I could have swron that Ford had settled last year for an increase in wages. Was I ever wrong. Well, at least for new-hires. Looks like new-hires took the brunt of the cuts.
Canadian Auto Workers President Ken Lewenza said the focus on labor rates is misplaced since the UAW represents 10 percent of the cost of a U.S.-built vehicle and the CAW represents 7 percent of a Canadian-built car.
“Until people realize that labor rates are not the problem in terms of the crisis we’re in, then this insane race to the bottom will continue,” Lewenza said in an interview.
Yeah, right, except that Canada has national healthcare --I'm assuming that they don't have to cover that kind of cost.
http://www.bloomberg.com/apps/news?pid= ... refer=home[b]March 18 (Bloomberg) -- The U.S. auto industry may be close to reaching wage parity with Japanese carmakers’ U.S. operations, a stipulation required for General Motors Corp. and Chrysler LLC to receive further aid and a milestone of cost-reduction.
Ford Motor Co.’s latest contract with the United Auto Workers union puts it on a path to $50 an hour, including benefits, by 2011, nearly matching Toyota Motor Corp.’s $48 figure, said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan. GM may not be far behind.
GM and Chrysler LLC must demonstrate parity with the labor costs of at least one Japanese automaker’s U.S. operations to keep $17.4 billion in U.S. aid and convince the Treasury to release as much as $21.6 billion more. Failure to meet loan terms may prompt the government to recall the money, forcing a bankruptcy.
“For all practical purposes, we’re at parity now,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “When the market recovers, Toyota will return to profit first and profit sharing payments make Toyota’s hourly costs more expensive than Ford’s.”
Ford, which said it doesn’t need government loans, gave details on the new UAW contract after it was ratified by Ford UAW members March 9. The specific terms of the GM and Chrysler loans require a comparison with either Toyota, Nissan Motor Co. or Honda Motor Co. and exclude Korean automakers Hyundai Motor Co. and Kia Motor Co.
Contract Amended
Ford estimates its hourly labor costs under the new contract at $55 an hour, down from $60 before the concessions. UAW workers are paid $28 hourly at all three automakers and new workers get about $14 as current workers leave or retire. Benefits and retirement costs comprise the rest of the hourly labor costs.
Ford still pays more than the $40 an hour labor costs for Nissan and $30 for Hyundai in the U.S., McAlinden said.
“Even after the Ford concessions, they still have the highest benefits and wages” compared with any non-U.S. automaker, McAlinden said.
GM estimates its own agreement with the UAW, not yet ratified, will have a similar hourly rate, a person familiar with the plan said last week.
Even achieving a $50 labor rate will be a stretch for GM and Ford because it requires a high rate of attrition, said Brian Johnson, a Barclays Capital analyst, in an interview.
GM and Chrysler said they won’t disclose details on savings until after their contracts are ratified. All three automakers are offering new buyout packages for union workers this year.
Labor Concessions
The UAW announced tentative agreements on labor contract changes for Ford, GM and Chrysler on Feb. 17 without giving details. Ford was the first to vote after reaching an agreement on a plan to replace as much as half of future payments to a union-run retiree health-care fund with stock instead of cash. GM and Chrysler are still negotiating retiree-fund changes.
“It was a hard pill to swallow to give up all this stuff, but it was something that needed to be done,” said Anderson Robinson Jr., president of UAW Local 900, which represents about 3,500 workers at two Ford factories in Michigan. “I told my members if we don’t pass this, we could all be out of a job.”
The UAW-GM agreement makes similar economic concessions to the one ratified by union members at Ford, UAW Vice President Cal Rapson wrote in a March 9 letter to local presidents and chairmen.
Toyota, Nissan
Toyota’s hourly labor rate, with benefits, is about $48, spokesman Mike Goss said. Nissan pays technicians $25 an hour plus “a comprehensive and competitive package of benefits,” spokesman Steve Parrett said, declining to specify the value of benefits.
Toyota has wholly owned assembly plants in Kentucky, Indiana and Texas. Nissan builds vehicles in Tennessee and Mississippi. Hyundai has a factory in Alabama. Honda has assembly plants in Ohio, Alabama and Indiana.
