Union Takes Rare Front Seat in Chrysler Deal

[Pirate Smile]

Source: The New York Times

DETROIT — Labor unions usually dread bankruptcy, and for good reason. Their pay, benefits and pensions typically suffer significant cuts, as airline and steel workers can attest.
But for the United Automobile Workers union, Chrysler’s Chapter 11 case, which began in New York on Friday, could turn out to be — if the company survives and thrives — the Cadillac of bankruptcies.

The U.A.W., for example, has received upfront protection from the Treasury Department for its pension plan and the fund that will take over responsibility for retiree medical benefits.
Moreover, that fund, called the voluntary employee beneficiary association, or VEBA, will control 55 percent of the equity in the new Chrysler once it emerges from bankruptcy, and hold a seat on the Chrysler board.

-snip-
“I’m very comfortable,” Ron Gettelfinger, the U.A.W.’s president, said Friday on National Public Radio. “It’s not like we’re going into this bankruptcy fighting with Chrysler and Fiat and the U.S. Treasury. We’re going in there in lockstep to put our agreements in place.”

Labor and restructuring lawyers said such a comprehensive deal going into bankruptcy was rare.
“This is extraordinary, truly extraordinary,” said Mary Jo Dowd, a partner in the financial and bankruptcy restructuring practice at Arent Fox in Washington. “I never would have thought a year ago that this would occur. These are truly unusual times.”



Read more: http://www.nytimes.com/2009/05/02/business/02bankrupt.html?_r=1&hp

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Anyone who accused Obama of trying to screw the unions should eat a helping of crow right about now.

[Pirate Smile]

1. Ok - I like this part:

The government, in assessing what was needed to make Chrysler viable, decided it needed to support workers, as well as suppliers, and guarantee the warranties on Chrysler vehicles.

Because the union agreed to negotiate, it was made a partner, with the government and Fiat, in developing the plan to restructure the company. "

[bluestateguy]

2. Agreed

If John McCain had been in there, he would have simply let Chrysler fall into an unguided bankruptcy with no help from the federal government at all (Obama DID give Chrysler more bailout money; but it's not enough to stave off bankruptcy thanks to some of the creditors).

Point is, with McCain in there, Chrysler would have fallen into an outright liquidation, which would be far worse (not that the current situation doesn't suck too, of course).

[sasquatch]

3. Does that mean Chryslers will be purely American cars again?

:woohoo:

[Psephos]

4. no, they're going to be Fix It Again Tonys

I still don't get the part where FIAT walks in, puts nothing on the table except its "vaunted" engineering, and owns 20% of the business.

I had a FIAT when I was in school. It literally broke in half while I was driving to class one day.

[NCDem60]

5. Hate to say it but,

"I had a FIAT when I was in school. It literally broke in half while I was driving to class one day."


did you ever think of going on a diet? :evilgrin:

[Psephos]

6. lol n/t

[Sultana]

19. OMG

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

[tclambert]

8. Fiat has small engine and small car technology that Chrysler lacks.

And selling those high efficiency Euro cars at Chrysler dealerships should bring in more foot traffic. Don't you want to take a look at the Alfas, Ferraris, and Maseratis?

For unknown but stupid reasons, Daimler always refused to share technology with Chrysler, leaving Chrysler to do what? Repeat research and development Daimler had already done? Wasteful, for Daimler. Cerberus didn't have any auto technology to share. The result was Chrysler falling (further) behind in small car technology. Fiat and Chrysler working together gives them both big advantages. Fiat gets access to a US dealership network. ('Cause when your car broke in half, Fiat said, "Let's get out of the US market.")

[Demit]

13. Thank you for an informative post!

In two short grafs you laid out what went wrong before, and made me hopeful for this new alliance, which sounds like plain good common sense.

[Psephos]

17. They also have major reliability problems and a looming debt problem

http://www.usatoday.com/money/autos/2009-03-31-fiat_N.htm

I still don't get it. FIAT is one of the last companies I would tap to be a "savior" of Chrysler. This will not end well.

[WriteDown]

18. I believe the "plan"

is to be able to sell Chrysler's in FIAT dealerships around Europe, thus opening new markets to them. I'm not crazy about it either.

[SpartanDem]

7. I knew Obama had labor's back

[ProgressiveProfessor]

12. More like he is setting the union up this one

Chrysler is going to fail. The current prop up job is not nearly enough. However since the union (actually its health plan) will own more than have the company, it will become gospel in the mind of the public that the union ruined the company.

I may be a bit pessimistic and harsh here, but it sure seems clear to me.

[Hannah Bell]

15. and if they fail, it will cost the corp considerably less than it would have before this "great"

deal.

more workers getting $14/hr = less UE cost

no more 5.3 billion owed to the workers/pensioners' health care fund - uaw gave it away in exchange for non-voting shares of a bankrupt company

bankruptcy lets chrylser offload pension obligations & dealer contracts.

yep, it's win-win for the finance vultures.

[Jack Bone]

9. As a Chrysler worker, I don't know what to think...

I'm happy that Gettlefinger is "comfortable" in all of this. Then again, he's not laid off for possibly two months.

I'm very pleased w/ how President Obama and his team have handled this difficult situation.

There have been a few restless nights and many days spent debating the pros & cons of the buyout packages, but then patience takes precedent and things gets better.

I just hope that consumer confidence grows and the economy rebounds soon, otherwise I believe all the concessions and hard work will be for naught.

[Faith No More]

10. It's pretty much

"now that we've sucked the life out of the company, you boys can have it."

[Pirate Smile]

11. Who is "we've"?

[Pirate Smile]

14. kick

[WriteDown]

16. There is only ONE question...

Who is actually going to BUY a Chrysler at this point? A poll should be done. I doubt it will be reassuring.