1) Based upon your knowledge of Cost-Volume-Profit analysis (break even), how did GMs actions contribute towards lowering its breakeven point (consider all items that influence breakeven)? It is suggested that you first identify selected costs as either variable or fixed.

2) How does lowering its break even point benefit GM, strategically as a company?

3) Analyze Figure 15 (comparative manufacturing labor costs between GM and Toyota). This analysis is a before and after comparison of possible negotiated labor structures. Pro-forma is Greek for what if and is typically used as a term to identify future projections (this article was written prior to 2010).

Why might it actually be in the unions benefit to agree to a labor cost tier other than the more expensive Tier 1 (the original pre-2008 labor agreement)?

4) While some view the bailout of GM as somewhat controversial, due to the scope of the governments intervention, nevertheless the auto industry is still an important major industry in the U.S. and GM is its largest player. List some implicit considerations regarding why it is important for GM to be successful.

Figure 15: GM/UAW current and prospective wage structure (compared to Toyota) 2010 Proforma GM Toyota 2007 GM GM GM Wages +COLA Overtime Vacation/holiday Up-front bonus Other misc Total wages $28.12 2.81 6.55 1.44 4.23 $43.15 Core/Tier 1 $28.12 2.81 6.55 1.44 4.23 $43.15 Tier 1.5 $25.00 $0.00 $3.90 $0.00 $1.75 $30.65 Tier 2 $15.30 0.00 2.30 0.00 0.00 $17.60 $25.00 3.75 3.75 1.25 $33.75 Benefits Pension Group life Healthcare +OPEB FICA & UC Other misc. Total benefits 4.19 1.27 17.34 3.23 1.66 $27.69 5.88 1.27 6.08 3.23 1.90 $18.36 1.00 0.27 6.08 2.50 0.00 9.85 1.00 0.27 3.50 1.75 0.00 S6.52 3.381 1.25 5.29 2.88 0.71 $13.50 $70.84 $61.51 $40.50 $24.12 S47 Total labor cost per hour Sourcs. UAM, Company Reports, Deutsche Bank estimates Figure 15: GM/UAW current and prospective wage structure (compared to Toyota) 2010 Proforma GM Toyota 2007 GM GM GM Wages +COLA Overtime Vacation/holiday Up-front bonus Other misc Total wages $28.12 2.81 6.55 1.44 4.23 $43.15 Core/Tier 1 $28.12 2.81 6.55 1.44 4.23 $43.15 Tier 1.5 $25.00 $0.00 $3.90 $0.00 $1.75 $30.65 Tier 2 $15.30 0.00 2.30 0.00 0.00 $17.60 $25.00 3.75 3.75 1.25 $33.75 Benefits Pension Group life Healthcare +OPEB FICA & UC Other misc. Total benefits 4.19 1.27 17.34 3.23 1.66 $27.69 5.88 1.27 6.08 3.23 1.90 $18.36 1.00 0.27 6.08 2.50 0.00 9.85 1.00 0.27 3.50 1.75 0.00 S6.52 3.381 1.25 5.29 2.88 0.71 $13.50 $70.84 $61.51 $40.50 $24.12 S47 Total labor cost per hour Sourcs. UAM, Company Reports, Deutsche Bank estimates