The GM IPO: Wall Street celebrates impoverishment of auto workers

[Hannah Bell]

General Motors will conduct an initial public offering of nearly 500 million shares today, seventeen months after the giant US automaker declared bankruptcy and was removed from the New York Stock Exchange. At the price of $33 per common share and $50 for preferred stocks, the IPO is expected to net $23 billion, making it one of the largest, if not the largest, stock sale in history.

The US Treasury, which is reducing its ownership stake from 61 percent to as low as 33 percent, is expected to lose as much as $10 billion from the sale of its shares. The real money will be made by major Wall Street firms, with share values set to rise 10 to 20 percent on the first day of trading.

Morgan Stanley, J.P. Morgan, Bank of America, Citicorp, Goldman Sachs, Barclays Capital, Credit Suisse and Deutsche Bank were selected by the White House to oversee the IPO and will get first access to purchase the stock. The underwriters reportedly sought an even cheaper opening price. However, the Obama administration expressed concern that an even greater windfall for the banks would convince the public that the IPO was another handout to Wall Street―exactly what it is.

The potentially huge fortunes for the financial elite come at the direct expense of auto workers, their families and working class communities throughout the Midwest. More than a dozen factories in Michigan, Ohio, Indiana and other states have been shut down. Tens of thousands of workers have been thrown out of work, and current and retired workers have seen wages and benefits slashed. In addition, an entire generation of new auto workers is working for $14 an hour, half the wages their parents once earned in the industry.

The number of US hourly employees grew from 51,000 to 53,000, largely through the addition of tier-two workers making $14 an hour. In 2008, there were 74,000 UAW hourly workers in the US.

On Thursday, the UAW is expected to sell 102.3 million shares, netting the union bureaucracy more than $3.38 billion. The union will retain a 13-14 percent stake in GM, giving it an incentive to push through further concessions...

GM is no longer responsible for the health care obligations it owes to more than 340,000 retirees and their spouses. The UAW will now be in charge of retiree medical care and is expected to cut benefits because its trust is under-funded. GM pension obligations are also underfunded by $27 billion.
http://www.wsws.org/articles/2010/nov2010/gmip-n18.shtml

[KillCapitalism]

1. Yeah, $14/hr. does not go very far.

It really isn't a fair wage when you consider how tedious and physical the work is. They should be paid $20/hr. at minimum.

[Kalyke]

11. Depends on where you live.

$14 an hour in Tennessee is smack-dab middle class.

[Ginto]

14. In NYC 20$/hr would be a pittance. nt

[dkf]

2. By all rights this firm should be bankrupt with no workers.

No matter how bad workers have it, this was the best case scenario.

[Hannah Bell]

3. doubt it.

[dkf]

10. If everything would have worked out fine then why did we step in?

I don't understand your faith that everything would have been ok without the governments intervention. Look at what you are arguing...it is exactly what the right wing says when they argue we just wasted tax payer dollars. Your faith in the resiliency of the system is misplaced I think.

[Hannah Bell]

18. that's not what i said. please stop with the straw, annoying.

[Romulox]

15. How can you "capitalists" continue to argue as if the entire financial sector didn't get a bailout?

"By all rights..."

By all rights, shouldn't AIG, Citi, Chase, and most of the New York financial industry be in tatters? Or does that only work for Detroit? :shrug:

[TransitJohn]

17. +1

Very, very good point.

[xchrom]

4. Recommend

[JCMach1]

5. UAW sold out current workers for the sake of retirees

Why am I not shocked?

[Hannah Bell]

6. um, retirees took hits too. and will take more, or didn't you notice the underfunded health care &

pensions?

$14/hour workers aren't going to be making up that deficit ==

who sold out who?

uaw leadership sold out its members.

[NNN0LHI]

7. Who sold out the UAW?

When I was laid off from Ford my neighbors were buying imported or scab built cars. And they were very proud of them. There are probably some sitting in your neighbors driveway right now if you go look.

So, naturally I have a different perspective as to who sold us out. It wasn't the UAW. It was my fellow Americans who sold me out.

Don

[Fumesucker]

8. No, it was the management of the auto companies..

That didn't keep up with competition in providing a quality reliable and economical product for their customers to purchase..

The quality of American cars took a huge nosedive during the 70's, those of us who were burned by those pieces of crap took our business elsewhere.

The domestic car business was the American manufacturer's to lose and lose it they did by drastically cutting the quality and value of their product at just the time global car manufacturing started to make serious advancements in quality and technology.

[NNN0LHI]

9. I could make some improvements on your quality if you were competing against scabs and prison labor

Why don't we try that in your industry and see?

Prison labor like Honda was using back then never misses a day of work to go to a ballgame with their family. Do they? Is that what you support?

Don

[Fumesucker]

19. I don't have an industry, I've been out of a job for over two years..

If you have a fucking job you're doing better than me.

Care to try again?

[NNN0LHI]

21. I am out of a job too

Retired from the US auto industry that you seem to loathe.

Perhaps there is a direct correlation between you "taking your business elsewhere", and you now being out of a job yourself? Maybe the workers who are building your imported cars overseas aren't coming over here and purchasing the goods or services you provided before you were laid off?

Where as if you had supported American workers, those workers might very well still be purchasing those goods or services that you once provided that kept you working? Have you ever even considered that possibility?

Don

[Fumesucker]

22. You're really resistant to pointing the finger at the real culprits..

The management of the US companies who decided to make such a shitty product that it turned an entire generation against buying the products of those companies.

I used to love American cars, I had a 65 GTO, a 63 Sport Fury a 62 Buick Special and a 69 Chevy Pickup among others, then the 1970 and later models came out and they were basically crap..

If someone or some organization screws me once I don't give them an opportunity to do so again.

And besides, I've never bought a new car in my life.

Hell, I don't even own a car now.

[NNN0LHI]

24. You're really persistent at dodging my question

Do you think "taking your business elsewhere", may have had some bearing on you losing your own job?

Don

[Fumesucker]

25. The current economic problems have far more to do with the FIRE sectors..

Finance, Insurance and Real Estate than they have to do with which (used) cars I might have bought in the past.

But which cars I have bought were heavily influenced by the fact that one group of manufacturers, the American ones, produced shitty cars for at least a decade and really more like three decades for some.

I don't understand how it became my fault that American car companies decided quality and value didn't matter any more.

[Kalyke]

13. Yeah, but it's 2010 and American cars have been far more

reliable, easier and cheaper to repair if they do have problems and cost less on the front end.

I really don't understand why anyone bought a car where the money didn't support unions or went back overseas after 1995. :shrug:

[Fumesucker]

20. A car is the second most expensive purchase most people will ever make after a house..

People have long memories when they get screwed over on something that expensive..

You can blame whoever you want but the real culprit is the management of the US auto companies, not the customers they fucked over in order to get their huge paychecks.

[JNelson6563]

12. There it is.

In a nutshell. Well said Don.

Julie

[Romulox]

16. While that is true, it was the Obama Administration who was the party demanding concessions here.

:hi:

[leftstreet]

23. K&R