UAW Strikes GM

Yesterday morning, 73,000 UAW GM employees walked off their jobs to put pressure on the company to resolve issues concerning job security, wages, layoffs, and how much production goes overseas. Of particular interest is the initial funding of the Voluntary Employee Beneficiary Association (VEBA), which is the trust fund for retiree health care to be administered by the Union.

In today’s economy and job market, I can totally understand the concern over job security by the Union membership. Layoffs and the closing of plants are life-changing events that some people cannot recover from. And wages are always a contentious issue – there is a standard of living that many workers have gotten used to, and a reduction in those levels in an age of uncertainty is unsettling at best.

From an earlier post:

The whole idea behind a Union is to first and foremost protect the worker from abuses from the company they work for. Fair wages and other benefits are also part of the contracts as well as a certain amount of job security if the company runs into problems. A Union is not about telling a company how to run its business!! If anything, the contract that the Union and company signs is to protect the worker from mistakes the company’s management may make, which should help the company plan better.

Where the Union has been stung before is two-fold: The company asks for concessions due to the company losing money for the year, and closing the plants due to non-profitability. The company then turns around and gives executives multi-million dollar bonuses. The lack of credibility on the company’s part is obvious.

This now puts pressure on GM’s negotiators to come up with a workable solution that satisfies the Unions but still provides a profitable scenario for the company. Not an easy task, especially with the volatility of the automotive sector with changing consumer tastes and foreign automakers increasing their market share while Detroit struggles.

Part of the solution (from the automaker’s viewpoint) is VEBA. Excerpts from Newsweek on include:

The costs of providing health-care insurance have risen 78 percent this decade, according to a study by the Kaiser Family Foundation and Hewitt Associates. And that has caused many companies to drop coverage for retirees while others feverishly cut benefits. Last year three quarters of big American companies increased premiums for retirees under 65, and 58 percent raised rates on Medicare-eligible pensioners, according to the study.

Nowhere is the pain more acute than in Detroit, where General Motors, Ford and Chrysler are confronting a lifetime retiree medical tab of $100 billion. Providing medical insurance for 540,344 retirees and 180,681 workers adds about $1,500 to the cost of every car Detroit builds—which goes a long way toward explaining why America’s automakers lost a combined $15 billion last year. So the car companies are taking a cue from Goodyear, negotiating with the United Auto Workers to rid themselves of their retiree medical obligations by setting up a union-controlled trust known as a voluntary employees’ beneficiary association, or VEBA. (Among the benefits to employees: if an employer goes bankrupt, the retirees’ medical plan is protected from hungry creditors.)

In contract talks that have stretched well beyond a Sept. 14 deadline, GM and the UAW are haggling over how to create such a trust. The companies want to kick in about $70 billion to fund the trust, analysts say. That would wipe retiree health-care expenses off their books, which would immediately improve their credit ratings, cut costs and free up cash for other uses.

The union, however, wants more money in the fund—closer to the companies’ entire $100 billion obligation. The UAW may have good reason for wanting more. A retiree health-care fund set up by Caterpillar in 1998 went broke in 2004 when it couldn’t keep up with runaway medical bills.

It is this last paragraph that concerns me. Medical costs continue to escalate, possibly more than what the fund is able to keep up with. If the fund gets into trouble and needs an influx of cash, where is that going to come from? And the costs for administering the fund will also need to come from somewhere, and that is also a drain on the fund.

Is VEBA really a long-term solution for health care? From the standpoint of GM, it is. Consider this statement:

GM wants the trust, called a Voluntary Employees Beneficiary Association, or VEBA, so it can move much of its $51 billion in unfunded retiree health care liabilities off the books, potentially raising the stock price and credit ratings. It’s all part of the company’s quest to cut or eliminate about a $25-per-hour labor cost disparity with its Japanese competitors.

Yes, I have concerns about a Union-managed retirement health-care fund. A statement from the same article by a Union retiree:

…says unions have no business taking on the risk of doling out medical benefits to retirees.

While the auto companies need to be profitable to stay in business, it cannot do so without the Union’s cooperation. And the Union membership cannot live without the auto companies staying in business. A catch-22 if there ever was one. The problem is for the company and Union to come to an agreement that benefits both for the long-term, not a quick-fix, greed-ridden short-sighted agreement. And what that will be remains to be seen, not in the short-term, but with the clarity of 20/20 hindsight.

