Wednesday, October 15, 2008

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Unions, workers uneasy at possible GM, Chrysler deal

By Nick Carey
Reuters
Tuesday, October 14, 2008; 9:22 PM

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.

The Canadian Auto Workers union has asked both GM and Chrysler, which is controlled by private equity group Cerberus Capital Management LP (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.

Concern over the talks was also evident among workers at three auto plants in the Detroit suburb of Warren -- one belonging to GM and two to Chrysler. (N14169375)

"I barely have any work as it is," said Steven Jackson, a worker at the GM engine plant here. "So yes, I'm worried about job security."

At one of the Chrysler plants here the company's Dodge Ram and Dodge Dakota pickup trucks are assembled. Workers' concerns at this plant said they feared their trucks would be eliminated post-merger in favor of those made by GM.

"GM's got a truck just like Chrysler has," said William Wills, a contractor at Chrysler's Warren truck plant, which makes Dodge Ram and Dodge Dakota pickup trucks. "If there's a merger then one of those trucks has gotta go. That's what everyone in this plant is concerned about."

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 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 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 dived.

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

Last month, the U.S. government approved a $25 billion loan package for the auto industry to help offset the cost of developing fuel efficient cars. Democratic presidential candidate Barack Obama said on Tuesday that, if elected, he would demand those loans be distributed quickly to the distressed U.S. automakers. (N14298)

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. The company has 33,000 hourly workers in the United States and 9,000 in Canada.

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 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."

GM shares closed up 3 cents at $6.54 on the New York Stock Exchange.

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

© 2008 Reuters
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