Moody's is the Latest to Slash GM, Ford Debt; UAW Near Ready to Work Out Compromise with GM

Washington DC August 25, 2005; The AIADA newsletter reported that GM and Ford’s ability to borrow money at a reasonable cost worsened Wednesday as Moody’s became the latest in a line of credit rating agencies to move the two automakers to “junk” status as a result of continued operating losses in North America, reports The Associated Press.

Moody’s records GM’s outstanding debt at $170 billion; Ford’s outstanding debt rests near $150 billion. Standard & Poor’s in May cut both Ford and GM’s status. GM’s status was also cut to by Fitch Ratings.

In the meantime, the embattled United Auto Workers union appears more ready than ever to discuss plans for a compromise with ailing General Motors, according to The Detroit News. UAW Vice President Richard Shoemaker on Wednesday led a three-hour meeting with union officials from GM and parts supplier Delphi Corp. Although Shoemaker continued to reiterate that the union is firmly opposed to reopening its current contract, set to expire in 2007, with the automaker, union members who attended the meeting confess that the leader’s “comments were among the strongest signs yet that the two sides are moving toward a mid-term deal.” Said one UAW Local President: "He’s come to the consensus that we have to do something. He’s just in a quandary about what that something is.” GM has asked the union for concessions on health care costs, among other things.

GM’s UAW-workers contribute on average 7 percent of their health care, salaried workers pay almost 27 percent. Meanwhile, Delphi is teetering on the brink of Chapter 11 bankruptcy as it tries to stay afloat amid ballooning prices pressures.