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Apr 26, 2009 9:30 pm US/Central
UAW, Chrysler And Fiat Reach Concession Deal
DETROIT (AP) ―
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Dodge Ram trucks sit parked outside a Chrysler manufacturing plant Dec.19, 2008, in Fenton, Miss. Chrysler announced plans to idle North American manufacturing plants until Jan. 19, 2009.
Whitney Curtis/Getty Images
Chrysler LLC cleared another major obstacle to its survival Sunday when it reached a tentative deal for concessions with the United Auto Workers union.
The troubled automaker is just days from a Thursday U.S. government deadline to gain concessions from its unions and debtholders and form an alliance with Italy's Fiat Group SpA or face almost certain liquidation.
The UAW announced the deal in a news release Sunday night, calling the concessions painful but saying the deal takes advantage of the Obama administration giving Chrysler and its workers a second chance.
The administration in February rejected Chrysler's restructuring plan and said it could not stand on its own. The government gave the Auburn Hills, Mich., automaker until April 30 to make further cuts and ink a deal with Fiat.
The UAW deal is seen as a key piece of pulling Chrysler's plan together, and it's noteworthy that the UAW said Fiat was involved in the deal.
Chrysler has been living on $4 billion in U.S. government loans and is expected to get another $500 million. Without government help, it would have gone out of business around the first of the year.
After rejecting the original plan, the government had said the UAW and Canadian Auto Workers unions must make further concessions, including the UAW taking equity in the company for at least half of a $10.6 billion payment into a union-run trust that will take over retiree health care costs starting next year.
The CAW ratified a concessionary deal on Sunday which CAW President Ken Lewenza said makes labor costs competitive with non-unionized Toyota in Canada.
The UAW says its deal "meets the requirements of U.S. Treasury Department loans to the company," and includes changes to the health care trust. UAW Vice President General Holliefield said the agreement's ratification process has to be completed by Wednesday.
"We recognize this has been a long ordeal for active and retired auto workers, and a time of great uncertainty," UAW President Ron Gettelfinger said in a statement. "The patience, resolve and determination of UAW members in these difficult times is extraordinary, and has made it possible for us to reach the agreement we will present to our membership."
The UAW and CAW deals leave concessions from the holders of $6.9 billion in Chrysler secured debt and the alliance with Fiat as the remaining hurdles to Chrysler qualifying for additional government aid.
Debtholders, the company and the Treasury Department remain far apart in swapping equity in the company for much of the debt.
Holliefield said in the statement that UAW members and retirees are being asked to make extraordinary sacrifices to help Chrysler become viable.
"In order for the company to have a sustainable future, all stakeholders will have to show the same willingness to contribute to the common good that has been demonstrated repeatedly by our membership," the statement said.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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