As General Motors Corp. and the United Auto Workers enter their fifth day of bargaining under hour-by-hour contract extensions Wednesday, the unique issues that each of the Detroit Three automakers faces could make it difficult to use an agreement with GM as a pattern contract for Ford and Chrysler.
All three companies are grappling with dwindling market share, high health care costs and too much factory capacity, but Ford may negotiate temporary wage cuts, for example, because its financial situation is the most dire, and Chrysler's status as a private company could affect its contract.
Bargainers for GM and the UAW negotiated from midmorning until Tuesday evening before recessing for the night, GM spokesman Tom Wickham said. The company is no longer releasing specific start and end times for the talks, he said.
UAW spokesman Roger Kerson declined to comment on the talks.
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 who was 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 — which had been set to expire at midnight Friday — 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 in the midst of restructuring and are 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 unfunded retiree health care costs, Levy said, but Ford and Chrysler also would benefit, since the fund would allow them to take those obligations off their books and insulate them from health care cost inflation.
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.
“The union will talk pattern, and the idea of that is solidarity, but in terms of real commonality I don't think it really is true anymore,” Cole said. “We're into new earth, and circumstances are very different between the companies.”
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.
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.
