October 12, 2009

Well-Kept Media Secret: UAW Conceded No Base Pay, Health, or Pension Benefits in GM, Chrysler Bankruptcy Run-ups

NoToGMandChrysler0109A New York Times article by Nick Bunkley on Friday targeted for print on Saturday about the status of contract talks between Ford Motor Company and the United Auto Workers piqued my interest in a previously neglected but important matter.

Ford and the UAW are apparently close to an agreement. In describing what Ford workers are being asked to give up, Bunkley wrote the following (bolds are mine throughout this post):

Ford executives have said the company needs more concessions to keep G.M. and Chrysler from having an advantage.

…. The deal that U.A.W. workers at Ford approved in March got rid of cost-of-living pay increases and performance bonuses through 2010 and eliminated the jobs bank program, which allows laid-off workers to continue receiving most of their pay. In addition to those concessions, G.M. and Chrysler workers agreed to work-rule changes and a provision that bars them from striking.

What? From press coverage at the time, you would have thought that unionized GM and Chrysler workers made ginormous, humungous, unprecedented sacrifices to enable their companies to get through bankruptcy and to emerge as lean, mean vehicle-making machines.

Uh, no. What follows is a picture of the top portion of the first page of a “contract outline” presented by the union to its members shortly before the changes therein were ratified (full outline in PDF format is here; HT WSJ’s Deal Journal blog):


Let me repeat the key sentences found inside the red box:

For our active members, these tentative changes mean no loss in your base hourly pay, no reduction in your health care, and no reduction in pensions.

…. Unfortunately, in this process our retirees are required to make difficult sacrifices as is explained later in the summary.

In other words, the UAW protected its currently working members, the ones who get to vote on contracts, from any meaningful sacrifice, while hosing its retirees, who don’t get to vote.

How hard were retirees hit? This hard, according to a May local news report out of Detroit:

(UAW President Ron) Gettelfinger said the contract is a difficult one for the active members and retirees, who will give up some 25% of their health care benefits. “This was a matter of salvation as much as we possibly could for our retirees. I am regretful that we had to do anything and I think it’s a disgrace we had to do anything,” Gettelfinger said.

Spare us the pseudo-tough talk, Ron.

Even given the opportunity to cleanse all sins in bankruptcy, GM and Chrysler ended up doing very little to change their U.S. manufacturing day-to-day cost structure. Thanks to press coverage that has been almost completely derelict, almost no one knows this. Nick Bunkley’s piece above continues in that truth-obscuring tradition.

What really happened between the two companies and the UAW confirms and extends what I noted last week (first item at link) when items about post-bankruptcy restructurings began to appear:

In each case, it looks like the bankruptcy plan really consisted of the following:

  • “Let’s steal as much as we can from disfavored stakeholders.” In Chrysler’s case, with the help of government intimidation, first-lien non-TARP lenders were fleeced.” At GM, it happened to the unsecured bondholders.
  • “Let’s cut things back just enough to make us look like we’re serious, but not enough to be able to emerge profitably.
  • “Let’s hope for a miracle in the marketplace.”

It looks like retirees were treated by their UAW “brothers and sisters” as yet another set of “disfavored stakeholders.”

Meanwhile, the marketplace miracle necessary for all of this to even have a chance of working is nowhere to be found, and tens of billions of our tax dollars appear to be headed for a big, fat write-off.

Cross-posted at NewsBusters.org.

Lucid Links (101209, Morning)

Filed under: Lucid Links — Tom @ 7:59 am

As usual, there are at least 10 times as many items out there than I can get to.


U.S. sales chief leaves GM as restructuring goes on”As noted here previously (first item at link), getting all of the “restructuring” done was supposedly the point of going through bankruptcy. Instead, the company is having to keep doing it post-bankruptcy for two reasons.

First, and in its partial defense, it underestimated the ongoing negative impact of the POR (Pelosi-Obama-Reid) Economy, now the POR Recession/”Repressionas Normal People Define It, that brought the vehicle market to its knees during the last half of 2008 and has basically kept it there. As long as this administration thinks (or pretends to think) that “stimulus,” otherwise known as thinly disguised crony capitalism larded with economically unproductive transfer payments, is the way to economic recovery, consumers will resist making major purchases like new vehicles out of sheer self-defense.

Second, the company and the UAW (with the help of the press) misled the public about the seriousness of the concessions the UAW made in contract renegotiations. Here’s a quote from UAW chief Ron Gettelfinger from the first page of union’s outline of the contract modifications (PDF saved at my host):

For our active members these tentative changes mean no loss in your base hourly pay, no reduction in your health care, and no reduction in pensions.

Thus, it would appear that at least 90% of the compensation package for current employees was off-limits from the very start. The “concessions” heralded by the three parties involved (GM, UAW, and almost all of the press) amounted to nibbling around the edges for current workers and, as the union itself admitted in the document’s next paragraph, hitting retirees hard (not coincidentally, retirees don’t get to vote on contracts or contract changes).

So the company and the union avoided meaningful concessions while they, with the government’s unlimited legal assistance, shafted unsecured bondholders. Despite the PR, the company appears to have done little about its bloated cost structure, and is now forced to continue to “restructure” mere months after coming out of bankruptcy. Your tax dollars (and your kids’, and your grandkids’, and ….) at work.


