I hope people will join me in boycotting the purchase of soon-to-be-union-owned GM and Chrysler.
Some on the conservative side of the aisle tell us that we have a patriotic duty to “buy American.” I do that where I can, but not at the expense of my own well-being. Now, with the help of Bush in his last few days in office, Barack Obama is close to realizing his dream of turning every American industry he can get his hands on into a patronage farm for his shock troops.
Here is to hoping 2010 provides a reversal to these awful trends, but that doesn’t mean it isn’t time to start looking for a “exit strategy” of some sort.
The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.
Fiat SpA “eventually” will own 35%, and the U.S. government and Chrysler’s secured lenders together will end up owning 10% of the company once it is reorganized, that summary said.
The summary was distributed Monday evening at a gathering of union leaders in Sterling Heights, Mich. The deal was first disclosed Sunday night. The UAW aims for Chrysler workers to vote Wednesday on the proposed agreement, which requires changes to the union’s current Chrysler contract.
According to the summary, Chrysler will also issue a $4.59 billion note to the health-care trust fund that the union will manage for retired workers. The agreement said Chrysler will pay $300 million in cash into the trust fund in 2010 and 2011, and increasing amounts up to $823 million in the years 2019 to 2023.
The trust fund will own a “significant” amount of Chrysler stock and will be allowed to appoint a representative to Chrysler’s board, the summary said.
“While we realize the proposed sacrifices for UAW members are painful, we fought to maintain our wages, our health care and our jobs,” UAW President Ron Gettelfinger wrote in a letter with the summary. The UAW summary also said the accord would provide the union with regular updates from the company on its long-term strategy and product plans.
General Motors Corp. outlined a new turnaround plan that would leave the U.S. government controlling the auto maker, as it set up a showdown with bondholders that could determine whether the company lands in bankruptcy court.
Under the plan, GM is asking the Treasury Department for an additional $11.6 billion in loans, on top of the $15.4 billion it has already received. It envisions giving the government at least half ownership of the company as payment for half of the loans.
At the same time, GM said it would use stock instead of cash to pay off half the $20.4 billion it owes a United Auto Workers fund to cover retiree health care. That stock would leave the union owning about 39% of GM.
The upshot would be the transformation of a troubled American icon, leaving it in the hands of the government and its main union. The situation, fraught with complications and potential conflicts, comes on top of the U.S. government taking stakes in banks and insurer American International Group Inc.
Also Monday, the UAW and Chrysler LLC disclosed that the union would own 55% of that restructured car maker, while Fiat SpA would get 35% and the U.S. and lenders would own the rest.
GM told bondholders it wants to swap up to $27 billion in unsecured debt for a 10% company stake. If bondholders tender less than 90% of the debt, GM is prepared to file for bankruptcy protection, Chief Executive Frederick “Fritz” Henderson said.
These were two horribly managed companies whose Unions and Executive leadership lead them to disaster. They should have been allowed to go under. Here is a note to all the Union Drones in the EU and the US…
…there isn’t enough money in the world to fund your insane demands!!!
You’ve bankrupted entire states, large companies once thought invincible, and corrupted the entire financial industry. You are the new “robber barons.” Anything that isn’t tied down, you steal, and anything thing you can pry loose isn’t tied down.”
Unions have become the new definition of greed.