No sooner had I labeled the head of the CAW as a dreamer for thinking that he could reach a deal with GM that didn’t involve some sort of wage and pension reductions, then lo and behold – that’s exactly what he did.
Apparently the original story was wrong and the union did give some wage concessions – I guess I should have waited a while longer before posting this. 🙂
According to this Globe article – the deal reduces the total compensation (wages and benefits) by about $7 per hour to $63/hour. This doesn’t seem all that dramatic but it’s a good show of faith by the CAW. I suspect they will have to give up more in the future but the real cost savings will be in head count – as in a lot less of them.
My first thought was why the heck did GM agree to this deal? It seems quite obvious to me that significant salary cuts are needed – both in hourly wages and a reduced work force. It could be just one more example of how GM (and the other car companies) are incapable of negotiating properly with the unions but I think maybe some of these factors might also have been at play:
- This deal was made just to get the bailout money. The companies and unions have to show some serious money savings in order to qualify for the bailout so they put together a deal which they feel is the “minimum” necessary. If I was in charge of the bailout money – this deal wouldn’t get a dime.
- Given the worsening financial situation at GM, this deal might not mean much if they file for bankruptcy in a few months which I think is going to happen sooner or later. Even if they don’t file – financial conditions in a few months might mean this deal becomes irrelevant anyway.
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