What the Buyback Bought

On Tuesday, GM’s board approved $20 billion to buy back its own stock. Let me tell you about a man who helped make that money.

Jim, an operator on my line at Buick City in Flint, kept a good book beside him and read between jobs. I once gave him my statement of purpose in life. He gave it back with careful notes. I still have them. His job card asked for parts installed on time. It never asked for what he gave me in those margins.

Jim did not buy either story he was told. Management told one to investors. The union told another to the rank and file. He heard both for decades, and he kept asking the same question: who knows the real story on the floor?

Over thirty years, on a line building fifty-five cars an hour, Jim grew his judgment, his knowledge and his ideas many times over. On the day the plant closed, the last car went by, and Jim stayed on his stool, looking down the line as if another one was coming.

The buildings and the tooling had lines on the balance sheet, and somebody wrote them down. Jim had no line. There was nothing to write.

Jim was one man in a long line. In the five years after 2002, GM cut its U.S. workforce by about 40 percent. Then came the 2009 bankruptcy. By 2019, GM had roughly 49,000 UAW workers left in the United States. Every one of those exits was booked as a saving. Not one was booked as value going overboard.

That $20 billion is now a fight between GM’s CFO and the union president. Neither asked what made it. Jims made it, and no ledger counts them. Until a board can count what formed workers make, it will keep handing the cash back. That’s the argument.

Tuesday, two men

On Tuesday morning, General Motors reported record third-quarter revenue of $50 billion and net income of $3.3 billion. It raised its free cash flow forecast for the year to as much as $12.5 billion. It had finished January’s $6 billion buyback, and its board approved a new $20 billion authorization with no end date.

Before most plants finished first shift, chief financial officer Paul Jacobson was on television explaining it. The buyback, he said, was driven by “stellar free cash flow generation.” The stock was undervalued, near the bottom of the S&P 500 on earnings multiple. GM has averaged about $7.5 billion a year in buybacks for four years and cut its diluted share count by 37% since 2023.

Within hours, UAW President Shawn Fain answered. He called buybacks “legalized mass looting,” said GM had sold its soul to Wall Street, and promised the union would remember it in 2028.

Two men, one morning, one subject: the cash. Jacobson says it belongs with the owners. Fain says it belongs with the workers. Neither asked what made it. Jim would have recognized both stories. He believed neither.

The middle

For thirty-six years my jobs sat in the middle: supervisor, shift leader, plant manager, chief operating officer. Every one of them stood between the finance office and the floor.

The middle is not where the power is supposed to be. But it is the only place you can see the asset both men are fighting over.

The CFO sees cash. The union president sees wages. The plant manager sees Jim.

From the CFO’s chair, a formed workforce is a cost line. From the union hall, it is a membership and a contract. Only from the floor do you see what it is: thirty years of judgment, built on company time, paid for in wages, owned by no one, recorded nowhere.

That is the power in the middle: sight, not authority. Jim had it from his stool. I came to it from the other side of the line. Neither of us bought the story told up to investors or down to the rank and file.

The hurdle Jim can’t clear

GM’s capital rule is plain: reinvest where the money earns a 20% return, keep the investment-grade rating, return the rest. It is a disciplined rule, and a blind one.

A return needs a denominator. Every press and robot has one, because it sits on the balance sheet. Jim does not. When one company buys another, U.S. accounting folds the assembled workforce into goodwill. Inside the company it is not recorded at all. Training shows up as an expense. Formation shows up nowhere.

So formation never clears the 20% hurdle. Not because it fails the test, but because it can never be entered. The cash goes back to shareholders by default. Jacobson even told analysts one reason cash came in higher this year: capital spending ran below plan.

Nobody in this story is a villain. The system is extractive by design, not by malice. I know, because I ran it for years.

What each man misses

Jacobson’s case rests on a stock the market undervalues. Maybe it does. Or maybe the market sees what the books cannot show: an asset that walks out the door every time a Jim retires, with no write-down, no disclosure, and no line for an analyst to question. A buyback priced off a ledger that cannot see the workforce is a bet made with one eye shut. On Tuesday the market heard the $20 billion and sold anyway: the stock fell about 8% during the day, on doubts that this year’s cash would repeat in 2027.

Fain’s case rests on fair share. He is right that the people who build the profits share less of them than their parents did. But a fair-share argument sends boards to the bargaining calendar. Every contract becomes a fight over a fixed pie, and the pie stays smaller than it could be, because half of what baked it was never measured.

One says the cash belongs to the owners. The other says it belongs to the workers. From the middle, the question is what the cash was made of.

Counting it

We have fixed a blind spot like this before. Until 2019, a public company could lease billions of dollars of buildings and equipment and keep most of it off its balance sheet. ASC 842 brought those leases on as right-of-use assets. The profession decided that an asset a company depends on, but does not own, belongs on