Do auto workers really earn $73 an hour?

[James48843]

Here we go. It's the beginning of the end:


Chrysler says to shut down all production for month


DETROIT (Reuters) – Citing a credit crisis and dwindling sales, Chrysler LLC on Wednesday said it would shut down all of its manufacturing operations from the end of this week for at least a month.

The blanket shutdown marked a deepening of the financial crisis for the embattled U.S. auto industry and came as Chrysler and its larger rival General Motors Corp both seek to shore up cash as they seek a federal bailout they say they need to survive.

Chrysler, considered the weakest of the Detroit automakers, made the announcement on its plant shutdown in a letter sent on Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website.

Chrysler said its dealers were getting car shoppers into showrooms but losing between 20 percent and 25 percent of those potential sales because of the lack of consumer financing for new car purchases.

"As a result of the financial crisis, the automotive market remains depressed due to the continued lack of consumer credit for potential buyers," the automaker said in a statement.

Separately, Chrysler said its finance arm could be forced to stop making loans dealers use to finance inventory because the dealers have been pulling money out from a fund that helps finance the floorplan loans.

The shutdown by Chrysler will idle plants in the United States, Canada and Mexico producing vehicles for its Chrysler, Jeep and Dodge brands.

The more than 30,000 Chrysler workers in the United States represented by the UAW receive nearly full benefits and wages during plant shutdowns, but labor costs represent only about 10 percent of the total cost of the average vehicle.

By idling plants, Chrysler and other automakers can cut costs on inventory, components and related charges such as utilities for operating large production facilities.
The moves also keep finished vehicle inventories from piling up on dealer lots and increasing the pressure for even greater discounting to consumers.

GM said last week that it was cutting its first-quarter production schedule by 60 percent compared with the same period a year earlier.

Privately held Chrysler is 80-percent owned by private equity firm Cerberus Capital Management.

Chrysler's sales plunged 47 percent in November and were down almost 28 percent for the first eleven months of 2008.

Source: http://news.yahoo.com/s/nm/20081217...tdown/print;_ylt=AuQA9GiJ_BPKZ_7Si3BimvZu.aF4

 

[James48843]

France's auto parts supplier Valeo to cut 5,000 jobs

Wed Dec 17,
PARIS (AFP) – French auto parts maker Valeo said Wednesday it would cut around 5,000 jobs worldwide, including 1,600 in France, in response to the slump in global car sales.

Valeo, which employs a total of 54,000 people, said in a statement it was adopting a "plan to adapt its head-count in order to deal with the sharp drop in automobile production."

The company said fourth quarter production was expected to drop by over 20 percent, and that it expected no improvement in 2009.

"Given this situation, and despite the measures already implemented by the Group, Valeo must reduce its permanent head-count in order to maintain its competitiveness," it said.

"A reduction in headcount of around 5,000 employees is planned worldwide, including around 1,600 in France and 1,800 in other European countries," with priority given to voluntary departures, it said.

Valeo said it had transmitted the plan to the European Works Council and would launch consultations with staff representatives.

 

[James48843]

GM puts Volt engine plant on hold to conserve cash

GM puts brakes on Mich. factory that will build Volt engine as it tries to preserve cash

• Wednesday December 17, 2008, 4:54 pm EST

DETROIT (AP) -- General Motors Corp., anxiously conserving cash so it can keep operating into 2009, said Wednesday it would halt construction of a plant tied to one of its most important projects while the automaker awaits a Washington bailout.

GM said it is putting the brakes on the construction of a factory in Flint, Mich., set to make 1.4-liter engines for the Chevrolet Cruze and the Chevy Volt plug-in electric car.

It's just one more effort by GM to hold on to every penny possible as it speeds closer to the day when the 100-year-old industrial giant won't be able to pay its bills.

The company has been scaling back just about everywhere -- shutting down vehicle production, ending sports sponsorships, turning off escalators and even cutting back on office supplies -- to stay afloat.

GM is seeking up to $18 billion in government loans as it tries to survive the worst U.S. auto sales environment in 26 years. It says it needs $4 billion before this year runs out.

GM board member Kent Kresa told The Associated Press last week that the company might make it into the early part of the first quarter, depending on auto sales, yet GM has several billion dollars worth of supplier payments due shortly after the first of the year, and analysts have said the company probably doesn't have the cash to pay them.

GM announced plans in September for the new engine plant in Flint, 50 miles northwest of Detroit, and said production would begin in 2010. But the company is delaying the purchase of big-ticket items needed to build the factory, such as structural steel, spokeswoman Sharon Basel said.

