Autoblog

Fiat pondering swallowing rest of Chrysler, US IPO

Jonathon Ramsey — Wed, 24 Apr 2013 16:01:00 EST

Filed under: Government/Legal, Chrysler, Earnings/Financials, UAW/Unions, Fiat

At the moment, Fiat is in court with the United Auto Workers, waiting for the justice system to provide some guidance on a fair price for 41.5-percent of Chrysler it doesn't own. Fiat owns 58.5 percent of the company and wishes to buy the remainder, which is owned by the union's VEBA retiree trust, but the Italian company and the UAW are on different sides of the galaxy when it comes to assigning a fair price to that outstanding stake.

Naturally, Fiat CEO Sergio Marchionne is considering his options. A new report in the The Wall Street Journal says one of the scenarios being considered now is - depending on the outcome of the court case - to purchase the 41.5-percent stake and then issue an IPO to recoup some of the cost. About two months ago, Marchionne put the odds of an IPO for a wholly combined Fiat/Chrysler at 50 percent. Even with the WSJ report, it's not clear if those odds have changed.

The current company structure leaves a lot of options as to how a potential IPO could be issued, but it's said that Marchionne is against it, preferring "to be one company," under Fiat, indivisible. If Fiat is finally able to purchase all of the Pentastar, it would get access to Chrysler's war chest, pegged at $11.9 billion at the end of Q3 in 2012, and that money can't come soon enough for a brand taking a beating in Europe and delaying product over cash concerns.

Fiat pondering swallowing rest of Chrysler, US IPO originally appeared on Autoblog on Wed, 24 Apr 2013 16:01:00 EST. Please see our terms for use of feeds.

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UAW trust demands Fiat pay $342M for Chrysler shares

George Kennedy — Tue, 13 Nov 2012 13:01:00 EST

Filed under: Government/Legal, Chrysler, UAW/Unions, Fiat

Last month, we brought you the latest news in a rather tenuous ordeal between Fiat and the United Auto Workers over the future of the Italian automaker's stake in Chrysler. The union contended that Fiat failed to make an adequate offer for the 3.3-percent stake that was sought. Fiat offered $139.7 million for the shares in July, which the UAW rejected.

We now have word of the union's counter offer of $342 million - more than double what Fiat proposed. According to Reuters, the entity in question is the UAW's healthcare trust, known as Voluntary Employee Beneficiary Association, or VEBA, which currently owns 41.5 percent of the American automaker. Fiat boss Sergio Marchionne has voiced his intent to eventually purchase the trust's full 41.5 percent stake in Chrysler as part of a long-term unification plan.

Following the initial offer from Fiat, the trust refused to sell the 3.3 percent share in July, which resulted in a lawsuit brought by Fiat. As part of this counteroffer, VEBA has brought a counter suit, as well as a statement claiming that the initial Fiat offer was "substantially below market value."

VEBA originated from the 2007 auto bailouts, in which retiree medical benefits were shed off into their own entity to facilitate restructuring of the automakers. Rather than taking cash to fund its restructuring, VEBA took the Chrysler stock, which is the center of this current conundrum. According to a spokesperson for the trust, "sale of the called shares at the price calculated by Fiat would constitute a transaction prohibited by federal law." At this time, neither the automaker, the trust, nor the Securities and Exchange Commission have commented on the proposed transaction.

UAW trust demands Fiat pay $342M for Chrysler shares originally appeared on Autoblog on Tue, 13 Nov 2012 13:01:00 EST. Please see our terms for use of feeds.

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GM to buy back $2.1 billion of Preferred Stock, improve financial position

Jeremy Korzeniewski — Thu, 28 Oct 2010 15:28:00 EST

Filed under: Government/Legal, GM, Earnings/Financials, UAW/Unions

General Motors has just announced a series of actions intended to improve its financial position and make it more attractive to investors ahead of its Initial Public Offering. Perhaps the most intriguing is word that it plans to purchase $2.1 billion of Preferred Stock from the United Stated Department of the Treasury at a sum that is $700 million more than the recorded value of those stocks.

