Friday, November 21, 2008

What GM needs to Do to Survive

This is a great rundown on what GM and Chrysler needs to do in order to save their miserable hides since Congress is not going to help them.

Lawmakers also rapped the automakers' high labor costs and particularly the jobs bank, in which laid-off workers get 95 percent of their pay plus benefits even though they aren't working.

The United Auto Workers said it has cut the jobs bank and placed time limits on it in new contracts signed with the companies last year. Still, more than 3,500 workers are getting paid for not working, and that number is sure to rise as the companies continue to cut jobs.

Yes only in the auto industry do you get paid to not work. Plus the number of these unpaid, unproductive workers will suddenly grow as they start to close plants to save money. Talk about a case-in-point on the power of unions in American industry. Plus I found this just mind boggling:

Initially the UAW said it already gave up a lot in the new contracts, agreeing to lower wages for new hires and to shift the companies' huge retiree health care costs to a union-administered trust.

That means GM is currently paying into a trust that their own Union runs? So they have no control over their own health care payouts? So in other words they need Union permission to cut the contributions into the trust, try to shrink its size, or even collect fees from running the thing.

I figured that they cut contributions into this trust as soon as they started to take those multi-billion dollar losses earlier in the year. I think GM needs to go into Chapter 11 simply to rewrite these contracts in order for them to compete with the Japanese. I'm pretty sure Toyota dosen't have the UAW running any part of their business.

No comments: