DETROIT (AP) - The United Auto Workers union has placed
concession talks with General Motors Corp. on the back burner as it
tries to reach a deal with Chrysler LLC before an April 30
government deadline, two people briefed on the negotiations said
The decision likely means that any deal with Chrysler will set
the pattern for concessions granted to GM as both companies try to
show the government they have cut costs enough to get more
The people, who spoke on condition of anonymity because the
talks are private, said the union is focusing on Chrysler because
its government deadline to cut labor costs and swap debt for equity
is just two weeks away.
Chrysler also has to ink an alliance deal with Fiat Group SpA by
April 30 to get more government aid. Without further help, Chrysler
likely would be auctioned off in pieces under bankruptcy court
GM's government deadline is June 1, but the Obama administration
said it will provide bankruptcy financing if the company can't
successfully restructure outside of court.
GM spokeswoman Sherri Childers Arb and UAW spokeswoman Christine Moroski declined to comment on the negotiations. Chrysler
spokeswoman Shawn Morgan would not comment beyond a statement that the company has a goal is to reach a conclusion by April 30.
The Canadian Auto Workers union has said that it plans to resume
negotiations with Chrysler on Monday after Fiat CEO Sergio
Marchionne said the Italian automaker will walk away from the
proposed tie-up unless Chrysler's unions agree to major cost cuts.
Canadian Industry Minister Tony Clement said Thursday that the
CAW must make significant concessions to ensure Chrysler survives.
Without a deal in the next two weeks, the Canadian government will
also shut down its support for the troubled automaker, Clement
Ken Lewenza, the president of the CAW, called Clement's comments
an attack on workers. He said labor rates won't be the factor that
decides whether the Fiat deal is consummated.
"We've got an industry minister that would like Canadians to
believe that its autoworkers that have created this problem and the
autoworkers are uncompetitive," Lewenza said.
GM already has reached a deal with the CAW, but Chrysler said
the pact's hourly labor cost is $11.75 higher than Japanese
automakers with Canadian factories. Chrysler has threatened to pull
out of Canada if it can't get further concessions.
Chrysler, GM and Ford Motor Co. all reached concession deals
with the UAW in February to limit overtime, cut lump-sum cash
bonuses and eliminate cost-of-living pay increases. The union also
agreed to suspend the jobs bank in which laid-off workers are paid
most of their wages.
Workers at Ford, which is not receiving government aid, ratified
their deal, but the GM and Chrysler pacts were never presented to
union members because they got hung up on funding for a union-run
trust that will take over retiree health care expenses next year.
The New York Times reported on Thursday that Chrysler was
offering 20 percent of the company in exchange for half of the
$10.6 billion Chrysler must pay into the union trust.
Then, the Obama administration said last month that the cuts
outlined in GM and Chrysler's viability plans didn't go far enough,
and the union would have to give up more. Just how much more has
not been stated publicly.
If the union gives Chrysler and GM a better deal than Ford, the
Dearborn-based automaker is likely to seek parity. CEO Alan Mulally
has said Ford does not want to be at a disadvantage to its
Chrysler CEO Robert Nardelli, in an e-mail to employees Thursday
night, reported progress in concession talks with most of its
stakeholders, but said challenges remain. He said the CAW has not
been willing to make concessions to meet the terms of $1 billion
the Canadian government has loaned to Chrysler.
"Without a successful resolution, the alliance with Fiat and
our continued viability is at risk," he wrote.
Harley Shaiken, a professor at the University of California at
Berkley who specializes in labor issues, said the UAW probably will
have different contracts with all three automakers based on the
The UAW, he said, recently has moved away from traditional
pattern bargaining. In 2005, when Chrysler was considered the
healthiest of the three, the union refused to grant it the same
health care concessions given to GM and Ford, he said.
"Whatever takes place at Chrysler and GM will be tailored to
their specific economic circumstances as well as to a larger
pattern," he said.
GM has received $13.4 billion in government loans and may need
more money this month as it tries to survive the worst auto sales
downturn in 27 years. Chrysler has received $4 billion and may also
need more funding to stay alive until its deadline.
The government said it will lend Chrysler up to $6 billion more
if it completes a deal with Fiat and gains concessions from unions
But creditors that hold $6.9 billion in Chrysler debt - mostly
banks and hedge funds - have rejected an offer from the Treasury
Department to erase the debt for $1 billion. They are preparing a
counteroffer that likely will include more cash and an equity stake
in the company.
A committee representing the holders of $28 billion in GM bonds
is awaiting an offer from the company that aims to slash its
unsecured debt by at least two-thirds. GM said Thursday it is
preparing a public bond-exchange offer even though it has no
agreement with the committee.
The government also wants GM to shed some of its eight brands,
and there were reports Thursday saying GMC and Pontiac might be
added to the chopping block. But GM spokesman Tom Wilkinson said
the company still plans to keep Buick, Chevrolet, GMC and Cadillac
as its core brands. GM has placed Saturn, Saab and Hummer up for
sale and has said it plans to keep Pontiac as a niche brand.
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