GM and UAW Reach Tentative Agmt on Health Care

[cmattson]

The tentative agreement, subject to finalized language and UAW-GM member ratification, is projected to reduce GM's retiree health-care (OPEB) liabilities by about $15 billion, or 25 percent of the company’s hourly health-care liability, and cut GM's annual employee health-care expense by about $3 billion on a pre-tax basis. Cash savings are estimated to be about $1 billion a year.

http://media.gm.com/servlet/GatewayServlet...n=2&docid=19615

Understatement of the year:

“These negotiations were done in a positive, cooperative, problem-solving spirit,” Wagoner said in remarks to employees at GM’s global headquarters in Detroit . “While it may have taken some time to reach this cooperative solution, I think it was time well-spent.”

Really? $15b in savings? Time well spent? What insight!

Other news

Wagoner also announced that GM is exploring the possible sale of a controlling interest in General Motors Acceptance Corp. (GMAC) to a strategic partner, with the goal of restoring GMAC’s investment grade rating and renewing its access to low-cost financing.

This is interesting because GMAC is GM's cash-flow darling. There's a reason why GM hasn't divested itself from GMAC earlier than this: it's because GMAC brings in big money to GM's bottom line. You remove this, then you'd better be pretty confident you can make money selling cars. If GM makes this move, then they better have the rest of the ship in tight shape..

Although GM management is unable to estimate an amount of loss, if any, that GM may sustain due to Delphi 's Chapter 11 proceeding, and continues to evaluate whether, when and to what extent GM may need to record a related liability, it continues to believe that amounts closer to the midpoint of the range are considered more possible than amounts at either end of the range.

While it's nice to see that Delphi's bankrupcty isn't going to cost them a full $11b-$12b, it's still depressing to see that they'll likely be on the hook for something between $5b-$6b.

[SimonDavid]

Other news

QUOTE
Wagoner also announced that GM is exploring the possible sale of a controlling interest in General Motors Acceptance Corp. (GMAC) to a strategic partner, with the goal of restoring GMAC’s investment grade rating and renewing its access to low-cost financing.


This is interesting because GMAC is GM's cash-flow darling. There's a reason why GM hasn't divested itself from GMAC earlier than this: it's because GMAC brings in big money to GM's bottom line. You remove this, then you'd better be pretty confident you can make money selling cars. If GM makes this move, then they better have the rest of the ship in tight shape..

As I said in a previous post, yes GMAC is GM's cashflow darling and in a perfect world it would be nice to own all of it. However GMAC is now burdened by GM's junk credit rating, which makes very difficult for them to raise finance and probably makes their whole business unviable medium term.

And if GMAC is unviable then who is going to support GM's sales with competitve finance? So GM will probably sell a majority of GMAC to a "strategic investor" (whose name probably starts with a K), then GMAC gets its investment grade back, then while GM has lost part of the cashflow at least they still have a strong finance partner who can support their marketing.

[Simon C]

To all the union bashers: I said it from the beginning, and it turned out to be true ... the UAW will work with GM on healthcare. Now all you fella's out there that said it "wouldn't happen", and to "hire Replacement workers" ... (bear with me guys) E-A-T S-H-I-T!!! :) OK, I feel better. How bout you guys, knowing that you were wrong?

[Cremazie]

To all the union bashers:
I said it from the beginning, and it turned out to be true ... the UAW will work with GM on healthcare.
Now all you fella's out there that said it "wouldn't happen", and to "hire Replacement workers" ... (bear with me guys) E-A-T  S-H-I-T!!! :)

OK, I feel better. How bout you guys, knowing that you were wrong?

[post="30177"]<{POST_SNAPBACK}>[/post]

:lol:

[David]

I do not see this as wrong, the writing is on the wall, Unions are not the needed platform or really warrented in this day and age where our laws give each and every worker the right to negotiate for a fare wage and benefits on their own with out having to pay someone to do this for them. The Socialist Unions still have not fully woken up to the changes of a global economy and competition from China. The US companies will not be able to continue to keep over paid jobs in the face of a cost only 1/3 of that from over seas. Yes the UAW has finally given in some as Delphi has them partially scared. Yet we the UAW has a long way to go to really prove they are working and willing to work with GM for the best long term interest of the company. The UAW MUST CHANGE or else die and the retirees will loose out even bigger. after all the UAW is shrinking every month, quarter, year. they are only a fraction of what they are and seem to have no real business management that understand they need to be a working team player rather than a pitbull with a bat trying to keep a socialist equality for all. There never will be equality for all, you get better educated and move up looking out for your own family. The union only looks out for it's own political needs and not really the needs of it's members. BRIGHT NOTE, Glade GM is finally making change. Hopefully they will continue this all the way to the Top of GM and get on a competitve level with the other companies.

