How did GM let itself get into a position where it is supporting >3 retirees and a surviving spouse

[FarCenter]

for every active UAW member.

See chart in http://www.uaw.org/barg/07fact/fact02.php

I guess when they sold off their parts businesses, the kept the retiree obligation in order to make the financials of the spin-off look better?

And when they reduced vertical integration upstream in the parts supply business, they went for greater vertical integration down stream in auto loans and leasing, becoming more of a financial firm that an auto manufacturer?

And then really screwed the pooch by having GMAC go big in the residential mortgage market with Res Cap, Ditech, etc.?

Bunch of short-sighted, opportunist managers.

[notadmblnd]

1. Would you like to know how much I get as a surviving spouse with a minor child?

A whopping five-hundred-ninety-five dollars a month. My husband had 27 years in when he died. Oh, and we have health benefits, which I've never used for myself.

Imagine how many people would still be working and buying cars if GM hadn't been getting rid of all their employees these past 10 years and replacing them with cheaper labor who now can't afford to buy their products. Did the greedy bastards really think the Mexicans and the Chinese would buy their products? I saw this shit coming down the road for us 10 years ago and I'm no MBA. How is it that they couldn't? Kinda makes you wonder, just like the mortgage situation, if it wasn't all planned.

[hendo]

2. they reduced upstream integration at the behest of the UAW

They kept on retirees at the behest of the UAW.

They made three huge mistakes:

1) Not pushing through upstream vertical integration no matter what the UAW thought of it. They need to model all plants after the Brazil plant

2) They keep too much FGI on hand.

3) They shouldn't have gotten into mortgages with GMAC. They should have just focused on auto loans which was the original purpose of GMAC.

[notadmblnd]

3. What do you mean " kept on"?

Are you saying that retirees shouldn't be entitled to their pensions? Will you recieve a pension from your employer when you retire? Are you willing to forgo it?

[lukasahero]

5. The vast majority of working people today will not receive a pension

Most companies no longer offer them.

While I don't begrudge you yours, please understand pensions are a thing of the past to most working Americans these days.

[sufrommich]

15. All the more reason to hold corporations to their promise to

provide pensions to their workers. Christ, we are truly screwed if even Democrats are going to accept that corporations shouldn't have to bother their pretty little profits with quaint concerns like pensions for their workers after thirty years of service. Pensions are so 20th century.

[kath]

27. The pinko commie Yurpeens still get pensions.

Yet another way in which the social democracies of Yurp are so much better than this mess of a country...

By virtually any "quality of life" measure you care to use, the working people in most Yurpeen countries are far better off - health care, longer life expectancy, healthier, lower infant mortality rate, pensions, workers' rights, lengthy parental leave, subsidized high-quality child care, low crime, no death penalty, free university...

[Ignis]

32. OT: Yurp!

[kath]

42. Yeppers, that's where I got that from. That cartoon was in honor of Chimpyshit's 1st trip to Europe,

and it still totally cracks me up. Steve Bell is a genius!!

[YvonneCa]

34. But also please understand that many people had deductions...

...for their pensions taken out of EVERY paycheck (100's of dollars a month)...sometimes for twenty or thirty years or more. That deduction was money they earned as a worker/employee...not a freebie. In my case, I was not allowed to keep or save it...not allowed to put it into Soc. Security or a 401K...it was required to go into the pension fund.

I understand it's different now for most workers and that the 401K thing is not working out so well either. But it is wrong to steal.

[lukasahero]

40. "But it is wrong to steal" Thanks I didn't know that

That was never in question. I was responding to a poster who thinks everyone still gets pensions, I was just clarifying that inaccuracy on her part.

Since I spent 10 years in HR managing defined benefits and defined contribution plans, I don't need the lesson in how they work. The poster I was talking to did.

[YvonneCa]

43. Sorry. And I didn't mean to say you or anyone. ..

...here doesn't already know it's wrong to steal. I've been watching too many interviews today of people trying to bust unions. :7

[Carl Skan]

6. Yes, they should get their pensions

Retirees should get their pensions that were promised to them...

