workers are well-paid, but not $146,000 worth—that’s with unfunded liabilities included. They make about $100,000 a year counting everything (wages, insurance, retirement, workers’ compensation, FICA, tuition . . .). Part of this $100,000 is a fuzzy accounting term “other” on our yearly compensation reports. I was curious what “other” meant, so I emailed GM accounting and received a memo in return. Other includes janitorial services in the factories, so if you wish to compare our wages to yours, make sure you count the toilet paper your boss supplies you to wipe your butt. They count toilet paper in our total compensation, so to make an apples-to-apples comparison you must count it in yours, too.
Here's why such a high labor cost is reported by GM:
Burden or Manufacturing Overhead Costs
Typical Variable Accounts:
Indirect Labor
Material handling
Working leaders
Janitors & yardmen
Inspection
Set-up
Maintenance
Tooling labor
Laboratory services
Training
Other indirect labor
Non-Productive Labor
Diverted labor
Clean-up and breaks
Fringe Benefits (Hourly Work Force)
Shift differential
Paid lunch periods
Vacation pay
Holiday pay
Payroll taxes
Maintenance supplies
Tool supplies
Janitorial supplies
Power wash supplies
Group insurance
Workmen’s compensation
Employee education
Pension expense
Other benefits
Source: WWP: Supplier Cost Systems Overview 3-4
General Motors Corporation'
It’s too simplistic to look at wages /compensation alone and determine labor costs of an operation.'
'I hate to break this to you but the autoworkers do not make $73 dollars an hour or $150,000 a year. The hourly wage is about $28an hour for established workers and $14 for new hires. The fringe benefits are probably around 10 to 12 dollars and hour. So total hourly pay is about $20 to $40 dollars an hour, depending on seniority.
What most people hear about is a number that combines what auto workers really make along with pensions and health care costs for retirees who outnumber active workers by almost three to one. The companies, at least GM, adds the costs of retiree benefits to the wage package of the active workforce to inflate the compensation number for contract negotiations when the companies need the general public to side with them against the union. This is back-firing on the car companies now that they need federal help because Congressmen are looking at the $73/hour figure and saying that auto workers are over paid. The $73/hour number is as phoney as a three dollar bill.'
'So, basically, this whole article is a farse and should have never been posted. "Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D." Never mind. Looks like Forbes did get rid of it. I wonder why...'
http://www.washingtonpost.com/wp-dyn/ar ... Apr18.html
General Motors Getting Eaten Alive by a Free Lunch
A free lunch can be the most expensive meal in the world. For living proof, look at General Motors. A big reason that GM has gotten into such trouble is that the pension and health care commitments it made to employees decades ago seemed to be a free lunch.
The United Autoworkers placed a high value on these benefits, but the accounting rules of the time placed no cost on GM's risk of providing them. So the UAW and GM made deals that were heavy on benefits, relatively light on wages.
Lower salaries meant that GM reported higher profits, which translated into higher stock prices -- and higher bonuses for executives. Commitments for pensions and "other post-employment benefits" -- known as OPEB in the accounting biz -- had little initial impact on GM's profit statement and didn't count as obligations on its balance sheet. So why not keep employees happy with generous benefits? It was a free lunch. Besides, GM's only major competitors at the time, Ford and Chrysler, were making similar deals.
Now, as we all can see, pension and health care obligations are eating GM alive. The bill for the "free" lunch has come in -- and GM is having trouble paying the tab. In the past two years, GM has put almost $30 billion into its pension funds and a trust to cover its OPEB obligations. Yet these accounts are still a combined $54 billion underwater.
"Any market economist would tell you that things that are 'free' are overconsumed," says Greg Taxin, chief executive of Glass, Lewis & Co. "That's true of pensions, it's true of OPEB, and it's true of stock options in the '90s." That's a lesson the SEC seems to have ignored, given last week's decision to let companies delay counting the value of options as an expense. But that's a topic for another day.
GM began its slide down the slippery slope in 1950, when it began picking up costs for medical insurance, pensions and retiree benefits. There was huge risk to GM in taking on these obligations -- but that didn't show up as a cost or balance-sheet liability. By 1973, the UAW says, GM was paying the entire health insurance bill for its employees, survivors and retirees, and had agreed to "30 and out" early retirement that granted workers full pensions after 30 years on the job, regardless of age.
These problems began to surface about 15 years ago because regulators changed the accounting rules. In 1992, GM says, it took a $20 billion non-cash charge to recognize pension obligations. Evolving rules then put OPEB on the balance sheet. Now, these obligations -- call it a combined $170 billion for U.S. operations -- are fully visible. And out-of-pocket costs for health care are eating GM alive.
GM spokesman Jerry Dubrowski says the company expects to pay $5.6 billion in health care costs this year for 1.1 million people covered by its plans. That's up from the $3.9 billion it shelled out in 2001 to cover 1.2 million people.
"At the time GM began offering these benefits, no one had any idea that the costs for prescription drugs and medical services would explode the way they have," Dubrowski said. True. But the UAW was astute (or lucky) enough to push the risk of covering these costs onto GM.
GM's pension funds are in pretty good shape, thanks to an $18.5 billion infusion two years ago. GM got this cash by selling bonds at relatively low rates, hoping to resolve its pension problems once and for all. This maneuver has been successful so far, but funding the pension plans has consumed much of GM's borrowing power and strained its balance sheet.
