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To no one's surprise, the ground-breaking negotiations between General Motors (NYSE: GM) and the United Auto Workers are going well into overtime. The contract, which expired six days ago, is being extended hour by hour as the two sides attempt to hammer out an agreement that the UAW will then use as a template in negotiations with Ford (NYSE: F) and Chrysler.

According to an AP report, both sides are on the same page in establishing a Voluntary Employee Beneficiary Association (VERA) along the lines of that established by Goodyear Tire and the United Steelworkers last year. The VERA would turn over responsibility for retiree health care to the union. The two sides do not, however, agree on the amount of the contribution GM would make to the fund. GM's obligations for retiree health care is currently estimated at $51 billion, and the company reportedly proposed paying 65% of this amount into the VERA.

This is not the only contentious issue on the table, however. The UAW wants GM's assurance that it will keep building cars in UAW plants in the U.S., while GM is asking for a drop in hourly wages, larger worker contributions to health care program, a reduction in guarantees of work for UAW plants, reduced vacation time, and other cost-saving measures.

However, with 64% of UAW members eligible for retirement in next five years, until the VERA contribution is settled, no agreement can be reached. According to the Detroit Free Press' Tom Walsh, the delay works to the advantage of the union, especially if the market begins to lose confidence and GM's share price declines.

I suspect that as long as the union believes that it is making progress in the negotiations, it won't rattle the strike saber. If you start hearing its officials throwing around the "S" word, though, take that as an indication the two sides are closer to stalemate.

GM, UAW butt heads over retiree health benefits originally appeared on BloggingStocks on Fri, 21 Sep 2007 12:26:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>auto industryauto workers contractauto workers health careauto workers retireesAutoIndustryAutoWorkersContractAutoWorkersHealthCareAutoWorkersRetireescerebuschryslerffordgeneral motorsGeneralMotorsgminthenewsuawunited auto workersUnitedAutoWorkersFri, 21 Sep 2007 12:26:00 EST<![CDATA[Chrysler's dilemma]]>http://www.bloggingstocks.com/2007/03/05/the-dilemma-of-chrysler/http://www.bloggingstocks.com/2007/03/05/the-dilemma-of-chrysler/http://www.bloggingstocks.com/2007/03/05/the-dilemma-of-chrysler/#commentsFiled under: , , , ,

The news agency Reuters reports that the Blackstone Group is seriously examining the books and expense structure of Daimler's (NYSE:DCX) Chrysler unit. It is rumored in several circles in London that Daimler has a formal offering memorandum regarding Chrysler and that Blackstone is one of three potential, serious buyers. The other two being General Motors (NYSE:GM) and Cerberus Capital Management.

I spoke to a British portfolio manager who runs a European value fund and he feels that Daimler would be worth about $80 if it successfully sheds Chrysler. The Chrysler unit has been a drag on Daimler's core earnings base and has not allowed margins to slightly expand. This portfolio manager feels that Daimler's senior management would also be unencumbered with having to spend the inordinate amount of time on Chrysler's problems.

The more portfolio managers become convinced that Daimler will sell off Chrysler, the more enthused they become about loading up on Daimler's stock.

Those that have studied Daimler carefully believe that a private equity concern would be a better short term parent for Chrysler as the first 6-9 months following the takeover would require extensive and painful cost cutting. Obviously if GM were to be the winner in the Chrysler stakes, the near term hit to GM's earnings may be intolerable for many large institutional shareholders. The beauty of private equity is numbers can be discussed "in general" and specifics can be reported well after the fact.

Whatever happens, its clear here in London that Daimler is quite serious about unloading its American venture and re-building its own credibility and share value.

Georges Yared is the author of "Baby Boomer Investing...Where do we go from here?" and "Stop Losing Money Today"

Chrysler's dilemma originally appeared on BloggingStocks on Mon, 05 Mar 2007 09:15:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>BlackstoneCerebusCerebus Capital ManagementCerebusCapitalManagementChryslerDaimlerGeneral MotorsGMMon, 05 Mar 2007 09:15:00 EST