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Ford and Chrysler, the US carmakers, are preparing to accelerate detailed talks with the United Auto Workers union after the trade body managed to secure an agreement with General Motors workers this week.
Workers at Ford and Chrysler, both of whom are seeking to offload healthcare insurance costs and employ new workers at lower hourly rates, had agreed to wait until the problems at General Motors had been resolved before demanding detailed talks between their management and unions.
A spokesman at Chrysler said yesterday: “The first focus was on GM. While that has been going on we’ve continued to talk [with the unions]. We now want things to move on as expediently as possible.”
In the early hours of Wednesday morning, the UAW managed to secure a tentative agreement with General Motors management to hive off the company’s $51 billion (£25 billion) worth of medical insurance liabilities into a separate trust.
The agreement is expected to be ratified by a vote of the 73,000 unionised General Motors workers this weekend. General Motors has also agreed to pay existing workers an annual bonus of at least 3 per cent of their salaries as part of a four-year pay deal.
The union also agreed to a number of redundancies, whose jobs will be filled by new workers paid at much lower rates.
Ron Gettelfinger, president of the UAW, indicated that the agreement with General Motors would form a blueprint for impending negotiations with Ford and Chrysler and that he may even try to negotiate on their behalf simultaneously.
Ford and Chrysler have similar problems to General Motors. Both are weighed down by contractual promises they made to their workers over healthcare benefits.
The costs of those benefits have sapped the car manufacturers’ abilities to be able to fight leaner car groups such as Toyota, which has overtaken all its rivals to become the biggest car group in the world.
Ford and Chrysler are most keen to introduce a two-tier wage structure – setting a pay deal for existing workers and a lower rate of pay for new ones.
The two car groups also need to address the future funding of their retiree healthcare benefits, but their position is less onerous than that of General Motors.
Ross Eisenbrey, of Washington’s Economic Policy Institute, said that GM carries about 3.5 retired workers for every active worker, while Ford has 1.5 retired workers for every active one. Chrysler’s ratio is lower.
If all three car companies secure similar agreements to hive off their retiree healthcare costs, they experience difficulties raising cash to inject into the new trusts by increasing debt or issuing new shares. Rick Wagoner, GM chief executive, has said: “It’s not the best time to raise money.”
The UAW refused to comment and Ford did not return calls.
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