In addition, GM will:

Contribute at least $4 billion in cash and $2 billion in GM common stock to its U.S. hourly and salaried pension plans
Repay the $2.8 billion outstanding loan to the United Auto Workers Retiree Medical Benefits Trust
Complete a $5 billion revolving line of credit
Save $500 million per year by restructuring its payment deals on vehicles in transit to dealers

The official press release, which can be found after the jump, breaks each of these actions down using appropriately difficult to decipher language designed specifically to make your head explode... but you're free to check it all out all the same.

[Source: General Motors | Image: Associated Press/Paul Sancya]

Continue reading GM to buy back $2.1 billion of Preferred Stock, improve financial position

GM to buy back $2.1 billion of Preferred Stock, improve financial position originally appeared on Autoblog on Thu, 28 Oct 2010 15:28:00 EST. Please see our terms for use of feeds.

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Report: UAW files suit against GM over $450M Delphi debt

Zach Bowman — Wed, 07 Apr 2010 13:32:00 EST

Filed under: Government/Legal, Plants/Manufacturing, GM, Earnings/Financials, UAW/Unions

Once again, General Motors has found itself in hot water with the United Auto Workers. Way back when in 2007, GM signed a deal with Delphi to provide a total of $450 million for the UAW's Voluntary Employee Beneficiary - a trust set up to provide for retiree benefits, especially health care. So far, GM hasn't been willing to hand over the dough, and the UAW has decided to take The General to court over the issue.

The Detroit Free Press is reporting that the lawsuit claims GM denied the UAW its cash when the union asked for it last November and has refused to make payments ever since. As part of the automaker's bankruptcy filings last year, the company assumed all of its contracts with the UAW, including this one.

Delphi has been feeling the pinch of the economic slowdown in a big way, and found itself in bankruptcy court in 2005. When that happened, the company asked for concessions from the UAW, and managed to negotiate a pay cut of up to $10 per hour as part of the deal. GM has since snapped up four Delphi divisions during 2009, and word has it the automaker is seeking even further concessions from the union.

So far, GM hasn't said word one about the lawsuit.

[Source: Detroit Free Press]

Report: UAW files suit against GM over $450M Delphi debt originally appeared on Autoblog on Wed, 07 Apr 2010 13:32:00 EST. Please see our terms for use of feeds.

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Report: Ford assures workers of bonuses if targets are met

Jonathon Ramsey — Sun, 04 Apr 2010 11:35:00 EST

Filed under: Ford, Earnings/Financials, UAW/Unions

The latest musical theme for Ford workers and shareholders could be Junior Mafia's "Get Money." The Blue Oval just told its salaried employees that 2010 bonuses would average three percent. Not only does that reinstate the bonus system missing for the past two years, it rewards salaried employees the same way it rewards executives. Of course, it depends on the year's corporate and individual objectives being met, but there are few better ways to help ensure targets are delivered upon than by promising a bunch of extra credits in the form of greenbacks.

Employees aren't the only folks at the Ford cash machine: banks get a dose, with Ford revealing it will write a check for almost ten percent of its debt by next Monday, and the UAW is looking at a jackpot of more than one billion dollars by cashing out stock warrants with a nearly 50-percent profit between their purchase and sell prices.

Make no mistake, Ford still needs to keep this up for a while yet - $31.45 billion in debt remains to be paid to the banks, and $7 billion remains due to the UAW's Voluntary Employment Benefit Association (VEBA) for employee pensions and healthcare. But when you can pay things off and have enough left to spread some cream around, well, that's a good start to the year.

[Source: Detroit Free Press | Image: Karen Bleier/AFP/Getty]

Report: Ford assures workers of bonuses if targets are met originally appeared on Autoblog on Sun, 04 Apr 2010 11:35:00 EST. Please see our terms for use of feeds.

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Autoblog Podcast #160 - Analyst Jim Hall raises the Podcast IQ

Dan Roth — Tue, 05 Jan 2010 13:20:00 EST

Filed under: Concept Cars, Detroit Auto Show, Podcasts, Hybrid, Government/Legal, Technology, Ford, GM, Mercedes-Benz, Porsche, Toyota, Fiat, Electric, Luxury, Lancia

Click above for the Autoblog Podcast in iTunes, RSS or listen now!

