None of this sounds very drastic to me.
Of course it doesn't, because you have only a superficial understanding of it and are not going to expend a scintilla of energy outside your comfort zone, to come to an informed opinion.
So let me walk you through the situation.
It is related to new two tier pay scale that forces a new UAW worker to do the same work a current UAW worker makes at a plant, but only for HALF the wages.
does that sound drastic
enough for you?
1. Employment reductions in the U.S. auto assembly industry over the past three years have reduced the UAW-hourly represented workforce by roughly half. As a result, UAW monetary concessions at reasonable levels will not likely contribute substantially to solving the companies' short-rurnfinancial problems.
(Within four years, up to one third of unionized General Motors workers will be working at half the current pay scale, with sharply reduced medical benefits and without a company-paid pension plan.
Such will be the impact of the two-tier wage structure contained in the contract, signed in 2007. This historic reversion toward the type of low-wage, sweatshop conditions that prevailed in the 1930s, prior to the mass industrial struggles that gave birth to the UAW, will rapidly extend to all US manufacturing and lead to the devastation of living standards and working conditions for all American workers.
The UAW leadership is backing this catastrophic attack on its own members as the quid pro quo for GM’s agreement to hand over to the union $30 billion out of $50 billion in healthcare liabilities owed by the company to more than 300,000 retired UAW GM workers and their family members.
If the UAW is successful in pushing through similar deals at Ford and Chrysler, it will become a business enterprise controlling a healthcare trust fund, a so-called Voluntary Employee Beneficiary Association (VEBA), worth $70 billion, making the union one of the largest healthcare insurers in the US.
The joint strategy of GM and the UAW is to push out as rapidly as possible the older workers and replace them with younger employees who will receive second-tier wages and benefits. Some 64 percent of GM workers will be eligible to retire within five years, according to the UAW.)
the workers have ALREADY CONCEDED ENOUGH!
2. Elimination of employment security provisions are not likely to result in large savings for the companies because of the historically small size of the workforce.
3. The UAW may be required to make additional concessions for political purposes, but substantial savings will need to come from other sources.
The current controversy in Congress over a government loan to the GM, Ford, and Chrysler has evolved into a debate over corporate strategy with a large dosage of political posturing. Members of Congress have expressed concern about the wage and benefit packages negotiated between the companies and the UAW, suggesting that these wages and benefits have contributed to the current financial difficulties of the industry. As a result, it is likely that any loan by Congress to provide a loan to the Detroit 3 will likely be accompanied by a requirement that the UAW provide additional concessions.
Two points should be made here. First, because of attrition programs in 2006 and 2008, UAW-represented employment at least at GM and Ford is roughly half of what it was at the beginning of 2006. The major implication of this historically small UAW-represented employee population is that the amount of savings that can be obtained from wage and benefit concessions is modest, relative to the needs of the companies. Looking at GM, it is estimated that the company has approximately 55,000 UAW-represented employees. Assuming that current employees receive a wage and benefit package totaling $50/ hour ($28 in wages plus $22 in benefits), a 20% reduction in the package would generate a savings of approximately $1.1 Billion over a calendar year, assuming a 2080-hour year and no overtime. As GM estimated it was burning cash at approximately $2 Billion per month in the third quarter of 2008, a 20% reduction in current employee compensation would keep GM operating for two additional weeks. If one applies the 20% reduction to an estimated total hourly worker cost of $75/hour (an estimate that includes retiree health insurance payments), total annual savings are estimated at $1.7 Billion. Assuming that Ford currently employs 41,000 UAW-represented employees at compensation levels comparable to GM, savings would be $853 Million and $1.28 Billion. The basic point is that UAW concessions and attrition programs over the past 3 years have helped GM and Ford become substantially leaner companies than they were at the beginning of 2006 by reducing employment levels. There is simply not much left to be obtained from the smaller UAW-represented forces at reasonable levels of concessions.
A second, related point is that the UAW has expressed a willingness to renegotiate the employment security agreements with the GM, Ford, and Chrysler. Given the small size of the workforces, not much will be saved by the companies in eliminating these provisions and not much will be conceded by the UAW by abandoning these provisions.
In conclusion, obtaining additional concessions from the UAW may have large political benefits in the current climate. The financial benefits to Detroit 3 from such concessions, however, are not likely to substantially contribute to resolving their short run financial problems.
Yet to look at it another way I don't see anyone asking Detroit 3 stockholders to concede anything, nor did I hear a single remark that AIG's stockholders do the same during their bailout. its only blue collar workers who get asked to give up concessions not investors nor management.