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Contentious Vote Gives UAW Dues Hike

King orders second vote after first ends in a deadlock.

by on Jun.04, 2014

Delegate Eden Shultz from Local 2110 speaks on a proposed constitutional change during debate on Tuesday in Detroit. Photo credit: UAW.

The United Auto Workers approved a dues increase for 391,000 members, but the two-and-a-half-hour debate during the union’s quadrennial Constitutional Convention underscored the dissatisfaction within the union ranks over the two-tier pay system that now prevails in much of the auto industry.

“We need to have a war chest if we’re going to be serious about breaking the two-tier system,” said Brian Schneck UAW Local 259 in Hicksville, New York, who spoke of in favor of the increase that boosted dues from two hours wages per month to 2.5 hours per month.

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The vote was closer than the union’s executive board might have liked. When UAW Bob King called for a voice vote it failed to pass as the opponents shouted out their opposition. The increase was approved a few moments later on show of hands. (more…)

Many Questions Raised by Fiat-Chrysler Deal – Such as Where Maker Will Be Headquartered

As investors applaud Fiat-Chrysler news employees asked to “remain united.”

by on Jan.02, 2014

Marchionne currently spends much of his time shuttling between Fiat and Chrysler headquarters on both sides of the Atlantic.

Fiat SpA shares soared to nearly their highest level in a year on news that the Italian maker will soon complete its “defining” acquisition of U.S. alliance partner Chrysler for about $4.3 billion.

At the same time, Fiat’s top two executives urged workers on both sides of the Atlantic to “remain united” as the deal, nearly five years in the making, comes to a successful conclusion. But at least some union members in Italy were raising concerns about what the merger will mean, especially as Fiat-Chrysler CEO Sergio Marchionne continues pressing for further concessions while warning future production plans could shift away from Italy.

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Indeed, one of the big questions is whether the newly merged company will be based in Italy, the U.S., or continue to operate with dual headquarters on either side of the Atlantic.

(more…)

Fiat and UAW Agree to Complete Chrysler Acquisition

Deal nets union more than $4 billion for health care trust.

by on Jan.01, 2014

Sergio Marchionne's patience paid off as the Fiat and the UAW reach a deal for the union's stake in Chrysler.

After months of speculation about when — or if — the deal would be done, it is: Fiat SpA and the UAW have reached an unexpected New Year’s Day agreement for the automaker to buy the union’s remaining stake in once-bankrupt Chrysler Group for $3.65 billion up front, plus an additional $700 million after the deal closes.

Fiat acquires the remaining 41.46% from the union’s health care trust and is expected to complete the acquisition, a key goal of CEO Sergio Marchionne, by Jan. 20. The Italian automaker will pay $1.75 billion from its own bank account, while Chrysler will pay $1.9 billion. Chrysler also agreed to pay the VEBA an additional $700 million in in four $175 million annual installments after the deal is done.

The two parties had been viewed as being far apart on the purchase price for the stake — which could have scuttled the long-planned takeover by the Italian maker. The UAW had repeatedly suggested it wanted more than $5 billion while Fiat and Chrysler CEO Marchionne said he wouldn’t pay it. In fact, at one point last autumn, Marchionne began dropping hints that Fiat might consider severing its ties with the U.S. maker entirely.  However, the two parties continued to quietly search for mutual ground.

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“Clearly it’s a victory for Marchionne,” said Stephanie Brinley, analyst with IHS Automotive. “It took a lot of time and a lot of energy. It’s time well spent. More importantly, it’s resolved. They’ve eliminated the uncertainty in terms of who owns who.” (more…)

Chrysler IPO Not Happening until 2014

UAW trust's unwillingness to sell stake holds up offering.

by on Nov.25, 2013

Sergio Marchionne's planned IPO of Chrysler has been delayed until the first quarter of next year.

Investors looking to buy shares of new Chrysler stock as part of an IPO this year are going to have to rethink their investment strategy, as the company won’t be conducting that offering until next year.

Fiat – which owns 58.5 percent of Chrysler and assumed management of Chrysler in 2009 as part of the Auburn Hill automaker’s bankruptcy restructuring – said today that Chrysler’s board “has determined that it will not be practicable” to launch and complete the IPO before the end of the year. Chrysler will continue readying for a first-quarter 2014 launch of the IPO.

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“No assurance can be given as to whether or when an offering will be launched, as any launch will be subject to market conditions and other relevant considerations,” Fiat said. (more…)

Fiat Discussing Plans To Buy Chrysler

Marchionne says company has cash to make purchase.

by on Apr.29, 2013

Fiat/Chrysler CEO Sergio Marchionne says the company has the cash to purchase the UAW VEBA's 41.5% stake.

