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GM, Chrysler battle with union
By Tom Krisher |
February 16, 2009, Monday
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Print Edition
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CONCESSION talks between the United Auto Workers union and Detroit car makers shifted into an odd phase on Saturday as negotiations broke off with General Motors Corp, slowed at Chrysler LLC and sped up at Ford Motor Co, financially the healthiest of the three, according to people briefed on the bargaining.
The developments come as GM and Chrysler race toward a Tuesday deadline to submit plans to show the government how they will become viable and repay billions in loans that are keeping them alive during the worst vehicle sales slump in 26 years.
Ford, which borrowed billions from private sources before credit markets tightened, said that it can survive 2009 without government help.
The Treasury Department has committed to giving GM a total of US$13.4 billion if the vehicle manufacturer's plan is approved. GM's plan, however, will raise the possibility that more government loans may be needed, as sales in overseas markets have deteriorated worse than expected, according to a person briefed on the plan.
That means GM may seek another US$5 billion, raising the loan amount to about US$18 billion, the amount that GM sought when it made a presentation to Congress in December. The company will discuss bankruptcy in its plan but will emphasize using loans to get through the sales slump, said the person who spoke on condition of anonymity because the preparations are private.
Top executives of Chrysler and GM have said that bankruptcy is not an option for car makers because people will not make big-ticket purchases from a company that may not be around.
Health-care issue
Bankruptcy may also lead straight to liquidation unless the government provides debtor-in-possession financing.
GM is living on US$9.4 billion in government loans, and the Treasury Department must approve its viability plan for it to get US$4 billion more. Chrysler has received US$4 billion in government loans and wants an additional US$3 billion.
The conditions of the loans require the car makers to get concessions from unions, debt holders, dealers and others to help them become viable.
On Friday night union negotiators walked out of talks with GM in a dispute over funding of a union-administered trust that will take over retiree health-care expenses next year, said a person briefed on the talks.
At Chrysler talks have slowed considerably but the union is negotiating heavily with Ford, according to another person briefed on the talks. Neither person wanted to be identified because the talks are private.
The developments come as GM and Chrysler race toward a Tuesday deadline to submit plans to show the government how they will become viable and repay billions in loans that are keeping them alive during the worst vehicle sales slump in 26 years.
Ford, which borrowed billions from private sources before credit markets tightened, said that it can survive 2009 without government help.
The Treasury Department has committed to giving GM a total of US$13.4 billion if the vehicle manufacturer's plan is approved. GM's plan, however, will raise the possibility that more government loans may be needed, as sales in overseas markets have deteriorated worse than expected, according to a person briefed on the plan.
That means GM may seek another US$5 billion, raising the loan amount to about US$18 billion, the amount that GM sought when it made a presentation to Congress in December. The company will discuss bankruptcy in its plan but will emphasize using loans to get through the sales slump, said the person who spoke on condition of anonymity because the preparations are private.
Top executives of Chrysler and GM have said that bankruptcy is not an option for car makers because people will not make big-ticket purchases from a company that may not be around.
Health-care issue
Bankruptcy may also lead straight to liquidation unless the government provides debtor-in-possession financing.
GM is living on US$9.4 billion in government loans, and the Treasury Department must approve its viability plan for it to get US$4 billion more. Chrysler has received US$4 billion in government loans and wants an additional US$3 billion.
The conditions of the loans require the car makers to get concessions from unions, debt holders, dealers and others to help them become viable.
On Friday night union negotiators walked out of talks with GM in a dispute over funding of a union-administered trust that will take over retiree health-care expenses next year, said a person briefed on the talks.
At Chrysler talks have slowed considerably but the union is negotiating heavily with Ford, according to another person briefed on the talks. Neither person wanted to be identified because the talks are private.
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