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GM Sheds Billions In Costs Today

19K views 133 replies 68 participants last post by  jzchev28 
#1 · (Edited)
GM Sheds Billions In Costs Today
The UAW's VEBA Trust now has the health care cost burden.
www.gminsidenews.com
January 1, 2010
By: Nick Saporito


Starting today, January 1, 2010, General Motors will be freed of billions in health care liabilities. Last May, as part of GM’s efforts to restructure out of court, they and the United Auto Workers union agreed to an amended version of the 2007 contract. Included in those revisions were for the union to take over nearly all of members’ health care costs.

Prior to today GM was liable for nearly $2 billion per quarter in health care costs related to both active and retired UAW members. Starting today the UAW’s Voluntary Employee Beneficiary Association (VEBA) Trust will take over responsibility for those costs. As part of the contract, yesterday GM transferred a $10 Billion payment to the VEBA Trust from their pension fund. Additional funding for the VEBA Trust will come from the UAW’s equity stake in New GM when the VEBA Board wishes to sell their stake and annual payments to the fund by GM, and eventually Chrysler and Ford. Additionally, next week GM will issue $9 Billion in preferred stock to the VEBA fund with a 7% dividend. Below are the planned payments into the VEBA fund by GM:

  • 2011-NONE
  • 2012-$2.6 billion
  • 2013-$3.4 billion
  • 2014-$400 million
  • 2015-$400 million
  • 2016-$400 million
  • 2017-$3.4 billion
  • 2018-$400 million
  • 2019-$3.4 billion

VEBA has existed since 2007, when it took on select health care liabilities from the Detroit-based automakers, however starting today the current VEBA is going to merge with New VEBA. The existing VEBA was slatted to have about $500 Million in the fund prior to GM’s $10 Billion payment yesterday.

GMI sources have stated that GM’s North American operations could be running at a profitable level now that VEBA is in full effect. The health care cost reductions shed over $2,000 in fixed costs per vehicle that GM builds in the United States.

Today’s health care cost reductions come in addition to just over $30 Billion in non-cash liabilities and nearly $27 Billion in debt that GM was freed of in it’s June 2009 bankruptcy filing.
 
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#10 ·
Excellent, maybe GM can invest that money saved in a ULS for Cadillac as well as a CLS/6 competitor, further refine the Escalade (and distance it from Denali and other GMT900's), and come out with a next generation CTS sooner than anticipated ;)

I'm looking forward to and saving up for a GM IPO.
 
#12 ·
Many forget but it was Rick Wagners vision that made this possible.

The world financial crisis timing was off by a year but Rick was right on the money to make a GM profitable through implementing Veba..

thanks Rick for your forethought for a solution to a problem you did not create.

Thanks for the heads up.
 
#13 ·
I'd forgotten this was coming. Do Ford and CHrysler have similar agreements with the UAW?

.
 
#18 ·
They'll save about 22 million per day.
 
#21 ·
GM will be bankrupt in another 6 months, 9 months tops.
Name just one top-selling class-leading vehicle that GM sells.
We're talking 3-star safe, fuel-inefficient vehicles made with zero quality.
You can't even drive a Chevy off the lot without it self-combusting or the gas pedal sticking and the car careening wildly out of control.
...
...
...
Well, ya, maybe those are Ford and Toyota vehicles I described, but my original statement still stands.
 
#50 ·
GM will be bankrupt in another 6 months, 9 months tops.
Name just one top-selling class-leading vehicle that GM sells.
We're talking 3-star safe, fuel-inefficient vehicles made with zero quality.
You can't even drive a Chevy off the lot without it self-combusting or the gas pedal sticking and the car careening wildly out of control.



What kind of crappy defeatist attitude is that?
Let's see some optimism here.
...

Well, which is it ?


And can you name one "top selling, class leading" Nissan? Chrysler? Ford? Subaru?
 
#23 ·
Great news. Many said that GM would not be around to see this take effect. In one way the the naysayers are right, the "Old" GM is gone.
 
#88 ·
"In one way"? They WERE right, period. General Motors Corporation went in liquidation, changed its name, and stopped selling cars to the public before this kicked in.

FWIW, I don't recall anyone ever saying that all of GM's operations and brands would completely cease to exist. In just ANY imaginable GM liquidation/bankruptcy scenario, there'd obviously have been some arguably "valuable" parts of GM that would have survived in one or more other automotive company(ies).

(That, of course, is also exactly what happened in the one scenario that did happen.)
 
#24 ·
GM can be saved now that the crushing legacy expense has been lifted, but not with the AT&T gang. They need a dynamic leader who is a car person and hires the best people rather than the best friends to run the company. GM has some great vehicles and technology in the world mix and it will take a visionary leader to put the right cars in the right markets to be successful. Right now I am not so impressed with the effort so far. I seems that the US is an afterthought in this regard.
 
#25 ·
Should ease off a huge chunk of crap from GM's back. This is very good news, GM should now use the savings for higher quality interior materials and engineering technology. Getting back to being the all powerful industrial juggernaut, one small step at a time.
 
#29 ·
I think it is more of a leap, and yes, i think it is enough, and now its time for GM to kick some ass.
 
#31 ·
Good news indeed, an excellent way for GM to kickoff the new year, next comes NAIAS where GM is bound to steal the show! Special kudos to Rick Wagoner for having the foresight to accomplish this monumental task! Only the most hardcore GM enthustiasts realize that GM's current and future success is do in large part to Rick W., unfortunately history won't see it this way.....
 
#33 ·
This is a landmark day for General Motors and the UAW.

Many auto execs who work under foreign flags are no doubt disappointed that we made it to this watershed moment. They, and their pawns in DC who were plotting the industry's demise this time last year.
 
#34 ·
Well said 1G6, it is well known that German and Japanese auto execs would have loved nothing more than to see us destroy our own auto industry. This way they wouldn't have to eliminate their excess capacity in their own countries and could flood us with more imports. Fortunately cooler heads prevailed, thanks Barack!
 
#57 ·
I'm wondering if Mr. Whitacre is betting on a couple of solid quarters so he can fulfill that promise of paying back the fed before the IPO? If so, GM could nearly be out of debt by the end of 2010!
 
#82 ·
Yep, it was.
 
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