Coming Back to Civilization?

Coming back from a long, restful vacation is always interesting. One always wonders how fast reality displaces that peaceful feeling.

Mine came real fast. My desk at work earned a PhD while I was gone (that’s Piled Higher & Deeper), and I was assigned two more projects while I was gone to Michigan’s Upper Peninsula. Worse, I needed to come up with a presentation on one of those new projects by the end of the week, and still keep all the other projects running. I felt like a juggler with one arm tied behind his back trying to keep all the balls in the air. Sigh… There went the stress relief…

But the time away allowed Mrs. Common Sense and I some much needed time alone, and the unforgettable memories that make up any marriage. We had not been on an extended vacation away from home for 10 years. We were due, big time.

However, the world goes on, and one again wonders what is coming around the bend next.

For instance, OJ Simpson is back in trouble with the law. I have no idea how his latest run-in is going to shake out, and in some respects, I don’t care. I believe that this person got away with two murders, aided and abetted by the inept prosecution & law enforcement that is in Los Angeles, and the judge & jury that had no idea what they were doing. In some respects, that case shows how woefully inadequate our justice system is in dealing with celebrities and other high-profile cases – it becomes a popularity contest instead of justice & closure for the victims (or their families).

And this idiocy isn’t limited to celebrities either. The protests in Jena, Louisiana over the initial charging of 6 black youths with attempted murder over the beating of a white youth is incredible. While the initial charge was over the top, if the colors of the victim and defendants were reversed, the protesters would be screaming “hate crime” and nothing short of life imprisonment. From

The six black teens were charged a few months after three white teens were accused of hanging nooses in a tree at their high school. The white teens were suspended from school but weren’t prosecuted. Five of the black teens were initially charged with attempted murder. That charge was reduced to battery for all but one, who has yet to be arraigned; the sixth was charged as a juvenile.

The beating victim, Justin Barker, was knocked unconscious, his face badly swollen and bloodied, though he was able to attend a school function later that night.

The only crime here was the assault of the victim by the 6 defendants. While the act of hanging the nooses from the tree is disgusting, the act didn’t break any laws. But that’s not going to dissuade the race-baiters and activists from a good protest.

Where I have problems with Al Sharpton, Jesse Jackson, and their ilk (yes, ilk) is that they are not as color-blind nor as for equal treatment for all persons under the law as they would have you believe. No, they want their race to have special treatment. Multiple cases and incidents for both of these “gentlemen” speak for themselves if you care to do the research. The history there is that they stir things up, not resolve the problems or injustices.

Here’s my case in point: If they were as color-blind as they say they are, they would be pushing for hate-crime charges on the 6 black defendants. After all, didn’t the 6 black defendants beat up a white victim? And if past cases are to be used as examples, it shouldn’t matter what provocation took place – a physical assault took place.

And that’s the fallacy of “hate-crime” legislation. As far as I’m concerned, all crime is hateful in one respect or another. Hate crime legislation is not for the protection of the minority from the majority, but to provide additional penalties for crimes based entirely on hate. Which is another problem – how do you prove beyond a shadow of a doubt what a person is thinking or what really motivated him to commit a crime? Justice should be blind, and race (or any of the other hate-crime labels) should not enter into the mix. Entering criminal charges based on crimes with differing race, beliefs, or other criteria as factors can be just as discriminatory as the actions the accused is charged with.

While the above may crank off some of the readers of this post (and I can just hear this one coming) and think that I’m a racist, please stop and be intellectually honest with yourself. Do you really think that one race is superior than another? Do you hate a person’s race or skin color? I don’t on either count.

In many respects, this incident is something that has been blown completely out of proportion by activists. I’m not saying that nothing happened of a racist nature (there was), but calling attention to this event in this manner does nothing but present an “us versus them” attitude which numbs the message that they supposedly want to get across – equal justice. No, they want the defendants freed and not prosecuted for the assault. There is the injustice – do the crime, do the time, not freedom for the criminal.

And they wonder why people, in general, ignore these protests, and distrust the justice system.

Let’s not even start on Congress’s lowest approval rating ever, HRC’s health care plan or promised tax hikes, or Dan Rather suing CBS…

Before I Go…

Mrs. Common Sense and I are taking a long and well-deserved vacation.  We haven’t taken a vacation for a long time, and this one will be special.  We will be celebrating our 15th wedding anniversary next Wednesday.