Rapier-witted analyst Jim Hall of 2953 Analytics joins Chris, Sam, and Dan for Episode #160 of the Autoblog Podcast. Announcements and news have heated up after taking a holiday break, and we jump right in. First up, it's the speculation that four million fewer car sales might signal the end of days for the automobile. Once that's thoroughly mulled over, we move on to the Mercedes S400 Hybrid before talking about new engines that would bolster Porsche's efficiency, and discuss a turbocharged four-cylinder Mercedes C-Class coupe. Ford's VEBA payment is next before we touch on what's coming in Detroit. We wrap it all up by listing our #1 vehicle of the decade in a variety of categories. We hope you have as much fun listening as we did recording. See you next week!

Until next time, quality podcasting exists at Joystiq and Engadget. Let us know what you think of our podcast by dropping us an email at Podcast at Autoblog dot com, reviewing the show in iTunes, filling out our survey, or even leaving us a voicemail on our Google Voice line 734-288-8POD (734-288-8763). Thanks for listening!

Continue reading Autoblog Podcast #160 - Analyst Jim Hall raises the Podcast IQ

Autoblog Podcast #160 - Analyst Jim Hall raises the Podcast IQ originally appeared on Autoblog on Tue, 05 Jan 2010 13:20:00 EST. Please see our terms for use of feeds.

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Ford completes transfer of retiree healthcare to VEBA, makes extra $500M payment

John Neff — Mon, 04 Jan 2010 16:57:00 EST

Filed under: Ford, UAW/Unions

Everything's coming up roses for Ford. That's what we keep hearing in the news anyway. Ford can now add one more feather to its cap of accomplishments with today's announcement that it has completed transferring all of its retiree healthcare obligations to the VEBA trust run by the United Auto Workers union. The official press release from Ford after the jump is dense, but the gist is that Ford has made its required payments to the VEBA fund and thrown in an extra $500 million payment that isn't due until later for good measure. That last part not only gets The Blue Oval ahead of the game, but also demonstrates the degree of confidence that Ford has in both its turnaround plan and what its balance sheet will look like in the coming years.

The net effect of this news is that Ford can practically erase retiree healthcare off its books. Sure, the company takes a big hit now with the billions of dollars it just paid into the UAW-run VEBA account, but over the long term Ford won't be forced to roll the rising cost of retiree health care into the price of its vehicles. Both General Motors and Chrysler LLC have the same obligation as Ford to pay into VEBA accounts and transfer control of retiree healthcare to the UAW, but neither has completed that process to date.

[Source: Ford | Source Image: Bill Pugliano/Getty]

Continue reading Ford completes transfer of retiree healthcare to VEBA, makes extra $500M payment

Ford completes transfer of retiree healthcare to VEBA, makes extra $500M payment originally appeared on Autoblog on Mon, 04 Jan 2010 16:57:00 EST. Please see our terms for use of feeds.

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BREAKING: GM lurches toward bankruptcy as bondholder offer fails

Chris Paukert — Wed, 27 May 2009 08:58:00 EST

Filed under: Trends, Government/Legal, GM, Earnings/Financials

General Motors is teetering ever closer to the brink of bankruptcy today, as the automaker's exchange offer for its outstanding debt fell "substantially" short of the necessary take-rate. GM had offered some $27.2 billion of its unsecured public notes to its bondholders, but the offer expired at noon yesterday without having the minimum tender amount met. The U.S. Treasury Department had mandated that at least 90 percent of bondholders would have to agree to swap their shares for a 10 percent stake in the GM, but far too few failed to take GM up on its offer, effectively negating any swap at all under the conditions of the tender offer.

A number of major bondholders had originally countered with an offer to give up their stocks in exchange for a markedly larger stake in the company - 58 percent - but with the lion's share of the company already promised to the United Auto Workers' VEBA fund and to the U.S. government, the bondholder issue was widely expected to fail.

As a result, many are expecting GM to file for Chapter 11 bankruptcy by Monday, with The Detroit News reporting that GM's board of directors scheduled to meet earlier than that to discuss whatever options they may have left. Official GM press release after the jump.