The plant's engines will extend the range of the rechargeable Volt, GM's high-profile next-generation vehicle that will be able to travel 40 miles on electricity alone. They will also power the Cruze, GM's new small car that is supposed to get around 40 miles per gallon.
Basel said Volt and Cruze development will continue as scheduled and the company still plans to bring them to showrooms in 2010. The construction delay, she said, may be temporary until the company figures out its cash situation.

"Everything that involves heavy cash outlays obviously is under review," Basel said Wednesday. "Our intent is to still go forward with a new facility bringing that engine to Flint, Mich."

Basel said the delay, which The Flint Journal reported Wednesday on its Web site, is part of GM's overall effort to conserve cash until a decision is made on the government loans. President George W. Bush stepped forward to say he would act to save the domestic auto industry after a bill authorizing $14 billion in loans for GM and Chrysler LLC was thwarted in Congress.
Ford Motor Co. has said it has enough cash to survive 2009.

Bush administration officials said they were still evaluating options and attempting to avoid a disorderly bankruptcy of the companies while suggesting that concessions from all sides would need to accompany any deal. Several lawmakers have pressed for an array of terms and conditions in any deal crafted by the White House, complicating matters.

Meanwhile, GM has held off many large expenditures, such as the steel for the Flint plant, Basel said.
"Those are huge cash outlays, and we don't have the cash," she said.

Basel said there is plenty of time to build the factory, install equipment and get it up and running in time to produce engines for the two new cars. The company already makes the 1.4-liter engine at a plant in Austria, she said, giving it another option for engines.

"We have lots of options. The construction of the new plant is not going to interrupt our plans for the Volt or Cruze," Basel said.

Work will continue as scheduled on the Lordstown, Ohio, assembly plant, which will make the Cruze starting in mid-2010, said GM spokesman Chris Lee. The company has not formally announced where the Volt will be built, although the Detroit-Hamtramck Assembly Plant was identified in the 2007 contract with the United Auto Workers. Lee said Volt production remains on schedule for later in 2010.

GM said in September it would invest $370 million in the new factory, which will employ 330 hourly and salaried workers and allow the company to double its global production of smaller engines by 2011. The plant will have 300 flexible work stations that will let GM build different four-cylinder engines without retooling.

The United Auto Workers union agreed that new hires for the plant would be paid $14 per hour, about half the wages of a current UAW worker. It also agreed to a new flexible pact with GM that lets workers do multiple jobs.
The new factory brings the prospect of more jobs to an industrial city hard hit by auto job losses. GM's nearby Flint Engine North plant closed in August.

The state of Michigan approved $132.5 million in tax incentives for the automaker to spend $838 million on the new plant and to upgrade four other facilities.
Shares of GM rose 7 cents, or 1.7 percent, to $4.32 in afternoon trading.

 

[James48843]

 

[McDuck]

Is Uncle Sam slipping him a billfold full of $20s and credit cards?

 

[McDuck]

http://mjperry.blogspot.com/2007/07/uaw-pricing-themselves-out-of-market.html

 

[McDuck]

GOP Senators (and Reps) also tried to stop the Bank/Hedge-Fund bailout, but they were out numbered.

 

[James48843]

Bush considering 'orderly' auto bankruptcy

By JENNIFER LOVEN, AP White House Correspondent


WASHINGTON – The Bush administration is looking at "orderly" bankruptcy as a possible way to deal with the desperately ailing U.S. auto industry, the White House said Thursday as carmakers readied more plant closings and a half million new jobless claims underscored the deteriorating national economy.

With General Motors, Chrysler and the rest of Detroit anxiously awaiting a White House decision on billions of dollars in emergency federal loans, press secretary Dana Perino said it wasn't simply a choice between government rescue and the disastrous collapse of a major industry.

"There's an orderly way to do bankruptcies that provides for more of a soft landing," she said. "I think that's what we would be talking about."
President George W. Bush, asked about an auto bailout, said he hadn't decided what he would do but didn't want to leave a mess for Barack Obama who takes office a month from Saturday. A White House decision on helping the troubled automakers could come as early as Friday.

Bush, like Perino, spoke of the idea of bankruptcies orchestrated by the
federal government as a possible way to go — without committing to it.

"Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring," he said during a speech and question-and-answer session at the American Enterprise Institute, a conservative Washington think tank. "These aren't normal circumstances. That's the problem."

Perino emphasized there were still several possible approaches to assisting the automakers, including short-term loans from the Treasury Department's $700 billion Wall Street bailout program.

The Big Three automakers said anew that bankruptcy wasn't the answer, as did an official of the United Auto Workers who called the idea unworkable and even dangerous. GM said a report that it and Chrysler had restarted talks to combine was untrue.

