| UAW’s Chrysler Equity Is Small Comfort as Union’s Power Wanes | |
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| May 2, 2009 13:05 |   |
 | By John Lippert May 1 (Bloomberg) -- The United Auto Workers’ equity in Chrysler LLC is small comfort compared with the damage the automaker’s bankruptcy inflicted on the union’s bargaining power, labor analysts said. UAW President Ron Gettelfinger said in a statement the union’s retiree health-care fund had accepted a 55 percent stake in Chrysler in return for cutting in half the automaker’s $10.6 billion cash obligation to the fund. The UAW now has 26,800 members at Chrysler, one-fourth as many as in 1979. Its Chrysler equity could turn out to be worthless, leaving retirees with curtailed health insurance, if the company’s fortunes don’t turn around quickly, said Harley Shaiken, a labor analyst at the University of California at Berkeley. “What’s at stake is auto being the pre-eminent industry generating middle-class jobs in the country,” Shaiken said. “The union will have a tough fight in the future to make sure competitiveness results in high-wage jobs rather than coming at their expense.” While the UAW gained representation on the Chrysler board through the agreement, its power will be limited because shares owned by the trust fund will be voted by independent trustees, Shaiken said. Separately, General Motors Corp. said Tuesday it will be at least half owned by the U.S. government under a plan to slash its debt and reduce dealer ranks by 42 percent. 39 Percent |
| May 2, 2009 13:05 | #1 |
| The UAW could own 39 percent of the company, but GM said it may wind up with 40,000 hourly workers in the U.S. -- down from 450,000 in 1979. Chrysler listed assets and debt of more than $1 billion in documents filed today in U.S. Bankruptcy Court in New York. Banks including Citigroup Inc., JPMorgan Chase & Co., Morgan Stanley and Goldman Sachs Group Inc. had lent Chrysler $6.9 billion, secured by factories, real estate and other assets. On the surface, the UAW had a better day yesterday than Chrysler’s senior secured lenders, some of whom President Barack Obama blamed for causing the bankruptcy by rejecting a proposal to cut the company’s loan debt to $2.25 billion in cash. New York-based OppenheimerFunds Inc. said it rejected the offer because the government “unfairly” asked the fund’s shareholders to make greater sacrifices than were being asked of unsecured creditors, especially the UAW. The union’s new contract at Chrysler preserved the current $28-an-hour pay scale for active UAW workers, plus maintains their current health-care benefits. It contains significant concessions in other areas. Contract Concessions |
| May 2, 2009 13:05 | #2 |
| The contract reduced the number of skilled trades classifications, which the UAW used historically to keep work in-house. The contract also has a provision that as much as 25 percent of the total Chrysler-UAW workforce will make $14 to $16 an hour. This increased from 20 percent in an earlier contract. “They’ve accelerated the downsizing and two-tiering. They’ve accepted the logic of the market beating down the size of these companies and their core union workforce,” said Dan Luria, an analyst with the Michigan Manufacturing Technology Center in Plymouth, Michigan. Gettelfinger said yesterday the union had accepted the concessions by a 4-1 margin. “Our members have responded by accepting an agreement that is painful for our active and retired workers, but which helps preserve U.S. manufacturing jobs and gives Chrysler a chance to survive,” he said in a statement. In a statement yesterday, Obama said the bankruptcy had given Chrysler “a new lease on life.” Harsh Uncertainty |
| May 2, 2009 13:06 | #3 |
| The harsh uncertainty of the union’s future was brought home Thursday when Chrysler announced a shutdown as long as two months at most of its factories because suppliers are halting shipments. When production resumes, the company will be operated by partner Fiat SpA with a new nine-member board. On Wednesday, workers voted yes because UAW leaders said the new contract could prevent a bankruptcy and help keep factories operating, said Paul Thayer, 47, a welder repairman at a Chrysler stamping plant in Warren, Michigan. “Obama said none of the plants would close, and two hours later they sent us home,” said Thayer, a 17-year Chrysler veteran. “So now, whom do we call a liar, the president, the UAW or Chrysler, or are they all in bed together?” Thayer asked. Tapping 401(k) Thayer said that if he loses his job, he can tap his 401(k) savings plan to make his mortgage payments. He’ll have less money in retirement, but at least he’ll have a place to live, he said. Chrysler workers greeted the bankruptcy and new alliance with Fiat “with skepticism and fear of the unknown,” said Bob Cebina, president of UAW Local 723, which represents workers at a Chrysler engine factory in Dundee, Michigan. “There’s fear of what lies ahead. These people thought they would have a job for life, now they have to go through this,” Cebina said. |
| May 2, 2009 13:14 | #4 |
| Union gets 55% of stake thru swap btw workers' benefit liability and shares. There's a lot of uncertainty ahead considering conflict of interrest. It's a joke that seeking profits by working less and earn more... |
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