In 2008 GM nearly went under. Part of what saved them was the union working quite a bit of reduced compensation mostly for less senior employees. Now that GM is very healthy and profitable the union workers want thier share. Sees reasonable to me.
Health care costs are a key issue. Ford and GM said that they spend more than $1 billion per year on health care for active UAW workers. Government data for all union workers show that the average cost of health care benefits is more than $6 per hour, the Center for Automotive Research reported. But the report showed the UAW Detroit Three's health care cost is roughly 150% of the U.S. average. The average UAW worker pays about 3% of his or her health care costs compared with 28% paid by the average U.S. worker, CAR said. Note: Some of the money for CAR's research comes from automakers including GM, Ford and FCA.
UAW members are protective of their health care benefits because their jobs are physically demanding and they need health care to function and stay healthy to do the jobs. Automakers also worry about an economic downturn foreseen by some economists as the car companies face high costs to develop electric vehicles required in China and Europe and to prepare to compete in a future with more shared services and autonomous travel.
The unions don't want Medicare for all, their health insurance is even better than Medicare. They actually fought against ACA until the "Cadillac Plan Tax" was put into place. The govt then pushed out the tax for years.
Think of all the times you have heard "That job only pays $x an hour" and the reply "Yeah but the benefits".
They may also need a solution sooner than it would take Congress to do something like that, given the amount of opposition to it from people who prefer the status quo -- or any of a dozen competing alternative solutions to high healthcare costs.
As for needing a solution sooner... it’s not like this is going to be the end of it. Health care costs were a major point of contention in 2008 as well. I’m pretty sure they were a major problem for GM well before that.
That is consistently the claim, but unless it would also lower outcomes, what thing is it doing to cause that which couldn't be done independently of single payer? It's easy to lower "costs" using price controls, but then you have all the usual problems of price controls. Shortages, rationing, quality reductions necessary to meet the price target, etc. Keep in mind that for people with insurance, the US system has better overall outcomes than most socialized systems.
> and it would also put them on an equal playing field with the other domestic manufacturers, rather than having to compete with other companies who have lower costs due to not having such expensive union health care plans.
That doesn't really matter unless they're competing with those companies, but most of the other auto companies have the same issues with the UAW and US workers, and those companies have the same option to build plants outside of the US as their competitors.
> As for needing a solution sooner... it’s not like this is going to be the end of it. Health care costs were a major point of contention in 2008 as well. I’m pretty sure they were a major problem for GM well before that.
That's the point. 2008 wasn't even the beginning of it, this has been an issue since at least the Clinton administration. GM would likely be bankrupt (again) before Congress does anything meaningful here.
It is a promise that will likely be impossible to keep, but you know politics and all.
If I can go a meta layer above this subthread and explain the 2 different conversations happening:
- the gp (maxerickson) comment was responding to "2008 GM nearly went under", and it's correct (not technicality) that the old_company (with its own assets-liabilities) did go under. Not "nearly", but completely went under. A new_company was created as different legal entity with a clean slate to pick and choose assets-liabilities.[1]
- the other replies (Aloha, wil421) are more philosphical "Ship of Theseus"[2] type of arguments
All 3 (maxerickson, Aloha, wil421) can simultaneously be right because they are all emphasizing different aspects of what "General Motors" means. It can be either "GM the assets&liabilities" or "GM the brand, the public perception".
[1] https://www.nytimes.com/2009/07/11/business/11primer.html
I was also arguing that the bankruptcy was immaterial to GM's moral obligation to 'share the wealth' when times are good.
It's sort of a technicality, but it's an important one.
Did they rehire everyone and start their plants from scratch when the legal entity changed?
https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor...
The new company had ~23,000 less people (I think many of those jobs were sold to other companies).
Corporate reorganizations under bankrupcy law do happen, but they are rare, newsworthy, and very disruptive to workers (at a minimum, their pension and health benefits are renegotiated). Shareholders being wiped out is not normal, and retirement funds -- or really, the stock market at all -- would not work if it was.
In 2005 when the company lost $10 billion or in 2007 when they lost $38 billion the union workers didn't get bills in the mail instead of checks. On a personal level, the workers are still making profit regardless of whether or not the company is as well.
In 2008 GM was a $100 billion in debt. The union workers didn't pay that, they didn't take responsibility for that, the taxpayers did.
when they lost $38 billion the union workers didn't get bills in the mail instead of checks.
If management got bills in the mail, they shared in the loss. AFAIK, they did not.
Management only takes losses so far as they have equity stakes in the company, which is to say the extent to which they are owners. When GM lost $38 billion in a year the people who own the company took that hit.
That's why employees usually don't value ownership in a company, because it cuts both ways. A salary only deposits into your account.
[1] I’m not making a statement about whether this is true or not. Just capturing the context.
Assuming it's true they had their wages reduced in the crisis, it's absolutely disingenious to claim that a return to higher wages post-crisis would be undeserved profiteering. They did share in the losses.
Accepting the risk of losses is why owners have a legitimate claim to the profits. Workers take a guaranteed paycheck which shelters them from losses in bad years and forfeits their claim to profits in good.
It's just great when workers accept pay-cuts in bad times, just for people like you claiming that this is just normal, no loss, and certainly no reason to restore their paycheck when good times are returning.
We had good employee retention.
As with ao many things: it's complicated.
And you're saying that shareholders did get bills in the mail?
https://www.thebalance.com/auto-industry-bailout-gm-ford-chr...
https://money.cnn.com/2014/05/29/news/companies/gm-profit-ba...
They reduced their paychecks and benefits, so they actually shared part of the losses. Which entitle them now for a share of the profits.
These union workers are also taxpayers.
This seems to be the Crux of the issue. A quick look at the financial statements shows positive net income (though not consistently). The statement of cashflows, which is where companies go bankrupt or not, seems much less positive a story.
My accounting training is limited. Any HN'ers with accounting/finance background care to comment?
That seems totally reasonable to me too (and I'm not one of those blindly pro-union people, especially massive unions like UAW)