Honda pays workers at Marysville, Ohio, more than $28 an hour, including profit sharing and bonuses, said spokesman Ed Miller. He had no comment on CAR’s estimate that benefits bring that to $45 to $48 an hour.
Hyundai isn’t commenting on labor costs at its Alabama factory, said spokesman Robert Burns. When the plant opened in 2003, the company said it planned to pay workers wages of $14 to $24 hourly, without giving benefit costs. The average hourly pay and benefit rate for private-sector workers is $25.36 an hour, according to the U.S. Labor Department.
The U.S. labor rates of all the automakers, including the foreign companies, still exceed low-cost countries such as Mexico, where the comparable figure is about $7.50 an hour, and China’s $1.25, McAlinden estimates.
Canadian Auto Workers President Ken Lewenza said the focus on labor rates is misplaced since the UAW represents 10 percent of the cost of a U.S.-built vehicle and the CAW represents 7 percent of a Canadian-built car.
“Until people realize that labor rates are not the problem in terms of the crisis we’re in, then this insane race to the bottom will continue,” Lewenza said in an interview.
To contact the reporter on this story: Jeff Green in Southfield, Michigan at
jgreen16@bloomberg.net; Keith Naughton in Southfield, Michigan at
Knaughton3@bloomberg.net.
[b]
That engineering executive below doesn't seem to have a clue that there's a good chance that the Pension Benefit Guaranty Corp is likely to go bust.
http://tinyurl.com/dzfzvqGM Pensions May Be ‘Garbage’ With $16 Billion at Risk (Update2)
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By Holly Rosenkrantz
/b][/quote]April 8 (Bloomberg) -- Den Black, a retired General Motors Corp. engineering executive, says he’s worried and angry. The government-supported automaker is going bankrupt, he says, and he’s sure some of his retirement pay will go down with it.
“This is going to wreck us,” said Black, 62, speaking of GM retirees. “These pledges from our companies are now garbage.”
As the biggest U.S. automaker teeters near bankruptcy, workers and retirees like Black are bracing for what may be $16 billion in pension losses if the Pension Benefit Guaranty Corp. has to take over the plans, according to the agency. As many as half of GM’s 670,000 pension-plan participants might see their benefits trimmed if that happened, an actuary familiar with the company’s retirement programs estimates.
The possibility that GM might dump its pension obligations is likely to intensify debate over the treatment of executives of companies that receive U.S. aid. GM Chief Executive Officer Rick Wagoner, ousted by the Obama administration last month, may receive $20.2 million in pensions, according to a regulatory filing.
“The core issue is fairness,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “To have workers lose a significant amount of their pension after giving a lifetime to building a company is devastating under any circumstance. It’s made all the more worse by the symbolism of a $20 million payoff at the top.”
Issue for Obama
Measured by participants, GM’s pension plan would be the largest taken over by the PBGC, a quasi-government corporation created by Congress in 1974 to protect pension programs of bankrupt companies.
Dealing with pensions may be one of the thorniest issues facing President Barack Obama in a GM bankruptcy. Unions including the United Auto Workers rallied behind his candidacy, spending $52 million to help elect him last year, according to Washington-based OpenSecrets.org, which tracks campaign spending.
In an election-night poll conducted by Peter D. Hart Research Associates, union members identified protecting pensions and Social Security and reducing health-care costs as their top goals for the new administration.
“It’s going to be a very political decision,” said John Casesa, who follows the auto industry as managing partner of Casesa Shapiro Group, a New York consulting firm. “I’m not really sure how this will go.”
$20 Billion Short
GM’s pension system had a $20 billion shortfall as of Nov. 30, 2008, based on numbers the company provided the PBGC, said Jeffrey Speicher, a PBGC spokesman. By law, the agency would be able to make up only $4 billion of that, he said.
“The rest would be lost,” Speicher said in an interview.
GM fell 7 cents, or 3.5 percent, to $1.93 at 4:15 p.m. in New York Stock Exchange composite trading and has dropped 40 percent this year.
Current and future retirees of Chrysler LLC, the other U.S. automaker on life support, would forgo $7.1 billion, Speicher said. Chrysler’s plan is underfunded by $9.3 billion, and the agency would cover $2.2 billion, he said.
