The United Auto Workers union has said it has received a guarantee that the pension fund for Chrysler workers would get an additional $US1.2bn as a result of the pending sale of the struggling automaker to a private equity firm.
UAW president Ron Gettelfinger, a member of the DaimlerChrysler supervisory board who has endorsed the Chrysler deal, was reported by Reuter to have said both the future Daimler, and Chrysler’s new owner, Cerberus Capital Management, would contribute to the pension plan.
“Cerberus has committed to contributing an additional $200m to the pension fund and Daimler is providing a conditional guarantee of $1bn for up to five years,” Gettelfinger reportedly said in an online discussion on Wednesday between union members, Gettelfinger and UAW vice president General Holiefield, who will take charge of negotiating a new contract with Chrysler to replace a four-year deal on wages and benefits expiring in September.
According to the news agency, the UAW officials also said Cerberus had provided a written commitment that there were “no new plans” to cut jobs at Chrysler in addition to the 13,000 jobs already being eliminated as part of a turnaround effort.
“Excluding abnormal market conditions … there are no additional job cuts in connection with the transaction,” the union was reported to have said, quoting a letter from Chrysler.
Reuters noted that the UAW comments marked the first time terms for any additional Chrysler pension funding had been detailed since the sale of an 80% stake in the company to the private equity firm was announced on Monday, 14 May.
Chrysler and Cerberus representatives would not comment on Gettelfinger’s remarks to Reuters. A DaimlerChrysler spokesman confirmed only that the German automaker had extended the pension guarantee.
Reuters noted that Gettelfinger’s comments on the new pension funding came after he surprised some industry analysts with his immediate endorsement of the Cerberus deal this week, given his earlier hostility toward a private equity owner for Chrysler.
Haven taken an opposing viewpoint, CAW president Buzz Hargove earlier this week had speculated that the UAW leader may have had some inside information that accounted for his change of heart.
According to Reuters, in remarks to union members on Wednesday, Gettelfinger pointed to areas where the UAW, a union with strong ties to the Democratic Party, had common cause with Cerberus, whose chairman is former (Republican) Bush administration treasury secretary (finance minister) John Snow.
Gettelfinger reportedly noted that Cerberus-owned company NewPage had filed a trade complaint in conjunction with its union, The United Steelworkers, against what they claimed were subsidised paper imports from China, Indonesia and South Korea.
Gettelfinger called the lawsuit and an initial US Commerce Department finding for NewPage “a tremendous accomplishment by Cerberus and the (union),” according to Reuters.
Answering a member’s question, Gettelfinger also said the UAW recognised Chrysler would have to compete on quality and customer service. He added: “Cerberus management has assured us that they feel the same way,” the report added.
Reuters also noted that some analysts have suggested that Chrysler under Cerberus could consider shifting health care liabilities for retired workers to a trust aligned with the UAW and separate from the company in exchange for a one-time payment, a major shift for a Detroit automaker that would follow the outline of a strike settlement reached earlier this year between Goodyear Tyre & Rubber and its major union, the United Steelworkers.
On Wednesday, a UAW member called on Gettelfinger to consider having the union take a role in running the Chrysler pension but Gettelfinger avoided commenting on the specific suggestion, according to the report.
“The UAW has and will continue to negotiate responsible agreements that include pension plans,” he added, according to Reuters.