DETROIT - The United Auto Workers will emerge from a General Motors Corp restructuring as the second-largest stockholder in the reorganized automaker and with a more direct stake in its success, union President Ron Gettelfinger said on Thursday.
Obviously we have an interest in the company, we always have an interest in the company, Gettelfinger said in an interview. Now we will be more of a stakeholder in it and just try to move forward with the process.
GM's roughly 54,000 UAW-represented factory workers were voting on Thursday on changes to the union's contract with GM that would give a union-affiliated trust fund a 17.5 percent stake in the new GM.
Early results showed union workers voting overwhelmingly to ratify the deal, which would also allow the union to name a director to GM's board.
The Obama administration has set a June 1 deadline for GM to restructure its debt and slash costs. That is expected to coincide with a bankruptcy filing by the automaker under the guidance of the U.S. Treasury.
The U.S. government is expected to provide more than $30 billion in additional funding to GM on top of the $19.4 billion it has already extended, including financing in bankruptcy.
Plans announced by GM would have the U.S. government effectively nationalize the automaker by funding a new company to buy its best assets out of bankruptcy. The U.S. government would start with a 72.5 percent stake in GM.
The UAW would also be given $6.5 billion in preferred shares of the new GM and a $2.5 billion note.
Gettelfinger said he did not expect the union would be able to exercise warrants that would allow the UAW to acquire another 2.5 percent stake in GM.
In order for those warrants to be exercised, GM would have to bounce back to be valued at $75 billion -- more than 100 times its market value at the brink of bankruptcy. Really, we don't see them coming to fruition, Gettelfinger said.
The UAW chief, who has steered the union since 2002, said unionized auto workers had now given up all they could be asked to surrender in a series of concessions since 2005.
UAW 'SCRUBBED CLEAN'
Gettelfinger who sparred with Republican lawmakers last year over suggestions that UAW wages and benefits were to blame for the deepening crisis at GM and Chrysler, said factory worker pay represents less than 10 percent of vehicle assembly costs.
The companies cannot use this contract as an excuse for anything that happens in the future, he said. We're scrubbed clean.
GM bondholders, who own $27 billion of the automakers debt, had complained that the Obama administration had favored the union's position in restructuring GM, but Gettelfinger said he never saw it as a battle.
This is a dire set of circumstances for everyone involved. We just did the best we could for our constituency, he said.
Bondholders have been offered 10 percent of the new GM and could have warrants for another 15 percent in an offer extended Friday after renewed negotiations with U.S. officials.
The UAW plans to hold its stock in GM until at least 2012. A fiduciary appointed by the union's trust fund for retiree healthcare will determine when to sell, Gettelfinger said.
The union has assumed it will have to pay retiree healthcare expenses from its cash-generating investments in GM for the first two years.
The union's representative on the GM board will be appointed by trustees for its trust fund for retiree healthcare -- known as a VEBA.
That director will be there to monitor the business activities of the company and have the role of any independent board member and that's to make sure that the company makes sound business decisions, Gettelfinger said.
We want someone looking after that because the VEBA is very reliant on the success of the company, he said.
Gettelfinger said the UAW was successful in getting GM to drop plans to import a new subcompact car and make it at a U.S. factory with annual projected production of 160,000 units.
It should be built here if it's going to be sold here.
Membership in the UAW has dropped to 431,000 from a peak near 1.5 million in 1979. But with its ties to hundreds of thousands of retirees, the union remains a political force and campaigned for the election of President Barack Obama.
Gettelfinger said he would serve out his term as president and retire in 2010 as previously announced. I'll serve out the rest of the term, he said.
(Reporting by Kevin Krolicki; Editing by Gary Hill)