DETROIT, Sept. 16 — The nearly simultaneous deals the United Automobile Workers union announced Monday with the Ford Motor Company and the Chrysler Group represent a sharp break with tradition and underscore how tough times are for the Big Three and their suppliers.þþTerms of the four-year labor contracts keep the union workers' generous health care benefits largely intact, but the union gave ground on other important issues, including scaling back wage increases and selectively lifting a ban on plant closings, according to people with knowledge of the deals.þþThat contrasts sharply with the last contract, negotiated in 1999, before automakers based in Japan, South Korea and Europe had so thoroughly overrun the Big Three's chief automotive profit center, sport utility vehicles. It is also another sign of the difficulties faced by domestic manufacturers, who have lost 2.7 million jobs since June 2000.þþNegotiations continued today between the union and General Motors, as well as Delphi, the parts maker that was spun off in 1999 from G.M.; an agreement is expected this week. The deal with Ford included a new contract with Visteon, the parts maker spun off from Ford in 2000.þþÿOur bargaining committee at General Motors and Delphi will continue to stay at the bargaining table until a tentative agreement is hammered out,ÿ Ron Gettelfinger, the union president, said Monday evening at a news conference.þþStephen Girsky, an analyst at Morgan Stanley, said that the new contracts with Ford and Chrysler were ÿcertainly betterÿ than the last ones and that the last ones ÿwould have been a disasterÿ if they had been extended without being changed.þþÿDoes it create a competitive advantage?ÿ he asked of the new agreement. ÿNo. But it reduces competitive disadvantages.ÿþþAs part of the deal, Chrysler, a division of DaimlerChrysler of Germany that lost $1.1 billion in the second quarter, plans to shed nearly a third of its parts operations by closing or selling seven plants.þþTwo on the list that are expected to be closed are a glass plant in Detroit and a foundry in Indianapolis. Workers at an electronics plant in Huntsville, Ala., have been told that a deal has been reached to sell their plant to Siemens of Germany.þþÿIt's been expected but it still doesn't help you deal with the reality, when you get the official notification,ÿ said Temperance Perkins, 39, the president of the local union that represents 500 workers at the glass plant. Ms. Perkins, a mother of four, has worked at the plant since 1995. Her husband, an electrician, also works there. She said that workers had been told the plant would be closing.þþFord has already announced plans to close four plants as part of a turnaround effort, including plants in the St. Louis area and in Edison, N.J.þþIn the contracts with Ford and Chrysler, health benefits are largely kept intact; a notable change is a doubling of co-payments that active workers pay for brand-name prescription drugs, someone close to the deal said. That would mean a co-payment of about $10 for many workers.þþTerms of the contracts will not be made public until workers have ratified them. The contracts at the Big Three and the two parts makers cover more than 300,000 active workers and more than 400,000 retirees and survivors of retirees who have died.þþAutomakers hope increasing co-payments on brand-name drugs will encourage use of cheaper generics, but the increase is not expected to extend to retirees, who account for most of the Big Three's soaring health costs.þþForeign-based automakers have far lower health care costs because their home countries have nationalized medical systems. And while companies like Toyota, Honda, Nissan and B.M.W. have extensive operations here, their nonunion American work forces are much younger and they have few retirees in this country.þþMore ground was ceded on wages. The last contract included 3 percent annual wage increases on top of cost-of-living adjustments. In the current contract framework, workers will receive lump-sum payments in the first two years of the contract, a 2 percent increase in the third year and 3 percent in the fourth year, people close to the deal said.þþSome cuts in the cost-of-living adjustment are also expected.þþThe initial lump sum will be $3,000, about double that of the old contract. But lump-sum payments are advantageous for the automakers because they do not increase a worker's base pay, a sum used to calculate overtime and pension payments.þþBecause of their obligations to hundreds of thousands of retirees, both health and pension costs are significant burdens for the Big Three.þþReaching agreements at Chrysler and Ford within 24 hours is ÿan absolutely incredible achievement,ÿ said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass.þþIn the past, the union negotiated a tentative agreement with one of the Big Three up until the contract deadline, then waited for the deal to be ratified by rank-and-file members before moving on to negotiate similar deals with the other companies. That can take weeks.þþBut Mr. Gettelfinger sought simultaneous deals with Ford, Chrysler and General Motors, before the expiration of the contracts this past Sunday. He said Monday night that negotiations with Ford and G.M. were more complex because Visteon and Delphi now negotiate alongside their former parent companies.þþWilliam Clay Ford Jr., the chairman and chief executive of Ford, said, ÿThis was really quite a brave and unprecedented move that Ron undertook, to have simultaneous bargaining.ÿþþMr. Girsky, the Morgan Stanley analyst, said that Mr. Gettelfinger seemed to be sending a message to nonunion suppliers and assembly plants owned by foreign automakers that ÿyou don't have to be afraid of us; we won't bankrupt these companies.þþÿHe's setting the tone, that we didn't get a strike, we didn't even threaten a strike, we got everybody done quick,ÿ Mr. Girsky said.þþOther analysts have been pessimistic about whether any amount of concessions can close the competitive gap for the Big Three, whose domestic market share fell to a record monthly low in August.þþÿWe believe a contract with steep labor concessions is the sign of a troubled core business, not `good news' for investors,ÿ Gary Lapidus, a Goldman, Sachs analyst, wrote in a Monday report. He has compared the Big Three to ÿH.M.O.'s with wheelsÿ because of their health care costs.þþSome workers are still uncertain of their futures, while for others the waiting is over.þþIn Atlanta, a Ford plant that produces the aging Taurus sedan has not yet been scheduled for a new product.þþÿWe're cautiously optimisticÿ about the future of the plant, said Bo Marlow, the president of the plant's local union, in an interview Tuesday.þþIn Huntsville, Ala., Shirley Ford, a quality inspector at a Chrysler electronic components plant, said workers were relieved to learn Monday that their plant had been sold to Siemens.þþÿWe were curious for about a year now what this day would bring,ÿ she said. ÿIt was the not knowing that worried us so much. Now we know where our choices lie.ÿþþAs part of the deal, workers have the option of staying with the plant's new owner or moving from the area to another Chrysler job. The option to move is typically offered to workers at plants that are sold or closed.þþMs. Ford, 43, a single parent, said that she would probably move because she wanted to preserve her 20 years of seniority, and her daughter is off to college.þþÿChange is not bad,ÿ she said. ÿI have a job, regardless of where I go. It may not be home, but I feel like the U.A.W. has done the best they could for the workers.ÿþþ
Source: NY Times