[Sources: General Motors; The Detroit News | Image: Bill Pugliano/Getty]

Continue reading BREAKING: GM lurches toward bankruptcy as bondholder offer fails

BREAKING: GM lurches toward bankruptcy as bondholder offer fails originally appeared on Autoblog on Wed, 27 May 2009 08:58:00 EST. Please see our terms for use of feeds.

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Ford to offer 300 million shares of common stock

Chris Shunk — Tue, 12 May 2009 08:01:00 EST

Filed under: Ford, UAW/Unions

Right now, cash is king in the automotive world, and Ford Motor Company is looking to raise some serious greenbacks with 300 million shares of common stock. The money will be used to fund automotive operations, with a portion of the payments Ford is required to make to the Voluntary Employee Beneficiary Association (VEBA) retiree health care fund with the UAW.

At the close of trading on Monday, Ford stock was worth $6.08 per share, and the stock sale should net somewhere close to $1.8 billion, depending on future share fluctuations. That's low by historic standards, but nearly five times what it was worth in November, when the size and scope of the recession and automotive slump was being realized. Since that time, Ford has emerged as the one Detroit automaker that didn't need government funding. The Blue Oval has also increased market share in six of the past seven months, something the Dearborn, MI-based automaker hasn't done in years. The common share sale will be handled jointly by Citi, Goldman, Sachs & Co., J.P. Morgan and Morgan Stanley. Hit the jump to pour over Ford's press release.

[Source: Ford | Image Source: Bill Pugliano/Getty]

Continue reading Ford to offer 300 million shares of common stock

Ford to offer 300 million shares of common stock originally appeared on Autoblog on Tue, 12 May 2009 08:01:00 EST. Please see our terms for use of feeds.

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UAW will eventually sell Chrysler stock to keep VEBA going

John Neff — Wed, 06 May 2009 08:58:00 EST

Filed under: UAW/Unions

Big surprise, the United Auto Workers union does not intend to be majority owner of the New New Chrysler for very long. Outgoing UAW president Ron Gettelfinger confirmed in a press conference yesterday that the union's Voluntary Employee Beneficiary Association (VEBA) will likely sell part or all of its 55% stake in the newly formed automaker once its stock appreciates, that is, if its stock appreciates.

And why would the UAW want to keep its shares? Despite owning a majority of the company, the UAW's shares are nonvoting and they may only get one seat on the company's board, if that. The sole purpose of the VEBA is to fund retiree healthcare, not run an automaker, so ditching its shares at some point to replenish the fund's coffers sounds like the right thing to do. The funny thing is that before the VEBA was even set up, both General Motors and Ford wanted to fund their contributions partly with company stock instead of cash. Looks like they may get their wish if Chrysler's situation is anything to go by.

[Source: Automotive News - Sub. Req.]

UAW will eventually sell Chrysler stock to keep VEBA going originally appeared on Autoblog on Wed, 06 May 2009 08:58:00 EST. Please see our terms for use of feeds.

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REPORT: UAW's majority stake in Chrysler doesn't necessarily translate to control

Chris Shunk — Thu, 30 Apr 2009 09:25:00 EST

Filed under: Chrysler, UAW/Unions

The reworked contract between Chrysler and the United Auto Workers cedes 55% of Pentastar stock to the worker's retiree health care fund. That has lead to speculation that the UAW would have majority representation on the Chrysler board, but labor experts believe that won't be the case. University of California Berkeley labor professor Harley Shaiken insists that "equity stake doesn't translate into voting control." The 55% was given to the VEBA fund in lieu of the previously agreed upon cash payment. Since the only job of the VEBA is to ensure that the retiree health-care fund is properly funded, by rule, it cannot take ownership of the automaker. Though the UAW won't have majority representation, most expect the workers to receive at least one seat at the board.

Assuming that everything falls into place, the remaining owners of the new, leaner Chrysler will be Fiat at 35% and the government and lenders at a combined 10%. The changes made by the Pentastar over the past few months should equate to a healthier, more competitive Chrysler. But if things don't work out as planned (they rarely do) and Chrysler ultimately fails, retiree health car could end up being a thing of the past.

