UAW Auto Pacts Less Generous Than '99

DETROIT September 16, 2003; John Porretto writing for the AP reported plant closings or sales and smaller wage increases and pension payouts are part of tentative agreements reached this week between the United Auto Workers union and two of Detroit's Big Three automakers, according to sources familiar with the pacts.

The UAW, Ford Motor Co. and DaimlerChrysler have declined to discuss specifics of the proposed four-year contracts, but two sources who spoke to The Associated Press on condition of anonymity said they include a $3,000 signing bonus, a lump-sum payment in the second year and wage increases between 2 percent and 3 percent in the third and fourth years.

The union also managed to avoid any radical changes to its low-cost health care insurance program. Heading into negotiations, UAW President Ron Gettelfinger was adamant that the union would not move backward on its medical benefits.

In exchange, automakers are expected to have more flexibility in plant closings or divestitures, something both DaimlerChrysler and Ford had sought.

General Motors Corp., the world's largest automaker, and auto parts supplier Delphi Corp. remained at the bargaining table with the UAW on Tuesday afternoon.

The union has said GM employees will report to work as usual while talks continue. Gettelfinger said late Monday that union negotiators would stay at the bargaining table until a tentative agreement is reached.

The talks, which have taken place confidentially, began in mid-July.

The union normally presents the new contracts to its membership before discussing the terms publicly. All agreements require ratification by members, which is expected to take place in the next week to 10 days.

The 1999 contracts, which expired at midnight Sunday, included a $1,350 signing bonus and 3 percent wage increases in each year of the contract. Negotiated during more prosperous times in the industry, those deals also included a ban on plant closings and nearly cost-free health care.

But with the Big Three's U.S. market share at an all-time low, a glut of manufacturing capacity in North America and aggressive expansion by foreign automakers such as Toyota, Honda and Nissan, most analysts expected less generous packages for the UAW's 300,000 U.S. auto workers and half-million retirees and spouses.

"Details are sparse, but the DaimlerChrysler agreement looks to be status quo, albeit one that reflects that the Big Three can't offer the big paydays they have in the past," Goldman Sachs analyst Gary Lapidus said in a research report.

The union's deal with Ford, announced late Monday, also covers parts supplier Visteon Corp., which spun off from Ford in 2000 and negotiated along with the No. 2 automaker.

The union and DaimlerChrysler announced a tentative, four-year contract early Monday -- one that Gettelfinger said would serve as a model for the other deals.

The DaimlerChrysler pact covers wages and benefits for 63,000 active workers and 66,000 retirees and spouses. The Ford pact covers about 93,000 active workers and 105,000 retirees and spouses.

Bill Ford Jr., Ford's chairman and chief executive, said Monday that terms of the proposed contract would have no adverse effect on the company's ongoing turnaround bid, which includes closing several plants and improving profits by $9 billion by mid-decade.

Ford is trying to rebound financially from a loss of $6.4 billion in 2001 and 2002. As part of its restructuring, the company has said it plans to close four U.S. plants -- Edison Assembly in New Jersey, St. Louis Assembly in Missouri, Cleveland Aluminum in Ohio and Vulcan Forge in Dearborn.

GM hasn't publicly targeted any plants for closing recently. Neither has DaimlerChrysler, which 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.

But Temperance Perkins, president of UAW Local 227, which represents between 500 and 600 workers at DaimlerChrysler's McGraw Glass Plant, said she received word Monday from the UAW that McGraw is targeted for closing by year's end.

Also, workers at DaimlerChrysler's Indianapolis Foundry said managers have told them the company plans to phase out almost 800 jobs there during the next four years. UAW Local 1929 at DaimlerChrysler's Huntsville, Ala., electronics plant was notified in a letter Monday that the plant would be sold to Germany-based industrial giant Siemens, according to a union member who spoke to the AP on condition of anonymity.

DaimlerChrysler has said part of an ongoing restructuring involves selling some noncore automotive operations such as parts plants, but company spokeswoman Debra Nelson said she couldn't comment on plans for any plants before the contract's ratification process.

Siemens spokesman Bud Grebey also said he couldn't comment on speculation about a sale of the Huntsville plant, but he added, "Our name has come up quite a bit."

In trading Tuesday on the New York Stock Exchange, GM shares rose 63 cents to close at $41.88, Ford was up 26 cents to $11.63 and DaimlerChrysler's U.S. shares were up 47 cents