GM under?

[saluki9]

Quote:

Originally Posted by windsurf The "nasty surgery" would be perfectly legal but, in my mind and by my standards,, immoral as to defaulting on negotiated, contracted benefits and pension commitments.

Last time I checked GM was not allowed to print it's own currency. That being the case, what other option exist when their obligations exceed their cash flow and nobody wants to lend to them?

Would you feel better if the company went into liquidation and both the retirees and employees all got screwed?

FYI - As of their last form 5500 filing, the GM pension plan had a surplus of $6B So it would be the health benefits at risk, not the pension payments.

[ziggy29]

Quote:

Originally Posted by brewer12345 How do you figure? This is business, not religion. The UAW fought for all those high value benefits and got them. But anyone who has been alive for the past decade or so could see that UAW workers were taking a risk by accepting the high pay and very generous benefits and hoping that the automakers would stay healthy enough to continue paying them. Think risk premium. Well, if GM et al go into Ch 11, the risk that the union workers were being paid to accept will come home to roost. Those folks had a choice, and they chose to take the risk for the available compensation. They could have negotiated a less costly deal with the former big 3 or taken lower paying but safer jobs at non-union plants.

Something about geese and golden eggs comes to mind here.

For too long, I think the UAW has been in denial that it wasn't 1960 any more. At that time, there was very little international competition since most of the developed economies were still damaged by WW2 and the emerging economies hadn't "emerged" into becoming significant industrial players yet.

In such a time, U.S. industry was king, almost the only game in town. U.S. manufacturers flourished to the point where they could give the UAW (and other industrial unions) unprecedented retirement security. But in the face of increasing lifespans, cheap foreign competition, runaway health care costs and struggling pension funds in a tough market, these benefits are killing the goose.

We may find it unsettling that the "global economy" has had a real effect on the ability of U.S. businesses to provide economic security for its employees. But it's real, and as much as we don't want to accept it, labor has to resist the urge to keep asking for golden eggs while the goose is extremely sick. The alternative is killing it, and winding up with no more golden eggs at all.

Unfortunately this train wreck looks like it may repeat itself in state and local governments. And public employees unions are even more powerful than the UAW.

[brewer12345]

Quote:

Originally Posted by saluki9 FYI - As of their last form 5500 filing, the GM pension plan had a surplus of $6B So it would be the health benefits at risk, not the pension payments.

I figure what GM could gain pension-wise is that they could freeze the plan and stop letting employees accrue any additional benefits. What you have, you keep, since it is funded, but that's it.

Obviously the health stuff would get whacked to the extent the liabilities were greater than the assets in the VEBA trusts.

[haha]

Quote:

Originally Posted by saluki9 FYI - As of their last form 5500 filing, the GM pension plan had a surplus of $6B So it would be the health benefits at risk, not the pension payments.

Saluki, where can these be accessed? It's an IRS form, but also public I think?

Thnx,

Ha

[windsurf]

Quote:

Originally Posted by brewer12345 ?? How do you figure? This is business, not religion . . . . Sorry, you take the risk, you live with how the dice roll. Simple as that.

I am not trying to persuade you. Just giving you my perspective. And it's not a matter of religion–it's a matter of ethics.

[Marquette]

Quote:

Originally Posted by windsurf I am not trying to persuade you. Just giving you my perspective. And it's not a matter of religion–it's a matter of ethics.

So it's ethical to fight for as much as you can get now even if you know it's going to screw over future generations? As a childless, godless man, I agree, but I just wanted to make sure we're on the same page.

edit: I would call losing a lot of money stupid, not immoral. Or, is it better if they don't attempt to save the company and just fold completely and don't attempt to do anything? Is that morally the better thing to do?

[CitricAcid]

zigg29, don't forget the consumer or the essence of the competition in all of this. We definitely do find it unsettling that the global economy and competition threaten traditional job security, pension, health care, and wages, the benefits that are provided by it include a cheaper, better product, which (if everything is cheaper and better) makes you richer than you would be without it. Economies adapt as skills and knowledge are shifted amongst industries.

