IV) GM’s Survival
According to assessment materials made available to the court there is no evidence that GM’s ability to survive is solely dependent upon reducing cost to retirees opposed to reducing cost to other operations and or departments of the corporation. The latter only proves that the need for cost savings from one source only mitigates the needs for savings from other sources as well. If the Champions (counsels) of the retirees’ class participated during negotiations then they probably would have negotiated a settlement that would allow GM to provide the minimum to prevent GM from going into solvency as well as reduce the cutbacks on retirees’ benefits keeping them to a minimum. They could have negotiated cutbacks relative to the retirees’ contributions, such as contributions made from GM management, Stockholders, and GM creditors all of who have a stake in keeping GM solvent just as much as the retirees do. Therefore, GM and UAW counsel never did present evidence in court that the court could use to determine whether GM has the ability to pay retirees’ health benefits or supplement them from contributions from other sources such as Stockholders or current employees, so GM could keep the contribution from the retirees to a minimum. Furthermore, no evidence has been put before the court that proves GM would have to go bankrupt in the near future.
If you are, a GM retiree and you agree with the statements above you need to file and “Objection” and join Mr. McKnight by contacting his attorney
V) Hand Picked
The UAW International Union handpicked all the representatives from Local Union retired workers councils. If you feel those retirees represent you, do nothing. However, if you believe those retirees do not represent your interest then you should file and “Objection!” and join Mr. McKnight by contacting his attorney.
VI) Viability of the DC-VEBA
“Under the new Modified Plan retirees’ premiums are going from ZERO to $50 dollar/ $105 per month for individual family coverage.” According to the Settlement Agreement these premiums will be reduced to $10/$21 per month with money from the VEBA. Mr. Baumkel said “However, the settlement agreement provides that there is no assurance that the VEBA’s assets will be sufficient to maintain the premiums at the $10/$21 level,” He said, “that there is no assurance that the $10/$21 premium would not increase because of insufficient funds in the VEBA.” The VEBA appears designed to go broke in five to six years. Even if it does go broke by 2007 contract negotiations active employees will be able to negotiate a new package and restore their retirement packages.
In addition, the UAW and GM both can walk away from the VEBA but the retirees are stuck with it whether the VEBA produces enough income to secure their healthcare or not! In fact Mr. Payne, counsel for the UAW and GM conceded during the hearing that “the funding of the VEBA is vulnerable, “insofar” as it is linked to the financial health of GM.” If GM winds up near solvency then the VEBA could go broke. However, if GM has several good profitable years, GM does not have to restore even one penny into the VEBA to help reduce the co-payments for retirees.
Stock appreciation funding of the VEBA is a shell game also. Since GM and the UAW negotiated the VEBA back in the summer of 2005, GM stock prices have dropped from 30 dollars to around 19 dollars a share. There is no guarantee in the Settlement Agreement that GM’s contribution of 8 million shares of stock can continue to support the retirees’ benefits at the 26 dollars a share level set in the Settlement Agreement. Furthermore, some of the funding for the VEBA will come from excess earnings from the GM pension plan (TRUST), which means GM may pay very little, if none, to the future contracts. The counsel or Champions for UAW/GM class, failed to get assurances in the Settlement Agreement that would make provisions by which improved financial conditions at GM would automatically restore the forfeited retirement benefits.