"Your number are for 4 years not 3 months. Let be honest."
I assume that since you won't tell me what your number is, either you don't know or you know you are wrong.
"It is not "content," it is what the Big3 manufacturers pay THEIR workers in THEIR plants. THAT Labor works out to 5.7% of the cost to build the vehicles."
Yes, I understand all that. Please understand this though, it was 11.7% in 2007. It is less than half of what it used to be in just 7 years.
You're saying it's productivity? C'mon questy, that's quite a stretch. Do I need to research the number of UAW members that worked at GM in 2007 and 2014?
"Peanuts compared to this."
LMAO. You're obviously math challenged too. Add up your hieroglyphics and tell me what the total is. I'll just take a few out of my list (recognize that the big money is in the things that RDH quoted):
40,000 UAW members x $6K = $240 million
40,000 UAW members x 4x $1500 = $240 million
40,000 UAW members x 63 days x 8 hours/day x $28/hour = $565.4 million
$240M + $240M + $565.4M = $1,045,400,000
That's over a billion $. Let me know when you get to a billion with stock options and such, then I'll add up some more. Maybe we'll start estimating health care, pension benefits, etc.
"Peanuts compared to this."
You crack me up Jeye.
"GM should still deliver results that are in the black regardless of that $900M charge because sales of very profitable vehicles are going really, really well."
Agreed. In 14Q3 they made $1.4B net income, so I suspect you're right. Plus, as you say, the mix calculation should be a positive as well.
" I suspect they will take a special charge for the $900M ignition switch fine, so Q3 won't be so great."
Actually upon further review, they have already announced on Sept 17, they will take the $900M charge in Q3.
" GM is WELL on their way to cracking the 10% barrier. North American results WERE near or at the 10% level for the previous quarterly results."
Persie, actually North American EBIT margin was 10.5% for Q2, they don't measure profit by region. Consolidated profit margin was 3% (NI = $1.1B). I suspect they will take a special charge for the $900M ignition switch fine, so Q3 won't be so great.
"So for every guy making $27 an hour, or whatever, it was costing GM another bunch of money to pay for his health care, his family's health care, his retirement pension, and his future health care fund, since he was getting lifetime free gold-plated health care for life once he retired. "
Good starter list RDH. But don't forget programmed lump sum payments such as $6,000 signing bonus, inflation protection lump sums of $1500 per year, profit sharing, retirement incentives offered, paid 'family days', disability payments, wig benefits (for chemo patients), bereavement pay, jury duty pay, paid short term military leave, life and accident insurance, SUB pay, overtime premium, $50K lump sum for skilled workers to return to a production job, flu shots, tuition assistance, legal services, and 63 paid holidays over a 4 year agreement.
I'm sure there are more that I can't remember.
"stating all kinds of stuff about profit-margins at 10%, etc., as if anyone would believe that"
Fortunately, the union understands finances better than yourself. EBIT margin is about 10%, profit margin is 2.6%.
"You was upset with how the news wires reported CEO pay. I'm sure the same can be said how they handled hourly pay. "
How is the media misrepresenting hourly pay? Are they not reporting the right numbers? Is $28 per hour incorrect for unskilled labor?
"Then there must be another explanation for how UAW labor content has fallen from 11% to 5% since 2007. What is it?"
I noticed that someone gave me a thumbs down. Ordinarily I couldn't care less what other people thought of my opinions, but in this case, I was merely asking a question and was seeking input.
To the poster that gave me a thumbs down, which of the following would apply:
1. I don't think your facts are correct.
2. You made me uncomfortable with your question because I can't answer it without admitting that you're right.
3. I simply don't like you.
I sincerely hope that your answer is number 3, otherwise I would think that you need to reflect more on the content of your post before you hit the button.
"I don't know about GM but Ford has been insourcing work for years. This year at our plant they put in two new areas. One for sequencing rear axles and another for sequencing leaf springs. About 4 - 5 years ago they put in a from rotor build-up line, all insourced."
Then there must be another explanation for how UAW labor content has fallen from 11% to 5% since 2007. What is it?
""Labor accounts for a declining share of a vehicle's cost, said Sean McAlinden, chief economist at the Center for Automotive Research, noting that the three automakers' costs FOR UAW MEMBERS [emphasis mine] fell to 5.7 percent last year from 11.5 percent in 2007."
Good catch RDH. Instead of making an argument for the UAW, this is actually a condemnation of the UAW. Since auto sales have returned to pre-recession levels (17 million vehicles) and the UAW content has dropped from 11.5% in 2007 to 5.7% today, clearly, the answer is that a much bigger part of the labor to build a car is happening outside the UAW. For sure, productivity hasn't doubled, so at least I have no other explanation other than the automakers have been slowly, but surely continuing the trend of domestically out sourcing as well as off shoring labor.
