UAW Hints at Chrysler Help
DETROIT _ In suggesting Monday that his union might grant Chrysler health care concessions already given to General Motors Corp. and Ford Motor Co., UAW President Ron Gettelfinger is showing added willingness to be part of the solution for money-losing domestic automakers, an industry watcher said.
But many analysts say all the automakers will surely want even more concessions in contract talks that officially begin next month.
Last year, the UAW said Chrysler was making money and did not need the money-saving concessions the union gave Ford and GM when the two companies were losing billions of dollars. Chrysler, the U.S. arm of Germany-based DaimlerChrysler AG for perhaps only another month, began posting losses in the third quarter of 2006.
“In ’05 we made major changes both at General Motors and Ford. We are talking with Chrysler … quite frequently,” Gettelfinger said Monday morning in a radio appearance. “We have ongoing discussions there because we do need to find a way to fix the problem there now that Chrysler is in a downward mode.”
If Gettelfinger was indicating a willingness to grant the health care concessions to Chrysler, it must mean he believes he has sufficient support among the rank-and-file members to pass the measure, said Gerald Meyers, a University of Michigan business professor and former CEO of American Motors.
“Gettelfinger is acting like a new day has dawned over there. He sees the future, and it’s mixed, but at least part of it needs fixing. And he intends to be part of the solution, not part of the problem. That’s quite a change of pace for him,” Meyers said.
The possible reversal comes as the Auburn Hills, Mich., automaker’s ownership is on the verge of changing and the union is on the cusp of opening official contract negotiations with Detroit automakers. Private equity firm Cerberus Capital Management is working to close a $7.4 billion deal to acquire Chrysler.
It’s estimated that the Detroit automakers face $100 billion in future health care liabilities.
DaimlerChrysler spent more than a year trying to win health care concessions from the UAW, but the union refused.
Despite Chrysler’s $680 million loss last year, DaimlerChrysler still showed $5 billion in net profit in 2006.
DaimlerChrysler CEO Dieter Zetsche was openly frustrated about the lack of health care concessions, and several industry experts have concluded that the lack of a deal was a turning point for the Germans’ decision to sell Chrysler.
Zetsche has denied it led to the sale.
The deal granted to GM was estimated to save the automaker $1 billion annually and cut its long-term health-care obligations by $15 billion.
The Ford deal, which was narrowly approved by workers, was estimated to save the automaker $850 million a year.
For active workers at those companies, the new deal meant some of their pay increases were diverted to health care costs.
For retirees, it meant they had to pay new premiums and higher co-payments and deductibles up to a maximum annual out-of-pocket cost of $370 for individuals and $752 for families.
It has been estimated that a similar deal for Chrysler would save the automaker as much as $400 million a year.
“That’s a good start, but there’s going to be more than that, too,” said David Cole, chairman of the Center for Automotive Research. “Somewhere, somehow they are going to have to get about 20 bucks an hour out of total labor costs.”
In the days after the deal was announced for Cerberus to acquire 80.1 percent of Chrysler, the automaker’s CEO, Tom LaSorda, spoke publicly about the need for the health care deal.
“We need to get at least parity with GM and Ford, that’s clear,” LaSorda said at the time. A spokesman for the company declined comment Monday.
On Monday, Gettelfinger said his discussions with Cerberus have so far “been very professional” and that it “was a smart move on their part to keep” LaSorda and his management team.
“They have confidence in the process that’s been established and they will wait on the outcome like everybody else,” Gettelfinger said on WJR-AM (760).
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