The Detroit News reports that a "substantial signing bonus" could seal the deal on the new UAW contract with GM. The bribe bonus would be "something they could sell to members without making a long-term commitment that locks GM into something it can't afford down the road." The amount of the bonus hasn't been stipulated, but it's bound to be quite a chunk of change– especially piled on top of the billions GM will have to cough-up for the union-administered VEBA health care superfund that everyone but the retirees it'll cover seems to want. If the negotiating pattern follows past behavior, Ford and Chrysler will be expected to fork-out the same bribe pay out. Cerberus may be able to pull some cash for bonuses out of its deep pockets, but Ford isn't exactly flush. The UAW better finesse this one, lest they kill that proverbial goose.
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Whether you like unions or not their contracts are typically sent before their members to vote on for approval. This is nothing new. I work in a non automotive union work place. Every contract we ever had when it was put forward always had some little tidbit thrown in as an extra which would be given if the contract passed. If the union is making long term concessions on benefits they will probably have to throw in some cash goody to get it passed.
To me I never liked these up front Cash signing bonus, here in Canada they are taxed at 50%! I would rather have a nice raise every year or so. They might look good to the average worker but most Governments like them better to enrich there Tax coffers
It would seem that the union is struggling with the VEBA concept, and very concerned about the future viability of VEBA.
The bonus (window dressing) might make it more palatable, and momentarily obscure the VEBA. Like an ARM they will worry about it in a couple of years, and attempt to go back to the well, or hope for some sort of “parachute” from somebody.
I thought that anyone not named Rockefeller, Vanderbilt, Carnegie et al, had decided long ago that unions are necessary to counteract the power of CEO's and Wall Street. Do you really think that the working class has to tighten its collective belt? Money follows money, and the mere inference that the bankers want VIBA makes me very suspicious. But, in this country, health care is a "privilege", while its business model gets a pass because of the nature of the delivery system, and the power of its lobbyists. Do you really believe that the unions are to blame for the domestic woes? If so, then why is there parity of wages in the non-union manufacturers? There is an argument there that the UAW brought up the pay of Toyota workers, under the "rising tide floats all boats" theory. The non-union builders ONLY advantages are the market and the fact they do not have a 60 year legacy of retirees. Would you trust your retirement to the vagaries of the small print of ERISA and the largesse of your employer? I think not.
Maybe instead of dumping $30 billion into a VEBA, GM should consider paying a $100K signing bonus to the union to forget the retirees entirely.
With the exception of guyincognito the first 5 comments, say it all.
I don’t understand a lot of the U.S. issues, but I know the culture on the plant floor.The rank and file do not see G.M. as being in financial dificulties.I mean its buisness as usual on the floor.The same daily waste of money.The same incompetant people with zero accountability.There is not a sense of urgency.A line worker has real hard time believing
that GM is sqweezed for cash.
I’m lucky I don’t work on the line anymore, even from a desk job I don,t see any belt tightining.
GM goes out of thier way to tell us the turn around is working,and all is f—-en rosy!
So one can figure this whole concession pill is gonna be hard to swallow,eh.
Gettlefinger and Wagner are hoping a little cash might make the pill go down.
Its not my place to question the American autoworkers decision.As has been reported this is not gonna be a slam dunk ratification.
The union is not without guilt here.In Canada the CAW cultivates a culture of entitlement.The union then turns around and tells us”look people the Americans/UAW are giving away the ranch so if we want new product we better cough up more”
Who or what t f are you supposed to believe?
Strange days indeed!
mikey,
It would seem that GM wants to contain legacy costs, which is healthcare in the US and not as big an issue in Canada.
The individuals that worked and retired or are close to retiring should be dealt with in the “old way” the people with less seniority will be dealt with in a different fashion.
The manufacturers want to draw a line in the sand to contain the health care costs in the US, GM might say we will deal with retirees, and folks that retire within the next x period of time. You the union deal with all present employees, and retiress past x and beyond.
In the US they all cross their fingers, hope the Democrats come to power in 2008 with a health care program.
olddavid: Do you really believe that the unions are to blame for the domestic woes? If so, then why is there parity of wages in the non-union manufacturers? There is an argument there that the UAW brought up the pay of Toyota workers, under the “rising tide floats all boats” theory.
