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The deeply flawed, and inaccurate GM Lawsuit: Detroit media's failure to investigate:Part One

AlexB

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First, I would like to start off stating I'm surprise by the lack of ''the back of the envelope'' handwork put into by the media. The Detroit News instead of actually reviewing facts/timelines deicide to recycle previous information/ court material about UAW corruption and take GM Lawsuit (unfiltered)as gospel and spin it into a grossly presentation with lack of performing factual challenges (which so-called ''journalism'' is suppose to be about). Instead, it played up to the same old lip-service and typical ''GM cheerleaders'' that may have help cause the nearly demise of the United States Automotive industry by putting executives in an ''echo-bubble'' (a bubble that is less prestige than ''Wall Street'', ''Silicon Valley'') that prevents so many executives from seeing reality.

Lets do something that many simply have not been bother to do: actually post the lawsuit/complaint itself:http://int.nyt.com/data/documenthel...ysler/21db6535b3b6b6b083ad/optimized/full.pdf


As one would dig into this lawsuit, the shambles of misinformation, sloppy chronology, proven inaccurate details makes anybody with a brain wonder how could even such sad former giant of it former self away such trash to be greenlight by their President and CEO (Mark Reuss and Mary Barra).
Take the most elementary items--like the day you (as an Business) went Bankrupt--should be an unforgettable day of trauma ,and the lessons from such painful experience shouldn't be forget---well except GM that's who....


Chrysler filed for Chapter 11 on April 30,2009. Old GM followed two
months later.
GM filed bankruptcy on June 1, 2009 (a month later, or a 31 day gap between dates), not 60 days/two months later. Other holes in this lawsuit included
In June 2009, Chrysler emerged from bankruptcy with Fiat owning 20 percent of its equity. This was a coup for Fiat as it had only contributed intellectual property and know-how, and no actual money. Fiat also obtained operating control over Chrysler and Marchionne became its CEO. 61. Through the Chrysler bankruptcy, the UAW, through the UAW Trust, emerged as the majority owner of Chrysler, owning 55 percent of the equity. Additionally, the UAW Trust received a note payable for $4.6 billion at 9 percent interest and the right to appoint a director to Chrysler’s Board. Fiat was given the right to purchase 40 percent of the UAW Trust’s equity interest in Chrysler. 62. From bankruptcy, the UAW Trust also became the largest shareholder of New GM, obtaining 17.5 percent of the equity
The largest shareholder of GM after Bankruptcy until the end of 2013 was the U.S. Government, not the UAW VEBA Retiree Healthcare Trust.
For some reason the omission of the U.S. Government, and the U.S. Auto Task Force runs up-Runs-down throughout GM lawsuit, but isn't surprising given how the Czar of the Auto Task Force (Steve Rattner) book (Overhaul) basically burns down GM's lawsuit.....more on that later to come.

Back to being off by a mile on different facts, even Sergio's bio history with Fiat/Fiat Chrysler get ****ed up by GM:
Sergio Marchionne (“Marchionne”): Non-party Marchionne (deceased in2018) served as the CEO of Fiat, and later FCA NV,from2004 through his death in 2018. Marchionne also served as the Chairman and CEO of FCA from 2014–18, the Chairman (2011–14) and CEO (2009–14) of Chrysler, and the COO of FCA North America (2011–18).At all times relevant to this Complaint, and until his death, Marchionne was an agent of FCA Group.
Sergio was never Chairman of Fiat, nor Fiat Chrysler.

I. OPERATION CHRYSLER: FIAT ACQUIRES OPERATING CONTROL OF CHRYSLER FOR NO CASH
Now back to the leaving out the U.S. Government/Task Force element of this GM lawsuit. GM goes on-and-on about Fiat's involvement & eventual purchase of all of Chrysler that leads to the Fiat and Chrysler merger in the Netherlands with the theme of Fiat putting no upfront money into Chrysler. But besides the Auto Task Force mandating Fiat running Chrysler (as part of any deal),the key reason of Fiat's ability under Sergio to not put any upfront capital into Chrysler is of all Companies GM:
''To the GMers, the very identity of the company was at stake-how much more of its heritage must GM sacrifice to earn the right to survive? Tensions rose higher in mid-April when Harry asked GM to consider absorbing Jeep, Dodge Ram, and Chrysler minivans. In high-level meetings, GM executives would sometimes abruptly leave to talk among themselves outside the conference room, leaving Team Auto to wonder what was going on.''
''We had issues to resolve with Fiat, had not begun to negotiate with the UAW, and of course Jimmy Lee and the creditors were still demanding 100 cents on the dollar. We had carried out so little due diligence on Chrysler as a business that to invest now would be, by private equity standards , negligent. As smart as Larry was about so many things, I wasn't sure private-sector dealmaking was his strong suit.'