[Source: Detroit News Image Source: Bill Pugliano/Getty]

REPORT: UAW's majority stake in Chrysler doesn't necessarily translate to control originally appeared on Autoblog on Thu, 30 Apr 2009 09:25:00 EST. Please see our terms for use of feeds.

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GM future hinges on success of new debt-for-equity swap offers

Chris Paukert — Mon, 27 Apr 2009 10:49:00 EST

Filed under: Trends, Government/Legal, Hirings/Firings/Layoffs, GM

In addition to announcing the shuttering of Pontiac, General Motors has put forth a new offer to its bondholders to exchange $27 billion in claims for equity in the struggling automaker.

As part of the plan, GM is offering its bondholders a 10% equity stake in the company, but worryingly, if 90 percent of GM's stockholders don't make good on the exchange by June 1, the U.S. Treasury will almost assuredly push GM toward bankruptcy. In the language of GM's press release, the company would "expect to seek bankruptcy relief if the exchange offers are not consummated."

And it isn't just the shareholders that are being called to action - the success of the bond-exchange offer also hinges upon the Voluntary Employee Beneficiary Association (VEBA) health-care fund, whose controllers must also agree to swap at least 50% of its equity claims in order to make the plan work.

Finally, the U.S. Treasury must agree to exchange 50% its own loans - thought to be about $10 billion - for stock in the company. Together, the U.S. government and VEBA would then own around 89 percent of GM's stock post- debt-for-equity swap, with the outstanding one percent being held by GM's current common shareholders (10% bondholders + 89% VEBA/US Treasury + 1% = 100%).

Given that a debt-for-equity swap is widely considered to be unattractive to most bondholders (something that GM CEO Fritz Henderson stopped just short of confirming in today's press conference), The General seems to be well along the road to bankruptcy... and picking up steam.

Official press release posted after the jump.

[Source: General Motors | Image: Bill Pugliano/Getty]

Continue reading GM future hinges on success of new debt-for-equity swap offers

GM future hinges on success of new debt-for-equity swap offers originally appeared on Autoblog on Mon, 27 Apr 2009 10:49:00 EST. Please see our terms for use of feeds.

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Ford's new deal with UAW gets wages down to $55/hour

Jonathon Ramsey — Thu, 12 Mar 2009 11:29:00 EST

Filed under: Plants/Manufacturing, Ford, Earnings/Financials, UAW/Unions

Two years ago when Ford was negotiating a new contract with the UAW, the automaker was paying its union workers the oft-bandied amount of $70 per hour. That amount wasn't the actual hourly wage of each employee, though, but rather the employee's hourly wage plus the cost of contributions to current and future benefits for retirees and workers still with the company. Now, due to a newly signed agreement with the United Auto Workers union, Ford projects that total cost per worker will go down to $55 per hour.

That puts The Blue Oval only about $5 away from the total hourly compensation paid by transplanted automakers like Toyota and Honda to their non-union workers. Among measures such as cutting overtime, bonuses, cost-of-living increases, and one paid holiday, Ford reworked its contribution to the VEBA account that will fund retiree healthcare so that it can pay into it with stock instead of cash, the total savings of which could add up to $500 million per year.

Intriguingly, it was remarked that "Ford's deal with the UAW appeared to meet the cost savings targets set out by the Treasury Department for its aid to GM and Chrysler," yet Ford is the one that didn't take government money and so, technically, is the one automaker not compelled to meet those targets. General Motors and Chrysler have also made new agreements with the UAW, but details have yet to be released.

[Source: Reuters, Photo by Larry W. Smith/Getty]

Ford's new deal with UAW gets wages down to $55/hour originally appeared on Autoblog on Thu, 12 Mar 2009 11:29:00 EST. Please see our terms for use of feeds.

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Ford, UAW reach tentative retiree health care trust fund deal

Chris Paukert — Mon, 23 Feb 2009 17:29:00 EST

Filed under: Etc., Ford, UAW/Unions

Ford Motor Company says it has reached a tentative deal with the UAW regarding modifications to the Voluntary Employees' Beneficiary Association (VEGA) pact, the union's retiree health care trust. While specifics are not yet being divulged, the Blue Oval says that it has agreed to make up to half of its future payments into the fund with Ford common stock, although it may continue to use cash depending on the automaker's needs.

