chrysler insurance company bankruptcy
The United Auto Workers union recently announced a deal Friday with bankrupt supplier Dana Corp. that the transfer of rights to health care for retirees company to a union trust fund management.
The pact could serve as background for discussions of the labor force from this month between the UAW and Detroit's Big Three. Dana's agreement is like a negotiated in 2006 between the United Steelworkers and Goodyear Tire & Rubber Co. that manufacturers consider a possible model for the management of their own liabilities for retirees health care. The steelworkers are also part of the UAW-Dana pact.
The The company said the agreements with the UAW and the USW include four one-year extensions of existing contracts Dana's union plants in the United States, and new agreements with several recently organized facilities. They also establish two levels of wage structures in some installations of Dana and modify benefits existing disability.
The Detroit automakers are also expected to release in an agreement of two wage levels, allowing them to pay new employees significantly less than existing employees. Under the agreement of Dana, the auto supplier will contribute $ 700 million in cash and approximately $ 80 million in common stock to finance two VEBAs or voluntary associations of beneficiaries of the employee.
Each union will run one of these trusts, which provides health coverage for retirees and disability insurance long term for active workers. In view of this, the Toledo-based supplier will be released of all future obligations of such coverage. As such, the company expects to save more than $ 100 million annually.
Part of the funding will come of private equity firm Centerbridge Capital Partners LP, which has agreed to invest up to $ 500 million in cash for convertible preferred stock in the reorganized Dana. Additionally, the company is committed to help build $ 250 million from other investors.
The agreement is a success for Centerbridge, which hired former CEO of General Motors Corp. and auto analyst Steve Girsky stars to lead the business. Centerbridge was part of a failed attempt by Chrysler Group earlier this year.
"This agreement would not have been possible without the involvement of Centerbridge Partners," UAW President Ron Gettelfinger said in an interview. "They're going to play a key role in the future of Dana, and we look forward to working with them to help the company succeed in the marketplace."
Dana said the unfunded portion of its retiree health care obligations and long-term disability now total $ 1.1 billion. If the agreement is ratified by union members and approved by the federal bankruptcy court, the auto supplier have not eliminated that liability on its balance sheet to 71 cents.
As reported, GM and Ford Motor Co. wants to negotiate a figure closer to 50 cents. But the point is not that simple. Some industry observers that the Union was cautious about setting the bar too low.
Like the title = "Chevrolet Assembly lighthouse"> Chevrolet headlight assembly can make the vehicle more adaptable to different road conditions, the UAW pact with Dana also expected to meet the demands health of automobile workers varied. Dana's agreement is further evidence that the union is willing to negotiate on retiree health care. "No appears to be a pattern developing, "said Jim Gillette, an analyst at CSM Worldwide." I think they understand the realities of the situation. "
"If they were able to obtain these responsibilities retirement health care books, which go a long way toward making them more competitive, " said Bradley Rubin, auto analyst at BNP Paribas. "This is encouraging."
About the Author:
Anthony Fontanelle is a 35-year-old automotive buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.
Article Source: ArticlesBase.com – Uaw to Manage Dana Retiree Benefits
Making a Fat Man Fatter
