GM Chapter 11 filing sad day for workers, GM stockholders in northern Ohio

SANDUSKY For local GM retirees, active United Auto Workers members or owners of GM stock, Monday's b
Tom Jackson
May 24, 2010

SANDUSKY

For local GM retirees, active United Auto Workers members or owners of GM stock, Monday's bankruptcy filing was only the latest chapter of a sad saga.

Thousands of good-paying auto industry jobs already have been lost in Erie County, said James Harrington, president of the Local 913 retiree chapter of the UAW.

"I don't care how many $8-or-$9-an-hour jobs are created," he said. "They'll never replace $25-an-hour jobs."

Monday's bankruptcy filing by General Motors created uncertainty among retirees, although the Obama administration sought to provide reassurance.

Among their concerns was health care coverage.

Harrington said under the latest agreement between GM and the UAW, "as of today, we're losing dental and vision."

He said he explained those provisions when his retiree chapter met a few days ago.

"They accepted it," Harrington said. "They've been watching the news. They took it like grownups, obviously."

According to a letter the UAW sent to Congress, retirees also have given up reimbursements for the Medicare Part B premium ($76.20 a month) and are paying more for prescription drugs. In addition, retirees with pensions of less than $8,000 will have higher premiums and deductibles.

The long-term fate of health care for retirees may depend on how well the new version of GM does.

A trust fund designed to fund health benefits for GM retirees originally was going to be supported by cash. But the UAW was forced to accept an agreement that finances much of the fund -- known as the voluntary employees beneficiary association, or VEBA -- with future GM stock.

"Well, hopefully, GM under the new structure will be a viable company and the value of the company will increase and that won't be a problem," Harrington said.

In a statement on its Web site, GM said Monday that there will be no changes, for now, in pension, life insurance or health benefits.

But the statement added: "It is too soon to know with certainty how benefits for retirees of our (U.S.) operations may be affected once sale to the New GM has been completed. However, we do anticipate a reduction of certain benefits in the future."

Analysts are also predicting GM's bankruptcy filing and the company's latest round of plant closings might hurt GM suppliers. GM has been a prime customer for Kyklos Bearings International, the former GM, then Delphi plant in Perkins Township that now employs about 550 people.

KBI officials said Monday via a public relations firm that they had no comment. Doug Preston, president of UAW Local 913, which represents KBI workers, did not return a call for comment.

Meanwhile, GM dealers sought to reassure customers that warranties won't be affected and that they'll continue getting service.

Gary Steinle, one of the owners of the Steinle family's GM dealerships in Clyde and Fremont, said GM has assured car dealers it will keep reimbursing them for warranties and incentives to keep normal business running.

"We've been busy in our service department," he said. "We had a pretty nice spurt of sales over Memorial Day. In general, business is down. We're still taking care of the customers one day at a time."

While it may be business as usual for now at local dealerships, for GM stock owners who have stubbornly held on to their shares, Monday's filing represents the possible end of a long ride to the bottom.

George Steinemann, senior vice president at Citizens Bank, said that unless GM's bankruptcy case turns out to be unusual, holders of common stock will be left with nothing.

"It's going to be worth the paper the certificate is printed on, but that's about it," he said.