[Bestwifeever]

In other GM news:

GM shifts tiny Chevy Beat car to U.S. market - MarketWatch

Hope this is not too little (no pun intended), too late--it sounds like a nifty little vehicle.

[Midpack]

Quote:

Originally Posted by windsurf I am not trying to persuade you. Just giving you my perspective. And it's not a matter of religion–it's a matter of ethics.

Ethics irrespective of the (GM) economics? And why would GM be any different than the countless other companies who've had to renege on pensions and/or healthcare benefits for retirees and active employees?

[Lsbcal]

Quote:

Originally Posted by glinka I retired about two years ago from General Motors. Never thought about if they would go into bankruptcy. What happens if that does occur? I have heard different things such as the government protects it or it is fully funded by GM. But don't know for sure. The medical is in the process of being taken over by the UAW. Just wondered, have heard horror stories about companies going under just before someone retired, but not while already in retirement.

I think we should stick to the Glinka's question. I'm sure he's aware of the controversy around GM and the unions. But at this point he's just trying to survive in retirement. So let's cut him some slack!

So what is the history of union health plans where the union has taken over the plan? Or is this pretty unique?

[ziggy29]

Quote:

Originally Posted by lsbcal I think we should stick to the Glinka's question. I'm sure he's aware of the controversy around GM and the unions. But at this point he's just trying to survive in retirement. So let's cut him some slack!

I don't think anyone is "piling on" so I don't see where "slack" even enters into it.

Plus, I don't think you can avoid rattling off past mistakes when it comes to GM's future, because GM's future (and perhaps the survivability of its promises to retirees) depend on not repeating some of them.

The pension fund appears to be okay there, which might mean current retirees are in good shape but current employees may have their frozen at current levels and additional service will not increase it.

As for the health care, I think putting it under union auspices is a very interesting case study, and I'm sure other unionized businesses and unions are watching it carefully to see whether it's a colossal failure or the wave of the future.

[brewer12345]

Quote:

Originally Posted by lsbcal So what is the history of union health plans where the union has taken over the plan? Or is this pretty unique?

Pension for existing retirees appears to be OK, although I don't know how much GM stock or bonds are in the plan.

Retirees health plan is still in the process of transitioning to operation under Union auspices and AFAIK a lot of the funding that is eventually due has not yet made its way to the trust. So retiree healthcare benefits would be sensitive to the exact timing of when GM might enter Ch 11. If they go before funding the trust, benefits will be endangered. If they go after, benefits should be OK.

I think there are other union operated pension and healthcare plans, but don't know how successful they are.

[samclem]

Quote:

Originally Posted by ziggy29 As for the health care, I think putting it under union auspices is a very interesting case study, and I'm sure other unionized businesses and unions are watching it carefully to see whether it's a colossal failure or the wave of the future.

It's a brilliant move by GM. "Here--you do it." Vinnie will buy a bigger car for his friends, can hire more "helpers," and workers will get bigger copays. Perfect .

[FinanceDude]

Quote:

Originally Posted by saluki9 Last time I checked GM was not allowed to print it's own currency. That being the case, what other option exist when their obligations exceed their cash flow and nobody wants to lend to them? Would you feel better if the company went into liquidation and both the retirees and employees all got screwed? FYI - As of their last form 5500 filing, the GM pension plan had a surplus of $6B So it would be the health benefits at risk, not the pension payments.

Bottom line, if the debt markets aren't thrilled about GM's ability to pay, this will all be a moot point. GM HAS to have some successes or the institutional buyers won't touch their bonds with a 10-foot pole...........

[Running_Man]

Quote:

Originally Posted by glinka I retired about two years ago from General Motors. Never thought about if they would go into bankruptcy. What happens if that does occur? I have heard different things such as the government protects it or it is fully funded by GM. But don't know for sure. The medical is in the process of being taken over by the UAW. Just wondered, have heard horror stories about companies going under just before someone retired, but not while already in retirement.