 

[James48843]

Note:

Under bankruptcy, the pensions of those 419,000 would roll off the books of GM, Ford and Chrysler, and instead go to the Pension Benefit Guarantee Corporation. PBGC takes over defaulted pension plans, using insurance payments of pension companies. If the insurance is not enough, however, the taxpayer ends up footing the bill of unfunded liability.

G.M. alone had a significant pension liability -- for 2004 it was $89 billion. It has since been reduced significantly, but still is a large number.

They slashed pension plans in 2006, changing to a 401(k) style plan instead of a defined benefit plan for salary workers hired after 2001.
http://www.usatoday.com/money/autos/2006-03-07-gm-pension-freeze_x.htm

About six months ago they canceled the 4% matching funds for those 401K pension plans.

If they go down now, and PBGC ends up with just the pensions now owed, that alone will bring GM costs under Honda/Toyota, but it will mean the taxpayer will probably foot the bill for a whole lot more than the amounts they are talking about now as a loan.

Think about it.

 

[McDuck]

They slashed pension plans in 2006, changing to a 401(k) style plan instead of a defined benefit plan for salary workers hired after 2001.
http://www.usatoday.com/money/autos/2006-03-07-gm-pension-freeze_x.htm

Two-tier systems sucks. The union bosses do nothing for the new workers.

http://www.usatoday.com/money/autos/2006-03-07-gm-pension-freeze_x.htm
If they go down now, and PBGC ends up with just the pensions now owed, that alone will bring GM costs under Honda/Toyota, but it will mean the taxpayer will probably foot the bill for a whole lot more than the amounts they are talking about now as a loan.

Nobody in their mind is saying that "the amounts they are talking about now as a loan" would save the car company. It's just a temporary band-aid to draw it out. They would need numerous loans of this amount to subsidize making U.S. cars (like the Soviets did).

 

[Show-me]

James,

Are you sure it goes on the taxpayers? I thought under the PBGC they use the insurance premiums and what ever is left in the pensions, divide it up and that's all ya get folks.

I remember something about airline retires getting 50% or less of their pension because of under funding.

The immediate effect of the decision will be to cut by more than half the pensions of many members of United Airlines' four unions, who have now become wards of the federal government's pension guarantee program. While reducing the maximum United pension benefit from more than $100,000 a year to around $46,000 may not seem like a social disaster, the court's action may well mark the beginning of the end of the system of retirement planning as we know it. Indeed, this decision, more than the predicted shortfall of Social Security decades from now, will have a real impact on the retirement of real people who live in real time.

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/14/AR2005051400073.html

 

[James48843]

James,

Are you sure it goes on the taxpayers? I thought under the PBGC they use the insurance premiums and what ever is left in the pensions, divide it up and that's all ya get folks.

I remember something about airline retires getting 50% or less of their pension because of under funding.



http://www.washingtonpost.com/wp-dyn/content/article/2005/05/14/AR2005051400073.html

1. Divide it up and that's all you get...no. That's not how it works. PBGC operates like this: A. How much does the company have , and how much is it behind where it is fully funded. The difference is paid by PBGC. PBGC is funded mostly by pension insurance. But they already have said that they may run out of money this time around, depending on how bad it gets. And if PBGC runs out of money, then taxpayers end up with the bill.

2. The amount you get is based on a formula. Pensions for those over age 65, are guarenteed a certain amount. Those who are younger are guarenteed a sliding scale payout.
Age Annual Maximum Monthly Maximum Monthly Joint and 50% Survivor Maximum*

65

$ 54,000.00​

$ 4,500.00​

$ 4,050.00​

64

$ 50,220.00​

$ 4,185.00​

$ 3,766.50​

63

$ 46,440.00​

$ 3,870.00​

$ 3,483.00​

62

$ 42,660.00​

$ 3,555.00​

$ 3,199.50​

61

$ 38,880.00​

$ 3,240.00​

$ 2,916.00​

60

$ 35,100.00​

$ 2,925.00​

$ 2,632.50​

59

$ 32,940.00​

$ 2,745.00​

$ 2,470.50​

58

$ 30,780.00​

$ 2,565.00​

$ 2,308.50​

57

$ 28,620.00​

$ 2,385.00​

$ 2,146.50​

56

$ 26,460.00​

$ 2,205.00​

$ 1,984.50​

55

$ 24,300.00​

$ 2,025.00​

$ 1,822.50​

54

$ 23,220.00​

$ 1,935.00​

$ 1,741.50​

53

$ 22,140.00​

$ 1,845.00​

$ 1,660.50​

52

$ 21,060.00​

$ 1,755.00​

$ 1,579.50​

51

$ 19,980.00​

$ 1,665.00​

$ 1,498.50​

50

$ 18,900.00​

$ 1,575.00​

$ 1,417.50

​

The article you read about airlines was them saying the airlines owed them a pension based on annual earnings of 100K or so- (pilots WERE well paid). The max they can get under PBGC payouts would be much less than what pilots would have gotten in a fully funded pension program. For example, pilots must retire at age 60. Under United Airlines pension program, a pilot would have made perhaps $160,000 a year in the last three years as a captain on a 747. He would have been entitled to a pension of around 65,000 a year under United's pension plan. Under PBGC, after United went bankrupt, the pilot at age 60 instead would get a payout of $2925 a month.