But before we go to a place without Internet access or cars(!), there are a few comments about the past week’s events:

Fred Thompson finally announced his candidacy for the Presidency.  It will be interesting to see if his bid is as well timed as he hopes it will be.

Osama bin Laden released a tape a week before the 6th anniversary of 9/11.  It looks like he is just as vain as the civilization he wants to destroy – he dyed his beard and eyebrows!!

Cerberus has stolen or hired away a top gun at Toyota to run the sales and marketing for Chrysler.  Then the next day they hired GM’s man in China to help with globalization efforts.  Does make you stop and pause and think about the future of Chrysler.

Volkswagen announced this week that they were moving their North American headquarters from Michigan to the suburbs of Washington DC.  Another blow to Michigan…

The Michigan Legislature wants to raise taxes on anything from telephones (cell, land-line, & Internet) to health clubs.  Just what a state in trouble needs – more taxes…

Another sex scandal in Washington.  This time, a Senator plays footsie in an airport stall.  Where are the politicians that actually stand for something besides themselves and their party?  Is there no one with integrity?

The financial meltdown in the mortgage industry continues.  Countrywide Financial, a major lender, is cutting 12,000 jobs from it’s payroll in response to the flurry of bad loans, defaults, and the collapse of the housing market in general.  Who knows where this will end?

Luciano Pavarotti died this past week from cancer.  While not a fan of opera, his voice was one that would send chills down your spine with it’s power and tone. 

Finally, the Surge appears to be working, but we’ll see what General Patraeus has to say next week with his report.


Katrina +2 Years

This past week saw the two-year anniversary since Hurricane Katrina put New Orleans under water.  Of course, the news agencies were all over this, citing failure after failure of the government to address the needs of the storm victims.  And in some respects, they are right.

In other respects, what else would anyone expect from government?  Government, by and large, is a taker, not a giver.  Government is very quick to take a portion of your paycheck in taxes, but very slow in distributing funds (just the paperwork takes weeks to process).  If I remember correctly, there are still portions of Florida that are still in recovery mode from Hurricane Andrew from 1992.

Government failed the people of New Orleans.  First and foremost was the Mayor of New Orleans, who didn’t order an evacuation of the city with the resources he had available to him (remember the infamous pictures of the drowned school buses?).  He had plenty of time to implement disaster plans, but for some reason, didn’t.  Second was the Governor, who stuck her head in the sand and didn’t call the National Guard to assist in evacuating the city, nor to provide relief efforts until days afterward the disaster.  Last was the Federal Government, but not for the delay with FEMA aid.

The fault there was that there were numerous studies done and billions of dollars allocated for the levies to be reinforced.  The levies were not reinforced as needed, but the funds diverted for other projects as deemed by various Federal politicians.  I lay the blame squarely on the Federal government in not making sure that the funds were spent where best needed.  (link here)

The other problem that I see is that the people of New Orleans (and other places in the United States) believe that the Government will take care of them, no matter what.  The sad reality is that Government will not take care of them, and it is not the responsibility of the Government to take care of the individual’s needs.  We are being lead to believe to the contrary, but where in the Constitution does it state specifically that the Government is to take care of the individual?  It doesn’t, but we have been lead down that path, and we have blindly followed.

While I’m not a fan of Rudy Giuliani, he made this statement:

Government cannot take care of you. You’ve got to take care of yourself.

When I listen to some of the stories brought out this past week, some of them are truly heart-wrenching, others are not.  When I hear of people moaning and groaning that the Government isn’t taking care of them and doing nothing to help improve their situation, my sympathy for that person hits a new low.  When I hear of people trying to improve their situation by taking matters into their own hands, and requesting assistance to finish up that last part of putting their lives back together, then they have my admiration.

People need to take responsibility for themselves, period.  Yes, there are those that need help to get back on their feet.  But I oppose the “cradle to grave” or as Right-minded Frank would say “womb to tomb” support that certain segments of our society feels that they are entitled to.  But I digress…

When I think of Government assisting the population, I always think of this quote:

The most terrifying words in the English language are: I’m from the government and I’m here to help. – Ronald Reagan

Enough said…