At the end of last year, GM says, its U.S. pension funds showed a $3 billion surplus. GM's pension accounting, which assumes that the funds will earn an average of 9 percent a year on their assets, is highly optimistic. But things are under control -- as long as GM stays solvent.
By contrast, OPEB is out of control. At year-end, OPEB was $57 billion in the hole, even though GM threw $9 billion into an OPEB trust in 2004. The company has no legal obligation to pre-fund these costs, but it's trying to show the financial markets and its workers that it's dealing with them. The OPEB trust has a hefty $20 billion of assets -- but GM calculates its obligations at a staggering $77 billion.
What's more, GM says they're rising at 10.5 percent a year. Thus, even though President Bush's Medicare prescription drug benefit whacked $4 billion off GM's OPEB obligation last year -- thanks, George -- it covered barely half the year's increase in the liability.
If GM were making lots of money selling vehicles, this would all be manageable, sort of. GM could buy enough time for demographics to bail it out, as more retirees begin getting Social Security and Medicare, reducing GM's costs, and other retirees die off. Its ratio of retirees to workers, currently 2.5 to 1, would shrink. Alas, GM's vehicle business is in the tank. Unless GM starts making money on vehicles or gets a break from the UAW or the federal government, things are going to get really ugly. I hope that doesn't happen, but it easily could.
The bottom line: Whenever you offer someone a free lunch, make sure that you'll be able to pay the bill when it comes in.
See my post above.
ok what about it? why are you not understanding that GM could no longer afford to pay the high UAW costs? its pretty simple really.
when GM was selling boat loads of SUV's, $35/hr as well as well as all the benefit expenses were affordable. but then gas went to $4 and people stopped buying those SUVs and GM didnt have enough time to adjust to the volatile Oil market and consumer demands. thats a mgmt problem..but their hands were tied because they still had to pay those high wages and benefits even with no money coming in.
the logical thing would have been to cut costs since revenue was not coming in. but the UAW decided otherwise.
what about the part that says GM executives make substantially more than executives at other car companies? $8.5 million a year to be a CEO? ... how many $65,000 a year jobs are that?
according to my math...139. considered GM's 20,000+ UAW workers....not a big deal.
ok what about them? I'm not giving them a free pass. they were grossly overpaid as well.
well ... that's just the ceo - how many make up senior management? ... say you feel the gm workers should be paid $45,000 and that $1 million is reasonable for ceo ... well - that makes one overpaid executive = 3,750 overpaid workers ...
No SHIT! This was last fall when GM was desperately trying to stay solvent and keep operating. But when it's clear they're going under, is the union willing to compromise? Hell no, they say "fuck you", go on strike, and hurt the company even more. Great way to keep your job there... cause the company barely staying afloat even greater losses in the worst economy in 100 years because you don't want to take a pay cut like everyone else in America.
I suppose you think Sr mgmt should make the same as plant workers or secretaries? yes, I think the mgmt should have taken a pay cut....and most of them did in the last few years. but they are not bound by a Union contacts. Executives do take pay cuts during restructuring, the UAW did not.
I'm sure you know about the ones who took government money, like AIG and Citi..those CEO salary's is $1.
in my example - i gave the ceo $1 million - how much do you think they should make? ... i am not disagreeing that the union played a role here - but they seem to be the easy target here ... these executives are making large amounts of money - and their compensation is not always in salary - there are bonuses and perks that union workers don't get ...
for every story about the so-called compassionate ceo - there is a story of executives who are throwing lavish parties with bailout money ... let's face it - the sense of entitlement exists on both sides of the fence - the difference is that $value of that entitlement is far greater on the executive side ...
its irrelevant to why GM failed. but its good to know you dislike executive pay and benefits. no one cares.
I agree with all but the last sentence. The combined value of the entitlement of a 600,000 worker company with inflated wages means that the labor side is a much huger company hit than even 2-3 huge lavish CEO parties. Though you are correct that BOTH need to stop. These frivolous, back-slapping perks of executive life are so out of touch with reality that it's disgusting. But that doesn't mean the biggest monetary problem these companies face is not inflated wages. They could drop those lavish parties and the company is still going to go under because it's a drop in the bucket compared to the costs they incur from their pension plans and inflated worker salaries.
??? ok ... our public radio station is talking about executive pay and bonuses right now ... i guess some people care - clearly not you ...
i just meant on a per person basis - ie to save $7.5 million - you need to cut labour costs for 3,750 workers or 1 ceo (obviously rough and guestimated numbers) ... at the end of the day - there is much larger problem here that goes beyond executive pay and labour costs ... toyota i believe turned in a loss here as well so, even if GM were in line with other people in the same sector - they'd still be in deep shit - and that's on the executive and labour side ...
again, this thread is about GM. executive pay at GM had nothing to do with its collapse. if you want to cry about executives being more successful then you, make a new thread.
i'm not crying about anything but thanks for your concern ... just trying to engage in a thoughtful discussion
labor costs didn't ruin GM, you're the only one I know of even suggesting that.
I can't believe you knock CEOs
http://www.playboy.com/articles/playboy ... index.html
LOL I'm the only one huh?
Labor costs are one of many factors for its failure. to say its not is pure ignorance. as of their filing, GM had $173 Billion in debt and $82 Billion in assets. (that is not a good thing in case you dont know). the majority of their debt was to pay the Unions.