Chrysler’s plan, with 250,000 members, would be the second- largest taken over by the PBGC. The biggest to date was the 120,000-member United Airlines plan, absorbed by the PBGC in 2005. The agency had an $11.2 billion deficit itself as of Dec. 31.
The $16 billion that would be lost by GM workers and retirees is a “big deal,” said Frank Todisco, senior pension fellow at the American Academy of Actuaries in Washington. “That’s a significant haircut on one’s benefits.”
Maximum Amount
The maximum amount that PBGC can pay retirees 65 or older is $54,000 a year. They would lose anything they get over that amount. Beneficiaries under 62 would be likely to lose a supplement of $15,000 to $18,000 paid by the GM plans to bring pensions up to $36,000 annually, according to the actuary with knowledge of the plans, who declined to be identified discussing potential cuts.
GM declined to disclose pension benefits or discuss what might happen to them should it file for bankruptcy.
“We won’t speculate on the matter,” said Renee Rashid- Merem, a spokeswoman for Detroit-based GM, which has received $13.4 billion in U.S. aid and asked for as much as $16.6 billion more.
Obama on March 30 gave GM until June 1 to come up with deeper cuts in debt and labor costs than proposed by Wagoner to avert bankruptcy. He gave Chrysler until May 1 to form an alliance with Italy’s Fiat SpA.
“Our goal, of course, is to do everything realistic to protect workers and their pensions,” said White House spokesman Bill Burton.
Chrysler’s Plans
“We expect Chrysler’s pension plans to be nearly fully funded and have ample liquidity to continue benefit payments as required,” said Michael Palese, a spokesman for the Auburn Hills, Michigan-based company.
Christine Moroski, a United Auto Workers spokeswoman in Detroit, declined to comment.
Black, the former engineering executive, says he worked at GM for 34 years and for two years at Delphi Corp., the bankrupt auto-parts supplier formerly owned by the automaker.
“If GM loses the pensions, it would mean 25 percent of my source of income would evaporate,” said Black, who declined to say what his retirement pay is. “I would have to go back to work.”
Returning to work may not be an option for other GM retirees, Black said. “I’ve talked to lots of folks who would be devastated,” he said.
Not All Companies
Not all companies that go bankrupt dump their pension obligations, said Speicher, the PBGC spokesman. Northwest Airlines Corp. emerged from bankruptcy in 2007 without terminating its plans, he said.
GM’s plan also is in relatively better shape than others, because it’s about 87 percent-funded, according to the actuary, compared with the typical pension plan’s 60 percent to 70 percent funding.
“The question of whether GM’s pension obligations are too great to allow it to operate effectively is a complicated one, and far from obvious,” said Andrew Oringer, an employee- benefits lawyer at White & Case LLP in New York.
“Nobody really knows” what would happen with GM pensions in a bankruptcy, said Jack Dickinson, president of an advocacy group for GM retirees called Over the Hill Car People.
The “PBGC doesn’t want to touch it, they’ve got their own problems,” said Dickinson, 65, who worked for 34 years in sales and management at GM. “We’re just hoping they take a hands-off approach. We depend on that money; we earned it, and it’s part of our compensation.”
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Seriously, though, I'm delighted that I finally figured out how to copy pics in the threads before they had totally disappeared. I just wish more people had copied some of the pics of the abandoned buildings of downtown Detroit. Anyone got their own pics? And the comments give great context. I can see this as being of historical interest someday, maybe not even that far into the future, because I think that what's happening now is of epic proportions. I think that Michigan is going to soon be a failed state, and its people will be tomorrow's Okies. And its pain is going to spread to its neighbors first, including those in Ohio, in additiopn to states which now have foreign car manfacturers. Heck, I can remember a co-worker telling us of horror stories of home values her hometown area in Ohio that she had come to Minnesota from. Trying to remember the name of the town--started with a "T" and made me think of crystal (???). This would have been mid to later eighties, Anyway home prices were probably a quarter of what they would have been in Minnesota. We may be in for a rollercoaster ride, and it will be interesting in an emotionally detached kind of way to see where the coaster ends.
