UAW-GM Work Toward Contract, Other Automakers May Not Match It

Tuesday, September 18th 2007, 10:07 pm

By: News On 6

DETROIT (AP) _ The Detroit Three automakers all are struggling with declining U.S. market share, health care costs and bloated infrastructure, but they have unique issues that could make it difficult for the United Auto Workers to impose a contract with General Motors Corp. on Ford and Chrysler.

Bargainers for GM and the UAW negotiated from midmorning until Tuesday evening before recessing for the night, GM spokesman Tom Wickham said at 8:45 p.m. The company is no longer releasing specific start and end times for the talks, he said. It was the fourth day of bargaining since their contract was set to expire at midnight Friday.

Negotiators were optimistic but progress was slow as bargainers dealt with the details of a major health care agreement as well as changes to plant work rules, according to a person briefed on the talks. The person requested anonymity because the talks were private.

In a letter sent Monday night to local union leaders, UAW President Ron Gettelfinger and his bargaining team said they may establish a firm deadline if the talks don't accelerate. Because they have been extending their contract on an hour-by-hour basis, GM workers could strike at any time.

``We have made progress in many areas of the discussions with GM but there are several major issues separating the parties that must be resolved,'' said the letter, which was obtained by The Associated Press.

Wickham would not comment on the UAW letter.

The UAW chose GM as the lead company in the negotiations last week. Under the union's long-standing practice of pattern bargaining, the UAW is expected to reach an agreement with GM and then ask Ford Motor Co. and Chrysler LLC to accept similar terms.

The companies entered this year's talks in similarly precarious situations. All three lost money last year and their combined share of the U.S. market has plunged from 73 percent in 1996 to 54 percent last year. All are restructuring and struggling with high costs and overcapacity at U.S. plants. They say wages and benefits for U.S. hourly workers cost them $25 more per hour than their Japanese rivals.

Efraim Levy, a senior industry analyst with Standard & Poor's rating agency, said pattern bargaining will work this year because, for the most part, the automakers are seeking the same things. They want to hold the line on wages and make changes to things like the jobs bank, which pays workers even when they're laid off.

GM is pushing hardest for the formation of a UAW-run trust fund that would take over the automakers' estimated $90 billion in retiree health care costs, Levy said, but Ford and Chrysler also would benefit, since the fund would allow them to remove those obligations from their books and insulate them from further escalation in health care costs.

But the companies also have significant differences. David Cole, chairman of the Center for Automotive Research, said the UAW probably will tailor the agreements to individual automakers.

``We're into new earth, and circumstances are very different between the companies,'' said Cole.

Cole said Ford may negotiate temporary wage cuts, for example, because its financial situation is the most dire.

Chrysler's status as a private company also could affect the pattern. Chrysler's new owner, Cerberus Capital Management LP, is focused on creating short-term cash rather than achieving long-term cash savings, so it may not want to commit large amounts of cash to a health care fund. Since Chrysler's shares are no longer publicly traded, it also won't be able to contribute stock to a health care trust fund.

``Chrysler might deviate just a little bit because the health care isn't the overriding issue for them,'' said Erich Merkle, vice president of auto industry forecasting for consulting company IRN Inc. in Grand Rapids.

Chrysler also wants to shed some of its non-automotive businesses as part of the contract talks, something Ford and GM aren't asking for.

GM is pushing the union to adopt more flexible work rules to make its plants more competitive. If the Detroit Three could reduce job classifications and relax other union work rules to the level of their Japanese competitors, they could save $200 per vehicle, according to Laurie Harbour-Felax, an operations expert and managing director of Stout Risius Ross.

``A Toyota worker typically has other responsibilities, like cleaning their work area and doing certain elements of maintenance activity,'' she said. ``In a typical Big Three plant, those workers don't have that same range of job responsibility.''

Ford has gone further than its U.S. rivals in establishing new work rules at nearly all of its U.S. plants, a two-year effort that is saving the company $800 million a year, spokeswoman Marcey Evans said. So Ford may push for something else.

``Ford isn't looking for that kind of savings because they've already gotten it,'' said Aaron Bragman, an industry analyst with Global Insight. ``The three automakers are in very different positions.''