UAW's Gettelfinger On Chrysler's Future
STEVE INSKEEP, host:
Two auto companies could end up with much of their stock in the hands of their workers. A restructuring plan for General Motors sends stock to United Auto Workers' health care plan. The Wall Street Journal dubbed the company Gettelfinger Motors, after the union leader Ron Gettelfinger.
The Auto Workers' health fund would actually get 55 percent of Chrysler's stock if a bankruptcy goes along. And this raises many questions about what it means for the union to control its employer.
But when we reached Ron Gettelfinger this morning, he said the union will not own that stock for long.
Mr. RON GETTELFINGER (President, United Auto Workers): Well, there's a big misconception, Steve, on the 55 percent ownership. Under the Loan and Security Agreements that was signed by the companies in order to get the first funding from the U.S. government - the loan, if you will - the agreement required us as a union to take 50 percent of the debt that was owed to the VEBA in the form of equity.
INSKEEP: I'm sorry. The VEBA, that's your, basically, your plan to finance pensions and health care?
Mr. GETTELFINGER: Not pensions, but just the health care for retirees.
Mr. GETTELFINGER: And it's referred to as a Voluntary Employee Beneficiary Association. The VEBA is the one that will own the 55 percent of the company initially.
Now, we took a major cram down in the form of this equity in place of the debt. So, the VEBA is going to be stressed in order to pay the benefits, so what we will need to do as a VEBA is, as soon as we possibly can, to start selling these shares.
INSKEEP: I want to make sure I explain that for the layman. You already have had to accept company stock in place of money they were supposed to pay you. And that's how you would end up with such a huge share, not only of Chrysler but of General Motors, by the way. And you would want to sell that stock, again, you're saying?
Mr. GETTELFINGER: Right. We would need to sell that stock. It's not one that we wanted to or not. And again, it won't be the UAW, it's the VEBA that will be the owner of the stock because the debt is owed to the VEBA.
INSKEEP: So you are - just to underline this, you had absolutely no intent and in fact not even really the ability to remain major shareholders of two huge auto companies?
Mr. GETTELFINGER: That's correct. We do not have the ability because of the need for the cash in the VEBA to pay the retiree health care.
INSKEEP: Now, are you optimistic that Chrysler - let's start with that company - that Chrysler is going to come out of bankruptcy court in a viable form, in a long-term, viable form?
Mr. GETTELFINGER: Well, first of all we did everything that we possibly could to prevent Chrysler from filing for bankruptcy. We did our part, and we're not responsible for them being in bankruptcy.
There're too many unknowns in a bankruptcy proceedings, but having said that, I'm very comfortable. It's not like we're going into this bankruptcy, fighting with Chrysler and Fiat and the U.S. Treasury. We're going in there in lockstep to put our agreements in place.
Secondly, I do believe that once Fiat takes control of Chrysler, they emerge from this bankruptcy, I think that they will be viable for the future, and I think for the long term.
INSKEEP: Must be disturbing, though, on Monday, if I'm not mistaken, all the plants shut down, and you always have to wonder if they will ever start up again.
Mr. GETTELFINGER: Well, I think that is disturbing, and it creates additional concern for our membership. But I think right now, with the amount of inventory that's out there, part of the plan is to use that shutdown to reduce the inventory. And then when the company comes back, we'll have them - Fiat comes back in control, it will put them in a position to be able to move forward into the marketplace.
INSKEEP: Now, Ron Gettelfinger of the United Auto Workers, do you see any way at this point for General Motors to avoid following Chrysler into bankruptcy?
Mr. GETTELFINGER: You know, Steve, I really don't, at this juncture, want to make an assumption of what will be the outcome, but obviously we are going to have to go back in, (unintelligible) and do some things similar to what we did at Chrysler.
Now, whether or not they can avoid bankruptcy or not, I don't know. I do think this. I think that the president allowing Chrysler to go into bankruptcy shows that he means business here. And when he gave his speech on April 30, in the case of Chrysler, he said that their plan wasn't viable, gave them 30 days and stuck to it.
INSKEEP: Ron Gettelfinger of the United Auto Workers, thanks very much.
Mr. GETTELFINGER: Well, thank you very much, Steve. And thank you for having the UAW on.