How Is Your 401/Retirement Plan Doing? Because It Is Still The Largest Pool of $$ Left to Raid

The American dream is under attack; better paying jobs are being shipped overseas, our larger companies and universities are contracting out jobs to companies that import H-1B Visa holders that receive lower wages and fewer benefits, the cost of sending our children to university often requires taking out a second mortgage, a major illness can wipe out 40 years of work and saving and now our retirement funds are disappearing.

Craig M. Douglas and Tim McLaughlin penned an article about Boston’s mutual fund companies with major stakes in Citi Group. The largest holder of Citi stock, which have fallen 68% just this year, is Fidelity Investments which purchased an additional 100 million shares in the last quarter of 2008. As I read this article I thought of my previous employer that had their 401k through Fidelity and my son who also has his 401k with Fidelity. At the end of 2008 his fund had lost more than 50%.

It’s more than plausible that a majority of Americans have lost as much as 75% of their retirement. Already we have seen our steel workers retirement being taken over by the government. The auto workers who have worked 40 years building for their retirement are watching as Congress and the media demonizes them for bringing down the auto industry. Wasn’t this accomplished by an auto industry that made promises to workers then failed to provide the funding needed to fulfill those commitments?

The private sector isn’t the only part of our economy that is reeling from the obligations made to future retirees. Many communities offered lavish retirement programs to their leadership only to find themselves under a burden that they are no longer able to fund. Communities have a severe need to raise capital for human services, infrastructure repairs, police and fire services only to find that any increase in revenues are being eaten up by retirement liabilities.

Every week we pay 14% of our gross income to Social Security and Medicare; our esteemed politicians and economists have told us that both will be bankrupt in twenty years. That is if the Federal Government pays back what it has borrowed from it. There has been numerous papers written stating that the retirement age has to be moved up while benefits have to be cut if the Social Security Administration is to survive.

Even the last bastion of retirement security is being taken away from us. With property values dropping in most areas of the country, the equity that many had planned on using for their retirement has disappeared. The family home is the single largest retirement saving investment that Americans have used, that investment has also taken a 25% haircut.

All of this is happening while the government is the only part of the economy that is growing. The future demands for our tax dollars also has to grow which means that we will have less to work with. Even as our weekly checks will grow by a massive $13, the government seems to be on a consumption tax spree. Proposed increases in our taxes are in the pipeline for everything from a 50% increase in the fuel tax, a 150% increase in cigarette taxes, a massive carbine emissions tax will cause our electricity costs to increase (again), water and sewer fees will have to increase as new mandates come on line and the continuing need for school and education funding will affect our property tax.

The only answer I have is counter to the advice of our government; not to consume, not to spend and become even more conservative than I already am.

UAW, General Motors Corp., Ford Motor Co. and Chrysler Fight To Survive At Retirees Expense

Over the years auto workers have given up wage-gains, allowing the company to walk away with a promise of improved retirement benefits. Now that the future is here, the companies are going to attempt to negotiate their way out of those promises.

Last year the combined big three (B3) lost $15 billion and face legacy costs of $114 billion from those previous “promises”. The auto makers priorities are no secret; transfer those legacy costs to a shrinking UAW, drastically cut wages, shift the healthcare and retirement costs to their current workforce, implement a two-tier wage schedule and increase the use of part-time workers.

As written about in Toyota Is Running A One Person Hybrid Race, the B3 made a conscious decision to give up the small car market preferring the higher margins obtained by pumping out petrosauruses. That decision has allowed the small car manufacturers to capture the U.S. market putting the B3 at a huge disadvantage.

As the contract negotiations get underway there are a few other current events that help shape the UAW’s position. In the recent contract signed with bankrupt (financially and morally) Delphi, the Future of the Union writes:

“A federal bankruptcy judge approved this morning a new labor deal between Delphi Corp and the United Auto Workers that offers senior workers cash payments in exchange for accepting lower wages."

“Delphi will close 11 of 21 UAW represented plants. It will operate 4, while 7 will be sold and operated by other companies. As a result, the 17,000 UAW members at Delphi will drop to 10,000 or 11,000 in the next few years —“

But it would appear that the UAW is getting help laying down the rules for the “part-time” designation, from a Business First of Buffalo article Delphi faces out-of-state hurdle by Thomas Hartley:

”A union representing more than 2,000 workers at Delphi Corp. plants in Ohio, Alabama and Mississippi said Friday that it has filed a contract termination notice with the bankrupt automotive-parts supplier.”

From Delphi accepts equity bid; judge approves union deal by Vinnee Tong
of the Associated Press and printed on the journalgazette.net:

“Wages will drop to a range of $14 to $18.50 an hour from $27 an hour. The cuts are effective immediately."

