Even as Chrysler workers ponder whether or not to accept their new contract, GM is bragging about announcing the blessings the union has bestowed on the automaker's bottom line. Under the two-tier wage structure in the new United Auto Workers (UAW) contract, GM will be paying "non-core" workers about a third of the total wages and benefits they presently shell out to their union workers. The Detroit Free Press reveals that revisions to these employees' pension fund and health coverage will lower their cost to the company to $25.65 per hour. That's compared to the $78.21 per hour in wages and benefits GM currently pays all their UAW workers. What's more, GM expects 65 to 75 percent of their hourly employees to retire during the four-year life of the contract; many of these retirees will be replaced with lower-paid workers. CFO Fritz Henderson predicts the new labor deal will save The General some $2.8b in annual cash flow by 2010, and $3.3b by 2011.
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A billion here, a billion there – pretty soon, we’re talking about real money!
2011? You mean, the cash only starts flowing when the NEXT contract with the UAW is scheduled? Talk about an agile corporation…
Ah well, better late than never, I suppose.
Just curious, Is the upper management of GM taking pay cuts also? Oh sorry, that was a dumb question, I think this means bigger raises for the suits. This entire scenario with this contract is fascinating, it obviously is different from years past where UAW pushed GM around, this time it looks as though the UAW may have gotten used liked a donkey. You suppose the average UAW member who gripes about how much the big guys make in the tower is going to feel any better now? This should really help the line guys get motivated.
Oh, oil just blew by $85 bucks a barrel, on its way to a hundred. I guess the Cobalts will soon be flying off the lots.
Ack. Please delete the above non-comment. Treats me right for trying to use a fake xhtml tag format.
hltguy was, I’m sure, being just a little sarcastic with the Cobalt reference, but it is good (and not just a little sad) to hear pixarwolf’s rather pathetic real-world experience in the fuel economy department.
Maybe it’s them Aveos that will fly off the lot. Except their economy isn’t exactly world beating either. In fact, it is downright horrible for such a wee little penalty box.
On topic: that is a fairly impressive cost savings. It would be informative to see the per-vehicle bottom-line impact.
Yes, sarcastic. The opportunity in the near future, imo, will be for those car companies that can make a profit on fuel efficient vehicles. If Turkey decides to block our access into Iraq, oil prices could spike to $95 to $100 a barrel. If Americans flock to small cars, it would not take a Phi Beta Kappa to figure out Honda, Toyota, Hundai and Kia will be well positioned. A ten year old Focus platform, a warmed over Cavalier will not get it done.
it need not be said , but I will save someone else from having to do so. the big shots will most likely get a double bonus for saving 3 billion. whats a few million pasted out amongst the boys. cigars all around.
Icahn reveals how Wagoner got his job here:
http://www.portfolio.com/views/blogs/daily-brief/2007/10/11/how-did-this-guy-get-in-charge