GM-UAW contract seen hard to match fully by rivals

By David Bailey

DETROIT (Reuters) - Several aspects of the tentative contract between General Motors Corp (GM.N) and the United Auto Workers union will be hard for Ford Motor Co. (F.N) and Chrysler LLC to match in labor talks expected to heat up in coming days, people familiar with the negotiations said.

The adoption of second-tier wages for new hires at GM represents an attractive concession for Ford and Chrysler, but the structure of a retiree health-care trust could prove difficult to transfer, sources familiar with the matters said on Tuesday.

The establishment of a Voluntary Employees Beneficiary Association trust, or VEBA, was a centerpiece of the UAW's agreement with GM, allowing the automaker to take some $50 billion of liabilities off its books.

Privately held Chrysler has been focused on cash flow since Cerberus acquired the automaker over the summer, to the point that it has been taking daily cash flow reports.

The GM-UAW health-care trust would not provide savings until 2010, when the new trust is expected to take over some $3 billion in annual retiree health care payments from the top U.S. automaker.

Ford and Chrysler would be hard-pressed to match the bump-up in pension payments to their retirees that GM has agreed to give to its UAW retirees under the tentative contract, people familiar with the talks said.

UAW President Ron Gettelfinger said on Friday he expected to assess the state of talks with both Ford and privately held Chrysler after local UAW leaders unanimously recommended that workers approve the GM contract.

Gettelfinger wants the agreement with GM to serve as a basic pattern for talks with Ford and Chrysler in keeping with a long-held tradition that has kept all three Detroit-based automakers on a similar labor-cost footing.

The union's deal with GM includes a second-tier wage for new hires outside the production line, a health-care trust for retirees and some job security.

UAW VOTES ON GM CONTRACT CONTINUE

The UAW may not resume full negotiations with Ford or Chrysler until it completes the ratification, or has enough of a favorable indication from the voting at GM locals first, one person close to the talks said.

Subcommittees for the UAW and Chrysler had been meeting this week, but there was no indication when full talks would resume, said the person, who asked not to be named because of the private nature of the talks.

In the meantime, negotiators at Ford and Chrysler have been poring over the details in the UAW contract with GM.

The UAW and GM reached a tentative four-year contract last week to end a two-day national strike -- the first full-scale walkout by the UAW against GM since 1970. The union wants to wrap up the ratification voting by October 10.

A majority of the UAW members at GM must approve of the contract for the agreement to be ratified. The more than 73,000 GM hourly workers represented by dozens of UAW locals across the United States have begun voting on the contract.