The transplant operations roughly match the pay of the Big Three, but note that their health care benefits aren’t as generous, and, if I recall correctly, they do not provide much health care for retirees.
olddavid: Would you trust your retirement to the vagaries of the small print of ERISA and the largesse of your employer?
Which is why the union-run health care plan would be a good idea, if the companies can adequately fund it. If one or more of the companies goes belly up, the retirees and workers would still have their health care coverage.
If you don’t think that matters – come to Harrisburg, and we’ll visit some Bethlehem Steel retirees who found out what happens to retiree health care benefits when an employer goes bankrupt.
It wasn’t pretty.
Actually, Ford is flush with cash. Check your facts. $37.5 billion as of the end of Q2. Ford is probably in a better position than GM or Chrysler to fund its VEBA and adjust to a slowing economy in the short-term. They also have more assets to sell than their peers (Jag, LR and still more plants and operations to go).
All three, however, need this RHC fund. If they want to survive longer than a few more years in any meaningful way, they will have to establish it here and now. I hope the UAW doesn’t do anything stupid.
Re mickey…
The rank and file do not see G.M. as being in financial dificulties.I mean its buisness as usual on the floor.The same daily waste of money.The same incompetant people with zero accountability.There is not a sense of urgency.A line worker has real hard time believing
that GM is sqweezed for cash.
Yup. I’ve said it here before – the model to note is the airlines. You’d THINK that airline pilots’ unions would have the technical/math/financial skills to evaluate whether their own costs/compensation would hurt the company. Nope.
United Pilots in the ’90s were especially noted for their slowdowns and militancy. I often wondered how the union’s extortionists leaders answered rank and file questions when Chapter 11 double tapped the life out of their pensions. Then again, maybe there’s questions you don’t ask unless you want to meet Paulie Walnuts on an early Saturday morning…
the bonus is nothing new. every contract year the companys dangle some cash out there knowing the short-sightedness of the majority of the workers. you may be suprised at how many of the workers live paycheck to paycheck, so offer up a few thousand and watch your fingers. they, the workers take the bonus and fore-go a 2-3% or more during the course of the contract, a payraise that in the long run would be better.
Just about everyone understands these contract negotiation are important. But increasingly the average person on the street simply doesn’t care. Indeed I would say its worse than that, increasing numbers of people I hear saying that they don’t want and wont buy a union made car. And this is in the Detroit area! (but not in union families)
The reason is simply the unions attitude. And the feeling that as long as other competitive car choices exist (more than enough) why buy a car made by disgruntled persons? And ones whose greed may sink their employer, and the warranty of the vehicle?
I think we are rapidly reaching the tipping point, and I believe the unions greed and sense of business as usual entitlement will keep them from doing what it takes to make meaningful long term changes that could turn the ship around. Why cant they put forth a positive plan and admit to some short term reductions in return for stock, or future profits or something related to actual value produced? Not one word is mentioned. To them not getting a big raise, is a reduction. All this talk of signing bonuses and stuff is madness. Deck chairs on the Titanic comes to mind.
GM will look at the signing bonus as a cost to ensure that VEBA gets accepted. The fact is that VEBA is the “out” the Big 3 have been looking for in changing the status quo from a defined benefit health care program to a defined contribution program. (In the case of Cerebus, it is a way to move capital out of Chrysler to fund other private equity deals. E.g., Cerebus offers Chrysler stock or investments in other Cerebus offerings and used the Chrysler cash flow to pay the VEBA liability off; at the same time funding the Cerebus offerings.)
Union members have had the privilege to consume health care without consideration to cost. A VEBA, when established will change the dynamic to one where a union member needs to consider the impact of the health care choice to viability of the VEBA. Once the VEBA is funded the employer only needs to supply a fixed amount to the VEBA.
I think the conflict will now move employer-union member to union-union member; and will split the unions on generational grounds. The union retirees who will die off in the next 15 years will receive the maximum value of the VEBA. The union members in their mid-40s or younger will be required to sacrifice with some question about what they can expect in their retirement. The union members being hired today in their mid-20s will likely not see a dollar of VEBA when then will need it 50 to 60 years from now.