GM aims to show $1 billion in annual labor savings

[Oracle of Delphi]

David Barkholz

Automotive News

February 16, 2009 - 5:06 pm ET

General Motors is expected to identify more than $1 billion in savings from additional plant closings and factory work-rule changes when it files a viability plan with the U.S. Treasury on Tuesday, said a source familiar with ongoing stakeholder negotiations.

The carmaker and the UAW are expected to bargain deep into tonight.

Meanwhile, U.S. Rep. Thaddeus McCotter, R-Mich., said today that Congress expects a commitment from GM bondholders to let the automaker pay off a sizeable portion of its $30 billion debt with company stock in lieu of cash.

"People had better put their best foot forward because these plans will be the basis for funds going forward," McCotter said.

GM and Chrysler LLC are required to file restructuring plans Tuesday detailing how they plan to cut costs and eventually repay $17.4 billion in federal loans that they are using to survive the worst industry downturn in decades.

GM's board was scheduled to convene via a telephone conference call today to review a draft plan of the automaker's viability plan before its submission to Treasury.

More plant closings

The source said GM must shrink, and that means more plants shutdowns. The carmaker may list the number of plants it must close without identifying specific factories, the source said.

That would help the UAW to win rank-and-file ratification for any major changes without alienating workers at the plants scheduled for closure.

Work rule changes also are a critical bargaining item, the source said. Even before the 2007 UAW contract talks, GM had launched a program called "True North" to achieve the industry's most-efficient labor rules for assembling vehicles and producing parts.

The 2007 contract mandated lower wages for newly hired workers, and outsourced non-production jobs such as forklift drivers.

The current crisis is an opportunity for the "True North" program to make further progress and meet federal loan conditions, which require GM and Chrysler to bring work rules in line with those of the Japanese transplant automakers in the United States, the source said.

Without requiring additional wage cuts, the UAW could help save GM more than $1 billion annually through factory rule changes, the source said.

For example, the UAW could agree to reduced skilled trades job classifications from as many as 15 in some plants to just two: electrical and mechanical.

Worker break times could be reduced. A provision called "full utilization" could be eliminated, the source said. That rule requires UAW skilled trades members to be present in equal numbers to outside contractors making repairs or doing construction in a plant, the source said.

Most savings eyed

Other cost savings are available. The UAW could agree to reduce "absenteeism pools" of workers, who are hired to fill in for employees who don't show up for work.

"These things can take a lot of costs out without ever hitting worker wages," the source said.

GM and UAW spokesmen declined to comment on the talks.

Auto analyst David Cole said he expects sweeping changes in GM's viability plan. Plant shutdowns, dealer reductions and labor concessions are needed to keep GM out of Chapter 11 bankruptcy, Cole said.

"That's the last thing the union wants," said Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

He said he would not be surprised to see GM clarify the fate of its distressed brands: Saturn, Hummer and Saab.

Retiring GM Vice Chairman Bob Lutz, in an interview with Automotive News published today, said Saturn probably would not survive long-term.

"This plan is going to get our attention," Cole said. "It will not be minimalist by any means."

It's unclear if there will be enough time for the UAW to approve concessions to its GM and Chrysler retiree health care trusts.

The U.S. Treasury wants the UAW to take equity instead of cash for half of the $20 billion that GM still owes its Voluntary Employee Beneficiary Association. That will be an issue to be negotiated past the deadline, the source said.

Meanwhile, a parallel set of talks have been under way at GM's smaller rival Chrysler with the union and its creditors.

Chrysler, controlled by private equity firm Cerberus Capital Management LP, has been granted $4 billion and is seeking an additional $3 billion in aid.

Both GM and Chrysler have buyout and early retirement offers to almost all of their nearly 91,000 hourly workers as they work to cut costs and bring in lower-cost workers.

Ford Motor Co., which so far has not requested federal assistance, would likely ask for similar concessions granted to GM and Chrysler.

Link: http://www.autonews.com/apps/pbcs.dll/arti...paign_id=alerts

[ZL-1]

They have until March 31st to achieve an agreement with the Unions, correct?

[gm4life]

No they won't be able to do this, just watch chapter 11 is coming and it is going to be better that way.

[gmcbob]

Whether it's CH 11, or total downsizing of the company or whatever, it's looking more and more like Saturn truly will be history now. Nice. My Vue is now going to be totally worthless.

Edited February 17, 2009 by gmcbob

[gm4life]

Sorry they did it to Olds, and it killed my Olds resale value.

[Oracle of Delphi]

Whether it's CH 11, or total downsizing of the company or whatever, it's looking more and more like Saturn truly will be history now. Nice. My Vue is now going to be totally worthless.

If you keep it long enough, it will become a collectors item and the value will increase as with all things.

[Camino LS6]

If you keep it long enough, it will become a collectors item and the value will increase as with all things.

