General Motors

[Embar Angylwrath]

Toyota builds cars here, and their hourly wages aren't that much less than the Big 3. How can they be competitive?

You have to look at the entire wage/benefit package. Wages are close, benefits aren't.

[Klast Brell]

I usually don't look look at the board on Saturdays, but I just read something that brought me here to rub $70 dollars in someone's face.

I had been requesting a breakdown of UAW wages Vs Non UAW wages. I got thrown by the pretty chart I guess. http://www.brellrants.net/forum/viewtop ... 60#p487949 I feel pretty foolish now. I saw a only .gov URLs in the small print and amused that it must lend the information legitimacy. The URLs could not be clicked or even copy-pasted because it was an image, and I was too lazy to transcribe the grainy low contrast fine print. Shame on me. There was a huge red flag that i completely let go without mentioning. The "heritage.org" in the lower right corner. I decided to give it the benefit of the doubt because the .gov URLs seemed to indicate that the information this chart was based on was not crafted to mislead. Shame on me. I swallowed it hook line and sinker. It wasn't till I looked at the fine print again this morning in preparation for this post that I noticed that the .gov URL was merely pointing to a copy of a Chrysler press release. Shame on me. I even ignored my little snark quote from my 3rd challenging for you to present actual wage and benefit numbers. http://www.brellrants.net/forum/viewtop ... 60#p487947 "Or admit that you are parroting talking points fed to you by sources who have reason to misdirect and obfuscate" Again shame on me,

I should have kept demanding the breakdown. Now i start finding some details leaking out. It appears that GM UAW workers do indeed get $28 an hour before benefits just like you said. Which is indeed less than Toyota workers get before benefits (again as you stated). http://www.brellrants.net/forum/viewtop ... 40#p487904 But that left us with the odd figure of GM paying $46.26 an hour in benefits to UAW workers and Toyota paying only $17.60. That would mean that the UAW worker is taking home and extra $28.66 an hour in benefits over and above the Toyota guy.

Now the answer starts to leak out. The $70 figure was indeed from "sources who have reason to misdirect and obfuscate" It was from Chrysler and the Heritage Foundation. The creative use of language is obvious in hindsight. The phase consistently used to describe the $70 an hour is "Labor Costs". And there lies the eye of a needle they were trying to stretch big enough to fit a camel. What is labor costs? What part of labor costs does the actual guy on the assembly line get? To got to $70 you have to add in the cost of pension payments to retired workers. You also have to add in the cost of health benefits for retired workers. You have to add all that money together then divide it up amongst the actual guys on the assembly line as if they were pocketing it themselves.

[Lurker]

You have to look at the entire wage/benefit package. Wages are close, benefits aren't.

Benefits are close too. It's only when you add in all retired workers that you get an absurd number. Wages and benefits for current workers are similar and will soon be almost exact.

To got to $70 you have to add in the cost of pension payments to retired workers. You also have to add in the cost of health benefits for retired workers. You have to add all that money together then divide it up amongst the actual guys on the assembly line as if they were pocketing it themselves.

This needs to be highlighted. The anti-union crowd is lying when they say auto workers are making $70 an hour. It's a lie. As Klast said, you only get that number when adding up all costs for all current workers and retirees and spouses, and then dividing that number by current workers.

[Embar Angylwrath]

Holy Jeezus Krist and the Koolaid...

Just to bring Lurker and Klast back to the planet...

Partition it out all you want, but the fact remains that hour-per-hour, the Big 3 pay more in wages and benefits than non Big 3 automakers. Whether that's towards pay, pensions, healthcare, whatever. The cost per hour per employee is more in the Big 3. Do any of you dispute that?

Didn't think so.

So.... if the cost per hour per employee is higher in the Big 3 that other manufacturers, then then that cost makes the Big 3 less competitive.

Any of you dispute that?

Didn't think so.

[Lurker]

The cost per hour per employee is more in the Big 3. Do any of you dispute that?

Didn't think so.

What is the cost per hour per employee for the Big 3 compared to the competition?

If they are getting a few bucks more in wages/benefits I don't think people are going to get worked up into a union-busting frenzy. When one side has to lie about the facts I question their motives.

[Partha]

Holy Jeezus Krist and the Koolaid...

Just to bring Lurker and Klast back to the planet...

Partition it out all you want, but the fact remains that hour-per-hour, the Big 3 pay more in wages and benefits than non Big 3 automakers. Whether that's towards pay, pensions, healthcare, whatever. The cost per hour per employee is more in the Big 3. Do any of you dispute that?

Didn't think so.

So.... if the cost per hour per employee is higher in the Big 3 that other manufacturers, then then that cost makes the Big 3 less competitive.

