UAW to GM: Will Deal on VEBA, More Wage Givebacks
May 21, 2009
By Bill Visnic
The United Auto Workers Union (UAW), under pressure to make concessions to General Motors Corp. as the company approaches a June 1 restructuring deadline, said today it will propose to its rank-and-file members key givebacks to help GM's long-term future, according to a report in the Wall Street Journal.
The union reportedly has agreed to allow GM to fund its remaining $20 billion obligation to a retiree health care plan with about $10 billion in cash and a 39 percent stake in the company -- whatever "company" may mean after June 1, when many industry experts and financial-community analysts expect GM still will declare Chapter 11 bankruptcy, despite the proposed concessions from the UAW.
The new UAW deal also is reported to incorporate further reductions in employee wages.
Reaching an accord with the UAW is one milestone GM needed in order to consequently deal with its debtholders, who also need to accept reductions in the amount of money GM owes. But those holding GM secured debt, in particular, watched the recent Chrysler bankruptcy that was colored by the perception the UAW was not absorbing the same cuts as debtholders were asked to accept. The inability to resolve that conflict, it is said, is what led to Chrysler's need to restructure through Chapter 11 bankruptcy.
In its 2007 collective-bargaining contract, the UAW agreed to allow GM, Ford Motor Co. and Chrysler to offload their massively ballooning retiree health-care obligations (which amounted to lifetime no-cost health care coverage for retirees) by establishing the Voluntary Employee Benefit Association fund. The massive funding obligation to the VEBA has become a tremendous hurdle for the automakers, however, as its payments were scheduled to begin just as the global economic crisis and the subsequent auto-industry collapse occurred last year.
The UAW's proposed concessions will require ratification by the 60,000 UAW workers employed by GM. There was no detail on when the union plans to place the matter before its rank-and-file workers.
Posted by Michelle Krebs at 11:44 AM under GM , News | Comments (0) | digg this | Seed Newsvine
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