Equal work, unequal pay Josee Valcourt / The Detroit News

"BELVIDERE, Ill . -- At $18.50 an hour with limited benefits, Forrest Ammons earns a decent living building cars at Chrysler's Belvidere, Ill., assembly plant."

"But Ammons toils side-by-side with workers who make $10 an hour more than he does and enjoy full health care coverage, generous vacation time and a host of other benefits and protections."

"Ammons, 35, is what's known at the Belvidere plant as an "enhanced temporary worker," a designation that not only sets him apart from his full-time co-workers."

From the Dayton Business Journal article Delphi union initiates strike plan:

“The IUE-CWA labor union said Friday that it has filed a contract termination notice with Troy, Mich.-based Delphi. The notice allows the local chapters to strike after midnight Oct. 13.”

“As part of the notice, the union also revoked its permission for Delphi to continue to use temporary employees in IUE-CWA represented facilities. The union said Delphi has the option of reducing production output or hiring the workers as permanent.”

From Contract showdown begins by Josee Valcourt / The Detroit News

”Nothing less than the future of the U.S. auto industry is at stake in this year's bargaining. Automakers want to eliminate a $30 gap in hourly labor costs that puts them at a competitive disadvantage with their Japanese rivals.”

“The key issue is can we have competitive firms and middle-class jobs?"

“Amid shrinking sales and mounting losses, Detroit automakers have cut tens of thousands of jobs since the last round of bargaining in 2003.”

“In an unprecedented move in 2005, the UAW agreed to shoulder more health care costs at GM and Ford because of the companies' financial problems. Under those deals, active workers agreed to give up pay raises to help finance retiree health care while retirees' out-of-pocket expenses increased.”

From Powerless, retirees fear losing benefits:

“Retirees are typically fiercely proud of their auto careers and staunch defenders of the United Auto Workers union. But they are growing increasingly concerned about the fate of their health care coverage and pensions during upcoming contract talks.”

“They will have no vote on a contract that could dramatically overhaul their benefits, known as automakers' legacy costs. And many current workers say they expect to approve a deal in which everyone, including retirees, will have to make sacrifices.”

“The deals slashed $1 billion from GM's retiree health bill and more than $850 million from Ford's.”

"We took benefits instead of wages a lot of times, so our feeling is we've already paid for our benefits. Why should they be able to take it away?"

“With new workers paid far less than their colleagues doing the same job, Chrysler's Belvidere plant may be the future.”

IUE threatens strike against Delphi By DON SHILLING VINDICATOR BUSINESS EDITOR

The bottleneck in negotiations follows a settlement between Delphi and its largest union, the United Auto Workers. A bankruptcy court judge Thursday approved that contract, which cuts hourly wages from $27 to between $14 and $18.50.

"The union had allowed temporary workers as a goodwill gesture as long as talks toward an acceptable contract were progressing," Clark said. "Hopefully with this action, progress may improve."

Packard needs the temporary workers because of a large cut in its hourly work force last year. Nearly 3,100 of its 3,800 hourly workers in the Mahoning Valley at the time accepted buyouts and early retirement offers.

From a Bill Koenig article UAW Chief Stuck Between Reuther Legacy, `Crashing' Car Industry:

“At the same time, Gettelfinger's union is shrinking. UAW membership in December was 538,448, about one-third of its 1.5 million peak in 1979, as GM, Ford and Chrysler have cut jobs while losing U.S. market share. Thousands more members are departing GM and Ford this year in UAW-negotiated buyout programs.”

Seagram's Distillery Gives Employees A Hangover

From a Cincinnati Business Courier article by Dan Monk a Senior Staff Reporter, new owners CL Financial Group of Trinidad and Tobago, will cut 270 workers from 160-year old Lawrenceburg, Indiana facility. The remaining staff will be offered reduced wage and benefit packages, union and company officials say.

More lost jobs, reduced wages and sold assets by foreign investors.

Do You Have A 403(b)

If so this article by Neil Weinberg on Forbes.com is a must read. From the article:

“Lies, kickbacks, union corruption and tens of millions of dollars in ill-gotten gains are among the accusations laid out in a lawsuit that's likely to strike fear in the hearts of labor leaders and financial executives across the country.”

“The union received as much as $3 million annually for its endorsement and told its members "we've done all the background work so you don't have to!" In total, 53,000 union members invested over $2 billion in the plan. Expenses ran several times those of lower-cost alternatives.”

Circuit City Is Now Hiring – Cheap

This is late but still needs to be put out. From a Circuit City press release:

“The company has completed a wage management initiative that will result in the separation of approximately 3,400 store Associates. The separations, which are occurring today, focused on Associates who were paid well above the market-based salary range for their role. New Associates will be hired for these positions and compensated at the current market range for the job.”

