GM and UAW BFF ASAP, On Your Dime

You may recall that General Motors recently circulated a document amongst their paymasters on Capitol Hill “revealing” that they planned to import 17,335 Chinese-made cars by 2011. At the time, we speculated that the leaked “bailout bucks for Chinese trucks” memo was nothing more than a negotiating gambit by GM, designed to bring the United Auto Workers to heel. Play ball and we build here. After all, what else does GM have to offer, other than threats to up stakes and leave? That said, floating a GM in China trial balloon makes the company no friends, uh, anywhere. Especially with their most important stakeholders: customers. Anyway, Bloomberg indicates that the cudgel may have done it duty. GM CEO Fritz Henderson told them (yesterday) that “using U.S. production instead of imports would pivot on whether the UAW can build the vehicles at a cost GM can afford . . . This is a discussion we’re having with the UAW.” And so, today’s Wall Street Journal tells us that “GM Nears Crucial Deal With UAW.” Which could all fall apart.

The main sticking point: using stock in the “new” GM to cover the General’s $15 billion health care trust shortfall. Sensibly enough, the UAW has the sneaking suspicion that the new “good” GM’s fortunes could easily go pear-shaped, leaving them with, well, nothing.

Many worries remain for union officials, say people involved in the discussions. They say that the stock GM proposes to contribute to the VEBA is illiquid and hard to value, posing a big risk for UAW members. The union had initially asked for more from Treasury officials in the negotiations, but was rebuffed.

More? MORE? Does the WSJ mean more stock in a highly speculative venture in a business with a long history of failure (C11 even); or cash money guaranteed by your taxes? I’m thinking cash money. Odds are that the union will find a way to get federal guarantees for their pensions and benefits that lie completely outside of GM’s business operations. Keep your eyes on the fine print.