7 ms·

In 2008 GM nearly went under. Part of what saved them was the union working quite a bit of reduced compensation mostly for less senior employees. Now that GM is

In 2008 GM nearly went under. Part of what saved them was the union working quite a bit of reduced compensation mostly for less senior employees. Now that GM is very healthy and profitable the union workers want thier share. Sees reasonable to me.

maxerickson 7y ago
It did go under. It's not the same company that was operating before the crisis.
- Aloha 7y ago
  That seems more of a technicality than a practicality - GM workers in 2007 got a paycheck with the GM mark on them - in 2019, they also get a paycheck with the GM mark on them - the fact that the actual legal entity changes, matters for shit. Also the fact that GM considers itself the same GM that existed also somewhat dilutes this idea.
  - maxerickson 7y ago
    The government dissolved the old company and gave the union a significant chunk of ownership in the new company. It's sort of a technicality, but it's an important one.
    - wil421 7y ago
      It’s the same company if the same executives, managers, salaried and union employees are still there. Did they rehire everyone and start their plants from scratch when the legal entity changed?
      - maxerickson 7y ago
        You can read about it: https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor... The new company had ~23,000 less people (I think many of those jobs were sold to other companies).
        coliveira 7y ago
        Just because a company reduced its workforce it doesn't mean it is a different one.
      - chrischen 7y ago
        I'd say it's the same company if the same stock holders exist.
  - bpodgursky 7y ago
    Equity in the old GM got wiped out. It's more than a practicality for you if you held shares in the old company -- or your retirement fund held shares.
    - coliveira 7y ago
      Shareholders come and go. This makes little difference for the company.
      - bpodgursky 7y ago
        This is like calling a heart transplant an everyday affair. It's deeply incorrect. Corporate reorganizations under bankrupcy law do happen, but they are rare, newsworthy, and very disruptive to workers (at a minimum, their pension and health benefits are renegotiated). Shareholders being wiped out is not normal, and retirement funds -- or really, the stock market at all -- would not work if it was.
  - jasode 7y ago
    >That seems more of a technicality than a practicality [...] the fact that the actual legal entity changes, matters for shit. If I can go a meta layer above this subthread and explain the 2 different conversations happening: - the gp (maxerickson) comment was responding to "2008 GM nearly went under", and it's correct (not technicality) that the old_company (with its own assets-liabilities) did go under. Not "nearly", but completely went under. A new_company was created as different legal entity with a clean slate to pick and choose assets-liabilities.[1] - the other replies (Aloha, wil421) are more philosphical "Ship of Theseus"[2] type of arguments All 3 (maxerickson, Aloha, wil421) can simultaneously be right because they are all emphasizing different aspects of what "General Motors" means. It can be either "GM the assets&liabilities" or "GM the brand, the public perception". [1] https://www.nytimes.com/2009/07/11/business/11primer.html https://www.nytimes.com/2009/07/11/business/11primer.html [2] https://en.wikipedia.org/wiki/Ship_of_Theseus https://en.wikipedia.org/wiki/Ship_of_Theseus
    - Aloha 7y ago
      Yes, I was indeed making a 'Ship of Theseus' argument - specifically, GM's obligations to its current and some obligations to former employees was not extinguished by the bankruptcy. I was also arguing that the bankruptcy was immaterial to GM's moral obligation to 'share the wealth' when times are good.
mlrtime 7y ago
Isn't it true that if if they didn't have a reduced work load and compensation then the company would be closed and nobody would have a job today?
- atonse 7y ago
  That's not what the parent is saying. They're saying that now that GM is back to being profitable, the union wants those things raised again. That seems totally reasonable to me too (and I'm not one of those blindly pro-union people, especially massive unions like UAW)
- josefresco 7y ago
  No. You can't really blame GM's financial troubles on worker compensation alone. You can blame the quality and desirability of the products they create however.
- harimau777 7y ago
  Perhaps, but I'm not sure that the fact that the reduction was the proper response to the situation at that time changes the fact that the situation no longer applies.
_edo 7y ago
The workers never take a share of the losses. In 2005 when the company lost $10 billion or in 2007 when they lost $38 billion the union workers didn't get bills in the mail instead of checks. On a personal level, the workers are still making profit regardless of whether or not the company is as well. In 2008 GM was a $100 billion in debt. The union workers didn't pay that, they didn't take responsibility for that, the taxpayers did.
- deleted 7y ago
  [deleted]
- Miner49er 7y ago
  What's your point? The workers don't run the company - it's not a co-op. Since they don't run the company and don't get a share of the profits, why would they ever be expected to pay losses?
  - dpark 7y ago
    The point is specifically that because they don’t share in the losses[1] they shouldn’t share in the profits. This was a direct response to the parent comment: “Now that GM is very healthy and profitable the union workers want thier share.” [1] I’m not making a statement about whether this is true or not. Just capturing the context.
    - deleted 7y ago
      [deleted]
    - Tomte 7y ago
      > The point is specifically that because they don’t share in the losses[1] Assuming it's true they had their wages reduced in the crisis, it's absolutely disingenious to claim that a return to higher wages post-crisis would be undeserved profiteering. They did share in the losses.
      - dpark 7y ago
helpPeople 7y ago
>Now that GM is very healthy and profitable I've seen other people post this. No, they are not healthy or profitable. It doesn't take much research at all. Reminds me of the phrase, those who talk don't know.
- deleted 7y ago
  [deleted]
xibalba 7y ago
> GM is very healthy and profitable This seems to be the Crux of the issue. A quick look at the financial statements shows positive net income (though not consistently). The statement of cashflows, which is where companies go bankrupt or not, seems much less positive a story. My accounting training is limited. Any HN'ers with accounting/finance background care to comment?
- mrfredward 7y ago
  I'm no accountant, but I think the bulk of the issues is that profits never last in the auto industry. GM trades at a price to earnings of 1/4 of what the market as a whole gets, because investors expect earnings to be negative as soon as a recession hits. GM has cash on hand of 3X its current profits to weather this storm.
danesparza 7y ago
This isn't just about wages. From the article: https://www.freep.com/story/money/cars/general-motors/2019/09/13/uaw-contract-talks-deadline-strike-gm-ford-fca/2266631001/ https://www.freep.com/story/money/cars/general-motors/2019/0... Health care costs are a key issue. Ford and GM said that they spend more than $1 billion per year on health care for active UAW workers. Government data for all union workers show that the average cost of health care benefits is more than $6 per hour, the Center for Automotive Research reported. But the report showed the UAW Detroit Three's health care cost is roughly 150% of the U.S. average. The average UAW worker pays about 3% of his or her health care costs compared with 28% paid by the average U.S. worker, CAR said. Note: Some of the money for CAR's research comes from automakers including GM, Ford and FCA. UAW members are protective of their health care benefits because their jobs are physically demanding and they need health care to function and stay healthy to do the jobs. Automakers also worry about an economic downturn foreseen by some economists as the car companies face high costs to develop electric vehicles required in China and Europe and to prepare to compete in a future with more shared services and autonomous travel.
- mikeash 7y ago
  One wonders why they aren’t heavily lobbying the government to enact something like Medicare for All.
  - refurb 7y ago
    You mean GM? The unions don't want Medicare for all, their health insurance is even better than Medicare. They actually fought against ACA until the "Cadillac Plan Tax" was put into place. The govt then pushed out the tax for years.
    - mikeash 7y ago
      Yes, I mean GM. Would be a great way to bypass all the fuss and expense of these fancy health plans.
      - 7y ago