[Shantanu]

No one has a crystal ball when it comes to future cash flows. GM needed a big hit on Wall Street, and since the car division and the financial division aren't delivering it, this was supposed to be it. We'll see if their new deal really saves $15 billion, or if the real figure is something much, much lower.

[Angry Dad]

To all the union bashers:
I said it from the beginning, and it turned out to be true ... the UAW will work with GM on healthcare.
Now all you fella's out there that said it "wouldn't happen", and to "hire Replacement workers" ... (bear with me guys) E-A-T  S-H-I-T!!! :)

OK, I feel better. How bout you guys, knowing that you were wrong?

[post="30177"]<{POST_SNAPBACK}>[/post]

Did they have a choice?

BTW, the rank and file must still ratify any agreement.

[Northstar]

GM stock jumped $2.11 (7.5%) today (I assume because of this news).

GM wants to run its plants at 100 percent capacity or more by 2008, Wagoner said. GM plans to cut 25,000 hourly jobs.

If there are no jumps in volume, GM has to cut 900,000 units of volume capacity if it continues to sell the same amount of vehicles as last year. I would assume GM expects to increase volume, but we'd still be looking at at least 750,000 units of capacity that needs to be cut.

Getting rid of GMAC wouldn't be that bad, as GM's low credit rating is making borrowing pretty expensive right now, so GM isn't really making a ton of money off of it anymore.

[Simon C]

Did they have a choice?

BTW, the rank and file must still ratify any agreement.

[post="30333"]<{POST_SNAPBACK}>[/post]

Angry Dad, yes the UAW had a choice, and they made it. To work things out. The UAW is always looked at as uneducated, fat, lazy workers who want more money, more money, more money. We're not like that. 90% of us are hard working, honest people. That percentage is much like any other workplace.

[Snate]

Angry Dad, yes the UAW had a choice, and they made it. To work things out. The UAW is always looked at as uneducated, fat, lazy workers who want more money, more money, more money. We're not like that. 90% of us are hard working, honest people. That percentage is much like any other workplace.

[post="30354"]<{POST_SNAPBACK}>[/post]

Not really. I mean if they had not made concessions now, they would have just had to deal with it later and it would have been more severe.

Make concessions now and keep your job or make no concessions and lose your job later on down the line.

[Newbiewar]

how long would it take to replace GMAC? how long would it take for GM to remake the equity that GMAC has? meaning... sell of GMAC for say... 30 Billion... take that 30 Billion and start ohh say "GM Credit", instead of GMAC... start another Insurance... and only do automobile loans, until they are larger... But the only thing is... if GMAC wanted, sell itself... just quit offering new loans... and without offering any new loans, GM will have atleast $10 billion coming in a year... This would essentually be the same as selling it off, you remove the marketing partnership, and bring in sheer money.... depends on how long term the adverage loan is... but if the average GMAC loan is 30 years (home) then you have 10 Billion a year...

[razoredge]

Well there was alot of puff and fluff in that "intense" artical but they could have saved valuable resources and time if they had just wrote this

leveraging the globalization of GM’s product development, Wagoner said.

That sums up the future of American business and jobs.

[Member55]

Even if GMAC is sold they will still service GM's auto loans. They need each other. Who the hell would want GMAC if they would lose access to 5 million potential auto loans every year. Edited October 18, 2005 by Member55

[Member55]

But the only thing is... if GMAC wanted, sell itself... just quit offering new loans... and without offering any new loans, GM will have atleast $10 billion coming in a year...  This would essentually be the same as selling it off, you remove the marketing partnership, and bring in sheer money.... depends on how long term the adverage loan is... but if the average GMAC loan is 30 years (home) then you have 10 Billion a year...

[post="30392"]<{POST_SNAPBACK}>[/post]

I don't get it...

[sciguy_0504]

I read this earlier today on FOXNEWS.com and almost lost it in class. I hope GM makes the best of this situation because it's pretty damn good and I don't expect the Union to do it again anytime in the near future.

[Angry Dad]

Angry Dad, yes the UAW had a choice, and they made it. To work things out. The UAW is always looked at as uneducated, fat, lazy workers who want more money, more money, more money. We're not like that. 90% of us are hard working, honest people. That percentage is much like any other workplace.

[post="30354"]<{POST_SNAPBACK}>[/post]

What about that ten percent?

Ten percent absenteism, ten percent is a lot.

From what I've seen of this "new attitude" the pattern for the next contract for GM union workers is going to be cut. No more job bank BS, no more single didget co-pays, and none of what was trumpeted by Waggoner is set in stone. The rank and file still have to agree to the sacrifice.