Before this and other changes can take effect, the UAW will review the agreement later this week, and any alterations must be signed off on by UAW-represented Blue Oval workers as well as the court system. Ford says that the VEBA agreement, combined with the labor deal reached on February 15, will help the automaker be more competitive during the economic recession without federal loans. Be sure to check out Ford's press release after the jump.

[Source: Ford | Image: Bill Pugliano/Getty]

Continue reading Ford, UAW reach tentative retiree health care trust fund deal

Ford, UAW reach tentative retiree health care trust fund deal originally appeared on Autoblog on Mon, 23 Feb 2009 17:29:00 EST. Please see our terms for use of feeds.

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Gettelfinger: Wage cuts won't be part of UAW concessions

Chris Shunk — Thu, 22 Jan 2009 16:30:00 EST

Filed under: Hirings/Firings/Layoffs, Chrysler, GM, UAW/Unions

General Motors and Chrysler are tasked with gaining concessions from debt holders and organized labor by February 17. If major cuts aren't achieved, the struggling Detroit automakers risk having to pay back the $17.4 billion in government loans that have helped keep the companies solvent. UAW President Ron Gettelfinger told Automotive News that any concessions won't include wage cuts. The Ron points out that Toyota workers at Georgetown average $30 per hour in wages and bonuses, or $2 more than tenured UAW workers. Though the union's $28 per hour wage is likely safe, generous blue collar health care benefits may not be. Pension costs are likely to decrease as well, as part of the loan agreement calls for half the retiree health care trust to be paid for with equity instead of cash.

Gettelfinger has recently questioned whether it was possible to agree to concessions in time for perceived February 17 deadline, but now he sayst that he fully expects the UAW, GM, and Chrysler to have "laid out ground work" to satisfy its portion of the loan deal.

[Source: Automotive News, subs req'd]

Gettelfinger: Wage cuts won't be part of UAW concessions originally appeared on Autoblog on Thu, 22 Jan 2009 16:30:00 EST. Please see our terms for use of feeds.

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UAW agrees to suspend Jobs Bank, postpone VEBA contributions

John Neff — Wed, 03 Dec 2008 14:27:00 EST

Filed under: Government/Legal, UAW/Unions

While Ford, General Motors and Chrysler all submitted plans to Congress yesterday that detail how much sacrifice they're willing to make in order to secure government loans, the United Auto Workers union waited until today to announce how it plans to contribute. UAW President Ron Gettelfinger met with leaders of his local Detroit 3 unions today and emerged with a plan to suspend the controversial Jobs Bank program that allows laid off workers to receive up to 95% of their standard pay. Gettelfinger also said that Detroit automakers could postpone making payments into the Voluntary Employee Beneficiary Association, a union-run fund that was scheduled to assume responsibility for retiree healthcare after automaker contributions in the tens of billions were made.

Gettelfinger will once again take a seat next to GM CEO Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Bob Nardelli in front of Congress tomorrow. After their admittedly weak showing on Capitol Hill last month, the CEOs and Gettelfinger now have detailed plans to offer Congress on how they would use government loans to ensure their long term viability.

Oh, and while each of the Detroit 3 CEOs will be driving down to DC after being lambasted by Congress for their previous travel aboard separate private jets, Gettelfinger, who never had a private jet, will still be using a commercial airline to reach his date with destiny.

[Source: Automotive News - sub. req'd, Jalopnik, Photo by Chip Somodevilla/Getty]

UAW agrees to suspend Jobs Bank, postpone VEBA contributions originally appeared on Autoblog on Wed, 03 Dec 2008 14:27:00 EST. Please see our terms for use of feeds.

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Details emerge on Ford/UAW contract

Damon Lavrinc — Mon, 05 Nov 2007 09:01:00 EST

Filed under: Ford, UAW/Unions

Ford stands as the last domestic automaker in the process of negotiating its labor contract with the UAW, and details of the new contract have begun to hit the web. The Detroit News has an in-depth article on what's gone down thus far, but for those of us with attention spans akin to meth-addled Chihuahuas, they put together a listing of the major elements of the new contract, while comparing and contrasting what Ford's cross-town rivals have already agreed to.

