Have You Seen The GM/UAW Labor Contract?
01 June 2009 | By LowellB in Economy, Lowell, TN BlogWe Couldn’t Resist . . . .
These reams of paper featured on our page today are the actual pages of the General Motors-United Auto Workers labor contract. In 2007, contract negotiations between the two resulted in an unprecedented $50 billion millstone around the corporate neck of General Motors. The $50 billion price tag covered GM’s responsibility to retirees only, consisting mainly of health benefits.
Every so often The New York Times does something right, and today the newspaper has a superb question and answer article that is essentially “the General Motors bankruptcy made simple!”
If you own an American-made car, or are planning on buying one from GM, you’ll want to read it.
This late find…On October 27, 2007, The Washington Post reported the following deal between the General Motors and the United Auto Workers. The devil is in the details:
“At the core of the new deal is the transfer of retiree health-care payments from GM to the UAW. GM will pay an estimated $35 billion into a trust designed to appreciate in value and pay health-care benefits for retired workers for at least the next 80 years, the union estimated. In return, GM is able to unload a $51 billion burden in retiree health-care obligations from its books, enabling the troubled company to borrow money more easily and move more nimbly against competitors. GM’s health-care liability is more than twice the company’s $21 billion market capitalization.”
Somehow General Motors management was more intent on keeping the corporation afloat in the moment, rather than in the future.
Another indicator of GM’s lack of vision? The automaker’s top-selling vehicle? The The Chevy Silverado. It’s biggest, gas-guzzling, pick-up truck.
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