General Motors Death Watch 43: One More Such Victory…
Yesterday, GM announced it will release former subsidiary Delphi from an agreement trimming big bucks from The General's parts bill. This despite the fact that GM CEO Rabid Rick Wagoner has consistently used the discount to casually suggest that Delphi's bankruptcy was good for General Motors. Never mind. Delphi responded to GM's generosity by extending its contract deadline with the United Auto Workers (UAW) to January 20th. The quid pro quo means GM avoids a cataclysmic loss of parts– until that date. It's all part of Rabid Rick's masterplan for dodging Delphi's strike-related bankruptcy bullet…
Rabid Rick's tendered the 'get out of free competition free' card to provide Delphi with the funds it needs to subsidize the unthinkable: the difference between what Delphi wants to pay its UAW workers ($10 an hour) and what they currently earn ($27 an hour). What's more, TTAC's Deep Throat reckons GM will also reach into its back pocket to mop-up other UAW claims against Delphi's cash. The General will pay Delphi's superfluous union workers not to work, underwrite the union's benefit guarantees and assume Delphi's $10.8b pension liability. In short, Rabid Rick's recently stated desire for all sides to figure out "what we really need to do here" actually means delivering huge sacks of GM blood money to the UAW.
Should this scenario play out, Wagoner will claim victory for avoiding a company-killing strike, Delphi President Miller will claim victory for delivering Delphi from bankruptcy (at GM's expense) and union boss Big Ron Gettelfinger will claim victory for maintaining his members' compensation. Meanwhile, Wagoner's craven capitulation will cost The General a mountain of money. Back of the envelope estimates place the figure at around a half billion dollars per quarter, all in. That would put the price tag for Delphi's union peace at $2b, PLUS the lost discount (which could be worth up to a billion dollars), PLUS the $10.8b pension top-up, PLUS whatever other clever little caveats the union demands and receives.
Excuse me for saying so, but this is turning-out to be a Hell of a year for the UAW. The "historic health care giveback" that saved Rabid Rick's butt in the fall (and made the union look magnanimous in the process) will dump an extra $2b into their bank account and leave health care benefits intact. The plant closures that painted union workers as blameless victims of management incompetence will not injure a single union member financially (thanks to retirement buyouts and the infamous jobs bank). And now Delphi's "Last Stand" promises to make the union bosses look like heroes, as The Man behind the Man caves like a professional spelunker.
Rabid Rick's timidity on the union front is stunning. While it's often said GM can't blame the UAW for its troubles– GM agreed to the union demands that helped create those troubles– the argument avoids the real issue: drawing a line in the sand. No matter what GM granted the union in the past, consenting to it in the present sacrifices the company's future. While you can (and should) blame Rabid Rick's mob for its bone-headed product/brand/discount/investment binges, GM's cost structure remains unsustainable. And though nothing much has been said about the union's inflexibility on the factory floor, that cancer also remains unchecked. Rabid Rick has not even paid lip service to solving these issues.
CallmeSteve Miller is no better. The tough-talking Delphi Prez said right from the start that GM should bail his company's ass out of bankruptcy. In other words, he's happy to sacrifice his anti-union rhetoric on the point of Rabid Rick's check-writing pen. In fact, there's only one resolute player in this entire epic: Big Ron Gettelfinger. The union boss has maintained his hold on both his members and GM's coffers, while winning the PR war without uttering more than a word or two at the appropriate moment. And that's why this thing is bound to blow-up.
While Wagoner and Miller play footsie, Big Ron knows it's Last Man Standing. He doesn't need an expensive independent audit to realize that GM is doomed. Nor does he particularly care. Big Ron's job, the UAW's job, is to extract as much milk as possible from the GM tit for as long as possible. When GM collapses, even if it's his union's intransigence that precipitates the event, even if it means the complete dissolution of the UAW's contract with GM, Gettelfinger will look back with satisfaction and say "I always did my best for my members".
How do you negotiate labor/legacy reductions with a man with that mentality? You don't. You can't. The truth is, GM doesn't really want to. Rabid Rick is willing to pay-off Delphi's UAW now to buy enough time to sell enough SUV's, crossovers, something, anything that will revive the company's fortunes and allow it to once again avoid a UAW confrontation. Yeah right. If Rabid Rick manages to forestall a Delphi strike, GM only lives to die another day. History will describe Wagoner's escapology as a Pyrrhic victory; one that protected his own future at the expense of his employer's.
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- FreedMike In unrelated news, my left shoulder has gotten used to me patting it with my right hand, while saying “man, were you smart for buying last year before this all got out of hand.”
- FreedMike I’d like to say I’m outraged and won’t buy anything from GM, but aside from a Stingray or a CT5 V Blackwing, they don’t make a damn thing I want anyway.
- FreedMike Well, given that the plastic “wrap,” featuring any number of colors ranging from off-the-wall to utterly obnoxious, is now a thing, maybe these guys figured they’d get a piece of the action.
- SCE to AUX Hyundai still gives 3 years of Bluelink for free, then it's $99/year after that. I like it, and I pay for it.I agree that GM is just finding a way to raise prices, but what happens after 3 years - does OnStar disappear?This isn't different from other moves by mfrs. For instance, many drop the FWD option and standardize on AWD, while raising prices $1500. Few people complain about that.
- KevinB I have three vehicles with OnStar solely for the purpose of accident response. Everything else they offer is useless to me because Bluetooth pairs my phone and car for hands free calls, Android Auto pairs with my newest car just fine, and if my car gets stolen, I don't ever want to see it again. The monthly diagnostics report in my email are also a good thing, but roadside service is a joke. My older cars, however, will cease operating by the end of the year because 2g/3g will go away. GM has no plans to retrofit an upgrade to these cars. It makes me wonder how many subscriptions they will be losing because of this.