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UAW Strongly Objects to GM’s U.S. Factory Closings

Negotiation deadlock spills over into public lobbying by union.

by on May.18, 2009

Kevin Melton, UAW Local 602, courtesy UAW

The implication is the Auto Task Force has told the union the closings will proceed.

With the 31 May deadline approaching for GM’s revised plan, the United Autoworkers Union on Friday sent a letter to members of the U.S. Congress objecting to the centerpiece of GM’s Viability plan – closing 16 plants in the U.S. and importing vehicles from low-wage, non-unionized countries.

The factory closings are not new, they have been in various versions of the plan since GM went to the U.S. government for bridge loans late, last year, but in bringing the argument over the closings public, the union is attempting to prevent some of them through political pressure after apparently being shut down at the bargaining table. The implication is that the Auto Task Force has told the union that the closings will proceed.

Alan Reuther, UAW Legislative Director, wrote Congress that “As the discussions continue concerning the restructuring of General Motors, the UAW wishes to restate our strong opposition to the company’s plan to close 16 manufacturing facilities in the United States, while at the same time dramatically increasing the number of vehicles it will be importing from Mexico, Korea, Japan and China for sale in this country. We urge Members of Congress to join with the UAW in urging the Obama administration to insist, as part of any further government assistance, that GM should be required to maintain the maximum number of jobs in the U.S., instead of outsourcing more production to these other countries.”

The Chrysler restructuring plan now being worked out in bankruptcy court in New York City also closes U.S. factories and turns the company over to off-shore based Fiat. The factory closings, though, are smaller in number and the small cars and engines that will be supplied by Fiat will be built in the U.S., Canada or Mexico. Furthermore, by getting access to Fiat’s overseas distribution system, exports of Canadian or U.S. made vehicles could increase, preserving or creating UAW jobs.

Subscribe to TheDetroitBureau.comThe core issue the union is raising – U.S. jobs — is an aspect of industrial policy debates that politicians from both the Democratic and Republican parties have ducked for decades. With unemployment at record levels and increasing, our lack of industrial policy is glaringly obvious. Every major nation in the world has policies, laws, tariffs and non-tariff regulations that protect jobs and encourage the export of goods and services into the large, profitable and unrestricted U.S. market.   

U.S. employment continued to decline in April as another 539,000 jobs evaporated to total 13.7 million out of work people, and the unemployment rate rose from 8.5% to 8.9%, according to the Bureau of Labor Statistics. Since the recession began in December 2007, 5.7 million jobs have been lost. In April, job losses were large and widespread across nearly all major private-sector industries. Overall, private-sector employment fell by 611,000. Over the past 12 months, the number of unemployed persons has risen by 6.0 million, and the unemployment rate has grown by 3.9 percentage points. 

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U.S. Bankruptcy Judge Approves Chrysler’s First Day Motions in Federal Court

So far things are progressing smoothly, confounding critics.

by on May.04, 2009

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Tom LaSorda, Vice Chairman and President, left, announced his immediate retirement on the first day of the bankruptcy court proceedings.

Last Friday Judge Arthur Gonzalez in the U.S. Bankruptcy Court in New York City immediately approved a series of court filings from Chrysler LLC known as “first-day motions.” The orders issued by the court allow Chrysler to continue to operate its business during the reorganization proceedings. The quick action was expected, since the court is used to dealing with large, albeit less publicized, bankruptcies.

The Court granted approval for the company’s request to continue payment of wages and health and welfare benefits to employees and contractors, and continue its customer warranty programs.

However, the true test of whether a swift bankruptcy can occur in 30 to 60 days, as the Treasury Department claims, remains at an unknown date in the future. Still to be heard from are Chrysler’s debtors who object to the proposed $2 billion settlement on $6.9 billion in secured Chrysler debt. Even though the four largest banks holding 70% of this debt have agreed to the settlement, it is unknown how Judge Gonzalez will treat the issue. Other impediments to swift reemergence from bankruptcy remain, as hundred of motions from interested parties are expected.  

Subscribe to TheDetroitBureau.comStill, day one went smoothly from Chrysler’s point of view. Only one day before, Chrysler announced a restructuring plan that was agreed to by many of its stakeholders including the Obama Administration, now its largest creditor. The Chrysler agreement in principle to establish a global strategic alliance with Fiat SpA is the cornerstone of a new company. (more…)

Dealers Buzzing on Chrysler Bankruptcy

Offshore brand organization is shaken by the President's patriotic sales pitch.

by on Apr.30, 2009

Cody Lusk, AIADA

Not so fast Mr. President, said Lusk.

President Barack Obama rattled the windows around the car business with a “buy American” plea as he rolled out the administration’s plans for rebuilding Chrysler with help from Fiat.

The American International Automobile Dealers Association responded almost immediately to a speech in which President Barack Obama asked Americans to “buy American” vehicles as part of our economic recovery.

“AIADA objects to President Obama’s ‘buy American’ solution for the auto sector,” said AIADA President Cody Lusk. “In today’s globalized economy ‘buying American’ can mean anything from buying a Chevy Avalanche built by Mexican workers in Silao, Mexico to buying a Toyota Camry built by Americans in Georgetown, Kentucky.”

“The real issue is that every car purchased in America today is a shot in the arm for our economy, a boost for car dealers, who are the cornerstones of communities all across this country, and a win for American consumers who have the opportunity to choose the vehicles that best meet their driving needs. President Obama must recognize that protectionist policies and statements like “buy American” have no place in America’s economic recovery,” said Lusk.

Critics would maintain that the real issue is the closed markets to American exports of all kinds by the governments of offshore-based automakers, including, Korea, Japan, and China, among others. This is destroying American jobs. So is the refusal of  European and Asian governments to increase deficit spending to stimulate their home markets now that the American market has collapsed, and can no longer be a dumping grounds for their exports. The U.S. Treasury Department has been highly critical of such practices recently, and a trade war is already underway. (more…)

Daimler Cashes in its Remaining Chrysler Chips

The once called "merger of equals" comes to an unequal end.

by on Apr.28, 2009

The settlement ends the threat of an expensive lawsuit against Daimler by Cerberus and Chrysler.

The settlement ends the threat of an expensive lawsuit against Daimler by Cerberus and Chrysler.

Daimler AG has agreed to put a total of $600 million into Chrysler LLC’s pension fund during the next three years, under an agreement reached yesterday with Cerberus, the company that bought Chrysler from it, and the U.S. Pension Benefit Guaranty Corporation. It also is giving its remaining 19.9% stake in Chrysler back to Cerebus. Cerberus has previously agreed to give its shares in Chrysler to the U.S.  government as part of the proposed restructuring.

The settlement apparently ends the threat of large and expensive lawsuit against Daimler by Cerberus and Chrysler, and eliminates another obstacle in the restructuring of Chrysler that must be completed this week under a U.S. Treasury Department deadline. Bondholders remain the last major roadblock to finishing a restructuring of Chrysler.

The term sheet signed Monday covers any and all issues still pending between the parties in connection with Chrysler, Daimler officials said in a terse statement issued from the company’s headquarters in Stuttgart.

Daimler will also forgive repayment of the more than $2 billion in loans extended to Chrysler, which were already written off in the 2008 financial statements. Daimler has agreed to pay $200 million into Chrysler’s pension plans on the date of the execution of definitive agreements and in each of the next two years. (more…)