UAW in weekend negotiations with Chrysler

DETROIT Sat Apr 25, 2009 2:46pm EDT

A man looks at vehicles for sale at a Chrysler dealership in Glendale, California April 24, 2009. REUTERS/Mario Anzuoni

A man looks at vehicles for sale at a Chrysler dealership in Glendale, California April 24, 2009.

Credit: Reuters/Mario Anzuoni

DETROIT (Reuters) - The United Auto Workers union is holding weekend negotiations with Chrysler LLC as the struggling U.S. automaker races toward a month-end deadline to clinch concessionary deals with its union and creditors.

UAW President Ron Gettelfinger did not attend a Democratic Party event in Detroit on Saturday, where he was to be honored, after being pulled in to the negotiations, organizers of the event said.

Chrysler, about 80 percent controlled by Cerberus Capital Management, faces an April 30 Obama administration deadline to reach deals to cut its debt and labor costs and cement an alliance with Italy's Fiat SpA.

If it fails to reach agreements, Chrysler could see its government support lapse and face potential liquidation.

The automaker on Friday announced a tentative deal with the Canadian Auto Workers union for concessions, shifting the focus now to talks with the UAW, which represents the automaker's U.S. hourly workers.

Central to any negotiation is the fate of a healthcare trust for union retirees, a Voluntary Employee Beneficiary Association, or VEBA, that was created as the centerpiece of Chrysler's UAW contract in 2007.

However, as a condition for receiving government emergency loans, Chrysler was ordered to restructure the funding for the VEBA, which was set to be launched at the start of next year.

The talks between Chrysler and the UAW over the VEBA had not made much headway in the past week, according to sources who spoke on condition of anonymity because the discussions are private.

Chrysler also must reach agreement with its lenders to reduce its debt and talks between the lenders and the Obama administration have accelerated in recent days.

Chrysler's tentative agreement with the Canadian Auto Workers union would cut about C$19 ($15.70) per hour from its labor costs in Canada, according to the union.

The deal would save Chrysler about C$240 million per year by cutting benefits, time off, legacy costs and improving productivity, but would not cut wages or reduce pensions.

($1=C$1.21)

(Reporting by Poornima Gupta, editing by Anthony Boadle)

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