On 27/02/2011 17:51, Paul Stenquist wrote:
On Feb 27, 2011, at 10:37 AM, mike wilson wrote:
On 27/02/2011 17:28, frank theriault wrote:
On Sun, Feb 27, 2011 at 11:20 AM, Bob Sullivan<rf.sulli...@gmail.com> wrote:
And Frank,
I want to tell you something that will make you happy.
We visited rich friends in a gated community in Naples Florida.
4 people on their block were early retirees from General Motors.
Their pension benefits were capped at $72K.
(I know that's a lot, but it's a lot less than they were getting.)
And the highest ranked among them has already sold and move back to Michigan.
They were all drawing money from 'defered compensation plans',
where GM held back some salary to pay them later at a lower tax rate.
Guess what. In bankruptcy, all those funds go to the creditors.
It puts a 6 figure crimp in their lifestyles...
Regards, Bob S.
That doesn't make me particularly happy, Bob. First of all, I'm sure
these people worked hard for their money, often working long hours,
weekends, with many business trips and lots of pressure. I may not
agree that the work they did was for the betterment of all, but they
had every right to rely on agreements made with their company and to
pattern their life accordingly.
The fact that due to GM making bad decisions they lost their pensions
or a portion thereof only means that creditors got that money - and
I'm sure that banks reaped most of that benefit. I'd rather see the
money in the hands of an individual than a huge faceless corporation.
I don't think there's anything happy about your story.
Agreed. If they had been in a union, it would hopefully not have allowed those
funds to be kept in a place available to creditors. Did GM actually go
bankrupt?
--
GM declared bankruptcy and was reorganized as two companies: one held the bad
assets, and the new GM held the good assets. It was a necessary step due to way
too many dealerships that had become non performers but had franchise
agreements that compelled GM to continue to keep them in business. It was also
necessary due to onerous obligations to the union. Many of those agreements
were made at a time when the Detroit automakers monopolized the U.S. car
market. The union would strike, and the automakers would give them whatever
they wanted and roll it into the price of the cars. That usually meant taking
quality out.
So bad management practice, at least as much as greedy unions.
Now, many of GM's union obligations have been brought more in line with
reality, although they are still more of a burden than other automakers have to
contend with. Toyota, Honda and most other foreign automakers build cars in
non-union U.S. factories, located in right-to-work states (states with laws
barring compulsory union membership). The lack of union commitments on the part
of other auto manufacturers made the Detroit automakers union contracts
untenable if they were to compete.
This is what I find hard to understand. Workers organise themselves to
improve their conditions. Weekends off, paid holidays, health benefits,
living wages. Management did its best to minimise those improvements
and continues to do so. Yet in the USA the very people who would
benefit from the organised effort are often, it seems, the ones who
oppose it - the working class. They seem to have a classic death wish
in their urge to participate in a race to the bottom and the people who
are orchestrating the race are held up as bastions of industry, opposing
some kind of socialist takeover of the American dream. Utterly bizarre
to the outside, dispassionate viewer.
There also seems to be a more noticable corruption problem in US unions
than many other places, although the people that I talk to about it are
equally vehement about corruption in politics, media, police forces and
business.
GM has already paid back a substantial amount of its government loans, and the
government has been selling off its GM stock at a profit. The same is happening
at Chrysler, although at a slower pace. The industry bailout was well planned
and well executed. It saved a major U.S. industry and an entire region, and in
the end, it will cost the taxpayers nothing.
Paul
It will be interesting to see how things work out for the big three over
the next decade or so.
--
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