GM stock soars as UAW annouced it will discuss healthcare costs.

[IMPALAon20s]

source:marketwatch.com

GM soars on UAW healthcare reports

SAN FRANCISCO (MarketWatch) - General Motors Corp. moved sharply higher Friday on reports that local United Auto Workers representatives have given their national leadership the go-ahead to discuss healthcare issues with the company.

GM shares were up 6.3% at $33.80 on the news.
While the UAW is not set to open formal contract talks with GM until 2007, union officials agreed at a meeting Thursday to broach the thorny issue of rising healthcare costs to explore ways the rank and file might ease some of the burden.

GM has outlined for the UAW steps the company needs to take to become more competitive and asked the union to respond by the end of the month.

GM, which on Tuesday announced plans to cut 25,000 jobs from its payroll, has repeatedly pointed to the spiraling cost of healthcare for current and former employees as a key factor behind its recent losses.

As part of its effort to rein in costs, GM has outlined for the UAW steps the company needs to take to become more competitive and asked the union to provide by the end of the month suggestions on how to achieve these goals.
"The fact that the UAW appears to be willing to negotiate and that some type of deadline has been set is an incremental positive," Morgan Stanley auto analyst Stephen Girsky said in a note.

"However, we would caution that the deadline may just be hypothetical and other deadlines have slipped in the past. In addition, it is not clear if GM can obtain meaningful savings without opening at least part of the contract," he added.

[TaHoE]

Now THAT is what I am talking about, finally the UAW comes through. Although from Wagoner's speech, it did not sound like the two sides were going to find an agreement. We will have to wait and see what unfolds. Currently the stock is up 7.2%!

[Perian]

The following comment is attributable to UAW Vice President Richard Shoemaker, who directs the UAW General Motors Department:

“It’s one thing to present in a speech specific targets for job reductions and closing plants by the end of 2008; in reality, various important factors will come into play – including the natural attrition rate, changes in volume and market share, and, of course, the 2007 UAW GM negotiations.

“The UAW is not convinced that GM can simply shrink its way out of its current problems. What’s needed is an intense focus on rebuilding GM’s U.S. market share, and the way to get there is by offering the right product mix of vehicles with world-class design and quality.

“No one has a greater stake in the success of General Motors than UAW GM members — and no one has played a more vital role in GM’s strong gains in productivity and product quality. They’re doing their part to help GM meet the challenges of today’s fiercely competitive auto industry. We will do all that is possible to protect the interests of our members and their families.”

[jckjds]

I was actually hoping that the UAW would continue to refuse to renegotiate the contract, giving GM good reason to break the union after the contract's expiration in 2007.

Oh well, looks like the UAW will give just enough to save its hide, again.

[IMPALAon20s]

all this is, is a power struggle. and GM only has threats of cutbacks/plant closures to force UAW into talks. I expect contract to get reopened. shame they didnt get to crush UAW though, least doesnt look that way right now.

[goblue]

Originally Posted by jckjds

I was actually hoping that the UAW would continue to refuse to renegotiate the contract, giving GM good reason to break the union after the contract's expiration in 2007.
Oh well, looks like the UAW will give just enough to save its hide, again.

Unless gas prices drop well under $2, or the new SUVs get really good fuel economy - like 21-22mpg combined - you'll get your wish afterall IMO.

Seeing things like the berated I5 instead of the world class I6 in the Silverados is just the latest piece of evidence...GM has a nasty reputation of pushing engines the public has rejected. Not good enough for Canyon, but good enough for Silverado. Maybe offer the I6 and the 5300 - just like the TB? That would have been encouraging.

When GM starts offering more than the competition at an equal price, then the incentives and marketshare erosion will stop. Offer more for less and marketshare will increase.

[New_Mexico_Sunset_on_Rt66]

It's simple economics. When costs increase on employers, then need to release employees (er, say, 25,000). When costs go down, they can hire employees. The UAW, I think, is realizing that they are losing dues, due to the costs.

All sides need to work together. In an increasingly, not decreasingly, competitive market, all sides need to find resolutions.

[tgagneguam]

...The UAW is not convinced that GM can simply shrink its way out of its current problems. What’s needed is an intense focus on rebuilding GM’s U.S. market share, and the way to get there is by offering the right product mix of vehicles with world-class design and quality...

