UAW promotes health-care aid to help automakers

By John Crawley

WASHINGTON (Reuters) - The union representing workers at U.S. auto companies is proposing that another round of government aid to distressed carmakers go toward easing health-care cost burdens, freeing cash for the companies to spend on saving themselves, a senior labor official said on Friday.

Alan Reuther, legislative director of the United Auto Workers, said in an interview that the group is proposing lawmakers approve up to $25 billion in new loans for General Motors Corp, Ford Motor Corp and Chrysler LLC.

Reuther said the aid would cover pledged contributions to a retiree health care trust, the Voluntary Employees Beneficiary Association, which was negotiated last year with the companies.

"If the companies get the assistance that makes it easier for them to do other things," Reuther said. "I think the financial markets would look at that and say that helps lift a significant liability and that's a good thing."

Reuther said such a step would also ensure retiree benefits.

Officials at GM and Ford had no immediate comment. Chrysler could not immediately be reached for comment.

GM, Ford and Chrysler are shifting retiree health-care liabilities to the independent trust account, which takes effect in 2010.

In July, the UAW allowed GM to defer a planned $1.7 billion downpayment on the trust with the carmaker trying desperately to conserve cash. Chrysler also deferred a payment to the fund that will total $56 billion.

The UAW plan is the latest floated by industry supporters for government to assist Detroit, which last month received authorization from Congress to apply for $25 billion in low-interest advanced technology loans to help U.S. carmakers build more fuel-efficient cars.

The money, however, is not expected to be available for months and may not allow the kind of financing flexibility U.S. manufacturers say they need right now. Auto executives and lobbyists nevertheless are pushing hard to accelerate loan funding.

The White House has said it is working as fast as possible to accommodate Detroit, although the Bush administration has been reluctant to provide massive aid for an industry that has been in a downward spiral.

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Ford, GM and Chrysler have been hit hard by the ongoing credit crunch, which came near the end of an already-dismal sales year. High gasoline prices, a weak economy, and stiff competition from overseas rivals have sapped consumer appetite for their bread-and-butter pickups and sport utilities.

U.S. auto sales have fallen by 13 percent through September and automakers expect to report October monthly auto sales on Monday that reflect the continued downturn.

Ford is in the best financial position of the three, while GM and Chrysler continue to burn through cash. Plans for a GM-Chrysler merger were put on hold until after the November 4 election once it became clear on Thursday that the U.S. Treasury Department would not help fund it as GM had hoped.