I am writing today to announce the closure of the Michigan Messenger. After four years of operation in Michigan, the board of the American Independent News Network, has decided to shift publication of its news into a single site, The American Independent at Americanindependent.com. This is part of a shift in strategy, towards new forms [...]
An abstinence-only presentation provided to numerous school districts in Calhoun and Eaton Counties in October of this year provided false and misleading information to students about HIV, experts allege.
Two county registers of deeds filed a class action lawsuit Monday on behalf of Michigan’s 83 counties alleging that the Mortgage Electronic Registration Services owes millions of dollars in property title transfer taxes.
Despite evidence of the impact of mercury on children and public health, Michigan Attorney General Bill Schuette last month joined with 24 other state attorneys general in filing a lawsuit to scuttle new EPA regulations that would reduce mercury emissions from power plants.
One of the key elements of the restructuring plans being negotiated for both Chrysler and General Motors is the ownership stake being given to the UAW’s Voluntary Employee Beneficiary Association (VEBA), which is the giant healthcare trust fund set up under the 2007 collective bargaining agreement. In both companies, the union has agreed to exchange about half of the cash payments due from the companies to the VEBA fund for an equity stake in the company.
In the case of Chrysler that stake is 55%, but the mere number significantly overstates the actual control the union will have. Despite that 55% stake, the union is only getting one seat on the nine-member board of directors for the new Chrysler/Fiat partnership that will emerge from bankruptcy proceedings.
The other reason it’s overstated is because the union won’t be able to keep those shares. In January, 2010, the VEBA takes over the entire healthcare system for employees and retirees for all three American auto companies. The reason the companies were slated to pay nearly $40 billion in to that system was because that amount of money is going to be required to be able to fund those commitments.
Since Chrysler and GM are now going to be paying in $15 billion less to VEBA than originally planned, that shortfall is going to have to be made up by selling those shares of stock at some point. The higher the stock value, of course, the fewer shares will have to be sold. So the union is also rolling the dice on those companies making a comeback and the value of the stock going back up.
If the best case scenario happens and both companies come back stronger and leaner, the economy improves and sales rebound sooner rather than later, the value of that stock should move up relatively quickly and the UAW will be able to fully fund VEBA without selling off too large a chunk of the stock they’ve taken in exchange for the lower payments. But if the recession continues longer than expected and sales continue to slump, things could turn out much worse.
Chrysler’s workers are betting that a new, leaner and more competitive Chrysler can emerge from bankruptcy and become profitable and stable in the long term once again. And they are quite literally gambling with their own health in making that bet.
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