Thanks for the information, Perian.

I suppose Shoemaker is entitled to his opinion, and whether or not I agree with it, this statement suggests to me one of the UAW's problems: it thinks it should dictate business strategy at GM. I find something wrong about that. It's a union that I thought was supposed to represent the longterm interests of its members and negotiate a contract that reflects that mission. When it starts to suggest strategy - and feel entitled to enforcing that strategy - is when they extend beyond their purview the scope of their influence.

Thanks for the thoughts, Rich... Moving right along.

Incidentally, I think if the loss of 25,000 jobs extends beyond certain types of attrition - retirement, death, quitting - then I feel badly for the people who lose their jobs. That can't be good. I have to say that with the plan to roll the employee reductions over 3.5 years indicates that Shoemaker may be correct.

[Globalist]

Looks like a first directionally good step.

[dindak]

My $29 buy is starting to look real good now!!

[timman]

Originally Posted by jckjds

I was actually hoping that the UAW would continue to refuse to renegotiate the contract, giving GM good reason to break the union after the contract's expiration in 2007.

Oh well, looks like the UAW will give just enough to save its hide, again.

A couple days ago people were saying that the union was greedy and wouldn't give an inch...now your still not gonna be happy if the union "gives in" some...you will never be happy. Just like the past shows that no matter how much is "given back" it'll never be enough. The past decade shows that the union has a reduced work force equivalent to half what it was and IT STILL IS NOT ENOUGH FOR YOU. If you think that it's a simple process to open a just signed contract to re-negotiate some stuff all over again before 2007 then you are either naive or just plain dumb. Which one is it?

[johnny smallblock]

I don't know why everyone is so down on the UAW. They didn't enter into a contract with themselves, GM agreed to everything in there. Besides all the good unions have done in general (40-hour/5-day work week, minimum wage, good, safe working conditions), I really don't see siding with millionare executives over blue-collar workers. Maybe I misjudged the relative wealth of people in this forum, but I thought I heard all sorts of complaints about GTOs being too expensive, a lack of an affordable muscle car (Camaro), etc, etc.

Is the UAW contract good? Yes. Are it's health benefits some of the best in the private sector? Yes. Is it the fault of the union and not GM? No. They both got themselves into this situation, now they have shown some signs of working together to get themselves out. Actually, all GM has said so far is that the workers have to give back...and oh yeah, we're going to fire 25,000 of you. I know, I know, it's all related. But How much do you think Wagoner and the rest of the executive board is making? How much do you think they pay for healthcare? When they get fired, how much do you think they get? And of all the employees GM has, does the executive board deserve the share they get???

What's my point? Don't bash the union...at least don't suggest breaking them. They asked for too much, but GM, knowing far more about the health of their company, gave it to them. Bash GM for making the contract. Suggest breaking the idiots in the boardroom who said they'd pay workers for not working. I'm not a union worker, for the record, but I'm never going to make working Americans the enemy, rather than over-paid corporate executives who couldn't engineer their way out of a paper bag.

[mk1700]

Originally Posted by johnny smallblock

I don't know why everyone is so down on the UAW. They didn't enter into a contract with themselves, GM agreed to everything in there.

?....!... Me for example for a single reason: They are killing GM!
Thats true, Gm agreed some time ago, but now are different times.
cant UAW understand that many people around the world deppends of GM no just they and they $%#$%$# healt care?
The are not just killing a corporation, they are killing a simbol!

[Perian]

Originally Posted by dindak

My $29 buy is starting to look real good now!!

GM stock is >>currently<< up 7.7% on >>expectations<< that GM and the UAW will come to >>some sort<< of agreement on health care.

Trust me - the outcome, if there even is one; will probably not meet Wall Street's high expectations.

Then your $29 buy may look different.

[timman]

Originally Posted by mk1700

?....!... Me for example for a single reason: They are killing GM!
Thats true, Gm agreed some time ago, but now are different times.
cant UAW understand that many people around the world deppends of GM no just they and they $%#$%$# healt care?
The are not just killing a corporation, they are killing a simbol!

You need to smoke less opium and get some help with your english.

GM agreed to a contract in 2004...that ain't a long time ago. How did management not see health care as an issue one year ago? My guess is they did and chose to keep it out of the negotiations for a reason. It would be another guess as to why.