A BIG problem when it comes to Chrysler, GM and the UAW

[ProfJohn]

Thought this topic was worthy of its own thread since I have to see it mentioned elsewhere.

There is a BIG problem developing with the government plans for Chrysler and GM.
According to the plans as they sit the UAW will own large parts of both companies.

However, the UAW will not own any part of Ford. Which raises a HUGE problem.

How can a union that owns a competitor be expected to bargain honestly with Ford?
The worse Ford does the better it could be for Chrysler and GM and thus the UAW. The UAW could demand higher pay and benefits from Ford because it won't benefit on the back side as it will with Chrysler and GM.

I expect that this will lead to some serious problems down the road.

 

[glenn1]

Chrysler likely won't be around by the next round of contract negotiations, and GM will be a shell of its former self. The UAW will have absolutely no leverage to push Ford into concessions and there will be plenty of former workers from other automakers to easily break a strike with scab labor.

 

[Mxylplyx]

Unless the Obama administration pressures the courts, I really dont see how the terms that were forced down the throats of the secured bondholders can stand the coming court challenge. That "agreement" is a complete affront to established bankruptcy law. The UAW contract is no more enforceable, by the letter of the law, than the contract they have for cleaning services.

 

[ProfJohn]

^ that is the BIG wrench in the works when it comes to Chrysler.

With GM it may be different. Supposedly secured bond holders are going to be paid dollar for dollar.

 

[fire400]

There will be competition, so let it happen.

And if they all die to foreign car companies, come on, it's capitalism.

 

[feralkid]

Originally posted by: fire400
There will be competition, so let it happen.

And if they all die to foreign car companies, come on, it's capitalism.

In its truest form.

However, we can't be having China build our tanks for us, can we?

 

[senseamp]

UAW needs Ford profitable and healthy to fund it's VEBA retiree/benefit fund. There is also agreement that Ford will fund these obligations partially through equity, so UAW will in fact own a piece of Ford too. So I don't think this is a major concern. However it is still somewhat dubious that Ford has to compete against a government backed competitor or two. So far they are actually enjoying some good PR by not taking government money, but in longer term one starts to wonder where this goes and moral hazards it creates where Ford has to pay taxes (if they eventually make a profit) to support their competition. Also if GM and Mopar are out there touting their government backed warranties, their cheap government financing, etc, while Ford has to compete in the real world, with real financial constraints, that is just not very fair.

 

[rchiu]

I wouldn't worry about Ford. I actually think Ford is gonna benefit by this, they are smart staying away from the government and the bailout money and they will benefit from having control over their business instead of having government and the UAW running the show.

IMHO, The goverment and UAW is gonna run GM and Chrysler to the ground. If you think things are bad before, imaging how things will be with UAW owning 40% and gov. owning 50% of the company. I do not know who in the right mind will want to buy GM with UAW having such big control of the company. And if I were to buy an American car now, I would definitely buy Ford because you just don't know what's gonna happen to GM and Chrysler. So as long as this GM and Chrysler show goes on, Ford will benefit greatly.

 

[Thump553]

Originally posted by: Mxylplyx
Unless the Obama administration pressures the courts, I really dont see how the terms that were forced down the throats of the secured bondholders can stand the coming court challenge. That "agreement" is a complete affront to established bankruptcy law. The UAW contract is no more enforceable, by the letter of the law, than the contract they have for cleaning services.

Please provide the SPECIFIC legal authority for your legal opinion that "the terms that were forced down the throats of the secured bondholders can stand the coming court challenge. That "agreement" is a complete affront to established bankruptcy law."

I am particularly interested in the basis for your factual assumption that the bondholders were secured. Please link to the relevant text of the bond documents. This is an extremely critical factual assumption. Assuming you can establish that the bondholders were secured, then please establish the factual basis for valuing the collateral that they were secured by.

A legal opinion should not be an expression of political doctrine and should not be based upon unproven factual statements.

I hope you are a bit more rational in your real job.

