May 20, 2009

How Bad Of Shape Are GM and Chrysler?

So bad that the UAW isn't happy about owning them.

The UAW is set to receive a 55% stake in Chrysler through its union trust fund once that automaker emerges from bankruptcy. The trust fund will also likely get up to 38% of GM's stock as part of its reorganization.

But that doesn't mean the union will be calling the shots at either company. In fact, UAW president Ron Gettelfinger said the union hopes to sell its stake in both companies quickly because he is more interested in raising cash to cover retiree health care costs than having an ownership stake in GM (GM, Fortune 500) and Chrysler.

"Let somebody else take the stock. Give us the money," Gettelfinger said at a recent press conference. "We are trading debt for equity, and what is the value of the equity? Let's be honest, it's zero today."

Since the trust fund, and not individual union members or the union itself, will own the stakes in GM and Chrysler, it is expected that the UAW will not use its newfound role as a large shareholder to push for major changes at either company.

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