On the job side of the equation, two-tier wages will be enacted for new employees until 20-percent of the work force lies in the lower wage bracket. Employees currently in the "Job Bank" have one year to either pick a new position or quit the company, compared to GM's "take the first, or take the second, then you're done" setup, or Chryslers two-year term in the Bank. Another health care VEBA is planned for Ford retirees, with a 40-percent cash infusion, compared to GM's 54-percent and Chrysler's 59-percent.

Ford will shutter two additional manufacturing centers - the Wayne Stamping and Assembly Plant and the Ohio Assembly Plant - and won't close any other plants aside from those already announced. The money they didn't contribute to the VEBA will be invested into plants, specifically to make these centers more flexible so they can manufacture any vehicle in the Blue Oval's arsenal. Ford will also make product commitments to the Wayne plant and a few other facilities.

You can read the entire summary by click the "Read" link below.

[Source: Detroit News]

Details emerge on Ford/UAW contract originally appeared on Autoblog on Mon, 05 Nov 2007 09:01:00 EST. Please see our terms for use of feeds.

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The Moneyed Tycoons of the UAW - Autoline on Autoblog with John McElroy

John McElroy — Thu, 27 Sep 2007 13:57:00 EST

Filed under: Autoline on Autoblog

John McElroy is host of the TV program "Autoline Detroit". Every week he'll bring his unique insights as an auto industry insider to Autoblog readers.

I gotta believe Karl Marx is spinning in his grave. Can you imagine the captains of capitalism handing tens of billions of dollars over to labor? For free? It's enough to make a Communist lose all hope for class warfare!

Yet, as part of a deal to get rid of all their health care bills for retired hourly workers, Detroit automakers are going to make the UAW richer than it ever dreamed possible. They're creating a VEBA, or Voluntary Employee Beneficiaries Agreement, which is a gigantic fund that will be used to pay all those health care bills.

The payoff for the car companies is that they can take all those future obligations off their books. That will immediately reduce their debts, improve their credit ratings and let them borrow at lower interest rates. It will also save the automakers billions every year, allowing them to drop some of it to the bottom line, and a lot more of it into developing new cars and trucks-something that Detroit desperately needs to do.

But before they get there they'll have to hand over something like $60 billion to the United Auto Workers union. And that's where it gets interesting.

Continue reading The Moneyed Tycoons of the UAW - Autoline on Autoblog with John McElroy

The Moneyed Tycoons of the UAW - Autoline on Autoblog with John McElroy originally appeared on Autoblog on Thu, 27 Sep 2007 13:57:00 EST. Please see our terms for use of feeds.

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Big Three discussing joint healthcare fund

Jonathon Ramsey — Tue, 12 Jun 2007 14:27:00 EST

Filed under: Chrysler, Ford, GM, Earnings/Financials

Recently, the UAW decided to look at the unusual step of taking over heathcare liabilities from the Big Three. The reason being that pension fund costs for future retirees is adding a terrific sum to the expense sheet every year -- GM's costs alone were $4.8 billion in 2006, and combined costs could have amounted to $12 billion. That's the price they are paying to assure healthcare for 2 million workers, ex-workers, and dependents. That drag on the bottom line is making GM, Ford, and Chrysler's return to competitiveness difficult, as if the job wasn't difficult enough already: the domestics lost $15 billion in '06, while Toyota, Honda, and Nissan made $23 billion.

In terms of total liabilities, the Big Three owe a combined $114 billion right now. The car companies have begun to discuss a fund, called a VEBA (voluntary employee beneficiary association) among themselves. They would proffer a one-time, lump sum payment, which would be a percentage of what they owe. After that, their contribution would be capped at a consistent rate that would keep them competitive. GM already uses VEBA's for some of its workers, and Goodyear set up a VEBA last year with $1 billion for the United Steelworkers, and has no further healthcare obligation.

A VEBA is just one option on the table, and neither side has said it will bring it up during labor talks. The discussion among the Big Three is in its initial stages, so company contributions have not even been determined yet.

[Source: Bloomberg]

Big Three discussing joint healthcare fund originally appeared on Autoblog on Tue, 12 Jun 2007 14:27:00 EST. Please see our terms for use of feeds.

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