UAW Planning To Sell Chrysler Stock Obtained From Bankruptcy Deal To Fund VEBAUnited Auto Workers will sell its 55% stake in the reorganized Chrysler as soon as possible to fund a trust that will cover retirees' health care costs, UAW President Ron Gettelfinger said Monday, the AP/Houston Chronicle reports. Chrysler owes about $10.9 billion to the UAW-operated voluntary employees' beneficiary association, which will cover health benefits for about 82,000 retirees and their spouses, as well as future retirees. The trust will start paying out in 2010.
Gettelfinger expressed confidence in the fund but said that it "will be on life support initially." Dental and vision benefits for retirees already have been cut from the VEBA, and further cuts are possible, he said (Johnson, AP/Houston Chronicle, 5/4). The fund will start with $1.5 billion from an existing health care trust, and will receive about $300 million from Chrysler next year. Gettelfinger added that all money from the sale of the Chrysler stock will go to the VEBA (Bennett, Wall Street Journal, 5/5).
Although the Chrysler deal grants the VEBA a seat at the board of the new company, that position would carry very little influence because it must vote with a majority of independent directors, according to Gettelfinger. Gettelfinger said of the deal, "Of all of the alternatives that were out there in front of us, clearly this is head-and-shoulders above anything else." He also discounted criticisms from Chrysler's bondholders who said the agreement was unfair because it gave the union a better deal. He said that UAW is taking a large risk in using stock to fund the trust because the stock has little value. "Let's be honest, it's zero today. The equity is going to be stressed," Gettelfinger said, adding, "This isn't about finance, it's about people that expected health care benefits for life" (AP/Houston Chronicle, 5/4).
No-Cost Clinic Opens for Laid-Off Ford Workers
In other automaker news, Oakwood Health last week opened a new, no-cost medical clinic in Dearborn, Mich., to provide care to former Ford Motor employees who lost their health coverage when they were laid off, the Detroit News reports. The clinic will remain open for two half-days weekly or longer if needed. Currently, only former Ford employees who have been laid off in the past three years and their families qualify for no-cost care at the clinic. The automaker plans to send letters to about 6,000 former workers to inform them about the clinic. While about 30 primary care physicians have volunteered to work at the clinic, the hospital is providing the clinic with additional staff, no-cost medical tests, space and equipment (Rogers, Detroit News, 5/2).