''The Fiat negotiations were not going well. Although Chrysler had unveiled the alliance with great fanfare on January 20, we viewed that announcement as a beginning rather than an end. In particular, we remained concerned that Fiat was putting no money into the deal. This was bad business and bad politics. The agreement called for the Italian automaker to get an initial 35 percent ownership stake in return for providing Chrysler with technology and management expertise. I worried about the potential backlash from billions of dollars of U.S. taxpayer money going to an automaker that would be managed and partly owned by a foreign company. Worse, for Fiat the deal was risk-free-- if the alliance didn't work, it could walk away with no penalty.''



''We struggled to persuade Sergio to put up some cash. But as much as the ambitious CEO wanted Chrysler, that was where he drew the line, at least in part because Fiat was facing its own financial challenges. Eventually, after hard bargaining, Ron succeeded in carving back Fiat's initial ownership stake to 20 percent, requiring the company to meet meaningful milestones before receiving additional shares and limiting its ownership to no more than 49 percent until the entire Treasury investment had been repaid. All in all, I felt it was a fair deal, and nothing that has transpired since then has changed my mind.''
Once again from Steve Rattner's book(car czar), GM had numerous chances to absorb Chrysler (or even various slim-down version's of Chrysler) during the Great Recession, all the way to Mid-April of 2009 as Sergio was a big pain in the Government/Cerberus/UAW asses. Yet GM whom now trying to play victim over the whole ordeal, failed to even step up when asked by the Auto Task Force to put counter pressure on Sergio. Ironically, because of GM refusal to truly consider Chrysler, Fiat could get into Mopar's doors with no upfront Cash and get the U.S. Government to agree to such terms especially because the U.S. Government ruled out (very early on in the early days of the Auto Task Force) Chrysler as an standalone & independent Automaker.

The other big element of GM's lawsuit is labor cost & terms where GM's lawyers attempt to tie labor agreement to bribery the way back to 2009, however the terms of the Bankruptcy Labor contract was put in place by Ron Bloom (former U.S. Marine) of the U.S. Government's Auto Task Force
''the head butting led Ron reluctantly to conclude that Fiat and the UAW would never reach agreement on their own. He summoned both parties to Washington and installed them in separate rooms on different floors of Treasury. A third room was reserved for Nardelli and company, who would spend the following days overseeing Chrysler via their cell phones and BlackBerrys and cooling their heels. For most of a week, Ron was Henry Kissinger shuttling between the North and South Vietnamese. Fiat and the UAW both understood that Chrysler's wages would have to be competitive with those of the transplants. Now that Sergio had committed to a projection of future sales, there was finally a quantitative basis on which to negotiate.''
''We knew from the outset that reducing hourly pay for active autoworkers would be confrontational beyond imagination, so we were relived when it turned out that base wages were not that different between Detroit Three and the Japanese transplants. Ron found other aspects of the contract where it would be easier to ask for cuts. Apart from cash income, UAW members enjoyed a gamut of benefits that added substantially to the automakers' costs. Another big burden for the automakers was the UAW work rules. Those required both GM and Chrysler to maintain scores of job classifications. A worker at Chrysler could not as much tighten a screw if it was not in his job description.''


''Ron focused on expanding a provision that new employees-- so-called tier-two workers-- could be hired at a lower wage. This category had been created in 2007 as a way to lower Detroit's labor costs without penalizing existing workers. It allowed for a limited number of new workers to come in at $14 per hour, versus about $28 per hour that existing UAW members earned. But because the automakers had been mainly laying off rather than hiring, few tier-two workers were actually on the domestic payrolls. To bring Sergio's projected costs down, Ron persuaded Gettelfinger to raise the limit on the number of tier-two workers that Chrysler would be allowed to hire. Of course, for Sergio's costs to actually decrease, Chrysler's business would have to grow enough to need new workers. ''

