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Originally Posted by Automotive News
UAW members ratify Chrysler contract concessions
Workers approve by more than 4-to-1 margin, union says
David Barkholz
Automotive News
April 29, 2009 - 10:38 pm ET
UPDATED: 4/29/09 11:34 p.m. ET
Chrysler's UAW members, facing the specter of the automaker seeking bankruptcy as early as Thursday, approved contract concessions that may help the company win additional U.S. rescue loans.
The UAW said 82 percent of production workers, 80 percent of the skilled trades, 90 percent of clericals and 94 percent of engineers voted for approval. Vote totals weren't released.
"This has been a challenging time filled with anxiety and uncertainty for our membership," UAW President Ron Gettelfinger said. "Our members have responded by accepting an agreement that is painful for our active and retired workers, but which helps preserve U.S. manufacturing jobs and gives Chrysler a chance to survive."
The ratification by Chrysler's 26,000 U.S. hourly workers resulted from two days of voting. The contract requires the UAW to accept Chrysler equity for half the $10.6 billion obligation that the automaker owes a retiree health-care trust that the union will administer.
The agreement will give the UAW 55 percent of the ownership in a proposed new Chrysler-Fiat partnership. (See box below.)
"Today's vote enables us to continue our work to meet the conditions laid out by the U. S. Treasury Department," Chrysler President Tom LaSorda said in a statement.
Even with the concessions, it remains unclear whether Chrysler can avoid filing for bankruptcy protection.
The Obama administration has set a midnight deadline on Thursday for Chrysler to show it can become viable through an alliance with Fiat S.p.A. Chrysler needs the Fiat deal and concessions from workers and creditors to qualify for as much as $6 billion in rescue loans on top of $4 billion received already.
Terms of the concessionary contract allow Chrysler to hire as many new workers as it can at a wage and benefit rate roughly half that paid to veteran UAW workers. The new terms eliminate until 2015 a 20 percent cap on the number of these lower-paid workers in the Chrysler U.S. work force.
The rank-and-file also gave up cost-of-living allowances, bonuses and some break time.
The UAW agreement follows a concessionary package approved Sunday by the Canadian Auto Workers. That deal will save Chrysler about C$240 million ($200.2 million) annually.
Four New York banks have also agreed to reduce the secured debt owed them by Chrysler. The banks, which represent about 70 percent of $6.9 billion in secured loans, said they would take $2 billion in cash for their holdings.
Another 40 banks and hedge funds holding the balance of that debt must still approve the change.
President Obama, in an evening news conference before the UAW vote was released, said it is still too early to tell if Chrysler can reorganize without a bankruptcy filing. If one is necessary, he said it could be done quickly.
Said Obama: "I'm actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that maintains a viable Chrysler."
New Contract Details
Below are some key points for the text of the UAW's revised contract with Chrysler, which covers 26,800 UAW-represented workers:
ÔÇó In exchange for concessions, the UAW is to get 55 percent stake in Chrysler
ÔÇó Italian car maker Fiat S.p.A. will "eventually" get a 35 percent stake in Chrysler
ÔÇó The U.S. government and Chrysler's secured creditors will split a 10 percent stake between them.
ÔÇó Chrysler will pay a new note to a retiree health care trust with a principal amount of $4.587 billion note
ÔÇó Further annual cash payments under that new note would start at $300 million for 2010 and 2011, then increase to $400 million in 2012 and $600 million in 2013. Annual payments would rise to $650 million for 2014 through 2017, then $823 million for 2019 through 2023.
ÔÇó Fiat would provide "key" engine technology -- such as 3.0 liter diesel and 1.4 liter gasoline engines -- that the UAW said would be "equivalent" to an investment of $8 billion and create 4,000 new UAW jobs.
ÔÇó Under the agreement UAW workers would be paid overtime after working 40 hours a week
ÔÇó The cost-of-living-allowance would be suspended.
ÔÇó Workers would lose of Easter Monday holiday in 2010 and 2011
ÔÇó Workers would lose their performance bonuses in 2009 and 2010
ÔÇó Workers would lose their Christmas bonuses in 2009 and 2010.
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