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Posts Tagged ‘UAW’

General Motors Corp is hoping that a recent, but as yet uncompleted deal between Chrysler and the United Auto Workers can quickly be modified to meet its own needs, and GM’s Chief Executive Officer Fritz Henderson said yesterday on a conference call, “I would expect we’d be able to pick up the pace here in the next several weeks”.

Henderson, who became CEO after President Barack Obama caused Rick Wagoner to step down, added that he is waiting for Chrysler to settle with the United Auto Workers, “The UAW is actually negotiating with two companies today, and one company (Chrysler) has a deadline of thirty days, and one company (GM) has a deadline of sixty days”.

GM, which faces a June 1 bankruptcy deadline, has been trying since December to cut its $20.4 billion cash obligation to the health-care trust in half, and was told by the Obama administration in March that it needs to make far deeper reductions in its debts.

Chrysler and the UAW (United Auto Workers) are close to an agreement which would involve the company ceding an equity stake of about 20%, in exchange for reducing its obligations to a $10.6 billion medical fund.

Union leaders and automakers agreed in their 2007 contract talks to create the trusts, called VEBA (Voluntary Employee Beneficiary Associations), with the intention being that they would free the companies from future retiree health-care expenses, in exchange for upfront contributions.

The original VEBA agreement called for payments by GM of $32 billion, with the union assuming an estimated $47 billion in future health-care costs.

In addition, GM is trying to convince its bondholders to accept a cut in the value of their debt, and the latest plan is to make a formal offer before April 27, which would involve bondholders swapping their claims for equity.

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