This saying still comes with the memory of my father and grandfather talking over cigars. For as long as I've been alive there's been some variation of this saying going around. But was there any truth to it? Perhaps, but I don't think in the way they used to think there was.
Last Week
Laying to Rest a 'Generous' Way of Life
Sunday, March 26, 2006; Page F02
They called it "Generous Motors." If you were lucky enough to get an assembly line job at one of its plants -- or those of Ford, Chrysler and some of their major suppliers -- you could earn half again as much as neighbors with the same skills and education, along with "free" health insurance; a month's paid vacation; and, after 30 years on the job, a generous pension and whatever health services were not covered by Medicare. At some point, the company even agreed to guarantee all workers full pay and benefits, even if there wasn't enough work for them to do.
But last week, General Motors and the United Auto Workers acknowledged the jig was up. Prompted by steep annual losses in its North American auto operations and the bankruptcy filing of Delphi, its former parts division, GM announced it would offer between $70,000 and $140,000 to employees to walk out the door with nothing more than their lunch buckets and their accrued pension benefits. Similar deals will be offered to Delphi workers as well. Those with 30 years of service or more will be offered $35,000 just to begin the retirements to which they are already entitled.
The purpose is to right-size the company to reflect its shrunken market share and clean up a balance sheet weighed down by retiree costs. It is also designed to avoid a crippling strike at Delphi by workers who, if they choose to remain, will almost certainly have to accept reductions in wages and benefits.
The surprise here is not that the golden era for autoworkers has come to an end but that it lasted as long as it did. General Motors has been losing market share to foreign automakers with lower cost structures for more than 25 years. Until recently, however, the richness of the compensation packages has been maintained as the company pushed costs into the future through a series of generous early retirement packages. But the future has become the present, making the financial reckoning unavoidable.
More...
http://www.washingtonpost.com/wp-dyn/content/article/2006/03/25/AR2006032500097.htmlU.S. trade deficit balloons to $805B
By David J. Lynch, USA TODAY
WASHINGTON — The most complete scorecard of the United States' international trade performance deteriorated to a record $804.9 billion deficit in 2005, the Commerce Department said Tuesday.
The "current account" deficit, including trade in goods, services and investment income, was 20.5% greater than 2004's $668.1 billion figure and more than twice as large as just four years earlier. "It's going to start to snowball. ... We're at a tipping point," says Catherine Mann of the Institute for International Economics.
No industrial nation has ever run a deficit this size, equal to 6.4% of economic output.
This year, the deficit will be at least $950 billion before topping $1 trillion next year, says Brad Setser of Roubini Global Economics.
Non-existent national savings and distortions in the dollar's value against other key currencies, notably the Chinese yuan, are the root causes. "There is a real problem with global exchange rates, and I also think the U.S. is living beyond its means," Setser says.
http://www.usatoday.com/money/economy/trade/2006-03-14-econ-usat_x.htmIt would appear that both GM and the US aren't making much of anything worth buying anymore. The result is epic debts and an inability to sustain their workers. At least GM offered some kind of buyout for their employees, not that it makes it much better when you have three kids needing braces and college tuition just around the corner. Many of the employees of the US didn't even get that when they lost their jobs to off-shoring.
I'll not assume to know where all this will lead either GM or the US, but they do seem to be walking down similar paths. I do know one thing, if I were on the board I'd be looking for a new more competent CEO, wouldn't you?
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
