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Breaking news from TTAC contributor Samir Syed, who just finished lunch with Canadian Auto Workers President Basil "Buzz" Hargrove. In a stunning admission, the union boss said he told GM CEO Rick Wagoner that a bankruptcy filing was inevitable. But wait! There's more. Buzz reckons ALL of Detroit's automakers are going down. "I don't see how they can survive in their current form." Samir's full report on his chin wag with the outgoing union boss will appear on Wednesday's TTAC editorial page.
40 Comments on “CAW Boss Buzz Hargrove: “I told Rick Wagoner it’s not a question of if you’re going to have to file [for bankruptcy], it’s a question of when”...”
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Look, is that an iceberg off the bow?
Obama, Reid, & Pelosi to the rescue.
Jan 2009.
Wow!
Which explains Buzz’s hard line stance. You’re not gonna change, fix the problems, etc so why should I help?
Interesting strategy. Get it while the going is good, because the ship is sinking.
Buzz bites back. GM hosed him with that Osahawa plant, and so he’s got no reason to be discreet.
Which explains Buzz’s hard line stance. You’re not gonna change, fix the problems, etc so why should I help?
Interesting strategy. Get it while the going is good, because the ship is sinking.
Totally agree, I’ve been saying this for quite awhile. Despite opinion to the contrary, the union leadership is not stupid. Since the companies are hopeless, the best that the unions can do is to protect their members who have been paying their dues (literally) all these years so that their interests are represented come contract time.
The culture of these companies, particularly General Motors, has been top-down and paternalistic. You can’t negotiate in good faith with people who think that they are superior to you, so there was no reason to ever bother.
GM takes no pride in its products, service or in serving its customers, so it’s a bit much to expect the workers to get teary-eyed and step up in ways that their bosses will not. When the battle is lost, it’s the officers who are at fault, not the privates.
Sajeev Mehta :
July 29th, 2008 at 12:48 pm
“Which explains Buzz’s hard line stance. You’re not gonna change, fix the problems, etc so why should I help?
Interesting strategy. Get it while the going is good, because the ship is sinking”.
Couldn’t agree more actually…good for you Buzz!
Buzz is a shrewd man, who happens to be a union boss. Came up through Chrysler, so this must be a particularly painful time for him. He brought the CAW to the centre of the political spectrum, for strategic reasons during the last two federal elections.
I do wonder why he is leaving, taking early retirement at such a crucial juncture for the North American industry. If I were to speculate, it would be one of two reasons. First would be political. There is likely an election coming this fall, and Buzz could nab Oshawa (a desirable alternative to Sid Ryan), or a seat in the Windsor area.
The other is health. I have no information, but it is the reason why I avoided posing the early retirement question to Samir. Buzz can discuss retirement issues as he sees fit.
Good luck Basil. Big shoes to fill.
So yesterday the CAW tell us what a wonderfull deal we got.
Right! So mikey runs out the door grabs his 100K
and his 35000$ voucher and lives on 3515$ a month.Subtract surviver benifits and a whole pile of taxes.Still,not too shaby eh?
So mikey,being mikey, asks WTF happens if GM files?….Well uh…uh..uh we don’t think thats gonn’a happen.Sooo mikey says I didn’t ask for your thoughts.I asked WHATS MY PENSION GONNA DO IF GM FILES?….We are not here to talk about that brother.
What we are here to talk about ,is financial security for the rest of my life.Untill somebody gives me an honest answer,they can take thier money and thier car and they can stick it up Buzz Hargroves ass.
Refresh my memory— when were the unions cooperative? Or has GM been doomed for 40 years? The unions always took the hard line stance, good times or bad. Which is understandable. Short-sighted, but understandable. They have a bigger interest in the long term health of the company than the executives; after all, the execs have golden parachutes. Its the workers and retirees that are going to be wearing the cement chutes when the company finally crashes. Taking a hard line stance against the hand that feeds isn’t a good strategy even if you do better in the short run.