...but pensions are a thing of the past and if you wonder why, look no further than the current mess. The numbers just don't work out.

[notadmblnd]

9. Well I don't think that people who don't have pension should expect those who do to forgo theirs

people that aren't offered pensions should fight for their rights to one. But alas, I guess it's easier to do nothing but build resentment?:shrug:

Another thing about those pensions. Once Social security kicks in, those pensions are cut and so is medical. The average retiree lives on about 3 grand a month. That's combined SS and pension. Retirees are not living high on the hog, as some seem to think.

People have given their lives in the past for the benefits autoworkers and many others enjoy. If those people hadn't been willing to risk their lives, many of you non-union employees wouldn't enjoy a 40 hour week, overtime, health benefits, vacation time, paid time off, or anything else, the majority of Americans receive today as part of their employment packages.

How would you like your 6 yr old going off to work every morning instead of school?

To those of you who would argue that a pension is not a right, it would be if you demanded it from your employer.

[lligrd]

10. Ha, So What Do You Suggest We Do With Retirees?

Don't tell me you believe this 401k bs is the way to go. Or perhaps you think you yourself supporting your parents after they retire is the way to go.

[bulloney]

12. PBS this week aired a 2006 rerun of Frontline on employees with 401Ks.

In general, the workers' retirement nest eggs will be substantially below a level to allow them to fully retire. They will have to sustain themselves through employment during their "retirement" years.

Keep in mind this show originally aired in 2006. How much further have these 401ks fallen behind with the current market collapse?

[ContinentalOp]

46. Hmm, you just allowed me to look at the situation in a new light.

I used to be jealous of my parents fat retirement benefits, knowing that my wife and I will have none when we retire. But maybe I should be happy that we don't have to support my parents but that our daughter will have to support us!

[notadmblnd]

11. You have any links to support your statement?

Corporations may not be keeping employees long enough to pay them pensions any longer, but I find it difficult to believe that most major corporations don't have some form of one.

[FarCenter]

13. Most corporations no longer have "defined benefits" pensions, and very limited medical for retirees

Typically, they have "defined contribution" retirement plan, where they kick in a certain amount into an employee's retirement account.

Typically, they also have a 401K where they may provide a matching amount on the first few percentage of salary that the employee contributes.

"Defined benefits" retirement plans are usually a sort of "Ponzi scheme", since they will almost always be underfunded, will rely on too rosy estimates of investment returns, and depend on future contributions of the company to pay ongoing "defined benefits" particularly if there is a cost of living escalator in the benefit.

And "defined benefits" that include health care are even more fraudulent, since the rate at which health care costs are rising outstrips even the most wishfull estimates of future investment income.

I think that other things, like insurance company annuities and guaranteed income contracts from insurance companies fall into the same "quasi Ponzi" category.

All these things are based on past performance of various asset classes during the WW II to 2000 period, which is very unlikely to be realizable in the future.

[lukasahero]

20. If you "find it hard to believe", do your own research

Someone just offered you information you were unaware of. Instead of suggesting they don't know what they're talking about, google it and find out if maybe you don't have all *your* facts straight.

The best part about DU is the opportunity to learn information we don't already know.

[ihavenobias]

22. The numbers "don't work" because of corporate greed, not pragmatism

Why do the numbers "work" when it comes to paying corporate executives millions of dollars? It's complete BS that you can't find a competent, smart and creative person to run a corporation for just ONE million dollars. Why 10 or 20 or 100 million? Do they work 10 or 100 times harder? Are they 100 times more creative? Are they 100 times smarter?

If no one gets pensions then they should expect bigger paychecks. After all, part of the reason pay-rates were set where they were was because employees accounted for good benefits. Taking away the benefits is effectively a large pay cut.

[Hannah Bell]

25. GM took in $178 billion in income last year. They could pay their

entire global workforce of 266,000 people, + their US retirees & dependents, plus global retirees $40k/year + $1000/mo in healthcare & it would come to $36 billion. That's 20% labor cost.

The numbers DO work out; they're just lying thieves.

