STERLING HEIGHTS, Mich. (AP) - The United Auto Workers union
will own 55 percent of a restructured Chrysler LLC and its retiree
health care trust will get a seat on the board if union members
vote to approve contract concessions this week.
Chrysler stock could even be traded publicly again, as there are
mechanisms for the UAW to sell shares to fund the health care
Factory-level union leaders voted unanimously Monday night to
recommend approval of concessions that union President Ron
Gettelfinger said would help keep the automaker out of bankruptcy.
A summary of the revised Chrysler-UAW contract says that Italian
automaker Fiat Group SpA eventually will own 35 percent of a
restructured Chrysler, with the remaining 10 percent stake divided
between the U.S. government and secured lenders, mostly banks and
The Obama administration required that equity fund at least 50
percent of Chrysler's $10.6 billion obligation to a union-run trust
that will take over retiree health care costs starting next year,
according to the summary.
It also said that under the agreement, workers will no longer
get most of their pay if they are laid off. Instead, they will get
supplemental pay from the company equal to 50 percent of their
gross base pay.
Union leaders say ratification votes across the nation should be
finished by Wednesday. That's one day before Chrysler's
government-imposed deadline to restructure or the government will
cut off aid and send the company into liquidation.
Chrysler is living on $4 billion in U.S. government loans and
must win concessions from its unions, swap equity for debt and ink
a partnership deal with Fiat. If Chrysler can pull the package
together in time, the government has said it will loan a new
Chrysler-Fiat partnership up to $6 billion more. Chrysler also
could get $500 million to stay afloat through April.
Fiat has been in discussions with Chrysler to take a 20 percent
stake in the Auburn Hills, Mich., automaker in exchange for Fiat's
Under the UAW deal reached with Chrysler, Fiat and the U.S.
Treasury Department, cost-of-living pay raises will be suspended
through the contract's expiration in 2011, and it adds a provision
for binding arbitration on a new contract through 2015. If no
agreement can be reached on a new contract, the arbitrator must
base total hourly labor costs on a rate comparable to Chrysler's
U.S. competitors, including foreign-owned manufacturers.
The union also agreed to consolidate nonskilled labor job
classifications into a team concept at all factories. Performance
and Christmas bonuses will be suspended this year and next to help
pay health care costs.
As part of the deal, Fiat committed to manufacturing a small car
in one of Chrysler's U.S. facilities, but the summary doesn't say
where. In addition, Fiat will share key technology with Chrysler,
including as all of its vehicle underpinnings and a 1.4 liter,
The health care trust will select one member of Chrysler's
board, with the UAW's consent.
"We fought to maintain our wages, our health care and our
jobs," Gettelfinger and Vice President General Holiefield said in
a letter to workers. "In the face of adversity, we secured new
product guarantees, and we negotiated new opportunities for UAW
involvement in future business decisions."
In addition to the stock, the company will pay its remaining
$4.6 billion obligation to the health care trust in cash annually
through 2023. Payments will start next year and in 2011 at $300
million, rising to $400 million in 2012, and $600 million in 2013.
After that, it goes to $650 million per year in 2014 through 2017
and to $823 million in 2019 through 2023.
Under the health care trust, retirees will no longer have dental
and vision coverage, according to the summary sheet. The union says
it likely will have to make additional benefit cuts in 2010 and
2011 because of uncertainty over the value of the Chrysler stock.
However, if the stock gains in value, benefits could be
restored, the summary sheet says.
The local leaders recommended approval of the deal after a
three-hour meeting at a suburban Detroit hotel.
The deal likely will serve as the template for a pact with
General Motors Corp., which also is receiving federal aid. Ford
Motor Co. already has signed a deal with the UAW, but has said it
will see parity if Chrysler and GM get better terms.
Also Monday, Germany's Daimler AG said it reached a deal to get
rid of its remaining 19.9 percent stake in Chrysler, severing the
last tie between the two automakers that was formed more than a
Under the agreement, Daimler will forgive $1.9 billion in loans
it extended to Auburn Hills, Mich.-based Chrysler, which it had
already written off in its 2008 financial results. Daimler also
agreed to pay $200 million into Chrysler's pension plan when the
deal takes effect and in each of the two years afterward. The money
will help fund the pensions of former DaimlerChrysler AG workers,
Daimler, who is slated to report quarterly results Tuesday, said
the deal is expected to reduce its second-quarter earnings before
interest and tax by about $700 million. The automaker has recorded
billions in losses related to Chrysler since selling off most of
its stake in the U.S. carmaker to New York-based private equity
firm Cerberus Capital Management LP in 2007.