''As the third week of April ended, an agreement between Fiat and the UAW at last seemed within reach. Ron knew he had to close the deal--hardly a given with Sergio, who as a ''volunteer'' was liable to back away again at any time. But Ron realized that he had trump card to play.''
''He went to Sergio and said, ''How about if I can promise you labor peace? Not just through this contract but through another contract after that? If I can tell you that there won't be a strike, that's especially valuable, because you want to change the culture.'' Ron offered other goodies as well. There included a commitment to keep wages frozen for the life of the contract, through 2011, and a commitment to have any open issues at the end of the next negotiation be subject to binding arbitration based on maintaining competitive wages with the transplants. Yet even with these enticements, Sergio was hard to pin down. First he said yes, then no, and then he decided to go back to Italy for the weekend to think about it. There he had been hailed by the Italian media as a conquering hero for Obama's decision to designate Fiat as the savior of once mighty Chrysler. Finally, near the end of the weekend, Sergio called Ron and authorized him to make the proposal him to make the proposal to Gettelfinger.'

Ron sat down with the UAW chief the following morning. He knew that his ''ask'' would not seem quite as big to Gettelfinger as ''give'' had seemed to Marchionne because the union chief was operating under the mistaken assumption that the conditions pf the TARP loan agreement, including the no-strike clause, would automatically stay in effect.

''Nonetheless, Ron also knew that he was asking the UAW to make the biggest concessions in its history. ''This is the best I can do,'' Bloom told Gettelfinger , outlining the terms he'd given Sergio and using every once of his credibility as a labor negotiator. ''I know you don't want to do this deal, but then we need to go home and Chrysler is going to liquidate.'' Gettelfinger thought about Bloom's proposal for an hour and agreed.''
As Rattner's book makes clear, the more marketshare/demand one (Automaker OEM )has, the more the automaker needs for new factory workers whom would of course be of lower pay. GM's so-called disadvantage is one of its own doing as GM Management have loss marketshare since Bankruptcy so despite a new U.S. SAAR rebound, GM hasn't had the same needed to hire new factor workers like Chrysler has. In addition to the rebound of Chrysler's marketshare with the added rebound of U.S. SAAR, Chrysler workforce was gutted under Bob Nardelli and needed to hire just to put the plants back in motion.

So the labor disadvantage that GM is moaning about is structural one, where time will lessen the labor cost disadvantage driven by GM's older workers retiring and Chrysler's new hires aging (higher pay) . However the quickest & best way for GM to eliminate the labor disadvantage is by GM Management is to stop losing marketshare while start generating product that's in demand so GM will need more new hires as an overall part of their workforce.

Part two will come by next week ( why GM's lawyer's need to be disbarred from practicing law) so stay tune!
Happy new year!
 
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Bili

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@AlexB

Do you dare to post it on the other forum? :LOL:
 

AlexB

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@AlexB

Do you dare to post it on the other forum? :LOL:
That website's mods one time got upset over my pointing out flaws in some Auto media folks pieces before. Just let that villiage go the way of caveman.

But you or others can post link to this thread for some fireworks as a preview to New Year's eve.
 

AlexB

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AlexB

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lol. Because 'Merica lol. That sucks. It is literally the best breakdown of the investigation

I'm with @AlexB on this.
Here's the thing : there's no ''breakdown'' occurring in that highly produce trash which isn't going to be what the Judge and the U.S. Legal system is going to be considering : reaggregation of GM's lawsuit by GM's PR Team through media outlets in which GM buys alcohol & dinners (''socialize'') for . Anybody can make fancy graphics (don't matter to U.S. legal system).
@Bili: Once again the actually Lawsuit :http://int.nyt.com/data/documenthel...ysler/21db6535b3b6b6b083ad/optimized/full.pdf
 

Bili

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Here's the thing : there's no ''breakdown'' occurring in that highly produce trash which isn't going to be what the Judge and the U.S. Legal system is going to be considering : reaggregation of GM's lawsuit by GM's PR Team through media outlets in which GM buys alcohol & dinners (''socialize'') for . Anybody can make fancy graphics (don't matter to U.S. legal system).
@Bili: Once again the actually Lawsuit :http://int.nyt.com/data/documenthel...ysler/21db6535b3b6b6b083ad/optimized/full.pdf

GM wants trial by jury. Right?
 

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