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The Honolulu Advertiser
Posted on: Wednesday, September 19, 2007

Any UAW-GM deal may not work for all

By Dee-Ann Durbin
Associated Press

DETROIT — The Detroit Three automakers all are struggling with declining U.S. market share, healthcare 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 yesterday 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 healthcare 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.

PATTERN BARGAINING

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 healthcare 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 healthcare costs.

TAILORING THE DETAILS

But the companies also have big 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," Cole said.

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 long-term cash savings, so it may not want to commit huge amounts of cash to a healthcare fund. Since Chrysler's shares are no longer publicly traded, it also won't be able to contribute stock to a healthcare trust fund.

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