[SharonAnn]

44. Pensions are part of their wages. They're "deferred compensation" which is sacred to management.

[JDPriestly]

28. Pensions are simply deferred pay.

The UAW bargained to get pensions instead of pay raises as they went along. They have a right to the pensions.

[Cessna Invesco Palin]

4. Because GM in particular has been weak for a long time...

...and the UAW has no qualms about leveraging that weakness to get what they want. And GM is happy to hide all sorts of problems in those transactions (so they can blame the UAW for everything later.)

However, this isn't the main reason why GM is in trouble. There's something of a perfect storm at work there, and the UAW's sins in this respect aren't primarily responsible for GM's troubles. They might have a bit of splainin' to do, but blaming them is nonsense.

[Carl Skan]

7. Excellent summary

It's a 2 * 2 * 2 * 2 = 16 kind of deal. All of the issues combining are what's causing the mess.

[Kolesar]

8. Automation...eom

[JVS]

14. Because they outsourced the active UAW workers. Remember Michael Moore's Roger and me?

[krispos42]

16. They're paying off people that worked for them decades ago...

...when GM had a much larger market share and the UAW had several times the workers it does now.

If we hadn't been collective idiots and instead protected our manufacturing industry the foreign car companies would have a much smaller share than they do today, the Big Three would have a much larger share, and there would be far more wage-earning people to pay the benefits for the people currently receiving them today.




It's similar to the coming (predictable) demographic shift with the Baby Boomer retirement; more retirees with fewer workers. Except, unlike the auto industry, a trust fund wasn't created 25 years ago to deal with the issue before it become a problem.

[doc03]

17. Simple the same as the steel industry

when I started in my company back in 1970 we had around 17,000 employees. We have gone through 2 bankruptcies, they shut down many operations, we have been highly automated and the company has had three different buyout programs giving people early retirements in order to combine or eliminate jobs. Now we have less than 3000 employees and we produce just as much steel today as 38 years ago. Those 14000 people are either dead, drawing a pension, or their widows are drawing a pension. My mother is steelworkers widow she gets a grand total of $1400 a year pension.
Now compare the American auto industry to the Japanese companies operating in the US, I doubt if few if any of their employees have been working long enough to retire. Another thing I would guess the Japanese Companies all have Defined Contribution Pensions as opposed to Defined Benefit Pensions at the Big 3, therefore zero legacy costs.

[Hannah Bell]

26. "Now we have less than 3000 employees and we produce just as much steel today as 38 years ago."

This is what people don't get. That level of production should support MORE workers, not less; those employed should get HIGHER salaries & BETTER benefits, & retirees should get what they ALREADY PAID FOR.

Instead, the value of the added productivity is taken by the owners & the workers are told "not enough money for you".

[doc03]

31. Are you kidding this is the USA we have to produce

more for less because our Chinese competitors make 50 cents an hour. We either have to work for 50 cents an hour or produce 50 times as much, the only thing saving us now is the Chinese have been using all the steel they produce at home. Back in the late 90s they were in a bit of a slowdown and they dumpped their steel here at below production costs and we were forced to sell steel at $250 a ton when it costs us $350 to produce it. It's the story of manufacturing in the USA the last 30 some years. In the beginning back in the 70s manufacturing moved down south to the RTW states, then later Japan and now since NAFTA and MFN they either go to Mexico or China. Then you have what I call limosine liberals on DU that bash American labor and products every day on DU.

[Hannah Bell]

33. "Our Chinese competitors" - yep, that's how they keep labor in line.

We don't have "Chinese competitors".

We have subsidaries of US & European capital, & their global compradors, moving production around the globe to play workforces against each other.

This is the history of the movement of capital from the 1600s on.

Check out FDI in China since the 80s. Check out the big names involved in "opening up" China, check out the start-ups of the big Chinese industries, check out how much of our imports from China are just US-based corps importing from their Chinese branches.

Same story in Japan, Korea, etc., & on back.

1/3 of the Japanese workforce is now "casual". That = temporary/part-time/low/no bennies, etc. Our "competitors".

