Bread and Roses strike - UAW Local 5960

Page 10 THE UAW LOCAL 5960 REPORT August 1, 2012
President Obama made the right call on the auto loans
USA Today, Op-Ed
UAW President Bob King
The bankruptcy restructuring General
Motors and Chrysler in 2009
through the creation of new companies
formed with assets purchased from
those troubled companies was highly
successful. Today, GM and Chrysler
are profitable, investing in America
and creating jobs.
President Obama’s decision to act
to save GM and Chrysler prevented
an economic catastrophe that would
have thrown the nation into a fullblown
depression and resulted in
dozens of additional bankruptcies in
the auto industry and across industrial
America. Instead, the auto industry
today accounts for an outsized share
of economic growth and is helping lead
our nation’s economic recovery.
Yet, for political critics of the Obama
administration, this achievement,
completing a process started by President
Bush, is barely worth mentioning.
The problem for these critics is that
the public, especially in states with a
large auto industry presence, knows
better. People who lived through the
ups and downs of the auto industry
remember well what happened and
how it turned out.
So when Republican presidential
candidate Mitt Romney insists that
GM and Chrysler should have been restructured
in a deal financed by private
lenders, the public remembers that no
entity besides the U.S. Treasury would
provide that funding. Without the
Treasury, “Let Detroit Go Bankrupt”
would have turned into “Force Detroit
to Liquidate,” with all the economic
calamity that would have followed.
U.S. Judge Arthur Gonzales found
exactly that in the order authorizing
the sale of Chrysler’s assets to the
new Chrysler. “The sale transaction
is the only alternative to liquidation
available to the debtors.”
Another oft-repeated criticism is
the claim that bankrupt Chrysler’s secured
creditors got less than they were
entitled to under the bankruptcy code.
In fact, the secured creditors received
the highest possible amount available
to them. Judge Gonzales affirmed this
point in the sale order: “The sale transaction
will provide a greater recovery
for the debtors’ creditors than would
be provided by any other practical
available alternative, including, without
limitation, liquidation whether
under chapter 11 or chapter 7 of the
Bankruptcy Code.”
The Chrysler creditors group
agreed, with 90% supporting the sale
as ordered. The U.S. Appeals Court
and the Supreme Court also agreed.
Challenges to the treatment of various
categories of creditors were rejected.
Appearing Sunday, August 5, 2012 at the
UAW 5960 Picnic
Independence Oaks, Clarkston
Yet, well after the questions of fact
and law were settled in court, claims
to the contrary are common among
the president’s opponents.
The latest salvo comes from the
Heritage Foundation, repeating the
idea that the United Auto Workers’
retiree health care trusts received
more money than they were entitled
to under the principles of bankruptcy
reorganization when compared with
unsecured creditors. But the comparison
is hardly apt.
The creditor’s recovery is still occurring
as a part of the bankruptcy restructuring,
while the health care funding
was approved by the court under the
specific part of the bankruptcy code that
deals with retirees, resulting in agreements
with the new GM and Chrysler.
The companies prudently bargained
new contracts with the employees (and
suppliers) they needed to be successful
as newly formed entities. That amounts
to good business judgment that is difficult
to second-guess when both GM
and Chrysler are performing better
than they have in decades.
This improvement was not achieved
without significant sacrifice on the part
of UAW members. Many plants were
closed, and tens of thousands of UAW
members lost their jobs. Those hired
before 2007 haven’t had a raise since
2003. They also gave up cost-of-living
raises, bonuses, vacation pay, overtime
pay, holidays and break time. Those
hired since 2007 are working for lower
pay and benefits that have allowed the
companies to hire thousands of workers
at a greatly reduced cost. Retiree
health care liabilities were shifted
to the retiree trusts. Retirees lost
vision and dental coverage and face
increased out-of-pocket costs.
Last year, UAW members approved
four-year collective bargaining agreements
with the domestic automakers
that contain no raises, but the deals
have the possibility of increased at-risk
compensation through profit sharing.
In return, the companies agreed to invest
in U.S facilities and create at least
20,000 new direct jobs that will result
in tens of thousands of supporting
jobs at suppliers and other businesses
supported by the auto industry in communities
across the country.
In those communities, we are seeing
plants retooled for new products
and new technology, especially as
manufacturers race to meet consumer
expectations for more fuel-efficient
vehicles.
While the political opponents of
the auto rescue package are sure to
continue their flawed criticisms, those
who live and work in auto communities
across the nation see the success,
the employment growth and the sense
of a brighter future, and that is the real
thing worth remembering about what
President Obama did to save the U.S.
auto industry.
With Special Guest
Mark Boucher
Music Begins at 1:30 p.m.
Sponsored by the UAW 5960 Education Committee