Can GM Defy The Union? - LS1TECH

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Can GM Defy The Union?

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Old 06-17-2005, 08:13 AM   #1
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Default Can GM Defy The Union?

Here's an article I ran across explaining some of GM's dilema. I guess it's hard to be nimble and roll with the ephemeral whims of the customer when you are weighed down by concrete union galoshes and paradigms more than fifty years old.

"GM's healthcare dilemma

By Jeff Jacoby

http://www.JewishWorldReview.com |Is General Motors an automobile manufacturer that provides healthcare benefits for its workers? Or is it a health insurance provider that also happens to make cars?

The question is facetious, but there's nothing funny about GM's predicament. At the company's annual meeting in Detroit last week, CEO Rick Wagoner told shareholders that health benefits add a staggering $1,500 to the price of every vehicle GM makes. GM will spend more than $5.6 billion this year on health coverage for 1.1 million people a population greater than Rhode Island's. Yet of that number, only 160,000 or so are current employees: The majority are retirees and their families. And with GM planning to shed 25,000 jobs through attrition over the next three years, its already lopsided ratio of 2.6 retirees per active employee is only going to get worse.

The health benefits GM provides are generous to the point of recklessness. While its salaried employees pay 27 percent of their healthcare costs, the nearly 120,000 workers who belong to the United Auto Workers pay a minuscule 7 percent. They have no deductibles, no monthly premiums only modest co-pays for doctor's visits and prescriptions. Benefits that lavish might have been tolerable back when GM was king of the automotive hill and could count on selling enough cars to defray such a huge expense. But GM today sells only about one-fourth of the cars bought in America down from nearly half in the 1950s.

All of which helps explain why GM lost $1.3 billion in the first quarter of this year. At the annual meeting, Wagoner warned that the exploding cost of healthcare benefits is ''perhaps the most challenging element" of GM's looming financial crisis. Is it ever.

Of course, GM has other problems, too. Union rules block it from shutting down underused plants. It takes 34 hours to build a GM vehicle, while Toyota can build a car in 28. Sales of high-profit SUVs and pickups have been depressed by rising gas prices. And, as critic after critic has complained, GM's array of brands is too large and indistinct. How many non-car buffs can distinguish a Buick from a Pontiac?

''One has to wonder," writes auto industry analyst Maryann Keller, ''why it has been so hard for GM to figure out what car buyers want and then give it to them."

Surely part of the reason is all those billions GM is spending on first-dollar health coverage for its legion of retirees. When $1,500 per vehicle is earmarked for Lipitor and knee replacements, that's $1,500 not being spent designing cars that drivers will fall in love with. Wagoner indicated last week that he intends to force down healthcare costs whether the union likes it or not ''our strongly preferred approach is to do this in cooperation with the UAW," he said, implying that other approaches are available if necessary. Indeed, The New York Times reported Wednesday that GM has given the UAW until the end of June to agree to healthcare concessions or face unilateral action by management.

GM's hourly workers undoubtedly have a sweet deal who wouldn't love health insurance that comes with a $0 deductible and no premiums? But such sweet deals drive up the cost of healthcare for everyone. When somebody else is picking up the tab, there is little incentive to economize. The price of prescription drugs, hospital stays, and medical procedures has skyrocketed in part because tens of millions of Americans are insured through their employers with low-deductible medical plans.

Why not run to the doctor for every minor ailment when the out-of-pocket cost is minimal? Why inquire whether a procedure can be performed less expensively when it'll be covered by insurance either way?

In no other area do we rely on insurance for routine expenses or repairs. Auto insurance doesn't cover oil changes; no one uses homeowner's insurance to repoint the chimney. That's because most of us pay for those policies ourselves, and therefore get only the insurance we really need generally against catastrophic events, like a car being stolen or a house burning down.

