News that the government will sell only $6b-$8b worth of its GM equity has been joined by an even more surprising GM IPO announcement: GM will buy the Treasury’s entire $2.1b holding of preferred stock in the initial offering. GM has not announced how much it will pay for the stake, and the Detroit News reports that it’s not yet clear if GM will also buy some $400m in preferred stock held by the Canadian and Ontario governments. We’re also getting word via Twitter that GM will put $4b in cash and $2b worth of its stock into its overdrawn UAW pension fund, as well as making a $2.8b payment to the UAW VEBA account. With a $5b line of credit secured, GM says these and other steps will reduce its debt by $11b over an unspecified timeline. And speaking to Reuters, GM CEO Dan Akerson made it clear what the point of these moves are:
It’s up to people like you and me, the burden we share, that we deliver on the promise and return the investment to the American taxpayers. We are going to do our level best to make that happen, and we will only do that by expanding our industrial base and entering new markets and being a better competitor.
Of course, we’ll have to see what value The General places on the preferred stock to know how seriously Akerson should be taken. After all, talk is cheap and money isn’t. [UPDATE: It appears that GM will buy the preferred stock for $25.50 each, essentially giving the Government its book value of $2.14b]
A laid-off worker at General Motor’s Orion Assembly plant has filed a complaint with the National Labor Relations Board in Detroit against the UAW for negotiating a deal to employ 40% of the workers at a lower wage rate.
Nick Waun, 31, of Lapeer said the UAW negotiated the agreement without giving workers a chance to consider it.
“The main thrust of this is to try to get a vote on the agreement, because they denied us a vote,” Waun said.
You don’t say? Didn’t see that one coming. No sir. But will the NLRB be sympathetic to the UAW’s well-reasoned position that some union brothers are more equal than others? Or is the union’s nominal ownership (by way of its VEBA benefits trust) of some 60 percent of GM’s equity possibly, just possibly, incompatible with the duties of a union? It’s a head-scratcher all right.
The UAW is getting an interesting lecture: Ownership of a car manufacturer entails delicate handling of labor relations. As Ed had reminded us so rightly: “Pre-bankruptcy, GM didn’t have to deal with the fact that the UAW is incapable of building fuel-efficient subcompact cars profitably. But now that the General has promised to build the next-gen Aveo in Michigan’s Orion Township plant in exchange for nearly $800m in local tax credits (not to mention the political benefits of “saving or creating” hundreds of union jobs), it’s up to the UAW to square the circle and make the damn thing profitable.”
And now, the UAW gets a taste of how it is when the working masses protest in front of your building: “About 100 General Motors Co workers and retirees picketed outside the United Auto Workers union’s headquarters on Saturday to protest plans to build a new small car with low-wage workers,” reports Reuters. They didn’t picket RenCen. They didn’t picket the Orion plant. They picketed their own union. (Read More…)
With some 17.5 percent of GM owned by the UAW’s VEBA trust, workers have been finding that their union has a hard time juggling its ownership and union responsibilities. And since workers have no real recourse against their union, GM is giving them the opportunity to profit from their sacrifices… and pay back taxpayers in the process. Automotive News [sub] reports that
GM is offering [a directed] share program as part of an IPO scheduled for November… giving about 600,000 employees and retirees [and dealers] in the United States and Canada the chance to buy stock in the company’s upcoming initial public offering at the IPO price.
The only downsides: you have to register by the 15th, and the minimum buy-in is “expected to be greater than $1,000.” Otherwise, getting in on the ground floor of GM’s IPO is a swell opportunity to keep GM’s merry-go-round spinning. Sure, the UAW VEBA fund is likely to dump all its stock at the first possible opportunity, likely driving down post-IPO values. And yes, the government will eventually have to sell off its entire stake in The General as well, meaning another 60 percent of the company’s equity will also be up for sale in the short-to-medium-term, likely depressing prices even further. Still, GM is going to need all the help it can get if it wants to be valued at or above the $50b taxpayers put into it. It’s time for the employees, retirees and fanboys to step up, put their money where their pro-bailout rhetoric is, and take their beloved company off the taxpayers’ hands.
