Word: uaw
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Dates: during 2000-2009
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Creditors are not the government's biggest problem with GM, although they would like the public to think debt is the headache everyone should focus on. A bankruptcy judge could force a large cut in health and retirement benefits for UAW members. That would be on top of what is likely to be another round of lay-offs. With the national unemployment rate moving up as fast as it is and large numbers of pensions facing funding problems, the federal government may not want to be forced to support current and retired GM workers. Someone will have...
...hard truths to the union. On that score, Obama's toughness has gained him some street cred in business circles - even drawing faint praise from a Wall Street Journal editorial. The task force has made it clear that GM can't afford the renegotiated wage-and-benefits package the UAW agreed to in 2007. Even using GM's best-case scenario, the company projected a negative net cash flow of $14.5 billion over the next six years. Most of that deficit can be accounted for in retiree health and pension benefits - which means that one way or another, the hundreds...
...harder job facing the Administration comes when the 60-day window is up for restructuring GM outside of bankruptcy. The biggest challenge for GM remains fashioning a plan acceptable to the UAW, which represent GM's 62,000 workers, and its bondholders, mostly banks and other large institutions, which are owed some $27.5 billion and by law are first in line to get paid back. It's fairly clear the Administration wants to make bondholders eat huge losses - or make them try their luck in bankruptcy court. "No bankruptcy judge is going to rule against GM and its plan...
...such as Hummer and Saturn, and dumping the retiree health-care liabilities into it. That company could be sold off or wound down. A second company would comprise the better performing Chevrolet, Buick, Cadillac, Pontiac and GMC brands. That ongoing firm could be partly owned by the bondholders, the UAW and other creditors...
...Understandably, neither the union nor the bondholders are happy about the task force's approach. The UAW feels particularly aggrieved because it has agreed to an unending series of givebacks over the past 20 years. Even before this latest crisis, the UAW had assented to the 2007 contract, which would have put Detroit's labor cost per car within a couple of hundred dollars of Toyota's and the other transplants'. That isn't enough, in the view of the task force, because consumers are willing to pay more for the foreign badges, and the Detroit Three need to earn...