There are really two things that jump out of the details about the Chrysler deal, via The Wall Street Journal:
The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.
Fiat SpA "eventually" will own 35%, and the U.S. government and Chrysler’s secured lenders together will end up owning 10% of the company once it is reorganized, that summary said.
The summary was distributed Monday evening at a gathering of union leaders in Sterling Heights, Mich. The deal was first disclosed Sunday night. The UAW aims for Chrysler workers to vote Wednesday on the proposed agreement, which requires changes to the union’s current Chrysler contract.
According to the summary, Chrysler will also issue a $4.59 billion note to the health-care trust fund that the union will manage for retired workers. The agreement said Chrysler will pay $300 million in cash into the trust fund in 2010 and 2011, and increasing amounts up to $823 million in the years 2019 to 2023.
The trust fund will own a "significant" amount of Chrysler stock and will be allowed to appoint a representative to Chrysler’s board, the summary said. [emphasis added]
First, it’s doubtful Walter Reuther ever imagined that the UAW would actually own a majority of the stock of one of the Big Three. But, heck, here we are. I don’t know that we quite understand the full magnitude of what this will mean down the road but why not take this for a little spin? See what kind of national policy a company controlled by the union can generate–for example, a demand for a single-payer health care system.
Which is why I am perplexed that, with all the concessions granted, the union only gets to appoint, apparently, one representative to the board. If the union is heading towards majority stock ownership, can’t it run a full slate of directors to the company’s board?
But, the whole spectacle of the shrinking of the U.S.-based auto industry is really a story of the incompetence of the managers and the executives of the companies, and of the so-called "free market" in general–all failures that workers are being asked to pay for. The managers had no vision or insight into how to run a modern, forward-looking company–and policymakers promoted the so-called "free market", which really only meant let’s allow companies to shift assets around the world without any regard to whether we are creating real prosperity–meaning, true prosperity, not the mirage fueled by credit card debt and home equity loans–for the vast majority of people.
