Could GM, UAW Deal Change Landscape? Ford, Daimler to Also Seek Concessions

Washington DC October 18, 2005; The AIADA newsletter reported that yesterday’s deal reached between General Motors and the United Auto Workers union to cut GM’s ballooning health care tab by $1 billion could set the stage for similar deals with Detroit automakers, DaimlerChrysler and Ford, reported The Detroit Free Press.

Under the GM deal, UAW workers and retirees will be required to pay anywhere from 25-30 percent of their annual health care costs. According to GM CEO Rick Wagoner, the agreement will shave $15 billion off GM’s $61 billion commitment to cover the health care costs over the lifetime of its hourly workers.

Hearing word of Monday’s deal, executives from DaimlerChrysler and Ford say they too will seek concessions from the UAW.

During a speech at the Tokyo International Automotive Conference Daimler’s new CEO Dieter Zetsche said, “"We have a clear understanding that whatever agreement they come to with GM would be applied in principle to us." Mr. Zetsche said some details of the union’s agreement with GM might be altered to fit Chrysler’s circumstances, but Chrysler will seek the "same impact" as the GM deal.

"We will engage in discussions with the UAW right away,"” reports The Wall Street Journal. Ford, who estimates it will spend roughly $3.5 billion in 2006 on health care for its employees, dependents and retirees, has already begun discussions with the union, reported Bloomberg.

Joe Laymon, a group vice president for Ford, issued a statement yesterday indicating that talks between the automaker and the UAW on ways to trim health care costs are “very private and constructive.”