You may recall that General Motors recently circulated a document amongst their paymasters on Capitol Hill “revealing” that they planned to import 17,335 Chinese-made cars by 2011. At the time, we speculated that the leaked “bailout bucks for Chinese trucks” memo was nothing more than a negotiating gambit by GM, designed to bring the United Auto Workers to heel. Play ball and we build here. After all, what else does GM have to offer, other than threats to up stakes and leave? That said, floating a GM in China trial balloon makes the company no friends, uh, anywhere. Especially with their most important stakeholders: customers. Anyway, Bloomberg indicates that the cudgel may have done it duty. GM CEO Fritz Henderson told them (yesterday) that “using U.S. production instead of imports would pivot on whether the UAW can build the vehicles at a cost GM can afford . . . This is a discussion we’re having with the UAW.” And so, today’s Wall Street Journal tells us that “GM Nears Crucial Deal With UAW.” Which could all fall apart.
The main sticking point: using stock in the “new” GM to cover the General’s $15 billion health care trust shortfall. Sensibly enough, the UAW has the sneaking suspicion that the new “good” GM’s fortunes could easily go pear-shaped, leaving them with, well, nothing.
Many worries remain for union officials, say people involved in the discussions. They say that the stock GM proposes to contribute to the VEBA is illiquid and hard to value, posing a big risk for UAW members. The union had initially asked for more from Treasury officials in the negotiations, but was rebuffed.
More? MORE? Does the WSJ mean more stock in a highly speculative venture in a business with a long history of failure (C11 even); or cash money guaranteed by your taxes? I’m thinking cash money. Odds are that the union will find a way to get federal guarantees for their pensions and benefits that lie completely outside of GM’s business operations. Keep your eyes on the fine print.
Finally a GM strategy that might actually make them some money. It was about time…
Oh wait… The money-making strategy is a “trail balloon”. Yup, now I recognize good old GM again.
The company is using threats to get the UAW to agree to anything.In Canada the two levels of government are telling the CAW “make a deal today or GM Canada will face liquidation”
In the USA thier using the cave or we “build em China”tactic.
Call it intimdation,extortion whatever you want.
Lets face it..They learned from the best.Managements got thier finger on the trigger this time.
Its not a popular stance amongst my peers.But I say “Cave and and come back and fight another day”
Great movie, but what’s “Fargo” got to do with it? (pic is of two of the n’er-do-wells in the film). Still, it does offer a fine commentary on the car business, and not to be missed for that reason alone. Outstanding work of the Coen brothers.
I think the photo reference is that these two were “business associates” (or BFF in the title) until one of them fed the other one into a wood chipper. It is actually a pretty good analogy for the UAW / domestic automakers relationship.
The UAW could make out very well here. I see them getting gaurantees from the government on their health care benefits that will put them above and beyond what the rest of us get from Obama’s nationalized healthcare. Plus, I see them getting a combination of stock and cash as well.
So who is who? Is the UAW or GM the little wiry dude that got fed to the wood-chipper?
(BTW I still like Raising Arizona better as Choen Brothers movie.)
Today its the dealers and the UAW/CAW being fed to the wood chipper.
Sometimes your the windshield,sometimes the bug.
Once again the UAW believes there is a pot of gold coins under Fritz’s desk they are entitled to and wage concessions mean more cigars for the executives.
As soon as a cost reduction is found each side immediately sucks it up like a sponge. This is no way to run a large corporation. Picture a nest full of robins and one very small worm for all of them.
GM means business with the China move. They are banking on recent research that indicated people didn’t care where something is made as long as it is cheap and doesn’t break. Chinese manufacturing is close enough to do this, thanks to the help from the rest of the world, and when 10,000 dollar 4 door sedans hit the market they will sell.
Gettlefinger better start learning Mandarin Chinese.
@guyincognito:
Plus, I see them getting a combination of stock and cash as well.
Cash? You think Obama will hand them taxpayer money? I doubt that. Taxpayer dollars appear to be reserved for high level execs and foreign car companies.
Actually I think in today’s world, our tax dollars are being fed into the wood chipper by the unions, our government, Chrysler & GM, etc.
What’s wrong with building cars in China?
Consumers will get cheaper and better (better as in better for that price) cars. UAW will fight for the benefits of the poor Chinese workers.
It’s a win-win.