Modern News

Over at Tom Blumer’s Bizzy Blog, we can see evidence that the United Auto Workers did, indeed, throw their retirees under the bus in its recent contract negotiations with Ford, GM, and Chrysler. Also, contrary to the way The New York Times reported the story, there was less scaling back other wise as far as the USA is concerned.

Blummer reports that things aren’t quite what they seem…

Let me repeat the key sentences found inside the red box:

For our active members, these tentative changes mean no loss in your base hourly pay, no reduction in your health care, and no reduction in pensions.

…. Unfortunately, in this process our retirees are required to make difficult sacrifices as is explained later in the summary.

In other words, the UAW protected its currently working members, the ones who get to vote on contracts, from any meaningful sacrifice, while hosing its retirees, who don’t get to vote.

How hard were retirees hit? This hard, according to a May local news report out of Detroit:

(UAW President Ron) Gettelfinger said the contract is a difficult one for the active members and retirees, who will give up some 25% of their health care benefits. “This was a matter of salvation as much as we possibly could for our retirees. I am regretful that we had to do anything and I think it’s a disgrace we had to do anything,” Gettelfinger said.

Spare us the pseudo-tough talk, Ron.

Even given the opportunity to cleanse all sins in bankruptcy, GM and Chrysler ended up doing very little to change their U.S. manufacturing day-to-day cost structure. Thanks to press coverage that has been almost completely derelict, almost no one knows this. Nick Bunkley’s piece above continues in that truth-obscuring tradition.

What really happened between the two companies and the UAW confirms and extends what I noted last week (first item at link) when items about post-bankruptcy restructurings began to appear:

In each case, it looks like the bankruptcy plan really consisted of the following:

• “Let’s steal as much as we can from disfavored stakeholders.” In Chrysler’s case, with the help of government intimidation, first-lien non-TARP lenders were fleeced.” At GM, it happened to the unsecured bondholders.
• “Let’s cut things back just enough to make us look like we’re serious, but not enough to be able to emerge profitably.
• “Let’s hope for a miracle in the marketplace.”

It looks like retirees were treated by their UAW “brothers and sisters” as yet another set of “disfavored stakeholders.”

Meanwhile, the marketplace miracle necessary for all of this to even have a chance of working is nowhere to be found, and tens of billions of our tax dollars appear to be headed for a big, fat write-off.

Clink on over to Blumer’s report and take a look at the other info he has on this story.