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UAW raises objection to GM restructuring plan
May 5, 2009 - 2:31 pm ET
UPDATED: 5/5/09 5:50 p.m. ET
DETROIT (Reuters) -- The UAW is calling on the U.S. government to reject General Motors' latest restructuring plan, saying it would cut U.S. factory jobs and clear the way for increased imports from plants in Mexico, Korea and China.
The objection by the union, which could own 39 percent of a restructured GM, underscores the deep problems that the No. 1 U.S. automaker faces in satisfying the demands of all of the parties with a stake in its effort to stay out of bankruptcy.
"The UAW urges you to join with us in expressing your opposition to GM's plans to close factories and eliminate jobs in the United States while it is increasing imports from other countries," Alan Reuther, the UAW's chief lobbyist, said in an open letter to U.S. lawmakers dated Monday.
After weeks of consultation with the Obama administration's autos task force, GM announced a new restructuring plan in late April that set aggressive targets for reducing debt, closing plants and eliminating about 21,000 factory jobs.
GM has used the plan as the basis for a debt exchange it has launched in an attempt to slash debt owed to bondholders by at least $24 billion in exchange for offering its bond investors a 10 percent stake in a new company.
A committee representing bondholders has objected to those terms and asked for a majority stake in a new GM instead.
With the two sides so far apart and less than a month remaining until the June 1 deadline for GM to complete a restructuring out of court, many analysts have concluded that the automaker will have to be put into Chapter 11 along with its smaller rival Chrysler LLC.
But in the case of Chrysler, the Obama administration had won agreements from the UAW and banks and lenders representing most of that automaker's secured debt before filing for bankruptcy protection.
By contrast, Reuther's letter to U.S. lawmakers shows how far apart the union and GM are on the basic question of what a restructured company should look like and where it should be manufacturing after the restructuring process is completed.
GM and the UAW are set to resume talks May 7 on a cost-cutting contract, Bloomberg News reported today, citing people familiar with the process,
The two sides stopped negotiating on Feb. 13 because of disagreements over cuts to a retiree health-care trust, or VEBA, the news service said. They later agreed on such issues as bonuses and unemployment pay without resolving the health-care issue.
Plant closings
GM has said it will close 16 plants, including four assembly plants, taking its UAW-represented work force to about 40,000 by 2010.
But Reuther said that GM planned to make up for that lost production by nearly doubling the number of vehicles it would import from Mexico, Korea, Japan and China.
"The overall number of vehicles that GM will be importing in 2014 represents the production of four assembly plants, the same number that GM plans to close in the United States," he said.
GM, which has been kept afloat with $15.4 billion in emergency federal loans since the start of the year, should be "required to maintain the maximum number of jobs in the United States" as a condition for any further assistance, Reuther said in the letter, which was posted on the UAW Web site.
A GM spokeswoman could not be immediately reached for comment.
Reuther said the UAW expected Chrysler's restructuring to be completed in bankruptcy within 60 days, as predicted by Obama administration officials.
The alliance between Chrysler and Italy's Fiat S.p.A. is expected to create 4,000 new U.S. manufacturing jobs as the Italian automaker fulfills a pledge to build a small car in an existing Chrysler plant, Reuther said.
May 5, 2009 - 2:31 pm ET
UPDATED: 5/5/09 5:50 p.m. ET
DETROIT (Reuters) -- The UAW is calling on the U.S. government to reject General Motors' latest restructuring plan, saying it would cut U.S. factory jobs and clear the way for increased imports from plants in Mexico, Korea and China.
The objection by the union, which could own 39 percent of a restructured GM, underscores the deep problems that the No. 1 U.S. automaker faces in satisfying the demands of all of the parties with a stake in its effort to stay out of bankruptcy.
"The UAW urges you to join with us in expressing your opposition to GM's plans to close factories and eliminate jobs in the United States while it is increasing imports from other countries," Alan Reuther, the UAW's chief lobbyist, said in an open letter to U.S. lawmakers dated Monday.
After weeks of consultation with the Obama administration's autos task force, GM announced a new restructuring plan in late April that set aggressive targets for reducing debt, closing plants and eliminating about 21,000 factory jobs.
GM has used the plan as the basis for a debt exchange it has launched in an attempt to slash debt owed to bondholders by at least $24 billion in exchange for offering its bond investors a 10 percent stake in a new company.
A committee representing bondholders has objected to those terms and asked for a majority stake in a new GM instead.
With the two sides so far apart and less than a month remaining until the June 1 deadline for GM to complete a restructuring out of court, many analysts have concluded that the automaker will have to be put into Chapter 11 along with its smaller rival Chrysler LLC.
But in the case of Chrysler, the Obama administration had won agreements from the UAW and banks and lenders representing most of that automaker's secured debt before filing for bankruptcy protection.
By contrast, Reuther's letter to U.S. lawmakers shows how far apart the union and GM are on the basic question of what a restructured company should look like and where it should be manufacturing after the restructuring process is completed.
GM and the UAW are set to resume talks May 7 on a cost-cutting contract, Bloomberg News reported today, citing people familiar with the process,
The two sides stopped negotiating on Feb. 13 because of disagreements over cuts to a retiree health-care trust, or VEBA, the news service said. They later agreed on such issues as bonuses and unemployment pay without resolving the health-care issue.
Plant closings
GM has said it will close 16 plants, including four assembly plants, taking its UAW-represented work force to about 40,000 by 2010.
But Reuther said that GM planned to make up for that lost production by nearly doubling the number of vehicles it would import from Mexico, Korea, Japan and China.
"The overall number of vehicles that GM will be importing in 2014 represents the production of four assembly plants, the same number that GM plans to close in the United States," he said.
GM, which has been kept afloat with $15.4 billion in emergency federal loans since the start of the year, should be "required to maintain the maximum number of jobs in the United States" as a condition for any further assistance, Reuther said in the letter, which was posted on the UAW Web site.
A GM spokeswoman could not be immediately reached for comment.
Reuther said the UAW expected Chrysler's restructuring to be completed in bankruptcy within 60 days, as predicted by Obama administration officials.
The alliance between Chrysler and Italy's Fiat S.p.A. is expected to create 4,000 new U.S. manufacturing jobs as the Italian automaker fulfills a pledge to build a small car in an existing Chrysler plant, Reuther said.
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