United Auto Workers President Ron Gettelfinger said Monday that the union must offer health care concessions to Chrysler similar to those it gave Ford Motor Co. and General Motors Corp. in 2005.
'We've been talking to Chrysler quite frequently - we do need to find a way to fix the problem there now that Chrysler is in a downward mode,' Gettelfinger said in an interview on 'The Paul W. Smith Show' on WJR-AM in Detroit.
The UAW two years ago gave health care concessions to Ford and GM that will save the companies billions of dollars, but refused to do the same for Chrysler because of its stronger financial condition at the time.
In 2005, the Chrysler Group made $1.8 billion, but its fortunes turned when gasoline prices rose to around $3 per gallon and buyers started to shun its truck-based models. The company said it lost $618 million in 2006 and $1.98 billion before interest and taxes in the first quarter of this year.
Gettelfinger said in March that the UAW had finished a review of Chrysler's finances to determine if the concessions are warranted. He would not discuss conclusions of the review in detail.
He did acknowledge Monday that Chrysler has a problem that needs to be addressed.
UAW spokesman Roger Kerson would not comment beyond Gettelfinger's remarks, and Chrysler spokeswoman Michele Tinson also would not comment.
Both sides have been negotiating on the health care concessions in advance of national contract talks with the Detroit Three that are set to formally begin in July. But so far, no health care agreement has been reached.
Combined, the U.S.-based carmakers have more than $100 billion in long-term retiree health care costs that analysts say must be reduced.
Under the 2005 agreement with GM, hourly workers would contribute $1 per hour in future pay increases to a new fund to help pay for retirees' health coverage. Single retirees would pay up to $370 a year in deductibles and fees. Most retirees and all active hourly workers would have higher co-payments for prescription drugs.
In the deal with Ford, also reached in 2005, retired autoworkers will pay monthly contributions, annual deductibles and co-payments for some medical services up to a maximum of $370 a year for individuals and $752 for a family.
Hourly workers have no deductibles or monthly contributions, but they must contribute a portion of future wage increases to a trust for future health care expenses. The agreement also raises workers' costs for prescription drugs retirees' emergency room visits.
When Chrysler was turning a profit, analysts believed any concession from the union on health costs was unlikely. The situation has now changed.
Chrysler's parent, Germany's DaimlerChrysler AG, announced last month that it would sell a controlling stake of its ailing U.S. operations to private equity firm Cerberus Capital Management LP. Analysts have said Cerberus likely will demand deeper concessions from the union than Daimler would have.
Losses also forced Chrysler to announce a restructuring plan that includes buyouts and early retirement offers so it can shed 13,000 hourly and salaried jobs in the U.S. and Canada by 2009.
Cerberus has said it will leave the negotiations to Chrysler, led by Chrysler Group President Tom LaSorda, although Cerberus already has executives inside Chrysler's headquarters working with its leaders.
'I'm pleased to say discussions I've had with (Cerberus) ... have been very professional,' Gettelfinger said on the radio show. 'They have a lot of confidence in Tom LaSorda. ... They have confidence in the process that has been established.'
All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us: firstname.lastname@example.org.
Anytime and anywhere to know the dynamics of China's auto industry