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Meanwhile, GM, rather than pushing for wage cuts, is demanding sweeping changes in work rules that would make it easier for the company to staff its plants with temporary workers as well as changes to the funding of the retiree healthcare trust or VEBA. Both GM and Chrysler agreed to fulfill their obligations to fund the VEBA with stock as well as cash, as required by the terms of the Bush bailout. But the automakers cannot unilaterally change the terms of the trust, so it's on the negotiating table...
Both companies want at least some commitment on the extent of the union concessions by Feb.17 when GM and Chrysler are scheduled to submit drafts of their new "viability plans" to the Treasury department. The automakers are supposed to show they have labor costs that are "competitive" with foreign car companies operating in the U.S. (See the 50 worst cars of all time...
Last week, General Motors Chairman and CEO Rick Wagoner insisted that "the supply, design and construction of [electric-car] batteries must be a core competency of GM." GM plans to build a plant soon, as well as a battery research center, along with the University of Michigan. Toyota is already majority owner of the plant that makes the batteries for its Prius gas-electric hybrid car. Other car companies are looking to manufacturing firms like Chinese BYD, a leading cell-phone battery producer, to satisfy their battery needs...
Fiat, which began a remarkable turnaround with the whopping cash payout from GM in 2005, is also struggling again, along with the rest of the auto industry, as car sales plummet amid a deepening economic crisis. Fiat has been itching to get its stylishly economic models on the market in the U.S., and the deal with Chrysler can be seen as part of a series of "strategic partnerships" it has sealed with other automakers in recent years, including one with Tata motors and a deal to build diesel engines with Daimler-Chrysler, before the breakup last year of that German...
Indeed, to understand the evolution that led to Tuesday's announcement, it is worth returning to the 2005 negotiations in which GM was forced to buy itself out of the cumbersome put option in its alliance with Fiat. The then brand-new CEO of the Turin company, Sergio Marchionne, emerged as a tough-as-nails dealmaker as he sat across the table from top GM executives. The Italian-born, Canada-raised Fiat chief told his American counterparts they would cough up the full value of the put option or battle it out in court. GM blinked, and the huge payout...