I took some flack from TTAC’s Best and Brightest on Monday when I suggested that the UAW’s deal to give 40 percent of Orion Assemblys returning workers a 50 percent pay cut was “cowardly and despicable.” What I didn’t make clear enough was that I have no problem with the UAW working for a lower wage as long as the burden was spread evenly. Instead, the union has arbitrarily divided its existing workforce into the old guard “haves” and the relatively-recently-hired “have nots” as a ploy to make the union seem capable of profitably building subcompact cars in America. It’s bad enough to prop up the old guard by paying new hires less, but cramming down recalled Tier One workers is totally contrary to the very concept of a union. And I’m not the only one who finds the lack of solidarity and shared responsibility within the union troubling.
Another day, another story on the ever-growing conflict between the UAW’s ownership stake in GM and responsibility to its members. Pre-bankruptcy, GM didn’t have to deal with the fact that the UAW is incapable of building fuel-efficient subcompact cars profitably. As a result, the outgoing Aveo was built and designed in Korea as the Daewoo Kalos, before being fitted with a bowtie and shipped to the US. But now that the General has promised to build the next-gen Aveo in Michigan’s Orion Township plant in exchange for nearly $800m in local tax credits (not to mention the political benefits of “saving or creating” hundreds of union jobs), it’s up to the UAW to square the circle and make the damn thing profitable. Which, according to Automotive News [sub] is just what they’ve done… by bumping 40 percent of the plant’s previous workers to the new “tier two” wages. Which is a nice way of saying “cutting their wages in half.” How is that possible?
The UAW’s 2009 amended contract with GM just before bankruptcy called for “innovative labor agreement provisions” that would allow GM to make a small car profitably in the United States.
Under those “innovative provisions” (which just happened to be conjured up when the government task force was elbow-deep in GM), Orion workers can neither appeal the decision nor go on strike over it. Either the UAW wants to be a union capable of building small cars profitably, or it doesn’t. Screwing less-senior “brothers” so politicians and union bosses can crow over the “green jobs” at Orion is cowardly and despicable.
In 2007, the United Auto Workers came to a defining decision: rather than sharing sacrifice equally in the spirit of solidarity, the union divided its membership into two tiers. Tier one was the old guard, existing UAW workers who continued to receive relatively generous wages. Tier two was made up of all new hires, who were paid about half what their tier one “brothers” made. As the bankruptcy and bailout of GM and Chrysler brought the UAW’s internal divisions to the fore, second-tier workers have become more and more vocal about their second-class status. The excellent Changing Gears project (a “public media conversation about the future of the industrial Midwest”) speaks with several second-tier workers about the challenges and frustrations of earning half as much as their union brethren. In the words of one worker
There’s a joke within the two tier people, that if two two-tier people died in a fire, they’d say “one GM employee lost.” You feel like half an employee… It’s not like we have to wear a badge.. or drink out of a seperate drinking fountain, it’s just, you know every day that when you go in there, the life these people have made for themselves is something you’ll never have.
UAW boss Bob King is taking the fight abroad, visiting Fiat’s Italian plants in order to take a look at the World Class Manufacturing system that apparently has not yet sufficiently taken hold at Chrysler’s plants to be viewed there. But the visit isn’t purely social. King tells Reuters that
We’re going to be pitching to suppliers that they should come and locate here in Michigan.
Because clearly everybody wants to do business with the UAW. Heck, American supplier firms are falling over themselves to move production to Michigan, but King just thought it would be nice to give the Italians a first crack. On the other hand, Italy hasn’t exactly been free of auto-sector laborstrife itself. At least King can pitch Italian suppliers by explaining that, as majority stakeholder in Chrysler, the UAW makes Fiat-Chrysler’s US labor environment a lot less complex: all you have to do is keep the union happy. So much for Marchionne’s “culture of poverty.”
Editor’s note: GM CEO Dan Akerson sent the following email to GM’s employees, his first such communication as GM’s CEO, in recognition of Labor Day Weekend Eve.
GM Employees,
As Labor Day approaches in the U.S. and Canada, I would like to wish everyone at General Motors a safe, happy holiday weekend. I also ask that we pause for moment to reflect on what this day means as we celebrate labor’s many contributions here and around the world.
Of course, labor’s role in building up this nation and others is well recognized and rightly so. And, coming from a union family, I know on a very personal level the good things that unions can do.