“The separations, which are occurring today.” They couldn’t have given a reasonable notice. I’m neither pro or anti unions, but this is a classic example of what takes place if there isn’t one.

From the Circuit City careers page:

"During our history spanning 50-plus years, we have continuously evolved to maintain our leadership in customer service and the consumer electronics industry."

This just demonstrates that Circuit City is no longer capable of managing a higher quality sales staff and wants to become a K-Mart style retailer.

In a previous life I was a Training Director for a company with about 2,000 employees. We purchased all of our AV equipment from Circuit City; they laid it all out, put it together and showed us some tricks that made life easy. What do you think you’ll get now that they are hiring their staff for as little as they can. Would you want to work for a company that has this attitude towards their staff.

Circuit City is officially off my shopping list.

Hanesbrands Closes Winston-Salem Plant Laying Off 610

The press release from the Hanesbrands website:

“WINSTON-SALEM, N.C. (March 29, 2007) – Hanesbrands Inc. (NYSE:HBI) announced today that it will close its Stratford Road textile manufacturing plant in Winston-Salem and move production to existing lower-cost plants in the Caribbean basin and Central America.”

“Production at the Stratford Road plant, which makes underwear and panty fabric, will substantially end by June 30, 2007. The plant’s print fabric operation, which employs fewer than 20, is expected to cease production by the end of the year. In total, the closure will eliminate positions for the plant’s current 610 employees.”

“The company will provide severance benefits and career transition assistance to employees and will apply to the federal government for U.S. Trade Adjustment Act assistance for affected employees. Also, affected employees will be allowed to seek open positions at the company’s other manufacturing and distribution operations in the Winston-Salem area.”

The Triad, once the heart of the textile industry, has seen textiles leave the area for years. The local, county and state governments have responded by coming together and presenting to businesses incentive packages that have attracted quality jobs to that area. Their development efforts is a model that other agencies, from across the country, have tried to emulate.

If anyone has some details of their severance package, please leave a comment.

Do You Work For Citigroup?

Well tomorrow is the day that Eileen Alt Powell, an AP business writer, wrote that Citigroup Inc. chairman and chief executive Charles Prince will announce, via a conference call, the companies proposed plan to satisfy disgruntled shareholders. Media reports that as many as 26,000 people could get their pink slips or be “reassigned”.

On March 26 an article in the Sacramento Business Journal said that media estimates were that Citigroup would cut 15,000 jobs. That estimate has grown and Prince is also quoted in the AP article as saying that “some operations would be moved "to lower-cost locations." And, he said, there would be continuing efforts aimed at "rationalizing our technology platforms to operate more efficiently and effectively."

These cuts are said to generate $2 billion a year in savings.

Other current activity, of interest by Citigroup, is their binge of takeovers:

Citigroup's overhaul came as the bank announced it will purchase the bank of The Overseas Chinese Bank, a mid-sized Taiwanese bank, for $425 million.

Last month, Citigroup announced it was launching takeover bid worth up to $13.3 billion for Japan's Nikko Cordial Corp., the country's third-largest brokerage.

In December, Citigroup acquired an 85.6 percent stake in the southern China-based Guangdong Development Bank for $3.1 billion.

Newer article on July 4, 07: Citigroup Mixed Signals & None Good

I have to wonder how many more jobs can be moved overseas. The Chinese are ready, willing and waiting for our jobs. Take a look at: One benefit you won’t find in the United States.

Delphi Blames American Workers

Quoted from an AP article by Tom Krisher, “Delphi Loses $2B in Third Quarter Due to Cost of Paying About 20,000 Workers to Leave Company”

In the first nine months of 2006 Delphi lost $4.6 billion attributed $2.9 billion of the loss to costs associated with the work force reduction. The parts supplier plans to close or sell 21 of its 29 U.S. plants and has moved most of the lost U.S. production to lower cost labor markets.

As previously posted in: This Ain't Your Daddy’s Oldsmobile, Delphi needs to have some of their production near their primary customer, GM, and has replaced nearly 40% of their U.S. workers with lower wage workers.

Internet Frustrates Print Media

As new opportunities open some close, some in the print media have called it “economic restructuring”.

As previously reported on in Newsroom Layoffs the last couple of years have been rough on newspapers and other print media. Newspapers and magazines have been scrambling to publish effective web sites and then the problem still exists on how to capture a portion of massive on-line advertising revenues.

As Joanne Morrison and Michele Gershberg reported on in their Reuters article based on a report from the outplacement tracking firm Challenger, Gray & Christmas, the print industry has lost over 27,000 jobs in the last two years. Job cuts are only on the upward rise as 2007 showed an 88% increase over 2006.The actual number of layoffs could be quite a bit larger as small and rural publishers don’t report their job loses.

In the first two weeks of the year over 2,000 additional cuts have been announced by Time Inc. and The New York Times.