In Kokomo, relief turns to anger, anxiety

6/9/2009

KOKOMO, Ind. - For auto workers and their families in Kokomo, Ind. - home to four Chrysler plants - anxiety and anger with their state's officials have clouded over what had been a sense of relief.

Union officials had been told that if the Chrysler sale to Italian automaker Fiat went through, all four facilities - three transmission plants and one casting plant that together employ more than 4,000 people - would return to operation.

But yesterday's decision by the U.S. Supreme Court to hear an appeal by Indiana Treasurer Richard Mourdock and delay the sale of Chrysler LLC assets to a group led by Fiat SpA, "has kind of thrown a wrench in everything," said Jerry Price, vice president of UAW Local 685, which represents the transmission plants' workers.

"It was kind of our saving grace with Fiat," Mr. Price said. "And now this comes about."

Indiana's treasurer and Gov. Mitch Daniels, both Republicans, are in support of the appeal filed by three Indiana pension funds which own $42.5 million of Chrysler secured loans.

The pension funds filed suit to block the sale to Fiat and after losing at the lower court and federal appeals court asked the Supreme

Court to hear their case.

Because most of that investment would vanish in a completed sale, despite the pension funds' secured creditor status, the members would prefer a Chrysler liquidation.

The pension funds are the Indiana State Police Pension Trust, the Indiana State Teachers Retirement Fund, and the Indiana Major Moves Construction Fund.

Yet Mr. Price said that workers and many Kokomo residents are perplexed by the stance of their state officials on the Chrysler deal.

Sale proponents say that Indiana would lose more than $20.7 million in annual tax revenue in a Chrysler liquidation.

"I don't know if it's a political thing or what," Mr. Price said. "If Chrysler is liquidated it's going to be a major blow to this community. Does the state of Indiana want to help us out here or do they want everybody to lose a job and have to pay us all welfare and food stamps?"

Representatives for the governor and treasurer could not be reached for comment last night. However, Mr. Mourdock explained his viewpoint in a recent open letter published in the Kokomo Tribune.

"We are attempting to re-establish the rule of law that protects investors from arbitrary acts of government officials in depriving citizens of their property," the state treasurer wrote. "Indiana's State Troopers, millions of Hoosier taxpayers, and over 100,000 retired teachers have legal rights that are to be protected."

Jeff Shrock, regional representative for the UAW, said Governor Daniels' stance has not been entirely surprising.

"He is an anti-labor governor. He has not been a UAW supporter from the start," Mr. Shrock said.

Mr. Price said that he sympathizes with the pension fund holders but noted how they are not the only ones taking losses on their investments and savings.

"I feel bad for the teachers' union and the police alliance and this construction alliance - it's a bad situation - but a lot of other people have invested their money in stuff and we've lost money too."

- JC Reindl