Automotive News [sub] reports that Mitsubishi will have to give UAW workers at its Normal, Ill plant a $1.60/hr raise because it doesn’t yet know what vehicle or platform it plans to build there in the future. Mitsubishi’s 2008 contract with the UAW required the disclosure, but the Japanese automaker requested an extension which the union membership proceeded to vote down. Because the extension failed, Mitsubishi is required by the terms of its contract to raise hourly pay to $25.60/hr. The plant in question currently builds Mitsubishi Eclipse, Endeavor and Galant models, which have collectively sold 11,215 units through August of this year. And thanks to the combination of low demand for Normal-built products, and the union’s failure to extend the decision period, it seems as though Mitsubishi may just walk away from the plant. (Read More…)
The core hypocrisy of the UAW is that it claims to work on behalf of workers everywhere, while actually serving only the interests of its most senior members. And the cognitive dissonance produced by this grotesque contradiction can lead to some interesting challenges in the day-to-day life of the union, particularly in the design of parking lot signs designed to keep the competition out. The sign shown above and the sign shown in the post preceding this one show the UAW at its most honest: if it’s built by one of the Detroit Three, it’s OK. If it’s got a “foreign nameplate” it’s not. But this honesty also betrays the fact that the UAW simply wants everyone to support it’s employers, rather than lead a nationalistic or class-based crusade.
At most locals the signs are more simple and ideal-oriented, but they’re also completely misleading. For example, a Japanese-built Camry or Korean-built Elantra should be OK in a lot with a “Union Made Vehicle Parking Only” sign, and an American-built Camry or Sonata should be fine in a lot with a “No Foreign Cars Allowed” sign… but of course, neither scenario would be tolerated. While you’re pondering the deeply cynical self-delusion at play here, enjoy this hastily-assembled gallery of union parking lot signs.
Update: Picture 417 has been removed at the request of the photographer. The original photo can be viewed here: http://www.flickr.com/photos/mlavander/4034221120/#/
We are sorry you were inconvenienced and had to worry about where your car was parked while you covered the signing. The UAW member you encountered in the UAW Local 249 parking lot meant no personal disrespect to you. Accomodating [sic] vehicles not made by UAW brothers and sisters is a passionate subject for our members.
He and UAW members across the country know that foreign automakers that allow workers to freely join unions in their home countries while denying that same right to U.S. workers are denying the First Amendment right of American workers to freely organize. Yet foreign automakers accept U.S. taxpayers’ dollars in incentives to build assembly plants, jeopardizing the future of middle-class workers in the domestic auto industry.
UAW Boss Bob King half-apologizes to Kansas City Business Journal reporter James Dornbrook, who was forced to remove his American-built Toyota Camry from the parking lot of UAW Local 249 in Kansas City while reporting a story there. The DetNews notes that King’s predecessor Ron Gettelfinger had loosened the UAW’s long-standing ban on non-UAW-made cars in its parking lots five years ago, when he allowed Marine Corps reservists who report to a nearby office park at UAW headquarters. But King is on a mission to reconnect the UAW with its old-time religion, and his letter proceeds to lecture Dornbrook on the standard talking points concerning the anti-middle-class evils of non-union transplant factories, and the general sanctity of all things UAW-approved.
King’s letter is a tedious read, but it’s proof that self-righteousness trumps self-preservation at the UAW, even when it comes to something as (relatively) easy to control as press relations. Reporters may not be quite as popular as Marines, but they have immense influence over public perception of the UAW (which, incidentally, is not in great shape just now). Kicking one off UAW property because he drives a non-union, American-built car and then lecturing him with UAW dogma is just plain stupid.
Since taking office in June, UAW President Bob King has ramped up the rhetoric level at Solidarity Hall considerably, as he seeks to portray the union as a defender of the American middle class. But, as the old adage goes, actions speak louder than words… and King’s actions this week couldn’t paint a clearer picture of the UAW’s priorities. (Read More…)
So there’s this huge metal stamping plant in Indianapolis. The current owner wants the workers to accept huge pay cuts so that the plant can be sold off to another buyer. The plant is a UAW shop. What does the UAW do? Paint picket signs? Threaten strike? Chant “solidarity forever?” Threaten to bust the rotten deal if the working stiff has to pay for it? Not this time. The plant in question is a GM plant. Through their union’s health fund, the UAW owns a good chunk of GM, and every owner of GM wants that stamping plant deal to close ASAP. There is an IPO in the works. (Read More…)
When Bob King was elected UAW president in June, he did something that was once seen as highly un-American: He swore to give his full attention to the Japanese. At closer look, he just followed the trend: American carmakers had lost more than half of the market to foreign name plates. And the UAW, with a membership of just 350,000 is only a shadow if its former 1.4 million member glory. King wants to get new members where Americans get new cars: from Japanese and other foreign automakers’ plants in the U.S. How does he want to go about it? With good old UAW arm twisting. (Read More…)
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