By on April 7, 2010

As if to confirm that GM’s  benefit obligation situation could actually be worse than today’s GAO report lets on, Automotive News [sub] is reporting that the UAW has sued GM over $450m in unfunded healthcare obligations for Delphi retirees. GM promised to fund a $450m Voluntary Employee Benefit Association for Delphi retirees in 2007, and Delphi’s bankruptcy court confirmed the commitment in last October. But, according to the UAW suit:

the UAW made a written demand that the company honor its contractual obligation to make the foregoing payment [last October… but] that UAW demand was rejected and since that time the company has failed and refused to make the contractually required payment.

That obligation apparently was not voided by GM’s bankruptcy, although The General’s spokesfolks have yet to officially comment on the UAW’s suit.

One thing is for certain though: this news clearly aggravates GM’s benefit cash crunch at a time when it is still barely able to cover its “cost of sales” with sales revenue and is still bleeding cash.According to the GAO report, GM’s payment schedule to meet minimum pension obligations looks something like this:

Adding another nearly half-billion dollars in Delphi VEBA costs doesn’t make a huge difference in light of these giant looming obligations, but it’s just one more cash suck that will weaken GM at a time when it needs to conserve cash on hand for these future outlays. Not to mention the necessary investments in new products, rescues of struggling overseas divisions in Germany and Korea, and maintaining the incentives that have been necessary to achieve current volume levels. To use the parlance of our elected leaders, a billion here, a billion there, soon you’re talking about real money.

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16 Comments on “GM Sued By UAW For $450m Delphi VEBA Shortfall...”

  • avatar
    Robert Schwartz

    We need Death Watch II.

  • avatar
    buzz phillips

    They should call Obama. Maybe he will write them another Washington Check!

    • 0 avatar

      That is exactly what the UAW wants.

      Yesterday on Cavuto a UAW rep said that if taxpayers want to get repaid the money they gave GM, they have to “invest” more in the company. It wasn’t followed up but it seems he was talking about more than the $450 million.

      I think he also said GM makes the best cars.

    • 0 avatar

      GM may need a little more investment, but he’s right. GM is designing, implementing, delivering, by far and away, the best vehicles on earth.

      Give them the investment now, and they’ll be the last American car company standing. GM is the only way out of this current recession.

  • avatar

    Although it will cause financial pain to a lot of people, the union members at Delphi and GM need to face a harsh reality–their companies were mismanaged and were not able to survive in the current auto market.

    It is unfair to the general taxpayer to front for their mismanagement when a lot of us struggle to keep our homes and jobs in the current economic environment. We will not put up with many more excuses before we demand to let these failing business models go.

    And yes, I have bought American autos for most of my life, so I have done my part to support the industry.

  • avatar

    While GM didn’t turn a profit the last 2 quarters, they didn’t bleed cash either. Gained 1 billion in cash.

  • avatar

    Why GM didn’t just drop this garbage in the bankruptcy is beyond me. Actually, it’s not, I know it was kept to pander to Obama’s UAW supporters, but it sure would have been better for the company and the taxpayers to let it burn with “Old GM”. Now GM is no better off than they were before. They still have all of the same problems, and will eventually build up the same debt as they had when they went to the bailout buffet the first time. This won’t end well if they keep having to drag around all of these legacy costs.

  • avatar

    This filing is a procedural device. The UAW is not sueing GM, they are sueing the US taxpayer.

  • avatar

    For decades the UAW was complicit in GM’s Ponzi scheme, as the company burned up capital while pretending it could to pay current expenses and honor future obligations. Collapse was inevitable. But why should they worry? They elected Obama, and won’t they now get free health care from the government?

  • avatar

    How about a pool on how many more Ch. 11s before GM does a Ch. 7 liquidation?

  • avatar

    The taxpayer will get off cheapest if we could just give them $12B more and tell them that’s all we have to give.

    Unfortunately I predict the gov’t will invest more in GM then eventually (about 2014-2015) pick up this $12B tab as a parting gift.

    So help me, this companies incompetence has given the elected officials way too much money from which to scam back a few bucks. Family and friends…got them covered too. So, on one hand it’s a business that simply isn’t going to make it and on the other hand it’s politico’s bathing in dollars. Moral of the story is both hands are burning through money and when they’re done we’ll count the total tab and add this $12B to it.

  • avatar

    Life is a never ending series of ‘one time charges’.

    At the end of the P&L all that matters is if you are positive or negative.

    I’d love to GM be positive. I want my money back.

  • avatar

    You guys really think Ford, Visteon, and their contracts with the UAW are any better? Really?

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