Big Three, Health Care, and Asian Manufacturers

So we all know the problems facing Ford and GM especially when it comes to the rising health care costs in the US as well as the massive amount of people they have to pay for. This is obviously one of the big problems that GM and Ford have to currently deal with.

*However* Asian companies, like Toyota for example, don't have to deal with this....yet.... For many years, I believe up until the 1980's, almost all Toyotas were built in Japan until there was an economic backlash against them, and Toyota opened up factories here in the US to provide American's with the jobs they were accused of stealing.

I would assume that Toyota offers similar health care benefits that GM and Ford does since they are dealing with the UAW. If this is true can we see the Japanese manufacturers running into the same problem down the road as the domestic companies are facing now? Is health care going to be the ultimate killer of auto companies or do you think if things get much worse for the Big 2 that the Gov will step in and subsidize to prevent yet another recession?

So we all know the problems facing Ford and GM especially when it comes to the rising health care costs in the US as well as the massive amount of people they have to pay for. This is obviously one of the big problems that GM and Ford have to currently deal with.

*However* Asian companies, like Toyota for example, don't have to deal with this....yet.... For many years, I believe up until the 1980's, almost all Toyotas were built in Japan until there was an economic backlash against them, and Toyota opened up factories here in the US to provide American's with the jobs they were accused of stealing.

I would assume that Toyota offers similar health care benefits that GM and Ford does since they are dealing with the UAW. If this is true can we see the Japanese manufacturers running into the same problem down the road as the domestic companies are facing now? Is health care going to be the ultimate killer of auto companies or do you think if things get much worse for the Big 2 that the Gov will step in and subsidize to prevent yet another recession?
Toyota doesn't deal with the UAW - they've managed to keep them out so far. Thus, they can build cars in America for much less money than do American car companies.

A lot of the reason why some Toyota and Honda models are built here in the US is because for the most part they are only sold in the US or North America at best.

Toyota doesn't deal with the UAW - they've managed to keep them out so far. Thus, they can build cars in America for much less money than do American car companies.

And they are actually able to tell their workers "Stop being lazy, build it right or we'll find somebody else who will" without worrying about a strike or being threatened by the union.

And they are actually able to tell their workers "Stop being lazy, build it right or we'll find somebody else who will" without worrying about a strike or being threatened by the union.

And isn't that how its supposed to be.. Nobody with a desk job can slack off and not get fired.

Non-UAW plants still have very competitive wages and benefits to UAW plants, PLUS you'll notice that in general (there are exceptions) the domestically built imports will have better quality. Robert_Nashville can provide the documentation of that. That's because workers are motivated by performance and acheivement and not just seniority.

Its the difference between the free market and communism, just in a smaller setting.

Unions will be the death of the Big 2.5, if that death comes. Hopefully they'll be able to survive. Just makes me mad the UAW decided it wouldn't budget at all on the GM healthcare premiums issue. They'd rather bankrupt the company and put all the workers out on the street than give an inch of ground to management. Us VS. Them is so old and worn out.

I am going to post the same article I put in another thread...
http://www.fortune.com/fortune/investing/articles/0,15114,1052510,00.html

The NYSE Merger: Lessons in Accountability
How CEO John Thain pulled off what Rick Wagoner and GM can only dream of.
By Justin Fox

The New York Stock Exchange's merger with electronic-trading network Archipelago Holdings is a lot of things. One of them is a really smart bit of corporate-governance reform. In a single transaction, NYSE chief executive John Thain has transformed the Big Board from a battleground fought over by dug-in stakeholders—the traders who owned the exchange's 1,366 seats—into a corporation owned by shareholders.

As I wrote in the current Fortune, companies where shareholders call the shots have a better record of adapting to disruptive change than those where other stakeholders—in most cases the employees—have significant say. That's because employees are, understandably, more concerned with their own current job security and pay packages than the long-term survival of their company. I know I am.

Thain's solution is to get the members of the NYSE to trade their seats for shares in a publicly traded company. Now they will presumably have at least as big a stake in the long-term success of the exchange as in their own trading privileges. That may mean the raucous stock exchange floor that made Maria Bartiromo famous will finally give way to a bunch of computers—unless the NYSE decides to hire actors to mill about and yell at each other, thus providing a compelling backdrop for TV broadcasts. But it also means the NYSE as an institution has a future.