Only when it comes to healthcare do we expect insurance to cover nearly everything. The problem may be especially acute at GM, but most of us have gotten used to having a faceless third party pick up the lion's share of our medical tab. GM's board of trustees can play hardball with the union. But ultimately this isn't a problem that a single company can fix. So long as Americans don't expect to pay for their healthcare themselves, what's no good for General Motors won't be good for America, either. "

Last edited by Mr Incredible; 06-17-2005 at 08:19 AM.
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Old 06-17-2005, 09:17 AM   #2
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wow, thats pathetic.
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Old 06-17-2005, 10:08 AM   #3
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That is bullshit. They do pay deductibles, monthly premiums and or co-pays. At least at the OKC plant they do. Each plant will differ because they have seperate contracts.
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Old 06-17-2005, 10:16 AM   #4
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Quote:
That is bullshit. They do pay deductibles, monthly premiums and or co-pays. At least at the OKC plant they do. Each plant will differ because they have seperate contracts.
Regardless, they do pay far too much in benefits to current and retired workers alike. That is and has been their biggest burden for a long time.
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Old 06-17-2005, 10:23 AM   #5
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It is still bullshit. If it is then don't spread it around as the truth.
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Old 06-17-2005, 10:31 AM   #6
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The beauty of collective bargaining...right out of business.
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Old 06-17-2005, 11:57 PM   #7
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Quote:
Originally Posted by Mr Incredible

And with GM planning to shed 25,000 jobs through attrition over the next three years, its already lopsided ratio of 2.6 retirees per active employee is only going to get worse. [/font]
Hey that sounds like Social Security.
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Old 06-18-2005, 12:26 AM   #8
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actually makes a lot of sense. hell even the federal govt workers dont have tht cooshy of a healthcare plan. gm would be good to cut back.
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Old 06-18-2005, 01:24 AM   #9
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eh.... don't feel like reading everything.....

but Fug unions they used to exist to protect employees.... but now they abuse employers.....
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Old 06-18-2005, 08:32 AM   #10
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Quote:
Originally Posted by horist
eh.... don't feel like reading everything.....

but Fug unions they used to exist to protect employees.... but now they abuse employers.....

Very True!
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Old 06-18-2005, 08:26 PM   #11
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I think they're gonna have to take on the union, those people are strangling GM.
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Old 06-18-2005, 10:52 PM   #12
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So it's all the union's fault, huh. It has nothing to do with the way GM's Execs have run the company in the last 30 years. They've made all the right decisions as far as product, design, engineering, etc........ It's the unions that have put GM in the financial position they are in today........................yea right.
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Old 06-18-2005, 11:42 PM   #13
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i would like to see the packages that other car companies give their employee's, just to compare.

on another note, i would say that it isnt the Unions fault, but just like personal finances- when things get tight you need to cut back. GM has apparently been generous with its employee's for quite some time now, and now that they are getting tight with money, its time to cut back.

and lastly- GM can butt heads with the union, but they can also strike. so unless GM wants to hire all new employee's, it might be a battle.
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Old 06-19-2005, 12:23 AM   #14
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And I suppose the whole Fiat thing is the Union's fault as well.
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Old 06-19-2005, 12:43 AM   #15
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Alright guys, don't get your panties in a bunch. There's plenty of blame to go around.
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Old 06-19-2005, 01:09 PM   #16
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Quote:
Originally Posted by 2xLS1
So it's all the union's fault, huh. It has nothing to do with the way GM's Execs have run the company in the last 30 years. They've made all the right decisions as far as product, design, engineering, etc........ It's the unions that have put GM in the financial position they are in today........................yea right.
That might fly years ago, but at this moment, YES, its the unions fault. They enjoyed lavish benefits for so long, so when the whole company is going down why didn't they insist on cutting back some to help them out?
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Old 06-19-2005, 02:49 PM   #17
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i have a temporary solution to the problem. Scrap or sell everything that has the name "Saturn" attached to it, and that should provide enough money to put into a really big endowment and help with some of the cost of the retiree's health care. Either that or GM can hire a small, yet discreet army of mercenaires to go and "visit" the reitrees and "discuss" cutting back on "benefits". (i put benefits in quotes for no real reason)
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Old 06-19-2005, 04:25 PM   #18
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Don't blame the union! What GM exec gave the go ahead with the Pontiac Aztec? It's a piece. The union will work with GM to get the problems solved!
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Old 06-19-2005, 06:14 PM   #19
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Quote:
Originally Posted by Will Clark
That might fly years ago, but at this moment, YES, its the unions fault. They enjoyed lavish benefits for so long, so when the whole company is going down why didn't they insist on cutting back some to help them out?
You don't have a clue man. The unions have been cutting back for years now.
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Old 06-19-2005, 10:34 PM   #20
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Quote:
Originally Posted by CRASH 02
You don't have a clue man. The unions have been cutting back for years now.
You're right, I don't have a clue. But when I see these numbers I can easily say that they arn't doing enough. Not you or anyone can say otherwise.
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