UAW, Automakers Close to Deal

DETROIT September 11, 2003; John Porretto writing for the AP reported that the United Auto Workers and Big Three automakers appeared close to simultaneous labor agreements Thursday, three days before the current pacts expire, union and auto officials familiar with the talks said.

The sources, who spoke to The Associated Press on condition of anonymity, said agreements between the UAW and General Motors Corp., Ford Motor Co. and DaimlerChrysler AG could be announced as early as Friday but almost certainly before Sunday's midnight deadline.

"What would be a surprise is if the talks weren't settled before the deadline," said an official with one of the automakers.

The union and Big Three automakers have never reached simultaneous contract agreements. The union typically chooses one carmaker as the lead negotiator and uses that pact as a model for the other two. The union has been bargaining with all three automakers at once this year and has not publicly named a lead company.

Representatives for the three automakers and the UAW each declined comment on the status of the talks Thursday.

The UAW and Big Three, along with suppliers Delphi Corp. and Visteon Corp., have held contract talks behind closed doors since mid-July. The pacts will cover wages and benefits for 300,000 workers and pension payments and benefits for another half-million retirees and their spouses.

The pace of talks picked up late last week, the union said, leading to speculation that deals could be reached ahead of the deadline.

Intense negotiations continued Thursday, and telephone messages on UAW-sponsored hot lines to update workers said UAW bargaining teams were making steady progress.

General Holiefield, a top aide to UAW vice president Nate Gooden in the union's DaimlerChrysler department, said in a recorded message that bargainers were working extended hours "to achieve a contract that best addresses our members' needs in these difficult times and positions DaimlerChrysler to win back market share and return to profitability."

At a time when the U.S. market share for GM, Ford and Chrysler is at an all-time low, and foreign automakers continue to expand domestic lineups and capacity, most observers have said the probability of a strike is low.

Some analysts and labor experts say the new pacts likely will reflect the difficult predicaments of the automakers, whose combined U.S. market share fell to an all-time monthly low of 57.9 percent in August.

Ford is trying to rebound financially from a loss of $6.4 billion in 2001 and 2002. Chrysler lost $1.1 billion in the second quarter of this year and, last month, was outsold in the domestic market for the first time by Toyota Motor Corp.

The threat of losing more business to Toyota and others was evident as talks began in July. At the time, Troy Clarke, a top negotiator for GM, said he didn't consider negotiations with the UAW an "us versus them" affair because both sides needed to protect themselves from the advance of foreign automakers.

Since 1996, foreign companies have increased their domestic capacity from 1.9 million vehicles to more than 4 million, and the trend continues.

"The Big Three is making a last stand here and feels they should join ranks and fight off this invasion as best they can," said David Lewis, a professor of business history at the University of Michigan and an automotive historian.

"The trend is obvious," Lewis said. "The Big Three are going backward, and the foreign competition is coming forward."

Analysts say both sides understand the others' situations and that compromise in areas such as wage and pension increases is likely.

UAW President Ron Gettelfinger has insisted the union will not retreat on health care benefits, so some analysts say negotiators are likely to reach agreements that will give automakers more flexibility in plant closings in exchange for continued low-cost medical coverage.

One Wall Street analyst has said the Big Three likely needs to close between seven and 10 plants in North America to move supply and demand into better balance.

Lewis said some concessions on the part of the UAW would not be unprecedented. He said the union agreed to certain concessions in 1980 during tough economic times and growth by Japanese automakers with their fuel-efficient cars.

"The UAW really felt it was in its own best interest to make those concessions, and it did," Lewis said. "Really, there are four entities involved here -- the three companies and the UAW. And they're all going to sink or swim together."