maxerickson 7y ago

It did go under. It's not the same company that was operating before the crisis.

Aloha 7y ago
That seems more of a technicality than a practicality - GM workers in 2007 got a paycheck with the GM mark on them - in 2019, they also get a paycheck with the GM mark on them - the fact that the actual legal entity changes, matters for shit. Also the fact that GM considers itself the same GM that existed also somewhat dilutes this idea.
- maxerickson 7y ago
  The government dissolved the old company and gave the union a significant chunk of ownership in the new company. It's sort of a technicality, but it's an important one.
  - wil421 7y ago
    It’s the same company if the same executives, managers, salaried and union employees are still there. Did they rehire everyone and start their plants from scratch when the legal entity changed?
    - maxerickson 7y ago
      You can read about it: https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor... The new company had ~23,000 less people (I think many of those jobs were sold to other companies).
      - coliveira 7y ago
        Just because a company reduced its workforce it doesn't mean it is a different one.
    - chrischen 7y ago
      I'd say it's the same company if the same stock holders exist.
- bpodgursky 7y ago
  Equity in the old GM got wiped out. It's more than a practicality for you if you held shares in the old company -- or your retirement fund held shares.
  - coliveira 7y ago
    Shareholders come and go. This makes little difference for the company.
    - bpodgursky 7y ago
      This is like calling a heart transplant an everyday affair. It's deeply incorrect. Corporate reorganizations under bankrupcy law do happen, but they are rare, newsworthy, and very disruptive to workers (at a minimum, their pension and health benefits are renegotiated). Shareholders being wiped out is not normal, and retirement funds -- or really, the stock market at all -- would not work if it was.
- jasode 7y ago
  >That seems more of a technicality than a practicality [...] the fact that the actual legal entity changes, matters for shit. If I can go a meta layer above this subthread and explain the 2 different conversations happening: - the gp (maxerickson) comment was responding to "2008 GM nearly went under", and it's correct (not technicality) that the old_company (with its own assets-liabilities) did go under. Not "nearly", but completely went under. A new_company was created as different legal entity with a clean slate to pick and choose assets-liabilities.[1] - the other replies (Aloha, wil421) are more philosphical "Ship of Theseus"[2] type of arguments All 3 (maxerickson, Aloha, wil421) can simultaneously be right because they are all emphasizing different aspects of what "General Motors" means. It can be either "GM the assets&liabilities" or "GM the brand, the public perception". [1] https://www.nytimes.com/2009/07/11/business/11primer.html https://www.nytimes.com/2009/07/11/business/11primer.html [2] https://en.wikipedia.org/wiki/Ship_of_Theseus https://en.wikipedia.org/wiki/Ship_of_Theseus
  - Aloha 7y ago
    Yes, I was indeed making a 'Ship of Theseus' argument - specifically, GM's obligations to its current and some obligations to former employees was not extinguished by the bankruptcy. I was also arguing that the bankruptcy was immaterial to GM's moral obligation to 'share the wealth' when times are good.