Which got me thinking about General Motors, the subject of my shareholder/stakeholder article. GM's problem is that its union has a bigger say in the company's future than its shareholders do. One measure of that imbalance: GM has a stock market cap of under $15 billion, while its pension fund—all of which is promised to employees and retirees—was worth $86 billion at the end of 2004.

So that's it, I thought. John Thain has unwittingly found the solution to GM's troubles. GM CEO Rick Wagoner could simply issue a billion new shares, give them all to GM employees and retirees, and their stakeholder/shareholder problems would be solved. The company would become a juggernaut of 324,000 people all working toward the same goal: Increasing the value of GM's shares.

Except it turns out this has been tried before, at United Airlines, and it didn't work. That's because United's unions decided they were still better off wringing money out of the company in the form of wages and benefits than waiting around for the share price to go up. As a result, the share price eventually went to zero as the company declared bankruptcy in 2002.

At GM the situation would be pretty much the same. At the NYSE, members were able to trade seats that have been selling lately for about $1.6 million apiece for cash and shares valued at close to $1.8 million. At GM, the current value of worker benefits is so much greater than the company's stock market capitalization that such an even exchange is hard to imagine. GM's market cap would surely rise dramatically if its workers and retirees renounced their claim to pensions and free health care. But it probably wouldn't rise enough to make those workers whole. They cut their deal with the company back when it was a far more formidable economic force than it is now; they'll never get such good terms from today's stock market.

Sorry, Rick Wagoner. John Thain has a much easier job than you do.

Toyota doesn't deal with the UAW - they've managed to keep them out so far. Thus, they can build cars in America for much less money than do American car companies.

How has Toyota managed to keep out the UAW? Is there any hope of GM or Ford phasing out the Unions?

How has Toyota managed to keep out the UAW? Is there any hope of GM or Ford phasing out the Unions?

Just like wal-mart does. You keep employees happy enough that when teh Union reps come around and try to infect a plant the workers vote against unionizing.

See, its the free market at work. To avoid the union you have to treat the workers well enough they don't feel like they need a union to suck money from their paychecks to protect them.

See, its the free market at work. To avoid the union you have to treat the workers well enough they don't feel like they need a union to suck money from their paychecks to protect them.

This is true. Say what you will about the UAW, but if they didn't exist, Toyota wouldn't have to pay its workers what they pay them now.

do u guys think that the UAW is large part of GM's problem then?

do u guys think that the UAW is large part of GM's problem then?

Yes. Its far from their only problem but it is maybe their biggest problem. A massive chunch of their labor costs are untouchable. Its like trying to balance the federal budget when over 60% of the budget is entitlement spending you can't adjust.

what, if anything, could possibly be done to rectify the UAW situation then? is it even feasible to think about starting to de-unionize?

what, if anything, could possibly be done to rectify the UAW situation then? is it even feasible to think about starting to de-unionize?
GM could go bankrupt and have its pieces raided by whoever has the cash.

First step would be standing up to the Union, and stand up to them with balls. Dont just roll over whenever the UAW says "No" immediately just like they will always do.

When the next contract comes up make some demands and dont sign the SOB until the UAW budges. If they dont. F'em, let the Union strike after the contract is up... It wont do them anygood. Then let them leave and go plague someone else and hire non union labor and pay them a good salary and treat them well and encourage them to do good and give them the incentive to do so.

Will take a long time to do this but it has to be done sooner or later or GM will eventually have to declare bankruptcy.

First step would be standing up to the Union, and stand up to them with balls. Dont just roll over whenever the UAW says "No" immediately just like they will always do.

When the next contract comes up make some demands and dont sign the SOB until the UAW budges. If they dont. F'em, let the Union strike after the contract is up... It wont do them anygood. Then let them leave and go plague someone else and hire non union labor and pay them a good salary and treat them well and encourage them to do good and give them the incentive to do so.

Will take a long time to do this but it has to be done sooner or later or GM will eventually have to declare bankruptcy.


