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.
Treasury has extended assistance for the financing arms of GM, Ford and Chrysler.
Industry, its supporters in Congress and the UAW are hopeful that the Treasury or another agency still could step forward soon with billions in direct capital grants or loans for all three companies to ease their cash crunch.
Much for the auto industry, however, appears to hinge on what happens on U.S. Election Day on Tuesday, when Americans will choose a new president. Democrats also hope to widen their majorities in Congress as well.
Labor has been an outspoken and active supporter of Democrat Barack Obama, who leads in national polls and said on Thursday that helping automakers would be an early economic priority.
The Illinois senator supports another $25 billion for the industry and has said that health care could be one area where government might help.
Republican John McCain's campaign supports the advanced technology loan package as a first step.
Congress is expected to return for a post-election session and could try to craft a broad economic stimulus plan, depending on the outcome of the election and the mood of the White House.
Industry supporters in the House and Senate have said they would try to include $25 billion in aid to Detroit if a stimulus bill was proposed. Otherwise, the matter would wait until the next Congress in January.
(Editing by Matthew Lewis)
