1/2 of their product sales just disappeared. Not enough left to keep it
efficient and money making so why go forward with pending losses? And the
government keep the deal in GM (Old) as a fire sale. Probably wanted to
much money and Toyota said no. So it gets liquified. Toyota is just doing
the right thing, when a GM falls short they cut their losses.
The lesson is everything Government Motors and old GM turns to crap in time.
The plant was a liability in fiscal terms, being in operation for 25 years
there is probably a lot of pending retirements and older workers. Neither
Toyota or Government Motors wanted the burden. Read on to see why.
Pensions in companies are often farces. Even government pensions, as these
group pensions are skimmed and underfunded by those that run it. While
government dips taxpayer revenue to fund it's pensions, companies wiggle out
of it. A major part of GM going bankrupt is to relieve GM of the pension
While companies promise these nice pensions but don't deliver as often as
you think, it does indicate a major pension reform is needed. Be it
government SSN or the company group plan, they are all skimmed and broke.
The real answer is a non-cashable IRA and the SSN/CPP and company amounts
get paid at the time it is earned irrevocably into the employees name. This
would prevent idle promises of pension that everyone in the know considers
Take my experience with NorTel. In 1995 I could see the executive change
when NorTel was at it's peek. I had no faith in them and having had some
older family members get the old pension shaft, I left rolled mine over to a
LIRA (Canadian version of an IRA but locked in). Seeing Stern get retired
with almost $1M/year for 4 years of dismal service I doubt seriously the
board in the shared plan of NorTel provisioned it properly. My transfer now
yeilds me more per month divident income than if I waited until 65 to
collect and I have years to go and as it grows beyond the original promise.
Not only that, the NorTel plan degraded benefits twice, and now many not
even be solvant. Kick in the added benefit that my estate gets the cash and
not the company slush fund when I pass on.
Did it again last year, the company was dwinding and looking to lay people
off. I knew the pension was underfunded, so I gracefully took a severance,
rolled over my moneys into a IRA and LIRA (yes, I have worked both sides of
the imaginary line). First thing they did 3 months later was to reduce
benefits but I was immune. I feel sorry for those I left behind, they get 3
times the work and insecurity with a tyrant like management, but one has to
look out for ones own family first.
Companies don't reward honor, they don't consider loyalty to the company,
only loyalty to the sociopath manager counts and it isn't always effective.
People need to view that they are all temporary employees. And staying too
long at any one company is often a liability, not a benefit. Your pension
is part of it.
Somebody should write a book on this.
GMs Salary and hourly pension funds are almost fully funded , t5thru 2007
they were overfunded. GM DID NOT relieve themselves
of Pension funds. They eliminated Salary health care. and will make
payments and give the hourly a stock stake in the company
to fund health care.
It makes no deference whose manufacturing plant it may be, foreign or
domestic or what produce you produce.
If you product in not selling, your economies of scale are diminished, and
you are loosing money you have no choice but to cut operating costs. If you
do not you will go out of business.
Toyota sales in the US are way off and they are earning far less in profits
to be sent back to Japan that are then given back to them by the Japanese
Toyota does not sell nearly as many vehicles in the US as GM. Toyota is
more than happy to make its needed cuts at a plant where they must use at
least 70% American materials and parts not and where the employee are
provided the highest wages of any Toyota employee, have a much more
desirable benefits package as well as a much better defined pension plan,
not a 401K.
Only if the promises are kept, and 80% of the time or more they are not.
401K/IRA beats defined plans hands down unless you are once of those
extremely rare birds that work for one stable company for 40 years, they
fund it right, don't get sold, aquired or downsize. A lot of ifs for 40
years. Maybe true for government employees.
Don't tell NorTel, Enron and thousands of companies that defined plans are
better. Even the big fraudster Wagoner got his cut big time.
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