 

[Hacp]

The solution is to deunionize the workers and start firing the ones that make over 14 dollars an hour

 

[boomerang]

Read up.

http://money.cnn.com/2009/05/1...postversion=2009051911

While the mistaken assumption that the UAW will have large stakes in both Chrysler and GM makes for great headlines and lots of hand-wringing segments on TV news, it's a false assumption. The above article confirms that and there are other articles out there where Gettelfinger states his case.

Two things. The so-called ownership would not have been by the union itself but by the VEBA. The VEBA is overseen by a board. Few of which are union leaders. The idea that the union would have control of either Chrysler or GM is both ludicrous and untrue. It would have been the VEBA. The key words being would have.

Gettelfinger has stated twice that I've heard, that the union has no intentions of retaining any stock it receives to fund the VEBA. The link above explains his reasoning. It's sound reasoning. He would be doing the retirees a great disservice to retain that stock in the hopes of it rising. This makes sense if you understand what the VEBA is all about. It was an agreement reached between the union and the corporation to unload retiree health care on the union. Thereby freeing the company of the burden by taking those obligations off its balance sheet. What's needed for those funds are safe, secure investments.

Stock is being offered for the VEBA because the cash is not available. Plain and simple.

I don't expect it to shake out any different with GM.

 

[MadRat]

Actually I think this should let Ford some slack. The UAW will find itself in precarious waters in any negotiations with Ford when it owns a part of the other entities exactly because of that ownership. Something called rico.

 

[LTC8K6]

Ford is also having to compete with cars that are built with heavy government subsidies.

Who thinks VEBA isn't going to do what the UAW wants? And who believes the UAW anyway?

Also, assuming they actually will quickly sell their stake, who are they going to unload this junk on and at what loss?

 

[RyanPaulShaffer]

This whole auto bailout deal is a gigantic mess, and it wasn't difficult to see all these problems coming. The free market should have been allowed to operate and culled the weak.

That being said, my favorite car is the Corvette, but I will never buy another GM product after this whole bailout fiasco. Another interesting thing is that I used to strongly dislike Ford, but now they are the only "American" car company I would consider purchasing from.

 

[Martin]

Originally posted by: rchiu
IMHO, The goverment and UAW is gonna run GM and Chrysler to the ground.

:laugh:

Do you people have any self-awareness of how utterly absurd you sound? Both have already been very thoroughly run deep underground and we're supposed to take your vague, omnious warnings seriously?

 

[soccerballtux]

Originally posted by: feralkid

Originally posted by: fire400
There will be competition, so let it happen.

And if they all die to foreign car companies, come on, it's capitalism.

In its truest form.

However, we can't be having China build our tanks for us, can we?

Except they wouldn't be. Toyota has tons of assembly plants over here, precisely to deal with this PR problem you brought up.

 

[SammyJr]

Originally posted by: rchiuIMHO, The goverment and UAW is gonna run GM and Chrysler to the ground.

Um, the super-duper megacapitalist multimillion dollar/year CEOs already did that.

If you think things are bad before, imaging how things will be with UAW owning 40% and gov. owning 50% of the company.

Um, the super-duper megacapitalist multimillion dollar/year CEOs brought the companies to bankruptcies. It can't be worse.

I do not know who in the right mind will want to buy GM

You could have stopped right there, but you had to continue with

with UAW having such big control of the company.

and add an unnecessary qualification.

And if I were to buy an American car now, I would definitely buy Ford because you just don't know what's gonna happen to GM and Chrysler. So as long as this GM and Chrysler show goes on, Ford will benefit greatly.

If I were going to buy an American car, I'd buy a Honda or Toyota or Subaru that's actually made here rather than a Ford that's probably made in Mexico.

 

[SammyJr]

Originally posted by: Hacp
The solution is to deunionize the workers and start firing the ones that make over 14 dollars an hour

Don't touch the CEO's multimillion dollar pay packages because those guys are soo smart, they ran the companies into the ground!

 

[Xellos2099]

Originally posted by: SammyJr

Originally posted by: Hacp
The solution is to deunionize the workers and start firing the ones that make over 14 dollars an hour

Don't touch the CEO's multimillion dollar pay packages because those guys are soo smart, they ran the companies into the ground!

CEO pay is nothing compare to the billion of dollar of the legacy cost that GM and Chrysler has.

