Labor Notes: GM: New Workers Now Make 20% Less than Average Manufacturing Worker

[amborin]

GM Workers under Sub-Par Contract Vote Down Further Wage Cuts

GM workers in Saginaw, Michigan, voted down drastic concessions by a big margin June 17.
It was the second time in three months that GM workers already working at substandard pay refused to be chopped any further.
“This was not a skilled trades coalition, or a legacy coalition, or a temp workers coalition—this was everybody,” said Saladin Parm, a committeeperson (full-time steward) at the plant. “When I tried to give them the explanation of the contract, they said, ‘No, thanks, I’ve got toilet paper at home.’”

Concessions sought at Saginaw included cutting skilled workers’ pay by $8 an hour and stripping family health benefits for the newest workers for five years.
Workers in the 2,200-worker plant, which makes pumps, steering columns, and other parts for both GM and Chrysler, voted 73 percent ‘no,’ though the company had said it would create up to 500 jobs under the new contract.
Scores of workers wore “vote no” T-shirts; some were threatened by managers. The contract was pushed by management and officials from the local union and international United Auto Workers.

In 2006 a Big Three worker made 74 percent more than the average U.S. manufacturing worker. Today, Big Three new hires make 20 percent less than the average.

[Greyhound]

1. Mission Accomplished

:cry:

[amborin]

2. exactly! this was crux of the take-over deal: busting the union

[Greyhound]

3. Yep, and it's obvious.

Of all the possible remedies, this was the worst for the workers, but it did save the class 'A' voting stockholders, executives, and board members, from losing all their money.

[Statistical]

5. Shareholders were wiped out.

The shares of "old GM" still trade for a penny or so but that is more gambling than any tangible value.
http://www.google.com/finance?q=MTLQQ

Any shareholders of "old GM" have no claim on the new company. So new GM would become a hundred billion company and earns billions a year in profits and shareholders of "old GM" will never see a cent.

New GM is owned by federal govt, Canadian govt, UAW, and senior bond holders.

US Federal Govt: 60.8%
UAW: 17.5%
Canadian Govt: 11.7%
"old GM" bondholders: 10.0%

So other than the US govt the largest owner of GM is the UAW.

[Greyhound]

6. Common stock, yes. The stock holders that matter go two options,

25% or conversion to face-value bonds. As long as you're rich enough to wait, you get your money back.

[Statistical]

10. No bond holders were given equity stake.

Stockholders were wiped out. Both preferred and common stock holders.
There was no "special stock" that retained ownership in the new GM.

Now in GM case it issued both junior and senior preferred stock. These shares traded openly and any investor had the option to purchase them. The junior preferred and common stock ended up worthless. The senior preferred (like senior bonds) were given option to convert to equity (common stock) in the new company. This was because BK rules requires senior debt (preferred or bond) to be at the head of the line.

As far as conversion TO bonds that is simply not true. The GM has no bond debt.
Senior debt holders were given an "option" of conversion to EQUITY in the new company. They were the only ones that didn't lose 100% still even for them the loss was 90%. GM had about $56B in senior debt. Debtholders make up 10% of the new company. GM estimated value is about 50B so debt holder's stake is roughly $5B or about $0.10 on the dollar.

Stock holders (as they should be) were wiped out in the bankruptcy of General Motors.

[amborin]

9. yes, and let's see how their imperiled pension fund fares; it's VERY worrisome

allowing it to be converted to shares.....

[Dappleganger]

4. If they're gonna take cuts like that, may as well be a Walmart greeter

get treated like shit for no benefits. What's the point of developing your skills of the trade is all you have to look forward to is THIS???

Jesus, nobody can survive like that. 500 new jobs of WHAT??

[xchrom]

7. this is what has been designed for american workers.

it's not an accident or anything else.

we've been heading this way since the 70z -- it's just more obvious now.

[amborin]

12. you're right, no accident; this was part of the deal of the takeover: gutting the UAW

and ensuring its rank and file manufacturing workers were screwed

and the new GM plants opening in Michigan of all places are non-union

[alarimer]

17. And BOTH parties are guilty of it.

This GM deal was brought to them by the current administration.

[amborin]

19. exactly! It's this current administration that presided over massive weakening of the UAW contract

[izzybeans]

8. The last line seems confusing.

Who is being compared to what?

All new workers typically earn less per hour than older employees. If new Auto workers hourly wages were 74% more than the average wage of other new manufacturing employees, then this comparison makes sense. However, if "all" workers hourly wages were 74% more than the average wage of all other manufacturing employees, the last bit of that sentence isn't something easily compared to the first part without more information. Otherwise it seems we are comparing only "new" workers to the industry average of all employees -which would (hopefully) be significantly higher than the wages of "new" workers. This is something you would expect.


"In 2006 a Big Three worker made 74 percent more than the average U.S. manufacturing worker. Today, Big Three new hires make 20 percent less than the average."

[amborin]

11. ? it means hard-wrought union wages have been destroyed by the GM takeover

even new GM workers were going to get a union wage

now that union wage has been destroyed; unionized manufacturing workers now get 20% LESS than the average worker


do you have ANY idea how horrific this is??????

[izzybeans]

15. I want to understand how horrific, but the line makes an unfair comparison.

I'll try to look up the numbers myself then.

You can't compare an industry average to new hires without creating a false impression of a huge drop. That's how the line reads. As someone who has taught statistics, it jumped out at me.

On edit: found the article.

$14 an hour for manufacturing work? Were there payscale concessions too. It will take a career to get back to the industry average.

[amborin]

16. how is it an unfair comparison?

"In 2006 a Big Three worker made 74 percent more than the average U.S. manufacturing worker. Today, Big Three new hires make 20 percent less than the average."

what is hard to understand about that?

otherwise, i've taught stats myself; not sure what your point is

[Statistical]

18. Because the first statement is average worker. The second statement is new hires..

"In 2006 a Big Three worker made 74 percent more than the average U.S. manufacturing worker." = average workers (workers from 0 years experience to 30+ years experience).

Today, Big Three new hires make 20 percent less than the average." = new hires.

A more valid comparison would be average worker in 2006 vs average worker in 2010 OR new hire in 2006 vs new hire in 2010.

[Hannah Bell]

13. & those high wages held up the rest of labor's. more cuts coming.

[amborin]

14. exactly! both held them up & raised them in the 1st place

[SoCalDem]

20. This has been the trend for unions for a long time

When I was in a union, every new contract brought new concessions, and "tiered" labor was always one. New-hires consistently got less and less, and through attrition, the labor force got weaker & weaker. It's sad to see unions devolve into "I've got mine, screw the new ones".

If unions just give back & give back,eventually there is no reason for them to even exist..

[Nikki Stone1]

21. Nibelungen

Look it up.