Maybe if GM hadn’t had out-sized labor costs and a workforce that would strike whenever GM tried to adapt to a changing market, GM wouldn’t be on the rocks now. Management was hardly top notch, bone headed for sure, but the “small cars don’t make money” line sure makes a lot of sense when labor costs add a couple grand to every cars cost over Toyotas. It’s no wonder every small car they make is a pile; making a car that was truly competitive with the civic would knock it out of the price range. Nor is the drive to SUVs and trucks all the surprising, since they were the one type of vehicle that offered the profit margins they needed to make money and be competitive. The cost-cutting, the subpar reliability, it all has its source in the fact that GM had to cut corners to remain price competitive. Thus, the shrinking market share, the job cuts, more cost-cutting— the entire cycle for the last 30 years. Contract issues ALONE add $630 a car. That isn’t health care. That’s work rules, line relief, holday pay. GM pays $350 per car for every worker who ISN’T WORKING.
People want and demand managers who are far sighted geniuses of iron will. Be nice if that were true, but it isn’t. Not many people are going to ride out the mother of all strikes because 30 years down the road its really going to bite the company on the ass. There’s too much pressure to perform today. That’s just human nature. Same dynamic on both sides lead to GM dying.
Buzz would know better than anyone the health of the Big 3. After all haven’t they had access to the books over the last few negotiations as the Company have been taking away union gains over the last few years.
Unless the Company has a special set of books to use as leverage that the union sees then we have to assume that Buzz kind of said, gee you guys aren’t kidding, you’re screwed.
Of course he had to make a deal with the company to appear to have fought for his members with a token strike, rally the troops sort of thing. Heck no big deal, companies said, we don’t need the cars anyway, and we can’t sell them.
Mikey, take the $100K and run. I should be so lucky. Those of us out here in the real world are lucky to get 2 weeks pay when we get laid off. Security? Pension? Guarantee? This isn’t 1960 buddy.
$100K in hand is worth more than 2 pensions anyday. If my bosses walked in and offered me only $10K to leave I would be out the door in 30 seconds. Don’t get too greedy Mikey.
Buzz reconds all domestics going under…???
PULEEZE.
You guys are acting like the guy is a real thinker.
Perhaps you see him as a visionary?
Talk like this is bull crap.
These companies are NOT going under.
There will be big, wonderful changes…but come tomorrow, they will still be here.
I love corrections in markets like this.
I love forced changes….and that is all we have here.
GM of tomorrow will be completely different, Ford will be a wonderful company with probably the best vehicles in 2011…but if this negative mob thinks it has a grasp on reality and these Buzz types are your soothsayers…look out above, the sky is falling!
Maybe Buzz isn’t a ‘visionary’ in the eye of some..but you can’t argue that the sharpies on Wall Street aren’t thinking the same way.
It costs more to borrow GM shares right now than it does to BUY the stock. The demand for shares continues to exceed supply…but only on the short side.
Refresh my memory— when were the unions cooperative?
When they agreed to take responsibility for their own health care.
Ah right. VEBA.
Once the ship was already sinking.
Once the ship was already sinking.
Ok, when has management been intelligent? Fewer times than the union has been cooperative.
So Hargrove’s a hero, while Gettelfinger’s a goat? Am I interpreting this right?
mikey,
There are many folks that would do “something illegal” for such a retirement package.
It also shows that folks that are considering retiring need to alter their lifestyles…not an easy thing to do, or accept.
motownr…
Don’t get me wrong…I am not a true believer type.
And never a big fan of the Ford family or its inbreeding management.
Nor of the whole Ford/Mercury thing or the GM multi brands, samo-samo cars.
But in fact, look at Toyota and Honda.
They are doing it with their so called luxury brands.
An Accord is still a Honda to me.
But I am a fan of many of their engineers and do expect that when the dust clears, GM will be here, but its look will not be the GM we all know and, well…used to love.
And Ford Finally married outside the family for better DNA.
But the BIG thinkers on Wall street and down on the (panic) trading floors are not going to decide my future.
And these union leaders are not and never have been for the interest of any company they work for.
I’m with toxicroach on this one. Why is this guy’s behavior exemplary to anyone? We’re talking about the endgame of the very shortest of short-sighted thinking, and yet people are rooting him on? GM et al.’s woes are not only the unions’ doing, but a big, BIG chunk of their woes certainly have a LOT to do with the unions. To say they don’t, and then to egg on the destructive machinations of a guy like Hargrove, is just beyond the pale.