 

[Zenmervolt]

Originally posted by: rchiu
I wouldn't worry about Ford. I actually think Ford is gonna benefit by this, they are smart staying away from the government and the bailout money and they will benefit from having control over their business instead of having government and the UAW running the show.

IMHO, The goverment and UAW is gonna run GM and Chrysler to the ground. If you think things are bad before, imaging how things will be with UAW owning 40% and gov. owning 50% of the company. I do not know who in the right mind will want to buy GM with UAW having such big control of the company. And if I were to buy an American car now, I would definitely buy Ford because you just don't know what's gonna happen to GM and Chrysler. So as long as this GM and Chrysler show goes on, Ford will benefit greatly.

I know this is anecdotal, but I have spoken with a lot of people who were looking at buying a car and bought a Ford simply because they no longer wanted to do business with GM or Chrysler due to the governmental intervention (both for pragmatic reasons and because they don't want to encourage companies that depend on the government to exist). There is at least a small segment of the population who now look very favorably on Ford for their ability to remain independent.

I mean, all Ford really has to do for a commercial is show the logo with an announcer saying, "Ford, we're the company that didn't steal your tax dollars." OK, so I'm being a little bit hyperbolic, but the fact remains that there is significant resentment in some segments of the population towards GM and Chrysler for their acceptance of bailouts.

ZV

 

[Ktulu]

Originally posted by: SammyJr
If I were going to buy an American car, I'd buy a Honda or Toyota or Subaru that's actually made here rather than a Ford that's probably made in Mexico.

Very true that some Toyota, Honda's and Subarus are made here but Ford still employs more people and builds more cars here in the US then any of them.

 

[ElFenix]

Originally posted by: Zenmervolt

I mean, all Ford really has to do for a commercial is show the logo with an announcer saying, "Ford, we're the company that didn't steal your tax dollars." OK, so I'm being a little bit hyperbolic, but the fact remains that there is significant resentment in some segments of the population towards GM and Chrysler for their acceptance of bailouts.

ZV

commercials on local radio for lincoln are stressing that lincoln didn't take any bailout money. the reason given (that the product is superior) isn't quite correct, but it's being used anyway.

Originally posted by: SammyJr

Don't touch the CEO's multimillion dollar pay packages because those guys are soo smart, they ran the companies into the ground!

fwiw, chrysler llc's ceo was already taking a dollar a year pay, and chrysler llc bought the company from ze germans, who actually did run it into the ground.

 

[rchiu]

Originally posted by: SammyJr

Originally posted by: rchiuIMHO, The goverment and UAW is gonna run GM and Chrysler to the ground.

Um, the super-duper megacapitalist multimillion dollar/year CEOs already did that.

If you think things are bad before, imaging how things will be with UAW owning 40% and gov. owning 50% of the company.

Um, the super-duper megacapitalist multimillion dollar/year CEOs brought the companies to bankruptcies. It can't be worse.

I do not know who in the right mind will want to buy GM

You could have stopped right there, but you had to continue with

with UAW having such big control of the company.

and add an unnecessary qualification.

And if I were to buy an American car now, I would definitely buy Ford because you just don't know what's gonna happen to GM and Chrysler. So as long as this GM and Chrysler show goes on, Ford will benefit greatly.

If I were going to buy an American car, I'd buy a Honda or Toyota or Subaru that's actually made here rather than a Ford that's probably made in Mexico.

Yeah and I am sure the super-duper UAW had no hand in all the mess.

And oh there are worse things. Some company come out of bankruptcy and runs fine, see United Airline. Some companies cease to exist after bankruptcy. But I am sure you ppl cannot tell the difference and bankruptcy is all the same to you.

The UAW and the labor/benefit/legacy cost was already one of the big problem with big 3, and now UAW + the pro labor government gets free hand with their 90% ownership. On top of that, people who actually cares about profit and knows how to run an auto company properly gets 10% or less and have absolutely no incentive to do a proper job. This is exactly what happens when country nationalize companies, which is pretty much what this whole BS is all about. Blatantly taking away a company from the real owners and give it to political entities affiliated to the government.