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When CAW Prez Buzz Hargrove told me a GM C11 is inevitable, I wondered if Canadians might have a more realistic idea of The General's financial health, or lack thereof. The Toronto Star provides confirmation. The paper reports that GM's Ontario workers have noticed that the automaker has taken full advantage of a company- specific exemption allowing them NOT to fully fund the workers' defined-benefit Canadian pension plan. Which GM hasn't done since 1992, to the tune of $5b. [A defined-benefit plan obliges GM to pay out a fixed, agreed upon amount to its beneficiaries– no matter what's in the fund.] "My concern is that, if GM goes into Chapter 11 bankruptcy protection in the U.S. or they go bankrupt altogether and out of Canada," a retiree worried. "My pension is going to be cut nearly in half." It seems GM's legislative loophole was worth every penny the company spent acquiring it. For GM, anyway.
Meanwhile they’re spending how much on “Style” events where they expect a half-exposed bra will solve their sales problems?
Let’s do a quick tally here:
GM have a hole of CN$5 billion in the pensions’ fund.
GM have a defecit of US$8 billion in Delphi’s pension fund (though, the Feds are tapping them for “only” US$1.5 billion, so far)
GM have untold amounts of loans and credit lines which need paying back (at exortionate rates)
GM need to fund their R and D budget, if they are to make vehicles which people want to buy (Bearing in mind that Mercedes-Benz, which is much smaller than GM, spends £7.3 billion on R and D every year)
Not to mention that every quarter, GM loses market share, post losses which go into the billions of dollars, try to buy out staff and putting money they don’t have on vehicles which nobody wants.
PLUS, they need at least $10 billion to keep day-to-day functions running.
Suddenly, the $27 billion $12 billion they have as a cash hoard seems very small……
I have a friend who works as a tool and die maker at GM in Oshawa – he has been there 23 years. He is scheduled to be terminated in a couple of weeks and I am certain he is not aware how precarious his pension really is. This is going to hit really hard. If you knew that you couldn’t count on the pension and made alternate arrangements 23 years ago, you would have been in good shape. Now, he will never be able to regain that lost time.
OK Here, some facts.That article is about 3 weeks old.It was brought out to at the same time as our last buyout offer.To say it caused a stir in the plant would be an understatement.
The Toronto Star is a left wing newspaper they thrive on bashing banks conservitive governments they love beating up United States and President Bush.The Star loves big government and hates big buisness.Unless of course its the very sucessfull
Torstar corp.
Mr Zimmerman has been beating that same drum for 25 years.While the 10 year retired old boy makes some good points he is out in left field.
If you skip ahead a few days in the “victim a day Star”you might find a scathing letter from a GM VP accusing the Star of fear mongering and lousy research.
Facts are the pension plan is 90% funded and is not part of GM Canada Limited assets.Believe me I
make it my buisnees to know such things.
GMCL is a wholly owned subsidiary of the American parent firm General Motors the Canadian and American hourly pensions are separated.
Nobody and I mean nobody knows what will happen should GM go into chapter 11. We call it recievership up here and we have different laws.
GM has made the hourly employees a very generous
buy out offer.Its an incredbly tough decision to make and all the doom and gloom doesn’t
make it any easier.
As one of Canadas largest and widely read newspapers The Star might want to look at more balanced jounalism.
CRACKERS: Your friend will be laid off with EI and SUB at skilled trade rate.750$ clear a week he will not be terminated.
Mikey:
Here’s the GM Canada VEEP reply:
—————–
Last weekend’s article concerning General Motors pension plans bordered much closer to fear mongering than reality.
The reporters interviewed GM executives and CAW President Buzz Hargrove, who all expressed confidence in GM and the health of its defined benefit pension plans in Canada. Yet the Star’s sensationalist article and headlines centred on comments from a single concerned plan member.
The facts are straighforward. GM Canada’s defined benefit pension plans are funded to required levels and can be expected to meet the retirement needs of their members. We contribute over $300 million in cash to our hourly and salaried funds annually.
GM has more than sufficient cash on hand to manage through the current North American auto industry response to increased fuel prices, the U.S. housing downturn and the resulting market shift from trucks to cars and crossovers.
And while GM continues to grow profitably and lead in auto sales in China, Russia, South America and other expanding world auto markets, our North American transformation, while certainly challenging, remains on track.
————–
No mention whatsoever of the actual financial position of the pension, aside from a few vague sentences. The Toronto Star came up with a solvency gap of $5 billion. Why doesn’t this guy just give us the real number then?
The end of the letter doesn’t even discuss pensions, it’s the usual paean to GM’s supposedly insane growth in the developing world.
It’s not very re-assuring to me. But then again, this is one unicorn whose horns I don’t depend on for my living.
“As one of Canadas largest and widely read newspapers The Star might want to look at more balanced jounalism.”
Sad as it is, facts and truth doesn’t sell newspapers.
As one of Canadas largest and widely read newspapers The Star might want to look at more balanced jounalism.
What, like the Toronto Sun? (poke, poke, poke)
Now, I’m left-leaning anyway, but I do agree that the Star tends to be sensationalist and a little loose with facts, but it’s sort of par for the course for modern newspapers (the hatchet-job done to Globe by CTV/Bell is sad).
I like the phrase “victim a day”. While they do good work, they also milk the “Investigative Report, Part x in a Series” for all it’s worth.
Teenage Lesbian Nazi Hookers; abducted by aliens, and forced to beat up baby harp seals – and vote for Conservatives! (or as Americans would call them , Moderate Republicans)
– all in next week’s Toronto Star.
I don’t see any sensationalism…
monkeyboy :
August 20th, 2008 at 9:27 am
““As one of Canadas largest and widely read newspapers The Star might want to look at more balanced jounalism.”
Sad as it is, facts and truth doesn’t sell newspapers.”
Nor does it elicit hits on a website, or give bloggers much to wag there keyboard at. The truth is (as we like to say) is that facts are few and elusive. The more facts one has, the less there is to discuss. Those in possession of facts tend to hord them though they cannot be contained.
Let’s face the facts =O)
We will know when we get there. Everything else is speculation and diversion.
Of course, lets not forget that some people make a lot of money and speculation and diversion. Fact?
mikey: “victim a day Star” What a perfect phrase. Looks like Canada’s big media is as bad as America’s.
Will Rogers said “All I know is what I read in the newspapers.” Thankfully, nowadays we have other sources of information. Whatever you do, don’t stop posting on TTAC.
Since Buzz didn’t quarrel with the numbers, he must either agree with them or doesn’t know.
Either way, it isn’t good.
As a GM pensioner, I am concerned.
But, if GM goes bankrupt, my problems will be minor compared to some people who are still raising families etc.
Interesting to note that GM is selling it’s National Distribution Center in Woodstock, Ontario and it’s Edmonton warehouse as well.
Looks to me like they are getting ready to leave Canada, regardless of what Buzz says.