mlrtime 7y ago

Isn't it true that if if they didn't have a reduced work load and compensation then the company would be closed and nobody would have a job today?

atonse 7y ago
That's not what the parent is saying. They're saying that now that GM is back to being profitable, the union wants those things raised again. That seems totally reasonable to me too (and I'm not one of those blindly pro-union people, especially massive unions like UAW)
josefresco 7y ago
No. You can't really blame GM's financial troubles on worker compensation alone. You can blame the quality and desirability of the products they create however.
harimau777 7y ago
Perhaps, but I'm not sure that the fact that the reduction was the proper response to the situation at that time changes the fact that the situation no longer applies.

_edo 7y ago

The workers never take a share of the losses. In 2005 when the company lost $10 billion or in 2007 when they lost $38 billion the union workers didn't get bills in the mail instead of checks. On a personal level, the workers are still making profit regardless of whether or not the company is as well. In 2008 GM was a $100 billion in debt. The union workers didn't pay that, they didn't take responsibility for that, the taxpayers did.

deleted 7y ago
[deleted]
Miner49er 7y ago
What's your point? The workers don't run the company - it's not a co-op. Since they don't run the company and don't get a share of the profits, why would they ever be expected to pay losses?
- dpark 7y ago
  The point is specifically that because they don’t share in the losses[1] they shouldn’t share in the profits. This was a direct response to the parent comment: “Now that GM is very healthy and profitable the union workers want thier share.” [1] I’m not making a statement about whether this is true or not. Just capturing the context.
  - deleted 7y ago
    [deleted]
  - Tomte 7y ago
    > The point is specifically that because they don’t share in the losses[1] Assuming it's true they had their wages reduced in the crisis, it's absolutely disingenious to claim that a return to higher wages post-crisis would be undeserved profiteering. They did share in the losses.
    - dpark 7y ago

helpPeople 7y ago

>Now that GM is very healthy and profitable I've seen other people post this. No, they are not healthy or profitable. It doesn't take much research at all. Reminds me of the phrase, those who talk don't know.

deleted 7y ago
[deleted]

xibalba 7y ago

> GM is very healthy and profitable This seems to be the Crux of the issue. A quick look at the financial statements shows positive net income (though not consistently). The statement of cashflows, which is where companies go bankrupt or not, seems much less positive a story. My accounting training is limited. Any HN'ers with accounting/finance background care to comment?

mrfredward 7y ago
I'm no accountant, but I think the bulk of the issues is that profits never last in the auto industry. GM trades at a price to earnings of 1/4 of what the market as a whole gets, because investors expect earnings to be negative as soon as a recession hits. GM has cash on hand of 3X its current profits to weather this storm.

danesparza 7y ago

This isn't just about wages. From the article: https://www.freep.com/story/money/cars/general-motors/2019/09/13/uaw-contract-talks-deadline-strike-gm-ford-fca/2266631001/ https://www.freep.com/story/money/cars/general-motors/2019/0... Health care costs are a key issue. Ford and GM said that they spend more than $1 billion per year on health care for active UAW workers. Government data for all union workers show that the average cost of health care benefits is more than $6 per hour, the Center for Automotive Research reported. But the report showed the UAW Detroit Three's health care cost is roughly 150% of the U.S. average. The average UAW worker pays about 3% of his or her health care costs compared with 28% paid by the average U.S. worker, CAR said. Note: Some of the money for CAR's research comes from automakers including GM, Ford and FCA. UAW members are protective of their health care benefits because their jobs are physically demanding and they need health care to function and stay healthy to do the jobs. Automakers also worry about an economic downturn foreseen by some economists as the car companies face high costs to develop electric vehicles required in China and Europe and to prepare to compete in a future with more shared services and autonomous travel.

mikeash 7y ago
One wonders why they aren’t heavily lobbying the government to enact something like Medicare for All.
- refurb 7y ago
  You mean GM? The unions don't want Medicare for all, their health insurance is even better than Medicare. They actually fought against ACA until the "Cadillac Plan Tax" was put into place. The govt then pushed out the tax for years.
  - mikeash 7y ago
    Yes, I mean GM. Would be a great way to bypass all the fuss and expense of these fancy health plans.
    - 7y ago