For everyone who thinks the unions are to blame for GM’s problems. Remember GM makes quite a few cars in non union plants. They’re still crappy, while Toyota makes the Corolla and the Tacoma with UAW workers. Even if GM had been totally non union as long as they were run by the arrogant “Americans won’t buy small cars”, everyone loves trucks, our cars are just as good as Toyota, its just a perception crowd they’d still be in the mess they are in now.
Buzz is like all the other big boys: wants to prove he’s got the biggest set and the longest tool. Whatever.
No one on either side of the Mgmt/Union negotiation table is interested in the health of the company or the workers. It’s a damn shame.
@mikey: things look bad to you right now because you look back at how good things were for others. In every other industry people would kill for such an opportunity (i.e. $100k to leave).
The trough has been so deep and so wide for so long that everyone involved has forgotten where it came from or how it gets filled. Soon though, there will be some very painful reminders.
I’m not saying the UAW is THE reason GM failed.
Far from it. But they certainly helped, and I can’t understand the attitude of Unions that it is in their best interest to weigh the parent company down with unfunded obligations, high labor costs, and work rules. Its asking for somebody to come in and start stealing your lunch.
And the fact that GM and Toyota make a few cars with union or non-union isn’t relevant to my overall point; the higher labor costs force GM to cut corners and make worse cars at the same price point.
Sure, management is dumb as hell too. But when I imagine being a GM manager and having to navigate between the unions, dealers, investors, other management cliques, the Feds, and 8 different brands, I can empathize with them. I’m not sure that they were left with any smart choices to make.
Mikey –
How much parking so you have? The BK judge may grant you a settlement made up of nice, shiny Silverado pickups.
toxicroach “Sure, management is dumb as hell too. But when I imagine being a GM manager and having to navigate between the unions, dealers, investors, other management cliques, the Feds, and 8 different brands, I can empathize with them. I’m not sure that they were left with any smart choices to make.”
It might be too late now but GM had all of those problems for the last 30 years. Are you sure you want to claim GM didn’t have any smart choices other than the ones they chose.
Ford looks like they made some smarter choices in just the short time Alan Mulally has had. Oh poor GM their hands are tied.
Ah, PCH, there you go again.
The military analogy does not apply. Both sides are at fault, and even the third side, the government, for getting into this mess.
Plenty of blame to go around. The only merit to your argument is that the officers of the company have to ACCEPT responsibility, because they should not have signed up if they weren’t up to fixing things.
The unions used government to interfere in the relationship. Once they did that, they crossed the line and are now just as culpable as anyone else. Especially culpable when it comes to retirment benefits since even Buzz sees the writing on the wall, yet he knows the pensions are not protected. Will he try to get while the getting is good and force a switch to individual accounts? Not a chance. He doesn’t even want to get CLOSE to that discussion.
First, “congratulatations” (inside joke) are in order to Samir. I never doubted you.
Second, I have to take my hat off to Buzz. If he accepts that, he is the most sane person in the American Auto Industry.
Sherman
I didn’t say that GM didn’t have any smart choices. I wonder if, from the perspective of an individual in the company, if that person could make smart choices. GM doesn’t have a brain of its own; it is the sum of a 100,000 employees decisions.
We could argue counterfactuals all day long, but it really amounts to the Great Man vs. Historical Forces argument. Could a genius have come in and saved GM? Or are such geniuses merely taking credit for what would have happened anyway? Was Napoleon a great general, or was he just riding historical forces that propelled him to the top? How much of a difference does a Napoleon make? How much of a difference does a Waggoner make?
Hey Adrian…
I asked Buzz about that. I asked him flat out:
“Is this [Chapter 11] a tacit admission that you are milking the Big 3 for everything you can get before they go?”
His reply was that C11 was specifically a US-thing, but they would be OK in Canada.
The rest will come tomorrow
So Buzz thinks GM is going bankrupt. Big deal; most of Wall Street now thinks the same thing.
I still wouldn’t trust the guy with a hot dog stand.
