Ford, Chrysler workers await union contracts

DETROIT -- GM's tentative new contract with the United Auto Workers offers the other struggling domestic automakers, Ford and Chrysler, enough cost-cutting inducements to find common ground and strike a deal with the union, analysts said Wednesday.

"You can do some specific things for them and still work within the framework of this contract," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "I don't believe that the union would have negotiated that if they did not believe it was viable for Ford and Chrysler.

"They couldn't hang Ford and Chrysler on this contract."

Part of the deal between GM and the UAW allows GM to move its unfunded retiree health-care costs into an independent trust administered by the UAW.

Ross Eisenbrey, vice president of the Washington, D.C.-based Economic Policy Institute, said the shift in retiree health-care obligation into the UAW-run Voluntary Employees Beneficiary Association, or VEBA, is more important to GM than its Detroit rivals. He said the automaker carries roughly 3½ retired workers for every one active worker, while Ford has 1½ retired workers for every active worker. Chrysler's ratio is even lower.

Of greater interest to Ford and Chrysler, he said, is the two-tiered wage structure agreed to between GM and the union, though both elements of the deal clearly serve the automakers' overall goal of cutting costs. All three lost money last year and their combined share of the U.S. market has plunged from 73 percent in 1996 to 54 percent last year.

"The union agreed to reduce the overall labor costs significantly, so that will be a help to both Ford and Chrysler," Eisenbrey said. "They'll want to get reductions that are in line with what GM gave."

Ford spokeswoman Marcey Evans said Ford is pleased that GM and the UAW were able to tentatively agree but would not comment what it might mean for Ford.

Chrysler spokeswoman Michele Tinson said the company also is, like Ford, awaiting word from the UAW on when bargaining will begin. The company has not had time to fully assess the GM contract, she said.