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Friday night, the nation's largest auto maker, General Motors' (NYSE: GM) old union contract expired and the company is working hard to gain approval of a new four-year UAW contract. Three people that are close to the talks have released some of the company's ideas, but have remained anonymous in their revelations. One of the company's new proposal is that it will cap out-of-pocket costs in order to gain a better bargaining position with the union-controlled health fund. It also has suggested a freeze in cost-of-living raises and base wages. What is at stake here is the approval by the union to allow GM to get rid of retiree health-care liabilities that ended up costing the Detroit auto maker somewhere in the neighborhood of $3.3 billion in cash during 2006.
In its attempt to unload the current health-care liabilities, GM is hoping to start a Voluntary Employee Beneficiary Association in which it would only have to contribute around 60% of its current liabilities to get started.
The freeze on cost of living increases could be a potentially explosive topic, however. The company also suggested such a freeze back in 1970 and in reaction the company witnessed a 67-day strike strike by employees. I am sure that this concept will once again raise more than a few eyebrows from the company's employees. The company is definitely aware of the possible backlash from a freeze in base wages, and has suggested providing lump sum bonuses to its employees in return.
The talks are still ongoing, and I will continue to keep an eye on the developments. Assuming that the two parties are able to reach an agreement, I will keep you up-to-date on all the details.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer
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Reader Comments (Page 1 of 1)
9-19-2007 @ 12:36PM
Indy Plume said...
IF UNIONS WERE SMART, AND NOWADAYS THEY NEED TO BE, THEY SHOULD ADD A STIPULATION THAT WORKER'S SALARIES AND COMPENSATION SHOULD BE DIRECTLY LINKED, VIA A PERCENTAGE BASIS, TO THE CEO'S--ONLY THEN WILL IT BECOME MORE FAIRLY EQUITABLE, THE CEO WILL BECOME MORE ACCOUNTABLE, AND EVERYONE WILL BE IN THE SAME BOAT TO SHARE THE RISKS.
9-17-2007 @ 11:34AM
Van said...
As an active stock trader, I am buying GM stock since it is known that this stock will double by the end of the year....Goldman & Sachs has been buying this stock for the last 6 months and their own stock is rising, which is a good indicator of GM stock to be a "windfall" for the investors who have the investment option.....Look out Toyota & Honda.....GM is going "flexible" in its operations for growth in the North American markets.....
9-25-2007 @ 4:35PM
Cameron BAIRD said...
I for one, can't wait to see the union fail. I'm sick of their tactics. Unions are the single biggest impediment to excellence in this country. I dont care if its the
UAW or the teachers union "mediocrity at its best". I relish the day I see the long lines at the unemployment offices and the welfare offices in Detroit. I hope the liberal media is as generous with their video when it happens. Should be some good opportunities in the real estate market as the pigs lose their homes!! The amazing part of this whole thing is that the rank and file havent picked up on the whole idea that they are the problem. What a bunch of moron's!! Won't they be suprised to see that they were replaced with trained monkeys!!