I wonder if Samir asked him my question… ;)
Assuming Mulally IS doing the right and necessary stuff, why didn’t he do it before? Because he wasn’t there, and if he had been he wouldn’t have been allowed to do it. From what I’ve read, WCF I wanted the PAG stuff. It had to be run into the ground and lose billions for years before it was obvious and necessary to dump it at a loss. Look at GM. What in the HELL could be going on in the ‘brains’ of the bystanders and the stock holders to let this death march continue? No telling what Lutz thinks and at what hours of the day. I think Wagoner is just milking the cow as long as they let him. Ditto the bystanders. As for the stock holders, I can’t imagine. I suppose gas COULD be selling for $1.50 tomorrow morning and everybody COULD think this has just been a bad dream and go buy their new truck, but lots of white and blue collar people really have no choice. Just hope their jobs are still there after the BK or bailout or whatever.
Similar situation for the whole country.
Toxicroach, I can accept that an extra $600 per car or so hurt GM in the economy car market. But why did they also give up on the luxury car market? Once upon a time, Cadillac was competitive with Rolls Royce and the top end Mercedes. An extra $600 per car wouldn’t hurt them in that market. Why did they give up on it and leave Cadillac as an entry-level luxury brand?
Well its not just 600 bucks, but I don’t know too much about the lux market.
I remember reading back in 94 or so that GM’s R&D budget was 1.5 billion.
Toyota’s was also 1.5 billion. This is back in the day when Toyota was what, half the size of GM or less?
That was the point where I knew this day was coming; it was obvious to me that GM would fall behind technologically and eventually people would let their wallet overcome their loyalty to GM. They had too many brands and models to be spending the same amount on R&D as Toyota and keep it together.
I don’t know why GM wasn’t spending enough on R&D. Maybe it was the desire to maintain good profit numbers, maybe they thought they could save some money through badge engineering. Maybe they didn’t want to cut into the dividend.
Like I said, labor costs are not the whole story. But it didn’t help, and I think it was the major reason why the domestics never managed to produce a small car that was competitive, and why GM ended up failing in the more price sensitive cars and sedans.
Thats my opinion anyway.
Sherman Lin
GM has no non UAW CAW plants in the USA or Canada building vehicles. They opened the OKC plant as nonunion years ago and that didn’t last very long.
So when is the money to be payed out? A year from now? If GM declares bankruptcy they will likely never see the money. Looks like GM is buying time and Buzz is covering his tracks before he runs off to collect his big pension.
Is Buzz’s pension secure even if GM goes into bankruptcy?
Pch101:
When the battle is lost, it’s the officers who are at fault, not the privates.
When the privates have UAW work rules instead of UCMJ work rules, even the best officers will often fail.
toxicroach:
People want and demand managers who are far sighted geniuses of iron will. Be nice if that were true, but it isn’t. Not many people are going to ride out the mother of all strikes because 30 years down the road its really going to bite the company on the ass. There’s too much pressure to perform today. That’s just human nature. Same dynamic on both sides lead to GM dying.
Well said.
And think about this. Years ago, Caterpillar went toe-to-toe with the UAW. And now Cat is worth 4 GM’s.
Anyone have any inside dope on how they pulled it off?!?
Is car manufacturing stateside going the same way as it did in the UK (with the exception of Nissan) i.e. dead as a dodo
Honda and Toyota each can build between 400k and 500k vehicles annually in Canada. That is more than Ford and likely more than GM or Chrysler will build this year. The market has shifted to non-union. Notice that Ford when they announced new investments last week there was nothing for Canada. The Big 3 have been moving production from Canada to the USA and Mexico.
Such is the legacy of Buzz.
A big part of the problem at GM is loyalty. Buzz is loyal to his members, who elected him, and was trying to get the best deal for them. The managers at GM on the other hand are annointed and only loyal to themselves. The decisions they made over the last 30 years have been made to increase their bonuses not make the company better as a whole. Filling management positions, from the factory floor to the Ren Centre with new minted MBA’s with no loyalty to the company, no knowledge of the car business and no people skills wasn’t a very good long term plan.
Potemkin,
The idea that Buzz is all about loyalty, and that the GM managers are all just mercenary is baseless and unfair. Buzz’s loyalty is just as bought and paid for as any of the others. If he could cut a deal for a better gig tomorrow he would do it. I see no reason to assign any of his actions to loyalty at all. Instead, I think he likes the job and all the perks. He is a celebrity in Canada for one thing, and he gets to stick it to the man on a regular basis. On top of all that he gets a salary.
As for hiring new MBA’s, maybe they have to catch them while they are young and naive. Otherwise, they would know better than to hire on at GM.