Chrysler may get health care deal

DETROIT–Chrysler may get the same health-care concessions from the United Auto Workers that its Detroit-based competitors received two years ago.

Union president Ron Gettelfinger said yesterday the UAW must find a way to give Chrysler a deal 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 told a Detroit radio show host yesterday.

The UAW in 2005 gave health-care concessions to Ford and GM that saved the companies billions of dollars, but refused to grant the same deal to Chrysler because of its stronger financial condition at the time.

In 2005, Chrysler Group made $1.8 billion (U.S.), 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, but wouldn't state the outcome of the review.
His comments yesterday, however, acknowledged Chrysler has a problem that needs to be addressed.

UAW spokesperson Roger Kerson would not comment beyond Gettelfinger's remarks, and Chrysler spokesperson 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.

Gettelfinger's statements indicate that a health-care deal could be in the offing, but it's not clear whether it will be done before national contract talks formally begin, said Efraim Levy, senior industry analyst with Standard & Poor's.

Much has changed since 2005, Levy said, including Chrysler's losses and the pending divorce from DaimlerChrysler AG, its deep-pocketed German parent.

"The fact that the union appears more ready to talk reflects the fact that the muddied playing field has become more equalized recently given the proposed transaction selling Chrysler to Cerberus, and of course, Chrysler's poor performance in the marketplace," Levy said.