Chrysler Deal Could Jeopardize Retiree Health Benefits if Restructured Company Does Not Return to ProfitabilityUnited Auto Workers "appears to be enjoying relative safety in helping steer the course of the [Chrysler Group] bankruptcy," but if the company does not survive post-bankruptcy, UAW's stake in the restructured company "could be worthless," the New York Times reports. Under a deal reached last week, Chrysler will grant a 55% stake in the restructured firm to a health care trust fund for retired autoworkers. The union was made a partner in the company, in addition to the federal government and Italian automaker Fiat, because it was willing to negotiate, according to the Times (Maynard, New York Times, 5/2). General Motors also is negotiating a plan with UAW that could grant the union a 39% stake in the company.
According to the AP/Seattle Post-Intelligencer, "the union could still come out the winner at Chrysler" and GM, but "that depends on the iffy prospect of the companies making money again and their stock values rising sharply" (Krisher/Carpenter, AP/Seattle Post-Intelligencer, 5/2). The Times reports that Chrysler's failure would put the voluntary employees' beneficiary association in "dire straits," as it would owe the Treasury Department but would not have the funds to pay off its loans, according to the Times (New York Times, 5/2).
Gerald Meyers, a University of Michigan business professor and former CEO of American Motors, said, "I think it's a whole lot weaker than it appears," adding, "I would say the UAW wouldn't want to get into the speculative game of the stock market. That's not reassuring to retirees."
Corey Rosen, founder and executive director of the National Center for Employee Ownership, said, "What's happening at Chrysler and GM is not employee ownership in any recognizable way," adding, "The employees don't own any part of Chrysler or GM, it's the health trust, and they're going to sell that stock as soon as they can. It's more like somebody saying, 'I can't pay the money I owe you, so take some stock and you can sell it'" (AP/Seattle Post-Intelligencer, 5/2).
However, UAW President Ron Gettelfinger on Friday said, "I'm very comfortable," adding, "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" (New York Times, 5/2). Gettelfinger added, "The VEBA's going to be stressed in order to pay the benefits. So what we will need to do ... is, as soon as we possibly can, to start selling these shares" (AP/Seattle Post-Intelligencer, 5/2). This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.