UAW Says Fiat Best Option For Chrysler

DETROIT, Jan 21, 2009; David Bailey writing for Reuters reported that United Auto Workers President Ron Gettelfinger on Wednesday said an alliance to give Italy's Fiat 35-percent of Chrysler LLC was the best deal the U.S. automaker could strike to preserve jobs.

"I think we all knew Chrysler needed to partner with somebody. It was a matter of who and what would do the least harm to people," Gettelfinger said. "Do we want to see Chrysler go away? I don't think that's a good idea."

He added: "I personally think that of all of the options out there, this was the best one."

Gettelfinger, who was speaking at the Automotive News World Congress, also said he was optimistic the union could work with the new Congress and the Obama administration.

The UAW campaigned for Obama in states like Michigan, Ohio and Indiana in the November election and has been sharply critical of Republicans in Congress for blocking an auto bailout bill and then pushing for deep union concessions in the emergency package approved by former President George W. Bush.

"I think you'll see a meeting coming up with the Big Three CEOs and the president very shortly," said Gettelfinger.

Under pressure to head off the collapse of one of the U.S. automakers, the Bush administration approved $17.4 billion in loans for GM and Chrysler in late December. Chrysler got $4 billion of loans and says it needs $3 billion more.

The terms of the government funding mandate that GM and Chrysler seek deep concessions from bondholders and the UAW and prove that they can be viable by end March.

One of the provisions backed by Sen. Bob Corker, a Tennessee Republican, would force the UAW to accept stock instead of cash for half of the amount the automakers pledged to a union-affiliated trust fund for retiree health care.

Gettelfinger said that provision, along with a call for the UAW to accept wages competitive with the non-union workers of Japanese automakers in the United States, would be hard for the union to accept or implement.

"Now we have this senator telling us you have to trade cash for equity? What's the value of it?" Gettelfinger said. "C'mon. Just because we're union don't mean we're stupid."

BEST OPTION OPEN?

The union offered its backing for Chrysler's tie-up with Fiat as soon as it was announced earlier this week.

Fiat and Chrysler's owner Cerberus Capital Management unveiled the terms of a proposed alliance under which the Italian automaker would take a stake in Chrysler's auto operations in exchange for access to technology and help selling vehicles outside the United States.

The deal, which does not involve cash, is contingent on Chrysler securing the additional $3 billion from the U.S. government.

Analysts have said the deal would strengthen Chrysler's truck-heavy vehicle line-up. Some also have questioned whether the automaker can find the cash to make the deal work if the U.S. auto market remains depressed.

Under Cerberus, Chrysler had contact with a range of potential partners before settling on Fiat including Renault-Nissan and GM, people familiar with the talks have said.

Gettelfinger said a GM acquisition of Chrysler would have cost thousands of jobs, especially in Detroit where both automakers have their headquarters. "It would have devastated the area," he said.

Gettelfinger said the union would have supported other partners for Chrysler besides Fiat. But he said he would have opposed a takeover of the company by a Chinese company.

He did not specify the reasons for his opposition to a deal with a Chinese automaker. The UAW has been critical in the past of Chinese trade, environmental and labor policy.

"Let's just say the environment is not good there for free trade," Gettelfinger said.

Editing for Reuters by Carol Bishopric