Gooooooooood morning U-A-W! In case you were wondering where the United Auto Workers stood during this, Detroit’s End of Days, we can now report [via Reuters] that the union is, finally, bellying-up to the billion-dollar (for a start) bailout buffet. “Alan Reuther, legislative director of the United Auto Workers, said in an interview that the group is proposing lawmakers approve up to $25 billion in new loans for General Motors Corp, Ford Motor Corp and Chrysler LLC. Reuther said the aid would cover pledged contributions to a retiree health care trust, the Voluntary Employees Beneficiary Association [VEBA], which was negotiated last year with the companies.” As odd as that sounds, the UAW bailout bypass makes a certain amount of sense– if a bailout it must be. If the automakers’ call on the public purse is designed to protect jobs, jobs, jobs, why not call their bluff? Or not. “If the companies get the assistance that makes it easier for them to do other things,” Reuther said. “I think the financial markets would look at that and say that helps lift a significant liability and that’s a good thing.” “Other things?” Such as… build cars people want to buy at a price that will make GM enough profit to pay off all its debts and liabilities? Good luck with that.
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They have a point. Should the Big3 go belly up, there will be no VEBA contributions and all those UAW workers will be S.O.L. I agree that VEBA should be considered as part of the bailout bucks.
no bailout! GM created this mess. get rid of the execs who did it. bring in new blood and make it happen. if you feed a wild animal it won’t hunt.
When Are You a Loser?
When you lose over $60,000,000,000 of your shareholders’ value…
when your annual losses are in excess of $70,000,000,000 in four years…
when you eliminate your company’s dividend…
when you drop over ten points of market share…
when you sell everything not nailed down in an effort to cover your mistakes…
when you borrow tens of Billions without any hope of paying it back…
.
when you take benefits away from your retirees…
when you are resposible for tens of thousands of job losses…
when you siphon off billions to your bankster buddies…
when you create lame excuses to cover your own failures.
Irresponsible union helps kill employer – its (former) employees gets screwed – people blame union. Isn’t this the healthy way for history to proceed?
Why would GM really want to take over Chrysler? Yes getting their hands on the Jeep division and the minivans is one consideration. Add in the $10 or $11 Billion on the balance sheet is of some help but that money will be spent and then some closing up the parts of Chrysler they do not want or need. I believe this deal is being driven by Cerberus not by GM.
Classic carrot and stick type deal, Cerberus is telling GM “take Chrysler off our hands and turn over your interest in GMAC to us or we will make sure that we take you down with us.” Look at the moves the 51% Cerberus owned GMAC has made the past 6 weeks. Upping the floorplan interest charge to GM dealers, pulling leasing, tightening credit standards and amount financed on vehicle purchases, and just recently pulling floorplan from some dealers while others are getting notice that they must make 5% monthly curtailment payments on 2008 new vehicles in inventory and payment in full for any used vehicle that is over 90 days old. All these moves are forcing GM dealers (GM’s real customers) to reduce new vehicle orders or out of the business altogether. So Cerberus by applying the screws through GMAC is forcing GM into this deal.
Cerberus needs GM to give up it’s 49% interest in GMAC so it can make GMAC a bank holding company which would qualify it for TARP funds from the Treasury. GMAC as it stands now cannot become a bank under its current ownership configuration under current banking regulations.
Yes GM is in big big trouble. But why add Chrysler to the problem? GM on it’s on has much easier sale to the government without adding in the Chrysler deal to the equation and the lost jobs it creates. Cerberus by holding GM hostage via GMAC forces GM to make the deal, take Chrysler off it’s hands and take all the heat for the deal. This deal allows Cerberus to rid itself of it’s investment in Chrysler and grab GMAC which get’s bailed out by TARP and becomes a very valuable asset while GM end’s up taking all the public and political heat for all the moves they will need to make to gut Chrysler.
Why does GM want Chrysler? short form, to make sure that CC dies. GM needs volume (market share) to make any of this add up. Plus it reduces the mouths for the Feds to give money to.
@losthope: Extremely good points. Cerberus, through GMAC, holds GM dealers hostage and tortures them to death in front of their supposedly caring parents. “Kill the deal, we’ll kill the dealers.” “Uncle,” says GM, takes Chrysler for GMAC balance. Stock swap, no taxable event. Hellhound Cerberus gets bank. Goes under the tarp. Fade to black.
The UAW is one of the biggest reasons detroit is imploding. They have gotten more than they ever deserved. Let them go out and get jobs that pay like the rest of american workers. They have raped the companies and the american public way too long. Whatever happens, it couldn’t happen to a more deserving bunch of bad actors.
Point well made Rday. Both are bad actors in all of this. BIG3 +UAW=UNCOMPETITIVE No amount of bailout will make these companies profitable. Ultimately those who build cars at a PROFIT will endure.
This whole debacle with GM and Chrysler reminds me of the Saw movies. Tortured souls are forced to inflict pain on themselves and have a chance at survival or face certain death at the hands of a maniacal killer.
Cerebus should buy the other half of GMAC from
GM, that’s all they want out of GM anyway.
Cerebus should sell Chrysler to the Chrysler
employees, much like when Harley-Davidson did
when their employees purchased it from AMF in
the 70’s.
The government can act as a guarantor for the
employees of Chrysler to act as a co-signer to
repay the loan for buying Chrysler.
Both GM and Chrysler could continue to survive
as separate companies. Each, though, will have
to streamline their operations for today’s times
and market reality.
Cerebus should sell Chrysler to the Chrysler
employees,
I can just see that; obviously no one who thinks that has ever worked in a UAW/CAW shop. I can just see the union bosses, trying to decide who is deadwood and who should stay, because they are good productive employees. As everyone knows the good old boy network is just as much alive and well with the union as it is with management. You would end up with the Shop Stewards and they guys who hang around the union hall upper management. Why don’t you try and picture that for a while and see how profitable the compant will be.
They have a point. Should the Big3 go belly up, there will be no VEBA contributions and all those UAW workers will be S.O.L. I agree that VEBA should be considered as part of the bailout bucks.
So basically you’re saying the taxpayers should fund GM retirees healthcare ? I know the UAW negotiated the benefits in good faith, but their failure was not to get any of it funded up front and instead relied on the fragile scenario of GM existing and being profitable for all eternity. Even agreeing to allow GM to use stock as part of the VEBA was stupid, because it’s future value is never certain. Any bailout should be loans to get the manufacturers manufacturing efficiently again, not to pay off liabilities and promises that could not and should not have been made.
Look, when your fricken janitors start earning $80,000 a year then you know you have problems.
I can’t help but find it laughable when some are concerned about $80k janitors when avg. fortune 500 executive comp, is over 14 million. BTW, check out Toyota’s blue collar wage structure. It’s not that much less.
Toyota’s blue-collar wage structure isn’t that much lower… but Toyota’s liabilities are well controlled because there is no union to demand pensions or retirement health-care. Since the last negotiations that established the VEBA route, Detroit’s wages have come closer to parity.
I don’t think spending the money on the VEBA would be nearly as bad as on a GM-Chrysler merger. At least someone benefits as opposed to no one benefiting.