NEW YORK — General Motors Corp. (GM), which rocked investors last week by slashing its 2005 income outlook, plans deep cuts to its nonunion employee ranks, according to a Wall Street Journal report…The Journal said GM began offering buyouts to white-collar workers earlier this month, with thousands of workers likely to accept the packages this week…
On Wednesday, Detroit-based GM said its income for 2005 would be only $1 to $2 per share, far below the $4 to $5 the company had predicted earlier this year. GM also said it expects a $1.50-per-share loss in the first quarter. Cash flow for the year, once expected to be a positive $2 billion, is expected to be negative $2 billion…
Analysts have long expected that GM would be forced to seek major concessions from the United Auto Workers on issues as fundamental as head count, capacity and benefits. For example, GM’s unionized workers currently pay nothing for health insurance.
After GM lowered its guidance, Standard & Poor’s said it was revising its ratings outlook for the automaker to negative from stable, reflecting concerns about the company’s profit potential. S&P’s decision could foreshadow a downgrade of its rating on GM debt to junk status, which would significantly increase GM’s borrowing costs.
Maybe if the company wasn’t spending up to $1.3 billion per year to pay people to not work, as I commented on before, they’d be in a bit better financial shape.
Any time I now see anything about the UAW, it makes me cringe. I can hardly believe that they try to associate with NASCAR. How many Red-State NASCAR fans even know what the UAW is about?
I briefly looked this morning for information regarding Japanese automakers in America and their ties to unions. Well, there really isn’t much of a tie in. USNews reported last summer that apparently good management practices will dissuade people from wanting a union. Lo and behold, it seems that everyone is happier in the end. What’s more
…at United Auto Workers Local 696 in Dayton, the worker-retiree pyramid is inverted: The local represents about 1,600 fully employed members, working for auto-parts supplier Delphi–and about 3,500 retirees. Honda’s newer factories are also far more efficient; and a nonunionized workforce allows Honda more freedom to invest in labor-saving technology.
Well with that kind of retirement structure, I sure want the UAW to tell me how to run social security, which they seem Hell bent on doing. Perhaps they have so little faith in the plausibility of their retirement system that they want to make sure their folks have a safety net.
Of course it also speaks poorly of unions when they specifically block new technology. They should really read any economics book. Cut costs. Increase reliability. Increase sales. Increase the needed workforce due to larger market share. Although I’m sure the UAW would rather have millions of worker whittling wheels “out of a piece of wheat” because that would surely keep them busy and employed. It seems that our Japanese counterparts are better able to embrace American capitalism than Americans are. At least our lazy older brother, Europe, seems to be in no hurry to improve on the American way.
I further love how the unions blur the line between being anti-worker and anti-union. But that will be a discussion for another day.
