GM

[tw]

Originally Posted by classicman

Didn't reducing retirees benefits also have an impact?

Once an employee retires, then that employee is no longer an expense to the company. Of course, that means the company is honest. Every day that employee works, the company puts a little more money in his pension fund. When the employee retires, only the pension fund - not the company - pays that retired employee.

But GM mortgaged everything to make management look good. GM stopped funding the pension fund decades ago so that the world's worse and most expensive cars would show a profit in the 1990s and 2000s. Why were pensions a problem for GM? In a world where bean counters screw everyone, the unfunded pension fund then gets blamed on union employees. When tens of $billions are owed to the pension fund, then GM knows a majority of Americans will blame the unions rather than blame what is taught in the business schools. GM did what any good business school graduate would do. Mortgage the company and then blame someone else.

Union costs were never a problem. Lying bean counters who stop funding pension were the problem. GM owed tens of $billions in unfunded pension obligations. Business school graduates who stifled innovation to make short term profits – that is GM's major problem. By shorting those $billions, GM could claim $millions of annual profits. Claim profits on cars that (if the bean counters were honest) should have forced GM into bankruptcy in 1991. Then when the spread sheets could not longer hide the truth, 'blame the unions' always works on an American public fed only by sound bytes. Unions never created any of this.

Once a bean counter is taught that “the purpose of a company is profits”, then his whole life purpose is similar to a mafia don. Do anything to make a profit. Unions did not create a problem that has existed in GM for more than 30 years. So who suffered because top management lied? Everyone except top GM management.

GM's pension problems are directly traceable to spread sheet spin. Other companies simply meet their pension obligations. GM stopped funding the pension funds in 1991 to avoid bankruptcy - to protect top management jobs and bonuses. 18 years later, the bills came due. So we should blame the unions? That is what GM did. GM called it legacy costs rather than call it by its real name - bean counter fraud.