General Motors Co. starting to have some financial trouble years before the financial government bailout of 2012. Usually monsters do not rear their heads over night; usually it comes from years of the poor planning, control, and inefficiency by the company leadership. An inefficient business practice is the high cost with low return will never work; you need low cost with high return. An example is in Europe GM has high labor costs; “the company has been losing money for more than a decade” (Kinicki & Williams, 2012. p. 55). The UAW (united auto workers) made concessions during the government bailout. Some of these were eye care and dental coverage. Lost wages were dramatically reduced; an example of this is a worker hired in from years ago might made $29 an hour to the ones hired after the 2012 bailout are $17 an hour. Instead of guaranteed annual raises, the UAW now gets profit sharing, which means if the company is not profitable the employees get nothing during the bad time the company is having. If workers are laid off they do not get paid while they are not working and cost of living increases were cut and also overtime now is over forty hours instead of eight hours. …show more content…
Under the new agreement bailout these concessions reportedly saves GM 340 million yearly, which put the employee benefits hourly package $20 an hour less than what it was before these new adjustments. This put them on the same page as non-union auto makers like Toyota. According to poliifact.com, the UAW trust holds 10.3 percent in GM and it will increase to 39 percent once the trust is fully funded. Why was the union given more ownership? According to businessweek.com the “The UAW won’t directly own equity stakes in the car companies. The shares will be owned by a Voluntary Employee Benefits Trust, or VEBA, which invests cash and manages a portfolio to pay union healthcare benefits” (Meadors,