They haven't made a big splash about it, you haven't seen this in the news, but the trend is continuing. It's a perfect example of the boiled frog parable.
I was thinking the other day that FCA was smart by putting car production in Mexico and trucks in the US because as CAFE standards accelerate to 2025, trucks will necessarily be a smaller portion of the national fleet. As the market for the highest margin vehicles decreases, so will the highest cost labor force decrease proportionately. Smart.
"You sound like a CEO its not my fault, its the guy on the line."
Jeye, you have lost any ability to carry on a conversation. Nobody said it was a line workers fault, not even close. But that's one of your favorite themes and you seem to want to talk about it regardless of the topic being discussed.
I think it might be time for you to hang up the old computer. Use it to play checkers or solitaire, but don't try to carry on a conversation that you can't keep up with.
"If the authorities REALLY want to get at the real story, they will offer one or two of the small fries a lighter sentence in exchange for names, dates, places, facts, etc. and information leading to convictions of the bigger fish."
"Conversely, if they DON'T cut these deals, you may safely assume they prefer that the real facts never be made known to the public."
When did you stop beating your wife? Got 'em both ways, right?
Consider this from Reuters on Tuesday:
"The inquiry has led to the suspension of more than ten senior managers. Only the names of the three top engineers, all of whom held key positions at the time, have surfaced in media reports.
The three are Heinz-Jakob Neusser, head of technical development at the core VW brand; Ulrich Hackenberg, head of research and development at premium brand Audi; and Wolfgang Hatz, the VW group's engine chief and head of R&D at sports-car brand Porsche."
Seems VW has a pretty good handle on this thing already. They say they have no proof yet, but they must have a pretty well developed scenario of what happened.
I assume your "big fish" is Martin Winterkorn, the former CEO that has already resigned. I find no reason why the new CEO, Mattias Muller, would not throw him under the bus if they have proof. It would do several things for Muller if he could show that Winterkorn was in on it.
First, it would satisfy the authorities (and the marketplace) that VW has left no stone unturned in ridding the company of these perpetrators.
Second, it would speed along the process of the being old news so that VW doesn't continuously find itself in the headlines.
Third, it would dis-associate Muller from Winterkorn so that Muller could go forward without being tainted.
I don't believe it will be very hard at all to get to the "truth" in VW's case. I think VW will hand this case to the authorities on a platter.
My wife and I spent some time in northern, lower Michigan this past week and had a great time in the early stages of fall colors.
While we were in Charlevoix, we saw one of the coolest houses I've ever seen. Whether or not you're a boat lover, you have to be pretty impressed with this house.
Go on one of the real estate websites (I use Zillow) and search for 125 Belvedere Ave., Charlevoix, MI and prepare to be envious. Click on the photos to see a slide show of the interior.
"Given that at the time of award, the typical option is to buy the stock at the current market price (the strike price), it's practically worthless at the time of award!"
Hardly anyone actually buys the stock when options are granted. Virtually everyone does what is known as a cashless exercise. That means they they wait risk free until the stock appreciates.
For example, let's say that you received options for 10,000 shares at $20. Typically you can exercise your option after one year and before 10 years so you have 9 year window. Let's also say that after 5 years the stock has appreciated to $35 and you decide now is the time to exercise the options. You would notify the company of your desire to exercise and would receive $15 x 10,000 shares, or $150,000. Your tax liability is only on the appreciation, or $150K. The bad news is since you didn't own the stock for those years, they are taxed at ordinary income rates.
The nice parts about options are:
1. You never have to lay out the capital to buy the original shares in the first place.
2. You can let the shares appreciate without risk to yourself. If the stock goes down, you simply don't exercise and you have no loss.
3. Your tax basis is only the difference between the grant price and the exercise price.
The only problem is that if you are an officer of the company, you can only exercise (or sell any company stock outright) on 4 random days of the year to help avoid the appearance of a conflict of interests and insider information.
"Nevertheless, it seems logical to me that the cost to the company should simply be the delta between the strike price and the market price if and when the option is exercised."
I'm not an expert on the accounting part of options, but I believe you are correct that the cost to the company is only the delta. I do believe they are required to have sufficient treasury stock to cover all of the options that are unexercised however.
"It's our duty to take advantage and exploit clueless investors isn't it? I think it's a form of tuition on their part."
Pretty soon they'll start referring to the stock market as the "Wall Street Casino" because that's what it looks like to them. They don't understand how to do due diligence and they clearly don't understand what drives corporate behavior. Some of them even believe that CNBC has direct control of the market's winners and losers.
Can you imagine that???
"Stand by for the lecture."
Not by me. I've changed my attitude a little, probably as a result of my discussions with Jeye. If some poster doesn't know the difference between industrial debt and finance company debt, he will make bad investor decisions. That, of course, leaves more for the rest of us.
It's our duty to take advantage and exploit clueless investors isn't it? I think it's a form of tuition on their part.