The United Auto Workers union chiefs voted last night to approve concessions required for the potential Chrysler-Fiat merger. All other union members will vote today. The concessions will mean pay cuts for all union members in exchange for a 55% share in Chrysler and a board member seat for the retiree health care trust, according to Left Lane News.
If the concessions are not agreed to, Chrysler will be ineligible for additional government support, and will face almost certain bankruptcy.
If the merger goes ahead as planned, Fiat will own 35% of Chrysler, which will leave 10% that will be owned by Chrysler’s creditors, including the U.S. government.
We don’t know what a union-run company will look like in the long run, but expect it to be interesting. We’re especially interested in how contract negotiations will work. With the union in control of the company, you’d think that pay raises would be pretty easy to come by. But how does that balance against the need to keep the company viable?