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Chrysler Group agreement with UAW proves that unions equal success

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Once again American workers who are employed by a corporation with the wisdom to make their workers partners in the enterprise are showing America the road to economic recovery. Chrysler Group and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America have agreed to a memorandum of understanding to supplement Chrysler Group's existing collective bargaining agreement.

Chrysler Group will provide additional contributions to the VEBA Trust of an aggregate of $700 million in four equal annual installments. The initial payment will be made on closing of a transaction in which the VEBA Trust will sell to Fiat North America, one of Fiat's wholly owned subsidiaries, all of the VEBA Trust's equity interest in Chrysler. Additional payments of $175 million will be payable on each of the next three anniversaries of the initial payment. Chrysler Group expects to fund the initial contribution to the VEBA Trust from available cash on hand.

A Voluntary Employees' Beneficiary Association is a form of trust fund permitted under United States federal tax law, whose sole purpose must be to provide employee benefits. Among the types of benefits which a VEBA may provide are accident insurance benefits, childcare costs, employee continuing education, the cost of legal services, life insurance benefits, severance pay, supplemental unemployment benefits, sick leave pay, training benefits, and vacation pay. The plan may pay benefits to employees, their dependents, or their designated beneficiaries, or to disabled, laid-off, or retired former employees

In 2007 the UAW agreed to form VEBAs for their workers at the Big Three automobile manufacturers, thus relieving the companies from carrying the liability for their health plans on their accounting books. The UAW Retiree Medical Benefits Trust, with more than $45 billion in assets as of June 2010, is the world's largest VEBA

In consideration for these contributions, the UAW will agree to certain commitments to continue to support the industrial operations at Chrysler Group. Chrysler Group expects to fund the special distribution from available cash on hand.

Passage of the Employee Free Choice Act would have allowed other companies to survive in partnership with their workers avoiding the long term effects of the Bush Great Recession. Incredibly some called the UAW model as an example of economic failure when in fact those operations that the Big Three kept in America and Canada under collective bargaining agreements have thrived and produced better products.

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