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"The bargaining teams on both sides worked hard, for many days and nights, to craft a transformational agreement that would adequately reward the commitment of our workforce while ensuring the Company’s continued success and competitiveness. Striking the right balance in these two objectives has been the most difficult thing to accomplish in these negotiations, but after many hours of dialogue and debate between the UAW and FCA US leadership, the Company felt that a just and equitable compromise had been reached. The memories of our near-death experience in 2009 are vivid to this day in the minds of most of us at FCA. A large number of new employees have been brought into the Group since then who, thankfully, did not have to endure the pain and sacrifices that were required of the workforce then. But it is that knowledge and those memories that continuously reinforce the FCA leadership’s resolve to never let those events repeat. While significant progress has been made since the events of less than seven years ago, much more work remains to be done and challenges remain while new, significant ones surface. The cyclical nature of the automotive business demands that while we must recognize the need for rewarding employees during times of prosperity, we must also protect against the inevitable market downturn. This agreement accomplished both of these objectives. The tentative agreement was designed to yield a strong and competitive FCA US, thus providing stability for our workforce and opportunity for future growth and investment in an increasingly complex global marketplace. The Company will make decisions, as always, based on achieving our industrial objectives, and looks forward to continuing a dialogue with the UAW." -
In a very detailed two-hour interview with Automotive News (AN) Marchionne says "I've offered to sit down with them and take them through the numbers. They won't listen. And that kind of abject refusal to engage ... the capital markets won't understand why you are rejecting the discussion." In a follow up to our original story we reported why GM thinks it might be able to hold off FCA US' advances. Basically it comes down to the incredibly unusual bankruptcy deal GM was given in 2009. The old company was able to shed all its old debts, and protect itself from liability going forward by forming a "new GM." That is not that unusual. However, the new GM got to carry forward the losses of the old GM for federal taxes on profits. That is completely unique. That means that GM has the ability to generate many billions in un-taxable profits. A merger would presumably wipe out that protection. However, take a look at the image above. Remember the sweetheart deal the automakers got in 2009? Perhaps keeping the protection from taxation is also up for discussion? Marchionne says he thinks that in a combined GM and FCA there are billions in savings. He says that he sees $30 billion in before tax profit in year one. Given that, it is easy to understand why he told AN "It would be unconscionable not to force a partner." -
The Irish Times is reporting that FCA US may be trying to line up GM's investors to force a discussion of a merger. Accordingly, the report goes on to say that GM is enlisting advisors (also called lawyers) to be sure it is ready if it comes to a forced merger, buyout or some other form of pressure to merge. Sergio Marchionne is one of the most accomplished heads of any automaker. Although very soft-spoken, he generally gets what he wants and his views are often ahead of the curve. He is well known to have said that car buyers don't care about things like engines and transmissions and that the larger automakers should simply team up to achieve even greater economies of scale. You are reading this at an enthusiast site, so you and I DO CARE about engines and other truck parts. Be honest though, most of our neighbors and relatives can't look at a car and tell which wheels are driven. How would you feel about a merger between Ram's owner and the folks at GM that make Chevy and GMC trucks?
