"The politically powerful united Auto Workers emerged with an exceptionally sweet deal in the proposed reorganization of a bankrupt General Motors -- and the taxpayer essentially is footing the bill. The federal government may be lucky to get back half of the $50 billion owed by GM, consisting of nearly $20 billion of existing loans and about $30 billion that Uncle Sam plans to extend through so-called debtor-in-possession financing in bankruptcy... The government effectively is making a gift to the UAW, because it is converting about $40 billion of its GM loans that are senior to the UAW claims into a 61% equity stake in the new company, making its recovery highly dependent on the new GM's equity value.

"RON GETTELFINGER: Well, I'm certainly not here touting it. It's a lifeline, is really what it's boiled down to. We would not have been in these negotiations. And let me just step back and say that a light bulb went on in somebody's head, like they came up with a new idea in Washington when we were in those hearings, saying, you know, these companies are leveraged on their balance sheet. Well, guess what? We knew that. We knew that in '03, and we started making movement in that direction. We knew that in '05. We made additional movements, mid-contract. PAUL SOLMAN: Movements meaning? RON GETTELFINGER: Meaning concessions in the contract, mid-contract in '05. We've made concessions again in '07, and we were moving along. (Emphasis ours)

"The tentative agreement, reached at 3:05 a.m. Sept. 26, delivers solid economic gains for active and retired members, despite repeated attempts by GM to impose harsh takeaways The agreement will deliver more than $13,000 in economic gains for a typical UAW member, including a $3,000 signing bonus, two 3 percent lump sums and a 4 percent lump sum. Active workers will see their comprehensive health care coverage continue, with dental, hearing and other benefits improved. Retired workers will have their health benefits secured by a Voluntary Employee Beneficiary Association (VEBA), prefunded by GM with $29.9 billion in cash and other assets. The fund can only be used to pay retiree health benefits, and will remain solvent for decades regardless of the financial condition of GM. The proposed contract will also deliver benefits to current and future retirees, with four lump-sum payments for current retirees, and a raise in basic benefit rates, the 30-and-out supplement, temporary and interim benefits for future retirees. The company came into these talks looking to shred our contract to pieces,” said UAW Vice President Cal Rapson, who directs the UAW GM Department. “But you can’t tear apart a group that stands together the way UAW members do.”

"The Obama infatuation is a great unreported story of our time. Has any recent president basked in so much favorable media coverage? Well, maybe John Kennedy for a moment, but no president since. On the whole, this is not healthy for America.

Imagine hypothetically that a President McCain had submitted a budget plan identical to Obama's. There would almost certainly have been a loud outcry: "McCain's Mortgaging Our Future." Obama should be held to no less exacting a standard.

"The union's cost-of-living increases, along with some holiday pay, were suspended. Yet UAW President Ronald A. Gettelfinger stressed that there would be no reduction in the membership's base hourly pay, health care and pensions... Most of GM's hourly workers will receive another buyout and early retirement offer. Production workers will be offered $20,000, plus a $25,000 car voucher. Skilled employees will be offered $45,000 plus the vehicle voucher. The biggest buyout package, for employees with at least 20 years of service, includes $115,000 plus the car voucher." (Emphasis ours)blockquote> Is this a group behaving like they work for a company that's about to go under....? ]]> http://www.patcleary.com/2009/05/the_uaw_fiddling_while_gm_burn_1.html http://www.patcleary.com/2009/05/the_uaw_fiddling_while_gm_burn_1.html GM UAW Wed, 27 May 2009 11:46:00 -0500 Here's a good article from HRExecutive Online - based on their interview with the top employment lawyers in the country. It covers their collective expectations about what is on the horizon for the Obama Administration and what steps employers might take. ]]> http://www.patcleary.com/2009/05/whats_on_the_employment_law_ho.html http://www.patcleary.com/2009/05/whats_on_the_employment_law_ho.html Tue, 26 May 2009 09:58:36 -0500 our post of May 14, kudos to the WaPo, who is like a terrier with a bone on the issue of the blatant inequity in the government takeover of Chrysler and GM. They've now editorialized on it twice in a little under two weeks. In today's installment, entitled, "Government Motors," they point out once again the proposed haircut (more like a buzz cut) for the investors while the UAW gets a trim:

"While the Obama administration has been playing hardball with bondholders, it has been more than happy to play nice with the United Auto Workers. How else to explain why a retiree health-care fund controlled by the UAW is slated to get a 39 percent equity stake in GM for its remaining $10 billion in claims while bondholders are being pressured to take a 10 percent stake for their $27 billion?"

As the WaPo points out, this has become a political, not a financial, process. Good luck finding investors for other future adventures. Go here to join an online manufacturing discussion on the topic.]]> http://www.patcleary.com/2009/05/this_still_doesnt_seem_fair.html http://www.patcleary.com/2009/05/this_still_doesnt_seem_fair.html GM UAW Tue, 26 May 2009 09:15:41 -0500 ManufacturingCrunch endeavors to do. Audacious, maybe, but worth a shot. You manufacturers out there (you know who you are), hope you'll check it out and join the discussion. The weak of heart should avert their eyes... ]]> http://www.patcleary.com/2009/05/welcome_manufacturing_crunch.html http://www.patcleary.com/2009/05/welcome_manufacturing_crunch.html Thu, 14 May 2009 10:17:28 -0500 its lead editorial today correctly (albeit gently) scolds the Obama Administration for a little uneven-handedness in dealing with the various Chrysler creditors during the Chapter 11 process. "President Obama may call them 'speculators,'" goes their sub-head, "but the economy needs private investors." Not likely, given the track record thus far, to wit:

"The government's intervention in GM's financial affairs tilts the scales so dramatically in the company's (read: government's) favor that it risks shutting out the legitimate interests of some creditors in favor of politically connected players who are owed much less and have less of a claim to the company's money. GM bondholders, for example, are being pushed to accept a 10 percent equity stake in repayment of their $27 billion in loans to the company. The United Auto Workers, on the other hand, is being offered a 35 percent equity stake in exchange for its claim of roughly $10 billion -- a claim that would typically be wiped out in bankruptcy. While the hedge funds are likely to receive less than 30 cents on the dollar, a health-care fund controlled by the UAW is being handed a 55 percent ownership stake in Chrysler. If bankruptcy rules had been strictly followed, the union would have been entitled to little, if any, return. Extraordinary times call for extraordinary measures, and it was with this thought in mind that we endorsed the federal government's decision to pump billions of dollars into the automakers. But the spectacle of creditors being stripped of their legal rights in favor of a labor union with which the president is politically aligned does little to attract private capital at a time when the government and many companies need these investors the most."

Holding the UAW harmless while dinging the investors is a lousy way to run a railroad - or a car company. Over time, this will come back to bite the Administration - and Chrysler's' proud new majority owners, the UAW. The UAW shares the blame for the sorry state of the auto industry.They can only kick the can down the road so far before they will have to come to grips with what they have wrought. ]]> http://www.patcleary.com/2009/05/this_doesnt_seem_fair.html http://www.patcleary.com/2009/05/this_doesnt_seem_fair.html bond holders Chrysler hedge funds Obama UAW Thu, 14 May 2009 10:06:17 -0500 "New compromise measures supported by Diane Feinstein and Arlen Specter may pave the way for the passage of the Employee Free Choice Act (EFCA). With 900,000 union members in the state of Pennsylvania, the Arlen Specter firewall appears to be crumbling. He knows he can't win a Democratic primary in Pennsylvania without labor, and they have made it clear that their support is contingent on his vote on Employee Free Choice."