Warehouse Standstill
The AP reports GM Walkout Brings Factories and Warehouses to a Standstill.
Union spokesman Brian Rothenberg said the two sides have come to terms on only 2% of the contract. “We’ve got 98% to go,” he said Monday.
The strike shut down 33 manufacturing plants in nine states across the U.S., as well as 22 parts-distribution warehouses. It’s the first national strike by the union since a two-day walkout in 2007 that had little impact on the company.
Two Key Points
CNN comments on the GM Strike. Here are the two key points.
1: GM Could be Headed for Junk Bond Status
General Motors’ credit rating could topple into junk bond status if the strike lasts more than a week or two, Moody’s said. GM’s debt rating is currently just one step above junk bond status.
2: Dealerships Aren’t Hurting Yet
Although most car companies have a 53-day supply, GM has 59. GM also has an 80-day supply of trucks and SUVs, and an even larger supply of its most profitable trucks, like the Chevrolet Silverado and GMC Sierra.
GM Offers 2% Raises to UAW; Company Ends Strikers’ Health Care
The Detroit Free Press reports GM Offers 2% Raises to UAW; Company Ends Strikers’ Health Care
General Motors stopped paying for health care coverage for striking workers Tuesday, the company confirmed. That means striking GM union workers are eligible for union-paid COBRA to continue their health care benefits.
Meanwhile, more details emerged about GM’s offer to the UAW. Two sources familiar with GM’s offer said it called for a 2% wage increase for the first and third year of the four-year contract and 2% lump sum payments the second and fourth years.
“Two percent is nothing,” said a local union leader who saw the deal. “We have not gained back anything we gave up during the bankruptcy.”
The union had $721 million in its strike fund in 2018 and temporarily increased dues in March this year to boost it to $850 million. That fund also will pay striking workers $250 a week.
Strike Benefits
$250 a week does not go very far, especially when you have to pay your own healthcare insurance.
Workers are upset.
Perhaps they should be grateful they have a job.
Flirting With Bankruptcy Again
Despite the bailout in which bondholders were ripped off (not that I have any love of them), GM is back flirting with bankruptcy.
Bankruptcy is not at all imminent, but junk bond status implies increased risk.
Moody’s downgraded Ford to junk on September 9. GM may be next.
As Yogi Berra famously stated, this is Déjà Vu All Over Again.
Mike “Mish” Shedlock
I don’t know about the stocks and bonds, but their cars sure are junk.
“union-paid” healthcare.
Funny they are not on obamacare…
Not funny; Obummer exempted his supporters from having to do it.
stillcj, “Why are their bonds rated junk?” I’ve assumed it’s the residual effect of the government recap of GM in which bondholders were slam dunked in favor of funding the UAW’s pension fund . Democrats bought the UAW rank and file loyalty for a generation, but put a permanent cloud over every US-based auto maker’s debt with the travesty deal.
Personally, I’d buy an Argentine bond before a US automaker with the UAW infecting them.
Some thoughts on this subject:
What kind of dopey statement is that?
Bondholders invested in GM bonds per contract law that they would be paid first and be paid fully in case of bankruptcy. GM bonds were priced with this mitigation to risk.
obama destroyed 100+ years on contract law to reward his political allies – the UAW in the GM bankruptcy.
I sure hope you don’t ever sign a contract and then have some politician destroy you in order to reward his political buddies.
“Despite the bailout in which bondholders were ripped off (not that I have any love of them)”
Exactly what I was thinking.
2 banana is dead on right… bond holders got screwed by Obama changing bankruptcy rules… not sure how that was legal… but it sure happened..
Also wasn’t GM the company that had “Rubber Rooms” (see WSJ article from 10y ago) where GM union employees went everyday to get paid for doing Absolutely Nothing.. and what’s really laughable is hearing union leadership claiming union members saved GM,,, that is the biggest load of crap… I distinctly remember taxpayers being soaked to save GM,,, wondering where that is spelled out in our Constitution!!!!
As I recall the “rubber rooms” were for educators that the union would not allow to be fired, despite their incompetence, and the school board could only isolate them to keep them from doing more harm to the kids.
Can robots strike? Oops.
4% raise over 4 years does seem a little low, no word on what they are asking for other than “higher”.
They shouldn’t get one dime. Look at what they make now, including benefits. Then compare that to what unskilled/semi-skilled labor gets across the rest of the country.
I hope GM holds out for months.
Some wags I know would say: Seems like yesterday that Obama shot the bondholders and handed their equity to the UAW for votes in his next election, but I would never say that….
I would say it… and I would add that the pallet of cash Obama sent to Iran didn’t make the Iranians behave either
the money was owed to Iran and yes Iran was in full compliance until the US pulled out of the agreement. get your facts straight
Obama sent Iran a pallet full of money as a bribe. He did it behind Congress’ back and behind the voters back, because even Obama, corrupt Chicago politician that he is, knew it was wrong.
Iran forfeited any claim to the money when they invaded US soil and stole the embassy. Oh, and they kidnapped embassy staff for 450 days.
GET YOUR FACTS STRAIGHT… YOUR IGNORANCE OF HISTORY NEEDS WORK TOO
Or is this another case where certain political viewpoints get banned, while others get a free pass?
The UAW has more than one year in strike pay at $250/week. It would benefit GM to have at least a one month strike to clear out inventory.
GM has a 77 day inventory right now. I’d say 50 to 60 days into the strike they will hammer something out something… maybe each other.
Yeah. I am going to throw the BS flag.
$250 × 44,000 x 52 = $572 million
GM, maybe, has three weeks of strike pay in reserve.
“The UAW has more than one year in strike pay at $250/week.”
I am not sure what you mean by bs flag. The number on the headline was 50k workers. GM doesn’t have to pay strike pay. Not sure what you’re point is.
Don’t let the door hit you on the way out you lazy dopes. Take a few city employees with you when you go.
Too many taxpayer bailouts. Too much union corruption. Consumers can’t float your nonsense anymore