Maximum monthly guarantee tables (PBGC.gov)

Your pension is safe up to the maximums listed, if your pension is more than the maximum it will be cut to the maximum amount if PBGC takes over the plan. Early retirement (say you retired at 60 but are now 65) will cause the amount to be reduced.

As for underfunding, it is my understanding that the funding status considering the company is a going concern, I believe GM would be woefully underfunded if the plan were to be terminated. The last estimate I saw was as of 2005 where GM claimed 2 billion overfunded as a going concern but the calculation showed 31 billion underfunding if the plan were terminated.
Is GM pension fund $31 billion short? - International Herald Tribune

With the recent stock market decline underfunding is quite likely.

[Helena]

Yesterday on the FOX business channel, they interviewed
someone from a automotive group [I forget his name] about
the possibility of GM going bankrupt. He said of the big three
American auto makers, GM was the most financially stable.
He implied that Ford and Chrysler could bankrupt before GM !


~

[FinanceDude]

Quote:

Originally Posted by Helena Yesterday on the FOX business channel, they interviewed someone from a automotive group [I forget his name] about the possibility of GM going bankrupt. He said of the big three American auto makers, GM was the most financially stable. He implied that Ford and Chrysler could bankrupt before GM ! ~

I don't know where he got his info, but I think Chrysler will fail first, followed by GM, with Ford last. Ford raised about $23 billion in bonds in 2006, (good timing), and they have more money than the other two. GM's cash burn has to be billions a month........

[al_bundy]

Quote:

Originally Posted by windsurf I am not trying to persuade you. Just giving you my perspective. And it's not a matter of religion–it's a matter of ethics.

the UAW forced GM into building nothing but SUV's to be able to pay the benefits. GM execs didn't care because they have 401k style pensions and knew they can just switch jobs. if i was in charge of GM i'd probably give the unions everything they wanted, collect the bonuses while times were good and then split to another job.

Toyota and Honda can make Corollas and Civics and make a lot of money on them. GM loses money on their small cars partly because of UAW contracts.

I hope GM goes Chap 11 so they can fix the company and make it competative again

OT, i'm driving a borrowed Ford Explorer and I think it's a piece of junk compared to my Toyota Matrix. It has more cargo space and that's about it. Both are 2005. The Explorer has that it's falling apart feeling, the interior is horrible, lots of wasted space, crappy sound system, no electrical outlet, my wife complains the AC smells bad, etc. i'm 6' tall and feel a lot more comfortable sitting in the backseat of my Toyota than the Ford. my mom has a buick and it also feels like it's about to fall apart. no wonder the big 3 are doing so bad. only thing going for the Explorer is that it's huge and it gives you a nice feeling of control driving something that big.

[ziggy29]

Quote:

Originally Posted by al_bundy Toyota and Honda can make Corollas and Civics and make a lot of money on them. GM loses money on their small cars partly because of UAW contracts.

I don't remember where I heard it and I can't vouch for the source, but I remember hearing that about $2,000 of the cost of every GM vehicle went to paying pension and health care benefits.

[al_bundy]

not only benefits

most of GM's plants are old and the areas they were built in have been developed and no room to expand. The foreign automakers build new plants in new areas and the plants are a lot larger making them more efficient.

Not sure about this year, but in 2000 Toyota and Honda were also better in quality. less than 5% of their cars needed repairs before being sent to a dealer compared to something like 75% of GM and Ford's cars needing repairs. Ford and GM tried to improve quality, but the UAW fought it because they said it would mean a loss of jobs for the people that fix the cars before sending them away.

in the end the labor costs of Toyota and Honda were half of GM when you include all benefits. Only reason GM is still in business is they were the big sellers of the truck based SUV's that they charged a huge premium for. now the values are falling so much that i might try to convince my wife to buy a GM next year. I can probably get an Equinox for $6000 to $9000 after my trade in, GM card points and all incentives.