I remain skeptical until I see this benevolent union really does put the corporation ahead of the check to check mentality.

[razoredge]

GM (Ford, American auto) isnt going to make it anyhow, this is just a tempory bandaid. Americans will continue to increasingly buy Asain cars because of some subliminal message sent decades ago they just can get out of their heads. Just watch that new Kia commercial, it sums up the mentality of Americans. If the muslims put a car on the market next year, Americans would rush to buy it as a gesture to show that they are sorry ? What for? Who knows but the bleeding heart liberal just loves to hate their own kind and nuture loosers Your all applauding for an encore but the band packed up and left decades ago.

[Simon C]

Hey guys, I went to bed last night and was talking to the "big guy" upstairs, and ..... I came to the conclusion, that I should apologize to all the union bashers I told to "E-A-T %$#@!!!" So, I apologize to you guys for saying that. It's been a worry-some couple of months, and reading all the stuff about union bashing ... well, I let it get to me and said something I shouldn't have. Sorry.

[haypops]

Even if GMAC is sold they will still service GM's auto loans. They need each other. Who the hell would want GMAC if they would lose access to  5 million potential auto loans every year.

[post="30409"]<{POST_SNAPBACK}>[/post]

Actually the most profitable part of GMAC is ditech.com. However the feds have raised short term interest rates 11 times in the last two years. This will cut into the the refiance business.

[haypops]

Who knows but the bleeding heart liberal just loves to hate their own kind and nuture loosers

[post="30445"]<{POST_SNAPBACK}>[/post]

Where do you come up with this stuff? Globilization is a fascist movement - by deffinition. Edited October 18, 2005 by haypops

[Cremazie]

Where do you come up with this stuff?  Globilization is a fascist movement - by diffinition.

[post="30692"]<{POST_SNAPBACK}>[/post]

I don't like it, trade is only destroying what we have all built!

[haypops]

I don't like it, trade is only destroying what we have all built!

[post="30698"]<{POST_SNAPBACK}>[/post]

The talking points is that this is only a temporary glitch until it all settles out. Not sure of that though.

[mjd1001]

GM selling GMAC might be a calculated move by them...calculated in that they expect a strike/shutdown in the very near future. Think about it, why would GM sell their most profitable part of the company? What if they know its worth more now than it will be in the future. Suppose GM plays hardball with the UAW, and that forces a strike. Certainly GM may actually welcome that from the operations/manufacturing side. We all have read that when you figure in labor costs, they don't make much money on cars and in fact often lose money. They make that money up through financing. So if a strike occurs, GMAC is where the huge it would be. I have a feeling GM execs are planning for a strike, maybe they are even going to push for one. So they sell GMAC now, get the money for it....and take care of the other side of the operation once a strike is gone. Remember, if a strike occurs, GMAC isn't worth much, it won't be generating any profits. By selling it now, GM gets something for it. Then, when the resolution to a confrontation between GM and the UAW occurs.....If GM plays hardball and pushes the UAW, maybe they can emerge from that with a labor deal that will actually make them profitable on the manufacturing side.

[CaddyXLR-V]

GM selling GMAC might be a calculated move by them...calculated in that they expect a strike/shutdown in the very near future.

Think about it, why would GM sell their most profitable part of the company?  What if they know its worth more now than it will be in the future.  Suppose GM plays hardball with the UAW, and that forces a strike. Certainly GM may actually welcome that from the operations/manufacturing side.  We all have read that when you figure in labor costs, they don't make much money on cars and in fact often lose money.  They make that money up through financing.

So if a strike occurs, GMAC is where the huge it would be.  I have a feeling GM execs are planning for a strike, maybe they are even going to push for one. So they sell GMAC now, get the money for it....and take care of the other side of the operation once a strike is gone.  Remember, if a strike occurs, GMAC isn't worth much, it won't be generating any profits. By selling it now, GM gets something for it.

Then, when the resolution to a confrontation between GM and the UAW occurs.....If GM plays hardball and pushes the UAW, maybe they can emerge from that with a labor deal that will actually make them profitable on the manufacturing side.

[post="31964"]<{POST_SNAPBACK}>[/post]

I was thinking the same thing. I dont know how true it is though. But could GM be selling whatever it can to be preparing for a strike in 07? I'd like to know an insiders thoughts on this. Are we way off here?

[haypops]

Some times things are just what they seem to be. The possible strike isn't an issue here. GMAC makes its money on financing HOUSES not cars. By selling a share of GMAC, GMAC and consequently GM will be able to borrfow money at a lower interest rate.