Chrysler, UAW Strike Deal That Includes Using Stock For Half Of Automaker's Obligation To VEBA

Main Category: Health Insurance / Medical Insurance
Also Included In: Seniors / Aging
Article Date: 28 Apr 2009 - 6:00 PDT

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Chrysler on Sunday announced that it has reached an agreement with United Auto Workers that will allow the automaker to pay about half of its obligation to a retiree health insurance fund in the form of company stock, the Washington Post reports. Neither Chrysler nor UAW released details of the agreement, which is subject to ratification by the union's members (Whoriskey, Washington Post, 4/27).

The automaker likely will take specific action under a plan developed by the Obama administration, which includes protections for employee benefits, according to people with knowledge of the matter. Under the benefit-protection deal worked out last week, employees would lose some benefits after the filing, but not as much as they would have lost under a Chapter 11 filing with government guidance, according to sources. The new Chrysler that would emerge includes a 20% to 35% ownership stake for Italian automaker Fiat -- with which the government has ordered Chrysler to merge -- as well as partial government ownership (Bunkley/Vlasic, New York Times, 4/27).

UAW President Ron Gettelfinger said, "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" (Krisher, Washington Times, 4/27). Chrysler in a statement said the "provisional agreement provides the framework needed to ensure manufacturing competitiveness and helps to meet the guidelines set forth by the U.S. Treasury Department" (Washington Post, 4/27). UAW plans to have its membership vote on the plan by Wednesday (New York Times, 4/27).

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