Any of you dispute that?

Didn't think so.

Of course, we won't talk about the fact that after January 2010, that large chunk for retirees and spouses goes off their bottom line, we wanna break the UAW! That'll show them for standing in the way of poor misunderstood business owners like William Clay Ford and CEO's like Bob Nardelli!

[Ddrak]

Can someone explain to me how the UAW thinks they can fund the retirees/spouses/etc. when it's breaking the Big 3? Are we just gonna see the UAW demanding government handouts to deal with the load come 2010, should the proposal go through? Why 2010 and now 2008?

Dd

[Partha]

Simply put, because the UAW pensions of that sort aren't available to everyone. The key is 30 years in - the Big 3 have been able to avoid a lot of that through early retirement buyouts and outsourcing. The current ratio of workers to retirees at the Big 3 is just about 1:1, which is a hell of a lot better than Social Security, which isn't in danger for decades - and as the years go on, that retiree cost will shrink as they die, since workers don't get those pensions anymore.

Now, I'll throw this in just because, like the original premise from the union breakers, we don't have all the info to make an informed decision...

http://www.post-gazette.com/pg/06177/701286-28.stm

When General Motors cites retiree costs, the giant auto maker has a point: It owed nearly 700,000 U.S. workers and retirees pensions that totaled $87.8 billion at the end of last year.

But $95.3 billion had already been set aside to pay those benefits when due.

All of these assets are earning investment returns, which offset the pensions' expense. GM lost $10.6 billion in 2005. But deep as its losses have been, they would have been far worse without the more than $10 billion per year in investment income that the GM pension plan for the rank and file generates.

The pension plan for GM executives is another matter. Unfunded to the tune of $1.4 billion, it detracts from GM's bottom line each year.

Just how much is a mystery, because GM doesn't break out the figure. It said executive pensions are "a very small portion of our overall expense" but declined to give the figure.

Earlier this year, GM announced it would freeze the pensions of its 42,000 salaried workers starting next January, as well as of those 5,200 highly paid employees. The freeze of the executive pensions will cut GM's pension liability by $60 million, while its freeze of salaried workers will yield a far bigger reduction, $1.6 billion.

[Ddrak]

The problem with that statement is that $97b is pre-crash. I'd be interested to know how much of the pension fund was invested back in GM stock. If the pensions were adequately funded then the costs wouldn't be a drain so the "offer" to relieve GM of the "pain" of pensions becomes merely an effort by the UAW to get a few billion dollars in free money, which hardly makes sense in the context you're painting the offer.

So, either pensions are a drain on GM which means they will be a drain on the UAW when (if) they take it over, or
pensions are a source of revenue for GM which means the UAW taking them over would be bad for GM.

Can't have it both ways.

Dd

[Partha]

Not making sense and missing the point, Dd. That's a common business practice. The point is that UAW pensions are only a part of the 'problem', and attempts by Embar to paint them as the whole of the problem are not only misleading but wrong. Which I thought was pretty obvious when his $70 an hour figure was disproven, but some people got a need to be John Galt, I guess.

[Embar Angylwrath]

That wasn't my number, Partha. It was BusinessWeek's number. And it hasn't been disproven either.

[Lurker]

That wasn't my number, Partha. It was BusinessWeek's number. And it hasn't been disproven either.

It certainly has been disproven. They took all labor costs (including costs for retirees) and then divided it by only the number of active workers and then claimed that active workers make that amount. It's a fake number; disinformation with the sole aim of demonizing the UAW.

[Embar Angylwrath]

It is the true cost of funding the wages and benefits. You can't arbitraily just say that since some of the cost is allocated to pensions, then that cost should be disallowed. Someone has to pay for it, and it's attached to the UAW contract.

[Klast Brell]

Holy Jeezus Krist and the Koolaid...

Just to bring Lurker and Klast back to the planet...

Partition it out all you want, but the fact remains that hour-per-hour, the Big 3 pay more in wages and benefits than non Big 3 automakers. Whether that's towards pay, pensions, healthcare, whatever. The cost per hour per employee is more in the Big 3. Do any of you dispute that?

Didn't think so.

So.... if the cost per hour per employee is higher in the Big 3 that other manufacturers, then then that cost makes the Big 3 less competitive.

Any of you dispute that?

Didn't think so.

I dispute your logic. If you want to add things the workers don't get to the cost per worker, then why not add in all the executive compensation. Why not add in every single expense the company has from the advertising budget to the toilet paper in the employee restrooms.

[Lurker]

It is the true cost of funding the wages and benefits. You can't arbitraily just say that since some of the cost is allocated to pensions, then that cost should be disallowed. Someone has to pay for it, and it's attached to the UAW contract.

