With Auto Talks In Overtime, The Focus Is On GM

DETROIT (WWJ/AP) - Contract talks are intensifying at General Motors, and cooling a bit at Chrysler, as negotiations continue past the September 14th deadline.

"The deadline's a useful thing to focus their attention on the task at hand, but it wasn't a critical milestone that they didn't reach an agreement by then," says Kristin Dziczek, who follows labor issues for the Center of Auto Research.

Dziczek pointed out that, on average, the UAW doesn't settle with the lead company until nearly four days past the deadline. All indications are that General Motors is taking the lead.

In an email to workers, UAW Vice President Joe Ashton said he was "hopeful an agreement can be reached soon."

Shortly after the expiration of the old contract, the UAW announced an indefinite extension of the GM contract. But they extended the Chrysler contract by a week at the request of CEO Sergio Marchionne, who is now out of the country on a business trip and won't return until next week..

As the union focused on General Motors, President Bob King did not travel to Chrysler headquarters to meet with Marchionne. The Chrysler CEO had left the Frankfurt Auto Show early and cancelled a meeting with the German Chancellor so that he could finalize a deal with King.

Just as the deadline approached, Marchionne fired off an angry letter to King, saying by not meeting the deadline they had failed Chrysler's workers.

"I know we are the smallest of the three automakers here in Detroit, but that does not make us less relevant," said the letter, which was leaked to the news media.

King refused to comment on the letter.

It's hard to tell how much damage has been done to talks that had been remarkably controversy free.

"Y'know, Mr. Marchionne came expecting a meeting," said Dziczek. "He had a very limited time schedule. I guess we will see what happens in the interim while he's back in Europe."

The fact that King did not come to Chrysler's headquarters, Dziczek says, could also be seen as an indication that the talks at that company were not close to being settled.

"To me it was a signal that they weren't really as close as some might have thought, and there were still some tough things to hammer out at Chrysler."

The union wants bigger profit-sharing checks instead of pay raises, higher pay for entry-level workers and guarantees of new jobs. Ford and GM want to cut labor costs, while Chrysler wants to hold its costs steady. Health care costs are also an issue.

Once agreements are reached, workers will vote on them.

The fact that bargainers at GM went home early Thursday and returned later is a sign that GM and the UAW are close to a deal, perhaps by the weekend, said Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass.

In past talks, both sides would have stayed up all night trying to pound out an agreement, Chaison said. But this time, bargainers appear more thoughtful and are taking time to digest what they have done, he said.

As for Chrysler, Chaison said Marchionne made the mistake of injecting personalities into the talks at a critical late stage. That could delay a contract agreement. Marchionne, he said, clearly is miffed that GM is getting more attention from the union than Chrysler.

"He also has to understand that these are not typical negotiations," Chaison said, noting that the talks are being watched by the White House, the public and the labor movement. The U.S. government still owns 26.5 percent of GM, the remainder of a big stake it got in exchange for bailing out the company.

It's likely, though, that any setback at Chrysler is temporary. The UAW has an interest in reaching a deal because a union-run trust that pays retiree health care bills owns more than 40 percent of Chrysler. Chrysler has turned a small profit in the first half of the year, excluding a one-time accounting charge for refinancing government bailout debts.

GM nearly ran out of cash and needed $49.5 billion from the government to survive. But it's made billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well.

Under terms of both companies' bailouts, unresolved issues can be taken to binding arbitration, and the union's new contracts must keep the companies' labor costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.

But, experts say arbitration carries its own risks.

"It's a very big unknown in this whole scheme of things," says Dziczek. "Most of the people 'I've talked to who are experts in arbitration—it's mostly been done in the public sector—say an arbitration over certain unresolved issues could last a year or longer."

The Associated Press and WWJ AutoBeat Reporter Jeff Gilbert contributed to this story.