The previous item probably goes a long way towards explaining why Ford and the UAW may be near an agreement with relatively little contentiousness. Again despite the press facade, Ford workers more than likely had to give up very little — perhaps almost nothing — to come down to parity with GM.


This is reporting? Here’s Nick Bunkley at the New York Times in an item on the Ford-UAW situation:

Ford executives have said the company needs more concessions to keep G.M. and Chrysler from having an advantage. However, Ford might be hard-pressed to show U.A.W. members that such a deal was necessary after posting a $2.3 billion profit in the second quarter, even though much of that was the result of a major debt restructuring.

One good quarter, and the company is supposedly in fat city — never mind that it lost $30 billion in the three years ended 2008. Bunkley is feeding readers a bunch of bunk.


Thank you, Bob Kerrey (bolds are mine):

…. (I) fear that American political leaders are about to talk themselves into breaking yet another foreign policy commitment.

…. (in 2007) against all reasonable predictions, President Bush chose to increase rather than decrease our military commitment. The “surge,” as it became known, worked. Victory was snatched from the jaws of defeat.

…. While success in Afghanistan may not look the same as it does in Iraq, I believe there is a very good chance that a stable democracy can survive there. If it does, it would be good for the Afghan people, good for the security of the region, and good for the United States.

…. If he chooses this politically safe route and does not give his military commander on the ground the resources needed to win, history will judge him harshly. Great American leaders of our past have ignored popular sentiment and pressed on during the darkest hours, even when setbacks give rhetorical ammunition to the skeptics.

…. our leaders must remain focused on the fact that success in Afghanistan bolsters our national security and yes, our moral reputation. This war is not Vietnam. The Taliban are not popular and have very little support other than what they secure through terror.

Afghanistan is also not Iraq. No serious leader in Kabul is asking us to leave. Instead we are being asked to withdraw by American leaders who begin their analysis with the presumption that victory is not possible. They seem to want to ensure defeat by leaving at the very moment when our military leader on the ground has laid out a coherent and compelling strategy for victory.

When it comes to foreign policy, almost nothing matters more than your friends and your enemies knowing you will keep your word and follow through on your commitments. This is the real test of presidential leadership. I hope that President Obama—soon to be a Nobel laureate—passes with flying colors.

So do I. The last Democratic president to keep America’s word in wartime was Harry Truman — and even he stopped doing so in Korea. Breaking a 60-year tradition of appeasement will not be easy. Prayer is in order.

Positivity: Holy Father canonizes five new saints

Filed under: Positivity — Tom @ 5:56 am

From Vatican City:

Oct 11, 2009 / 10:45 am

Today, Pope Benedict XVI canonized five new saints in St. Peter’s Basilica, including Fr. Damian of Molokai. During his homily, the Holy Father noted that all of the saints followed the invitation of Christ: “Come, follow me!”

Speaking to the faithful packed in St. Peter’s Basilica this morning, the Pope described the invitation of Christ saying that he “invites his disciples to the total gift of their lives, without calculation and human self-interest, with a wholehearted faith in God.”

This call, the Holy Father continued, is welcome by the saints who “place themselves in humble obedience” to follow the Lord.

They no longer focus on themselves, the Pope explained, but by their “logic of faith.” They choose “to go against the trends of the time living according to the Gospel.”

Benedict XVI then gave a brief description of each of the five newly-canonized saints: a bishop, a Trappist brother, two priests and a nun.

Archbishop Zygmunt Szczesny Feliński of Warsaw, founder of the Congregation of the Franciscan Sisters of the Family of Mary, was committed to evangelization and support for the poor, defending the oppressed during the Russian occupation of Poland, and was sentenced to 20 years in exile in Jaroslaw on the Volga. “His gift of himself to God and man,” the Holy Father said in Polish, was “full of confidence and love,” and “becomes a shining example for the entire Church.”

To those younger generations today who “are not satisfied with what they have,” the Pontiff gave the example of Rafael Arnaiz Baron, who came from a wealthy family and was a bit “of a dreamer.” He died when he was 27 years old, a Cistercian oblate, considered one of the greatest mystics of the twentieth century.

The Pontiff next spoke of Dominican Father Francisco Coll y Guitard, founder of the Congregation of Dominican Sisters of the Annunciation Blessed Virgin Mary. Through his preaching, the saint spread his love of the Word of God and the Sacrament of Reconciliation among all people especially the young.

Father Damian, the famous apostle to the lepers, left Flanders, Belgium at the age of 23 to go on a mission to modern day Hawaii. “Not without fear and loathing,” Pope Benedict underlined, “Father Damian made the choice to go on the island of Molokai in the service of lepers who were there, abandoned by all. So he exposed himself to the disease of which they suffered. With them he felt at home. The servant of the Word became a suffering servant, leper with the lepers, during the last four years of his life.”

He continued, “To follow Christ, Father Damian not only left his homeland, but has also staked his health so he, as the word of Jesus announced in today’s Gospel tells us, received eternal life.”

The figure of Father Damian, Benedict XVI added, “teaches us to choose the good fight not those that lead to division, but those that gather us together in unity.”

And finally, the Pope spoke of St. Mary of the Cross, of the Little Sisters of the Poor, and her “wonderful work to help the most vulnerable elderly.” He noted that her initiatives and goals are “still valid today, given that many elderly people suffer from multiple poverty and loneliness, sometimes even being abandoned by their families.” ….

Go here for the rest of the story.