GM's workers face even tougher times
The Obama administration is optimistic General Motors can restructure without declaring bankruptcy. But in order to do so, its workers will have to make more concessions. John Dimsdale reports.
General Motors workers leave the GM Powertrain Plant at the end of their shift in Warren, Mich. (Bill Pugliano/Getty Images)
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TEXT OF STORY
Kai Ryssdal: The White House countdown clock for General Motors stands at 58 days today. That's until the Obama administration's largesse runs out. Today was also sales reporting day. And the news is that March was less unkind to Detroit than February was. Still grim, though. GM sales tumbled 45 percent from a year ago. Ford was down 41 percent. A White House spokesman said today the administration remains optimistic General Motors can restructure without resorting to bankruptcy. One key to that happening is going to be the willingness of GM's workers to make more concessions. Marketplace's John Dimsdale has more on the tough choices facing the United Auto Workers.
JOHN DIMSDALE: To survive, GM will have to squeeze more wage and benefit cuts from union employees. And when push comes to shove, UAW leaders will have to decide whether to cut a deal with the company in the next two months or cast their fate to a bankruptcy judge this summer.
MICHAEL BELZER: They are the creditors with the least credit.
Wayne State University economics professor Michael Belzer says bankruptcy procedures are designed to save property, not jobs and wages. He thinks union leaders should avoid the judge who's almost guaranteed to throw away their contract.
BELZER: They're better off trying to negotiate something with people they know. Any time you go into court you lose control, and General Motors itself has been very concerned about doing that.
A labor-friendly White House with a big say in GM's future could be a valuable ally in protecting union retiree benefits. Don Stillman, a former UAW executive and now labor rights advocate, says the Obama administration must remember how important voters in the industrial Midwest will be for re-election.
DON STILLMAN: You obviously don't want to see a situation where you have 70 or 80-year-old people who've suffered greatly from the loss of their health care and that's a dilemma for the administration in these negotiations.
One that could make it difficult for GM to extract big money-saving concessions from union pension and health care funds without going into bankruptcy.
In Washington, I'm John Dimsdale for Marketplace.
Comments
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From Washington, DC, 04/01/2009
I must agree with Don Stillman here. Much of GM's debt is owed for the company's retirees for health care. These people worked hard in auto factories for many years to earn those health benefts. Looks like contracts for AIG bonuses must be honored, but breaking contracts made through the years that committed to health care for GM retirees seems acceptable to many of the politicians. That could hurt Obama and the Democrats in the next election.
From Grand Blanc, MI, 04/01/2009
If the uaw represented workers worked for free it would not solve the problem...They make pennies. $28 an hour for 60,000 employees is nothing. Especially since each employee makes the company about $4,000,000 per year in productivity.
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