Not all things.

The only Saturn with a chance at collectible status would be the Sky, the rest will soon be forgotten.

[Oracle of Delphi]

Not all things.

The only Saturn with a chance at collectible status would be the Sky, the rest will soon be forgotten.

I defer to your collectors knowledge. I only have the 1969 Pontiac Custom-S because we are the same age, and it was my 1st car. Ahhh the memories that car and I share ...

[gm4life]

Not all things.

The only Saturn with a chance at collectible status would be the Sky, the rest will soon be forgotten.

I totally agree.

[FUTURE_OF_GM]

First Olds... Now Saturn... Buick is next!

[gmcbob]

I totally agree.

I agree too - I think a Sky Turbo will probably hold on to quite a bit of it's original value long after Saturn is gone (esp. if it never gets driven). However, my Vue will completely tank in value.

I will say though that I do like my Vue for what it is and it sucks that GM has to do what they have to do now. And if it is going to be completely worthless, it will stop me from doing something stupid like trading it in on a more expensive Camaro SS or G8 or something later this year (which crosses my mind periodically). At this point I guess I'm just going to drive it until the wheels come off. I'll just have to keep telling myself that it's practical and drives well for what it is and I'll be happy.

I'm going to also safely assume that I can get warranty work done at existing GM dealers after they close Saturn, so I'm not worried about that aspect of owning it either.

Edited February 17, 2009 by gmcbob

[regfootball]

Whether it's CH 11, or total downsizing of the company or whatever, it's looking more and more like Saturn truly will be history now. Nice. My Vue is now going to be totally worthless.

no, glue a buick badge on it and call it a 'rendez-vue'

its just a commodity car, i don't think it will lose any more or less value than any other GM model. Auroras held their value extremely well after Olds folded.

Edited February 17, 2009 by regfootball

[cletus8269]

I defer to your collectors knowledge. I only have the 1969 Pontiac Custom-S because we are the same age, and it was my 1st car. Ahhh the memories that car and I share ...

come now, you must have seen how poorly the "prized" saturns did at barrett jackson where everything is 30% more than what it should have been. the difference is the years and how desirable. in 30 yrs who will find a saturn that desirable? i doubt you'll see one at mcD's cruise in and someone running over to say "oh snap a twin cam!"

cars these days are engineered to be tossed in 10yrs time. cars like yours and mine are timeless.

[GXT]

its just a commodity car, i don't think it will lose any more or less value than any other GM model. Auroras held their value extremely well after Olds folded.

For those of you complaining about resale value, you bought a GM, what did you expect? GM resale is just generally bad. As an informed consumer you knew that going in. Don't blame the end of the brand... there are plenty of chevys on the road that demonstrate that the end of a brand isn't necessary.

As for the Aurora... what are you talking about?

A 2003 Olds Aurora sold for 46,600+ taxes here in Canada. Black book value is now $7,700. That is a loss of nearly ~$40,000 or 83% depreciation. That is horrible! For comparison, a base 2003 accord would have sold for almost $23,000 less than the Aura and yet is now worth $3,500 more! (57% depreciation).

[regfootball]

maybe canadians are stupid, and the accord and aurora were in different segments anyways.

the 2nd gen auroras around here went for good money.

[hyperv6]

There will be a group of Saturn people who meet every year just as the Corvair and Fiero people do.

They will all marvel at the guy who shows with the Supercharged Ion.

Do not confuse collectability with Value. Some people will still cling to these cars though not in great numbers just because they like them. THey will not be worth anything but they will like them none the same.

They will be small in number but they will be there.

[Dragon]

maybe its just me, but the resale value will go down the tubes for any product from a company that has filed for anything that has bankruptcy in the title because most people don't know the difference between chapter 7, 11 or any other. All they hear/care about is the is the word "bankruptcy"

[gm4life]

Lots of good ideas have been rolling around in here. I agree a select few with treasure there Saturns and meet every year, that is fine but I won't be one of them.

[GXT]

Remeber when a billion dollars was a lot? Now GM is burning through 3 or 4 billion per month. So to put this 1 Billion in savings/year in perspective, that will buy GM perhaps another 8 or 10 days.

[BuddyP]

Whether it's CH 11, or total downsizing of the company or whatever, it's looking more and more like Saturn truly will be history now. Nice. My Vue is now going to be totally worthless.

No, it's going to become an instant classis... like my Aura!

Just look at what Duesenburgs bring at auction!!

Edited February 17, 2009 by BuddyP

[balthazar]

>>"Now GM is burning through 3 or 4 billion per month. "<<

What happened to GM's statement of spending $1B/month by the end of '08?

Where did you hear the so-specific "3 or 4 billion" number ??

They are continuing to close plants, lay off more workers AND hold or cancel future projects - how are their expenditures quadrupling as a result? They should OPEN plants & hire more if that's the case.