More on GM

Following friend Mike's comments here:

Looney Dunes: Unions Woes

and my musings here


Looney Dunes: Unions Woes...cont

Piece from Fortune, that digs into the legacy concerns:

The Tragedy of General Motors
Selective Quotes :

"Wagoner is exultant that he and the UAW gruelingly managed last year to make a deal that, if blessed by a federal judge, will cut GM's unfunded liability by around $15 billion and pare cash outlays as well. But that will still leave Wagoner facing a colossal competitive disadvantage. The cost is not his fault. Rather, it is a legacy dumped on him by CEOs of decades ago who gained a certain amount of wage restraint from the union--and labor peace for their own terms of office--by granting retiree health benefits that had neither large, immediate cash costs nor, under the accounting rules then applying, much effect on the bottom line. Today, with health-care costs exploding and the accounting rules stiffened, this mess has come home to roost."

and ...

"The truth is that GM is essentially indentured to the UAW because of the union's power to strike. To that sign of bondage, add another: GM's hourly and salaried employees, present and past, essentially own this company, a fact we will prove by describing some bank accounts. At the end of 2004, the latest date for which figures are available, GM's pension funds (both inside the U.S. and out) had $100 billion in assets--which is wealth belonging to GM's employees, retirees, and dependents. To that you can add $19 billion that GM has put in a dedicated account for retiree health benefits. That makes $119 billion that GM has banked for its employees. In contrast, the shareholders of GM recently owned their grubby $13 billion in market value. That is a bizarre, Alice-in-Autoland result from 98 years in which capitalism supposedly reigned."

Subsiquent news : GM cuts dividend in half, top brass take similar pay cuts.