It's a lie to say that UAW workers cost $70 an hour. What makes the lie worse is that the money to pay for the pensions and benefits was already allocated and has been earning interest, interest that GM used to bolster their bottom line.

[Ddrak]

Not making sense and missing the point, Dd. That's a common business practice. The point is that UAW pensions are only a part of the 'problem', and attempts by Embar to paint them as the whole of the problem are not only misleading but wrong. Which I thought was pretty obvious when his $70 an hour figure was disproven, but some people got a need to be John Galt, I guess.

Uh... you just switched sides. Please to be making up your minds.

First you criticize Embar's $70 number saying that he didn't include the fact that a lot of it was in pensions. Now you're saying Embar pretended it was all in pensions? To say "I'm not making sense" to you when you're happily switching around your arguments on whether Embar was including or excluding pensions is bound to be true - a leap like that would suggest basic arithmetic didn't make sense too.

On track again though, I'm not missing the point at all. I'm making a point by saying the pensions are the biggest problem on the table and if the UAW takes them on then they'll find themselves in the same trouble that the Big 3 are in, and will have a lot less joy in finding bailouts (end result, the union workers lose their pensions and the UAW itself vanishes in a cloud of gleeful Wall Street liquidators). If I'm wrong and the pensions are funded just fine then the UAW is trying to take away something that isn't part of the problem and must therefore be propping up the car makers.

Can't have it both ways - are the pension funds revenue positive or negative. Just answer the question and the rest sorts itself out. Lurker's clearly on the "negative" side with me, I just want to hear which way you think it is, Partha.

@Lurker: Do you think the UAW's offer to take on the pensions will end up an albatross around their neck?

Dd

[Embar Angylwrath]

The union took on the pension because they know the government backs them up through the PBGC. The PBGC is firewall against people losing pensions. In fact, I think if the Big 3 entered BK, the government would preserve all the pensions that currently exist. In short, the pensioners get a bailout. So saying that a BK would jack up a bunch of retirees pensions is just a lot of chaff being thrown.

[Lurker]

First you criticize Embar's $70 number saying that he didn't include the fact that a lot of it was in pensions.

It's not just that the number included pensions. To get the $70 they took all labor costs and then divided by only the active workers. You can't do that and then say, "OMG UAW workers get $70 an hour!"

Do you think the UAW's offer to take on the pensions will end up an albatross around their neck?

The union took on the pension because they know the government backs them up through the PBGC.

The UAW is only taking over health benefits, not pensions. The agreement sets up a VEBA and also includes increased contributions from employees. If health costs continue to skyrocket and investments continue to crater then I don't think the plan can work without significant changes in the coverage or contributions. The UAW will be in a better position than the companies to force those changes if necessary.

[Partha]

First you criticize Embar's $70 number saying that he didn't include the fact that a lot of it was in pensions. Now you're saying Embar pretended it was all in pensions? To say "I'm not making sense" to you when you're happily switching around your arguments on whether Embar was including or excluding pensions is bound to be true - a leap like that would suggest basic arithmetic didn't make sense too.

This is where I started arguing with Embar over unions, Dd.

Whatever happens, if they get the bailout, or not, you're watching the end of the UAW.

Tell me Partha.. why are Toyota, Honda, et al, not at that table? Why are only American car manufacturers there? Given the fact that Toyota, Honda, et al, have production plants here in the US. Hell, even the CEOs were talking about it.

Unions.

The UAW is putting the Big 3 at a global disadvantage. Did you listen to the expert on macroeconomics? He made perfect sense. In essence, his position was this: The Big 3 can make good product... however the Big 3 are saddled with union contracts that inflate costs.. and the Big 3 are also saddled with (get this) efficiency. They get more efficient every year, which means they need less (union) workers, which means they have to buy those (union) workers out at the tune of $105K per year.

Does anyone else on this board have that kind of parachute? Get fired and get handed $105K?

THAT'S the biggest problem with the Big 3. The cost of unions have put them at a competitive disadvantage, and as a result, all of the union jobs are in jeopardy.

Do you remember that? His argument is dishonest, and the $70/hour figure he pulled in to support his position is dishonest. Pensions are a negative: However, as with a great many accounting tricks, the loss is minimized by the investments they make - just like every other business on that level. I'm sorry that wasn't clear enough for you. Just like his blaming of unions wasn't, I guess.

[Embar Angylwrath]

Most Americans don't want the Big 3 bailed out.

http://www.cnn.com/2008/POLITICS/12/03/ ... index.html

Partha and Lurker are in the minority here, even among Democrats.