- Jul 7, 2005
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Labor experts and automotive industry analysts say the announcement is great news for GM and could mean the parties are willing to negotiate the retiree health care trust -- known as a Voluntary Employee Beneficiary Association, or VEBA. GM has been pushing to move its retiree health care obligation off its books and into a trust run by the UAW.
If you read further on you will find out that for every ACTIVE worker GM has they are paying for FOUR retired ones. The retirement obligations are immense. Through the years the automakers and unions have crafted an unsustainable system, a system that might have worked if the Big 3 could have kept dominance in the US. Even after market share was seen to be falling off and the writing was on the wall (and numbers were available proving how unsustainable the system was) they just kept putting more nails in the coffin.
GM is the strike target. Thats actually an honor. They get to set the base contract that Chrysler and Ford will be handed. The wild card is Chrysler who is under new ownership, non-traditional ownership at that. Ford is just a mess and any contract is going to have to tread lightly not to push them over the edge.
There is over ONE HUNDRED AND FOURTEEN BILLION AT STAKE HERE!
The confrontation threatened the cooperative mood of the talks and underscores the gap between the two sides on the unprecedented fund, sought by GM, Ford Motor Co. and Chrysler LLC to unload $114 billion in health-care obligations. Gettelfinger abandoned the union's five-decade-long insistence that automakers bear all health-care costs after they lost a combined $15 billion last year.
What you are looking at is essentially a run away system of "standardized" health care. Basically they got it all for for free. Getting deductibles into the system and requirements to lead a healthy lifestyle were merely laughed at. The system worked because the customers payed for it. Trouble was, the customers moved on but the system still went under the idea that there were X customers to pay while there were really X-Y customers.
The problem I have with whats going on is that it will make it easier to the UAW to appeal to lawmakers for relief should one of the 3 fall short. In other words this scheme they are selling could end up being dumped in our laps as taxpayers. Don't' scoff at the notion. There are numerous retirement systems which we the taxpayer have had to shore up because a lawmaker or two was bought.
Hopefully the big 3 won't squander any financial benefits they derive from this system. Hopefully for the employees and retirees the UAW won't screw up and lose lots of the funds through bad management or misuse. They don't have experience with these amounts of money and already there are all calls for outside supervision.
If you read further on you will find out that for every ACTIVE worker GM has they are paying for FOUR retired ones. The retirement obligations are immense. Through the years the automakers and unions have crafted an unsustainable system, a system that might have worked if the Big 3 could have kept dominance in the US. Even after market share was seen to be falling off and the writing was on the wall (and numbers were available proving how unsustainable the system was) they just kept putting more nails in the coffin.
GM is the strike target. Thats actually an honor. They get to set the base contract that Chrysler and Ford will be handed. The wild card is Chrysler who is under new ownership, non-traditional ownership at that. Ford is just a mess and any contract is going to have to tread lightly not to push them over the edge.
There is over ONE HUNDRED AND FOURTEEN BILLION AT STAKE HERE!
The confrontation threatened the cooperative mood of the talks and underscores the gap between the two sides on the unprecedented fund, sought by GM, Ford Motor Co. and Chrysler LLC to unload $114 billion in health-care obligations. Gettelfinger abandoned the union's five-decade-long insistence that automakers bear all health-care costs after they lost a combined $15 billion last year.
What you are looking at is essentially a run away system of "standardized" health care. Basically they got it all for for free. Getting deductibles into the system and requirements to lead a healthy lifestyle were merely laughed at. The system worked because the customers payed for it. Trouble was, the customers moved on but the system still went under the idea that there were X customers to pay while there were really X-Y customers.
The automakers don't break out specific liabilities for just union retirees, although the union members make up a bulk of the costs. If the difference between the UAW and GM positions were applied using the full $114 liability, the companies would put $63 billion into the fund under their proposal and $80 billion under the UAW's, leaving a $17 billion gap.
The problem I have with whats going on is that it will make it easier to the UAW to appeal to lawmakers for relief should one of the 3 fall short. In other words this scheme they are selling could end up being dumped in our laps as taxpayers. Don't' scoff at the notion. There are numerous retirement systems which we the taxpayer have had to shore up because a lawmaker or two was bought.
Hopefully the big 3 won't squander any financial benefits they derive from this system. Hopefully for the employees and retirees the UAW won't screw up and lose lots of the funds through bad management or misuse. They don't have experience with these amounts of money and already there are all calls for outside supervision.