Is this something that could even be done or is the UAW so deeply entrenched that it would take something drastic (ie Chap 11) for them to budge?

It would be very difficult. The UAW is far from GM's only problem that is for sure. However the UAW should make some concession that GM is asking for. Rather I say the big wigs who make big money that are the heads of the UAW should come to the table with an open mind and listen and see what problems they are causing. They could help GM out by budging on the Healthcare issue. Its hurting GM and the Consumer at the moment.

First step would be standing up to the Union, and stand up to them with balls. Dont just roll over whenever the UAW says "No" immediately just like they will always do.

When the next contract comes up make some demands and dont sign the SOB until the UAW budges. If they dont. F'em, let the Union strike after the contract is up... It wont do them anygood. Then let them leave and go plague someone else and hire non union labor and pay them a good salary and treat them well and encourage them to do good and give them the incentive to do so.

Will take a long time to do this but it has to be done sooner or later or GM will eventually have to declare bankruptcy.

The current UAW could probably withstand a strike far longer than GM could, which would give them the upper hand in this sort of conflict. It would be nice it the UAW could agree to some concessions regarding healthcare, but the UAW is run by elected officials who are elected to keep or increase current benefit levels. They are not going to budge.

Look what happened to the steel industry. A lot of mills were in real bad shape and the unions "held their ground" until the companies closed, kicked everyone out, locked the gates, and sold off the assets.

I also think the UAW is holding out for some sort of nationalized healthcare, which would level the playing field (all companies would have the same healthcare expenses), but it ain't gonna happen anytime soon. One way or the other, this current crisis at GM will be all over by the time that happens.

Just remember though, until the UAW is responsible for Design and Marketing, you can't blame them for everything.

Do any of you guys work for GM or the UAW/GM. Seems to me that alot of you auto experts know more about the UAW/GM contract than I do. And I work for GM. All I can say is you guys need to visit a GM plant before you open your yaps. This board is like a bunch of Monday morning arm chair quarter backs. Most of you have no clue on how a Union contract works and what it takes for a legal strike. Do you know what a local or national issue is?

I got an idea: How about the Healthcare industry give its workers a wage and benifit cut to lower the price of healthcare.

It is never as simple as it sounds, but way too simple to make a comment on the internet.

Roger

How has Toyota managed to keep out the UAW? Is there any hope of GM or Ford phasing out the Unions?

If my understand of the states that the Toyota plants are in, they are in Right to Work states. Toyota does have a port in Oregon, IIRC, and that port is a Union port.

I am still not conviced that the UAW is GMs main problem. :think:

Do any of you guys work for GM or the UAW/GM. Seems to me that alot of you auto experts know more about the UAW/GM contract than I do. And I work for GM. All I can say is you guys need to visit a GM plant before you open your yaps. This board is like a bunch of Monday morning arm chair quarter backs. Most of you have no clue on how a Union contract works and what it takes for a legal strike. Do you know what a local or national issue is?

I got an idea: How about the Healthcare industry give its workers a wage and benifit cut to lower the price of healthcare.

It is never as simple as it sounds, but way too simple to make a comment on the internet. :bow:
I don't work for GM, but am a UAW member.
I was thinking the same thing, Man I wish the UAW didn't have to make as many concessions as we have in the past 5 years, but we all know the rising costs and recent downturns must take sacrifices.
If we take more on our healthcare, I will probably seek employment elsewhere. Even the Japs have better coverage than we do. :rolleyes:
(But don't mention that that's b/c of the UAW setting a standard or anything...)

I am still not conviced that the UAW is GMs main problem. I'm sure it's NOT. If there were better investment management, this wouldn't be an issue, as well as the poor 401K track records of the past several years.

um, guys i work for GM on the assembly line and make 10.33 an hour. am i part of this big problem too? the minimum wage here in ohio is 5.35, maybe we should cut our wages down a bit.

what nobody listens to is that GM and everybody else is comming down on the unions, membership is lower each year, our union is so weak the company pretty much does what they want with us without any interference from the union. the days of the union are comming to an end, sadly, and they know this too thats why they dont fight as hard