Well That Was Quick

Just 2 days after going on strike against General Motors, it was over with. Well, that was quick. But then again, neither side wanted it to last very long any way.

80 GM plants were idle for only two days before a new deal was hammered out and it was over with. Under the new contract, a health care trust fund for retirees gets set up and some job guarantees go in place for current union workers. Some temporary workers, at a lower wage scale, will get permanent jobs with union blessing but on a two tiered pay scale approach. That means they'll get a lower pay scale than normal.

For GM, it's good news. $50 billion in long term liability gets taken off the corporate books by the trust fund setup. You can tell Wall Street like the news because GM's stock jumped up in value just under 10% higher on the day the settlement was announced.

Now, with stock value going up, manufacturing costs headed down, and the potential for profit there, maybe GM will get back to building quality again. Without it, none of this will make much difference as the imports continue to chew away at GM's US market share.


GM Workers Strike

GM workers went on strike Sept. 24. Behind it? Lots of things both sides say, but the root of it all (of course) is money and debt.

The UAW union is in a tough spot. They know there's $114 billion of unfunded health care and pension liability to be dealt with. Talks are that switching that to a union-managed trust fund would protect it better than leaving it as an unfunded risk on GM's books, if they can get GM to throw a one-time chunk of cash into the pot. Still, a strike drains cash from both sides and that means it's unlikely a strike would last for long.

Reports are that about 63 % of UAW workers can retire over the next 5 years. When you realize that about 44 per cent of the entire existing union membership has already retired, it doesn't take a rocket scientist to realize that the union is facing big time trouble with a dwindling membership at its core.

But GM is in a tough spot too, with car dealers sitting on unsold inventories of cars and trucks in a sluggish sales economy. So GM can certainly let the plants sit idle while dealers sell off the old iron. What the union can promise its younger members is a fight to keep remaining jobs inside the US and maybe even increase them.

Either way, Wall Street appears to be betting that this strike won't last long. There's too much competition out there in the marketplace for GM to let a strike go on too long. And there's too much risk and money at stake for the union to let it go on too long, either.

Of course, you just know that Ford and Chrysler are watching it all very, very closely.

Burdge Law Office
Helping Consumers Get Rid of Lemon Cars and Lemon Trucks Since 1978


Burdge Wins; Ford Loses

In a recent court case, Ford was required to back back a lemon car and to pay back to the consumer the amount that the selling dealer increased the actual purchase price in order to pay off the consumer's trade in. That's a first.

Called "negative equity" by car dealers, it can mean that your trade in vehicle isn't worth what you owe on it. Some dealers hide the numbers by jacking up the sale price without really telling the consumer what is happening. Other dealers aren't telling the truth about the trade in value in the first place. Either way, it can cost you money.

Now, the courts are recognizing that when that shiney new car turns out to be a lemon, then the manufacturer shouldn't be allowed to rip you off again by deducting the so-called "negative equity" amount from the money they have to refund. That's only fair. After all, if they had built it right in the first place, you wouldn't be in that spot.

That's good news for consumers, certainly, but the problem goes deeper than that. Before you go to the dealer's lot, check online to find out what your trade in is really worth. Then, argue for the highest dollar when you are negotiating on the dealer's lot.

And don't let them hide the number with some excuse like "oh, don't worry, we'll pay it off for you." Know the numbers; that's the one thing car dealer's don't want you to know and there's a reason. The less you know, the more they make off you.

It's your money, so don't waste it.

You read more car dealer terms and what they mean by clicking here to read our Car Dealer Dictionary.