GM settlement means "no more excuses"

Automaker closes cost gap, but is challenged to take advantage of the new opportunity

09/27/2007


By Bob Vavra
Editor
Plant Engineering

The end of the GM strike could be just the beginning for the automaker and its union, and create a blueprint for other U.S.-based automakers. Or, historians will look on this strike as the beginning of the end of the importance of the American automobile in a global marketplace.

Most experts agree on one thing %%MDASSML%% General Motors is out of excuses for being able to produce a financially competitive car in the global market. The legacy health care and retirement costs were negotiated into the hands of the United Auto Workers part of the deal narrows the cost gap between GM and Toyota by about $1,000 per vehicle, dramatically closing the gap with Toyota. The Center for Automotive Research in Ann Arbor, MI, estimates that shifting GM's $50 billion retiree health-care liability to the UAW and other savings in the contract will reduce GM's per-vehicle cost for labor and benefits to about $2,300, just $400 more than Toyota's.

"This means GM doesn't have a lot of excuses any more," said Rebecca Lindland to London’s Guardian news service. "They can't point to spiralling healthcare costs or a disparity in retirement benefits. They have to perform."

That view was shared by the Detroit Free Press, the hometown paper of America’s auto industry. “As second chances go, they don't get much better than the agreement reached Wednesday by GM and the United Auto Workers,” an editorial in Thursday’s editions said. “The key, going forward, is for GM to use its new financial flexibility wisely. Invest it in girding for the future, rather than bailing out the mistakes of the past. And the United Auto Workers, now responsible for providing health care to some 320,000 retirees, has got to manage the risks of that burden carefully.”

For the rank and file, however, the talks after the strike were not about the legacy costs of retirement, but about the short-term impact the salary and job concessions would have on their careers. CNN quoted Lansing, MI union president Chris “Tiny” Sherwood as saying his members weren’t as concerned about the pension issue as other provisions of the new contract.

"They're worried about the fact that they've eliminated the cost of living increases," said Sherwood, who said that members have heard rumors about what's in the deal. "They are worried about how the raises are in lump sums instead of increasing base pay. I understand why it was done that way though. There's talk about a two-tier wage system for some new hires. But nine out of 10 haven't mentioned the (pension costs)."

Wall Street did notice on Wednesday. GM gained $3.22, or 9.4%, following the settlement.





Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
October 2018
Tools vs. sensors, functional safety, compressor rental, an operational network of maintenance and safety
September 2018
2018 Engineering Leaders under 40, Women in Engineering, Six ways to reduce waste in manufacturing, and Four robot implementation challenges.
July/Aug
GAMS preview, 2018 Mid-Year Report, EAM and Safety
October 2018
2018 Product of the Year; Subsurface data methodologies; Digital twins; Well lifecycle data
August 2018
SCADA standardization, capital expenditures, data-driven drilling and execution
June 2018
Machine learning, produced water benefits, programming cavity pumps
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
October 2018
Complex upgrades for system integrators; Process control safety and compliance
September 2018
Effective process analytics; Four reasons why LTE networks are not IIoT ready

Annual Salary Survey

After two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It's the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

Read more: 2017 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Material Handling
This digital report explains how everything from conveyors and robots to automatic picking systems and digital orders have evolved to keep pace with the speed of change in the supply chain.
Electrical Safety Update
This digital report explains how plant engineers need to take greater care when it comes to electrical safety incidents on the plant floor.
IIoT: Machines, Equipment, & Asset Management
Articles in this digital report highlight technologies that enable Industrial Internet of Things, IIoT-related products and strategies.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
Design of Safe and Reliable Hydraulic Systems for Subsea Applications
This eGuide explains how the operation of hydraulic systems for subsea applications requires the user to consider additional aspects because of the unique conditions that apply to the setting
click me