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Unions uneasy over potential GM and Chrysler deal

DETROIT (Reuters) - Labor unions in the United States and Canada on Tuesday expressed concern about the prospect of job losses from any merger between General Motors Corp GM.N and Chrysler LLC, adding that union leaders had not been consulted by the automakers.

A new Chrysler sign is seen after the DaimlerChrysler sign was removed from the front of the Chrysler headquarters in Auburn Hills, Michigan in this August 4, 2007 file photo. REUTERS/Rebecca Cook/Files

The Canadian Auto Workers union has asked both GM and Chrysler, which is controlled by private equity group Cerberus Capital Management CBS.UL, to clarify whether they are considering a merger.

“I don’t see any positives in it on the surface,” CAW President Ken Lewenza told Reuters. “You’ve got to believe this would be massive consolidation and massive job losses.”

United Auto Workers President Ron Gettelfinger said the union had not had any “official discussions” with any of the parties involved in a potential merger, which he said remained “speculation.”

But he said the UAW wanted to protect jobs.

“I would personally not want to see anything that would result in a consolidation that would mean the elimination of additional jobs,” UAW President Ron Gettelfinger told Detroit local radio station WWJ.

Cerberus approached GM in recent weeks about a merger with Chrysler, the No. 3 U.S. automaker. Cerberus has also shopped Chrysler around to other potential bidders without immediate success, sources said over the weekend.

The talks with GM hit a snag over the value of Chrysler and any resolution is still seen as weeks away, according people close to the talks.

Analysts have questioned the benefits of a merger for GM, saying the cost-cutting from combining operations could be slow to emerge and complicated by GM’s existing problems of too many brands and excess capacity.

But a merger between GM and Chrysler would almost certainly prompt job cuts, plant shutdowns and the elimination of models and dealerships, analysts said.

Between them, GM and Chrysler employ about 205,000 workers in North America and produce 12 million cars annually.

“I think it’s a very legitimate concern on the part of the unions,” said Harley Shaiken, a labor law professor at the University of California in Berkeley. “It’s almost certain that a merger would result in fairly significant job cuts.

“But it is unclear at this point what either company would gain in terms of innovation and competitiveness.”

U.S. auto sales have sagged to 15-year lows this year as American consumers have struggled to deal with the worst housing crisis since the Great Depression, rising unemployment and tightening credit.

Just this week, GMAC, the financing company affiliated with GM, announced that it was limiting its auto lending to short-term loans to consumers with good credit.

U.S. auto makers GM, Chrysler and Ford Motor Co F.N have been hardest hit by the downturn, as sales of their highly profitable gas-thirsty trucks and sports-utility vehicles have dived.

The slowdown in sales has forced all three to either idle or close plants in North America.

GM has cut about 19,000 hourly jobs represented by the UAW through buyouts and early retirement incentives over the past six months. It now employs about 64,000 blue-collar workers in the United States, a spokesman said on Tuesday.

Chrysler has announced plans to cut 22,000 hourly jobs since February 2007.

Labor professor Shaiken said unions would need to be persuaded to go along with any merger because “a disgruntled work force” could present a problem for the combined company.

“Do the unions have veto power? No.” Shaiken said. “Are they a significant factor? Yes.”

But David Cole, director of the Center for Automotive Research, said that the unions would be forced to accept job cuts for GM and Chrysler to survive.

“Their jobs are defined by how many cars GM and Chrysler sell,” he said. “I think the unions will be pragmatic, because if GM and Chrysler can’t produce long-term sustainable profits, then there is no such thing as job security.”

Additional reporting by Kevin Krolicki and Poornima Gupta; Editing by Gerald E. McCormick

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