State of the Union August 22, 2011

August 22, 2011 online at
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Here is this week’s build information: 67 E-26s; 146 slider doors; 252 15-pass vans; 417 Onstar; 67 diesels; 60 YF7; 28 brake deck spare tire; 390 Enterprise rent-a-car; 83.9% white vans.

From Automotive News: UAW President Bob King said today that the union is negotiating with the Detroit 3 for higher entry-level wages and to improve the health of parts suppliers. In an interview with Automotive News, King said the $14 an hour wage paid most entry-level workers at the Detroit 3 is not "a livable wage." King said a profitable Detroit 3 can afford to pay those workers better or risk losing them to other jobs if they don't see improvement. He declined to give a target. "We've got to raise those wages so workers will want to stay and workers can support their families by working full-time in the auto industry," said King, who made his comments following a labor panel hosted by the Rev. Wendell Anthony, the Detroit NAACP chief. King revealed today that the compensation of parts supplier workers also is a big issue in this year's talks. He said consolidation in the sector has caused wages and benefits to stagnate or fall at nonunion and union shops alike. "That industry has really slipped in terms of income and equality. That's a major part of our consideration," King said.

From the Tennesseean: Union officials hope a new national contract being negotiated between General Motors and the United Auto Workers — due by Sept. 14 — could include a restart of the idled autoassembly line at the company’s Spring Hill plant. There’s no deal yet, though, and recent comments by a top GM executive suggest that the Middle Tennessee plant might not be getting a new vehicle to build anytime soon. “We are hopeful that Spring Hill will get a new product under the contract, and there are multiple options in the negotiations,” said Gary Casteel, director of UAW District 8, which covers most of the Southeast, including Tennessee. “The union’s position, which we announced before the start of negotiations, was that we would be vigorously pursuing a product for Spring Hill,” Casteel said. “But it’s still a long way from that happening.” In a session with analysts last week, Diana Tremblay, GM’s global chief manufacturing officer, specifically referred to Spring Hill, saying that despite its near-ready status, the plant is not yet needed. “We look at (manufacturing capacity) on a continual basis,” she said. “…We have our Spring Hill facility, still sitting there, that is very flexible. If we should find that we would be short of something, we can quickly get that plant started up. Right now, we don't see any need to do that.”

GM CEO Dan Akerson recently gave an interview to Public Radio. In the next few days we will review some of the more relevant questions and answers from a transcript of the broadcast:
Q. Step back from GM for a minute and look at the broader economy and help me understand when major companies in this economy might start investing.
Akerson: Well, you know, job creation is critical to any recovery and central to any recovery and any incremental job growth is productivity -- you must be productive -- and innovation. So you're going to have to invest capital to gain productivity, and you're going to have to spend on research and development to create some dimension of innovation. I think what I've been trying to do, and I think met with at least some preliminary success, is to view our industrial relations with the UAW in a completely different way. They are partners. They are our employees, they're General Motors employees. They're part of the family. They may be represented by the UAW, but the UAW then is a partner. And we want to have constructive dialogue. For example, we are in midst of negotiations now, but one of the aspects of that that I have tried to espouse and time will tell if we see any real progress or success in this area, is let's not increase our structural cost by having commitments to x percent increase in salary every year. I think what would be good in America, to incent management and labor to have a more productive and more constructive dialogue is to say, "You know, let's all pull in the same oar." We have four metrics before management gets any bonus at General Motors. I might parenthetically say that the top 25 people don't get any bonus, period, because of our government ownership and I think that's fair. It's reasonable. But for the average manager in the company, say middle-level manager, he or she is measured in four metrics, one of them being quality. It's a composite; it's everything from J.D. Power initial quality to our warranties and whatnot and we run up a composite to measure the quality, which quite frankly is second to none. Our quality right now I would put against any of the foreign transplants or any of our domestic competitors and we are proud of that and we want to keep it. So we are going to incent our people alone those lines. What we are trying to do is say, "Look, if management gets a bonus, then I think our hourly people ought to get a bonus." It's, if you will, profit-sharing or success-sharing. Of course one of the concerns is how are we going to know that you are not going to game it? Well, if we have a great year and management gets a bonus then you will get a bonus. And we will argue about how to feather that in and what's the mechanism for determining the amount, but let's agree in principal on that. By the way, if we have a bad year and management doesn't get a bonus, it's very clear then that the union wouldn't get a bonus. And that way we share in each other's success, we are all motivated along the same lines. And I think that would make it easier for companies to say, and tech companies in Silicon Valley have a different paradigm than we do in industrial America, but this would be a way to open up a new era I think of more productive dialogue between management and labor and not have this great divide, but rather let's close the divide and all be on the same team and we all would be incented on the same four things. Going into the bankruptcy of one portion of your employees by virtue of a union contract, and no, not saying this has happened to General Motors, but it seems strange somebody would be getting a raise whether it would be 1, 2 or 3 percent while at the same time you're slashing head count and salaries for management. So let's all get us on the same sheet and let's all get everybody aligned so I think whether it would be on a microeconomic basis within a company or quite frankly on a global basis or on a national basis. I think America is known for its generosity, and quite frankly in the past, I think we've been known for our ability to compromise and play on the same team and that's the environment here that I hope to, and the management team hopes to create here at General Motors.