The timing of Fiat’s purchase of the remaining 41.5% stake in Chrysler – currently held by United Auto Workers VEBA trust – is moving towards resolution, but the timing remains a topic of conversation.

“It’s under discussion,” Chrysler/Fiat Chief Executive Officer Sergio Marchionne said during the Chrysler earnings conference call. When pressed by analysts and reporters, Marchionne declined to offer any details. However, he suggested Fiat was in position to use its own resources to acquire the remaining stake from the VEBA.

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“When I last checked the bank account, there was enough money,” he said.

(more…)

UAW To Get Big Chunk of New GM Stock

Shares will prop up retiree health care trust.

by on Oct.14, 2010

The UAW gets approval to fund its retiree health care program with new GM stock.

While specifics of General Motors planned IPO have yet to be released, it appears the company’s retirees will wind up owning an even bigger chunk than before.

The U.S. Labor Department has given the go-ahead for GM to fund the United Auto Workers Union’s retiree health care trust fund, a so-called VEBA, with a mix of warrants, debt, and both common and preferred stock.

The decision could wind up making the UAW the largest shareholder in GM once the government eventually sells off its more than 60% stake in the automaker.

The move also helps avoid a situation in which the health car trust, known formally as a Voluntary Employee Beneficiary Association, might go bust and need a federal bailout.  The GM VEBA was established two years before the maker’s 2009 bankruptcy as part of an effort to shift health care costs off company books.  But GM’s Chapter 11 filing raised serious concerns about its viability.

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Without the Labor Dept. waiver, the UAW fund would not have been allowed to hold more than 10% of the “new” GM’s stock.  It will now be permitted to go up to 18% in common shares, while also holding up to 2.5% in GM warrants.

The VEBA will also hold $6.5 billion in preferred stock, along with a $2.5 billion note.

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Billions in UAW Liabilities off Ford Balance Sheet

Deal has $9.5 billion or more in debt, warrants for 362 million shares of stock, and sends more than $4 billion in cash to VEBA.

by on Jan.04, 2010

Good reason to smile, as liabilities decrease, stock values tend to rise.

Ford Motor Company (F) announced today that on December 31, 2009, it completed the transfer of its UAW retiree health care liabilities to the UAW Retiree Medical Benefits Trust or “VEBA Trust.”

Because of a series of complex financial transactions and a court approved settlement with the UAW, Ford has removed billions in liabilities off of its balance sheet, while apparently incurring about $7 billion in incremental debt on its balance sheet.

“This takes a significant amount of uncertainty away from those in the equity markets trying to value Ford stock, both now and in the future,” said analyst Joe Phillippi, of AutoTrends consulting. “Wall Street hates unknowns,” Phillippi concluded.

Ford stock closed today at $10.28 a share, up 28 cents or +2.8%.

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Costs!

The big question facing Ford’s UAW workers is whether the trust is anywhere near solvent enough at these funding levels to provide benefits as health car costs continue to rise at what the Obama Administration says are unsustainable rates.

(more…)

UAW Taps Blanchard for Chrysler Board

Old union ally helped save Chrysler in 1980s.

by on Jun.11, 2009

Former Michigan Gov. Jim Blanchard will take a seat on the new Chrysler's board. Nearly 30 years ago, as a Congressman, he helped the automaker win its first federal bailout.

Former Michigan Governor Jim Blanchard will take the VEBA seat on Chrysler Group's board. Nearly 30 years ago, as a U.S. Congressman, he helped the automaker win its first federal bailout.

The United Auto Workers has tapped an old ally to serve as its representative on the board of directors of the reorganized Chrysler Group LLC,  newly emerged from bankruptcy and now effectively under the thumb of the Italian automaker, Fiat.

The UAW announced the Voluntary Employee Beneficiary Association, or VEBA, has named former Michigan Governor James Blanchard to serve as its representative on the “new” Chrysler’s board. The terms of the deal that sold Chrysler to Fiat allows the VEBA to appoint one director.

Blanchard will play a critical role.  Though the union emerges as Chrysler Holding’s largest shareholder, the plan overseen by the Obama Administration’s Auto Task Force gives the UAW only limited say in the new company’s day-to-day operations.

“In accordance with the agreements establishing Chrysler Holding, LLC, the VEBA trustees have the right to name a director of the corporation, with consent of the UAW.  Other company directors will be named by Fiat, the U.S. government, and the government of Canada,” the union noted in a statement. (more…)