GM Sheds Billions In Costs Today

gminsidenews.com ^ | January 1, 2010 | By: Nick Saporito

[Reaganez]

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.

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.

[Cheetahcat]

Zeros health care BS includes the Unions.

[Reaganez]

I don’t know what the hell that means but ok.

GM starts to make money on each vehicle made.

No more $2k per vehicle in health care cost.

[CodeToad]

Unions = Little Communist Governments. If the employees actually had any skills or brains they wouldn’t need unions to get them money they didn’t deserve and would know the end is not going to be pretty. You can’t get blood from a turnip.

[101voodoo]

And it’s all because of tax payer money useed to bail them out

[goodnesswins]

BINGO....the MONEY they are saving is COSTING US! WE are paying for it!

[C19fan]

Is the US taxpayer the ultimate guarantor of this?

[Reaganez]

How do you propose preventing “little communist governments” in a free democratic capitalist society?

Which auto company does not have a “little communist governments” in their home country?

The poster boy for FR, Ford,also has a “little communist governments” it works with.

[Reaganez]

My guess is that if VEBA goes bankrupt they will ask the FEDs for money but no there is no concrete gaurentee from the government.

[GeronL]

GM “The state-run automaker” should be its official designation.

[GOPsterinMA]

We’re paying something (all?) for this mess and will for years to come.

I wouldn’t buy a GM or Chrysler if they were $5.

[Harley]

A couple of years ago it was reported that the auto manufactures paid about $1900 in health care costs for every car they made. That cost was more than the price of steel in each car!

Are they going to be able to become competitive with foreign and domestic non union car manufacturers now that the healthcare monkey has changed? Somehow I doubt it.

[Reaganez]

The money GM is saving is not costing the US taxpayer.

Healthcare liabilites have transferred to VEBA not the US government.

[CodeToad]

“How do you propose preventing “little communist governments” in a free democratic capitalist society?”

Sorry, but those companies were not free to ignore unions. They had courts make unconstitutional demands that guaranteed unions a place at the table.

A “democratic capitalist society” would be free to tell the unions, nothing but another name for a business, that they do not want to do business with them. They weren’t free to do so.

Unions are mental midgets. Where else can a high school dropout get $70k a year for turning a screw?

[Reaganez]

GM will be more than competative with Japanese and European auto companies.

They will be kicking Ford’s butt in the very near future.

The problem will be in taking Hyundai and the new Chinese manufacuturers head to head.

[Cheetahcat]

“I don’t know what the hell that means but ok.

GM starts to make money on each vehicle made.

No more $2k per vehicle in health care cost.”

$.02 Is too much let them pay their own like I have all my life.

[Reaganez]

Sorry, but free demoractic capitalist societies have free courts that make decisions you and captains of industry do not like.

The real world is a series of compromises. You can’t have it your way right away all the time.

Toyota,BMW, General Motors et al are all in situations were they pay high school drop outs 70k/year for turning screws.

That is not my ideal society but that is the world we live in.

I do not hate GM or boycott GM because they do business in the real world.

[Reaganez]

Like every employee in America they can accpet health care terms their empoleyer offers,negotiate better terms, or seek another job or profession.

[taildragger]

They will be kicking Ford’s butt in the very near future

This maybe to techical but here goes... Their patented (125 of them) Eco-Boost Engines will go into all cars between now and 2013ish per Ford's press releases. It turns the ICE from a variable airpump to a constant airpump with constant torque. Torque moves the car not Horsepower. GM's turbo/DI or DI cannot compete. Ford has figured something out unique here and although I haven't driven a car with it yet, I am told you can feel it, from those that have.

GM has no trump card for this, they can't or didn't figure out what Ford did, i.e. control the turbo and wastegate to get the flat torque curve. IMHO Epic Fail coming for GM.... Ditto that Chrysler.

[Gaffer]

Another effing reason that I, nor anyone in my family, EVER, EVER will buy a GM or Chrsler product again. They can choke on their vehicles.