 

[James48843]

Sorry, that table didn't work.

Here is a clip from that article you posted about the airlines back in 2005:

"According to Forbes, the PBGC currently faces a $23.3 billion gap between its assets and its liabilities. If other airlines and large corporations seek to shed their pension obligations, its deficit will mushroom. Eventually U.S. taxpayers are going to have to pay for the shortfall. In all likelihood, a PBGC bailout would be more expensive than the savings and loan rescue of the 1980s. If there is a bailout, the winners will be the corporations that created the crisis...".


Here is a link to the PBGC current payout limit tables for 2008:

http://www.pbgc.gov/media/news-archive/news-releases/2008/pr09-03.html

 

[James48843]

from that 2005 article:

How can the PBGC take on all these expensive obligations? The answer is that it can't -- because it wasn't set up to handle the escalating number of defaults now taking place. The PGBC's origins can be traced back to 1963 and the closing of the Studebaker auto plant in South Bend, Ind. Approximately 7,000 workers lost their pensions. The public outcry was so great that Congress set about to craft legislation to protect private pensioners. After 10 years, it enacted the Employee Retirement Income Security Act (ERISA). ERISA created the PBGC, an employer-financed but government-backed program of pension insurance that was loosely modeled on the Federal Deposit Insurance Corp., which provides insurance for bank accounts to give depositors some protection against bank failures.


According to Forbes, the PBGC currently faces a $23.3 billion gap between its assets and its liabilities.(in 2005)

 

[James48843]

And, from the 2008 report released by PBGC just November 7, 2008, they say this:

At year-end, PBGC’s estimate of its exposure from underfunding by plan sponsors whose credit ratings were below investment grade or who met one or more financial distress criteria totaled approximately $47 billion, down from $66 billion in 2007. PBGC classifies these sponsors’ underfunded plans as reasonably possible terminations (see Note 8 and Note 16).

So they are 47 billion in the whole already.

What is even more bizarre is this line:

No new large plans were classified as probable terminations in 2008 although twenty smaller plans were added as new probable terminations with underfunding of $233 million. Probable terminations represent PBGC’s best estimate of claims for plans that are likely to terminate in a future year.

As recently as November 7, they didn't think any more large plans would fail in 2008. Now we are talking about a slew of companies about to hit the skids. And PBGC is already 47 billion in the hole.

Here is the link to PBGC's annual report: http://www.pbgc.gov/docs/2008amr.pdf

 

[James48843]

No Cash No Parts: Part Suppliers Are Demanding COD For Chrysler Order Deliveries

No Cash No Parts: Part Suppliers Are Demanding COD For Chrysler Order Deliveries

Chrysler LLCs suppliers have begun asking for cash on delivery for auto parts, the Associated Press reported late Thursday, citing an interview with executives. Vice Chairman Tom LaSorda and Chief Financial Officer Ron Kolka said suppliers and other vendors have demanded COD, but the company is "fending them off," the AP said.

When suppliers demand COD from a troubled company such as Chrysler, it can cause chaos in the company's financial structure.
Chrysler's cash will drop to $2.5 billion by Dec. 31, company officials have said. That's the bare minimum the automaker needs to make payroll and pay suppliers, according to the report. Chrysler pays its suppliers $7 billion every 45 days, Kolka told the AP.


source: http://www.autospies.com/news/No-Ca...ding-COD-For-Chrysler-Order-Deliveries-38794/

 

[roskopfm]

I think Bush Really messed up on this one. Their should have been no bailout without the UAW agree in writting to specific concessions first.

 

[McDuck]

Autoworkers Union Keeps $6 Million Golf Course for Members

 

[McDuck]

UAW Keeps Talking About Wages, Not Talking About Legacy Costs

 

[McDuck]

Jimbo,

Other than a single letter from NTEU, did the union fat-cats do anything to try to prevent the IFT limitations put on us? Did they?

The union bosses take care of themselves and punish the workers. Being a union bo$$ is where the real money is now days. That's is why Obama's Chicago friend wanted to become one by selling the Senate seat.

Bump