GM made 178 billion in income last year. If they paid every one of their global employees, retirees, & dependents $40K/yr US + $1000/mo in health insurance, it would only be $36 billion, that's 20% labor cost.

[doc03]

35. I know they are American investors that built the factories there

but the bottom line is we have to compete with cheap labor, it's been a race to the bottom since the 70s.

[Hannah Bell]

38. The bottom line is, the whole set-up is a scam. Build up one area

by selling their cheap labor goods to the last "developed" area, collapse the developed area & buy it up cheap, move on to the next low-wage area to arbitrage the labor on the last one you just "developed".

No, the way to fight it isn't by trying to compete with cheap labor.

[Cessna Invesco Palin]

45. These goddamn foreigners are simply going to have to stop working.

Seriously, what ever made them think they should stop being fucking farmers? The ungrateful bastards.

[The2ndWheel]

37. That's not very efficient

Look at the cars we want them to make. We want more efficient cars. We want to get more for less.

It works the same way with corporate production. They want more for less.

If you can get a car that gets more gas to the mile for less money, you would do it. That's what we're all crying about. That's what we want from a universal healthcare system. More healthcare for less money.

[DainBramaged]

18. Are you joking?

My 92 year old Mother gets a Surviving Spouse check of about $400 a month from SS for my long gone Dad. Should she not receive that benefit?


What are you trying to tell us, that Retired workers and/or their spouses don't DESERVE pensions?

[doc03]

19. Same here my mother is 89 and she receives a survivors

pension of $1400 a (year), my dad died 18 years ago from cancer he probably picked up from working in the steel mill environment. So the Repugs think she is living high off the hog I guess. My dads pension was $256 a month after paying for his health insurance co-pay.

[FarCenter]

30. The Social Security pension is different from a UAW pension

If you are a GM retiree, you get both.

[we can do it]

21. Those Damn People Just Don't Die When They're Supposed To!

What a stupid question

[McCamy Taylor]

23. Their health insurance kept them from dying young?

[Hannah Bell]

24. GM took in 178 billion in income in 2007. They have 266,000 (global) employees.

Add that to US retirees & dependents = 604,902. Figure some global retirees to get to 700,000.

They could pay EVERY ONE $40K/yr + $1000/mo in healthcare insurance & it would only = $36 billion.

That's 20% labor cost.

Lying bastards.

[La Lioness Priyanka]

29. Can GM afford a chairman who doesnt believe in global warming and keeps making bigger and biggers

suvs? truck? NO.

[SoCalDem]

36. They closed/relocated factories elsewhere with mostly young-cheap

workers, and made the same product..

left behind remnants of their old-self up morth, where most of the "legacy" costs stayed as well..old buildings, retired post-WWII workers..

Consider this.. You have a family furniture store.. Granny & Gramps opened it and ran it and paid for the building it's in.. The building is old and costs a lot to keep up.. Granny & Gramps are still alive, your parents are running the place now, but they too are aging.. That one business now needs to support 4 older folks who had the audacity to not keel over dead at age 50.. So YOU run the place now, and you are responsible to keep the old building going, keep the furniture priced to sell, hire people to sell it..and you have a family now too that needs the place to operate in the black..

NOW...

a bare-bones, brand new furniture place pops up down the road..on land GIVEN to the proprieters, along with a free asphalt parking lot (yours is gravel, and pocked with potholes that YOU have to pay to keep filling).. Their building is brand new, and well constructed, well lit, and energy-efficient..

The NEW place also has a 10 year "tax holiday" given them because they promised to bring jobs" to the area.. They hire a bunch of 20 year olds who work there with NO benefits, and work part time.. They sell the SAME furniture as you have on display, but they sell it for 25% LESS, because their costs are less, and they are sure that if they can do it for a while, YOU will close up, and they will have the market all to themselves..

understand now?

[leftofthedial]

39. by relentlessly destroying the unions and cutting their membership.

if the ENTIRE US auto industry was unionized, domestic and foreign companies alike, the leacy costs would be sustainable.

[JuniperLea]

41. They mismanaged the retirement fund

Which, properly and safely invested, would have covered everyting nicely.