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UAW leaders to consider cutbacks in meeting Wednesday

5:28 PM, Dec 2, 2008   |    comments
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WASHINGTON (Detroit Free Press) -- Top UAW officials from across the country will meet in Detroit on Wednesday to consider key concessions in hopes of helping Detroit's automakers gain congressional approval of $25 billion in federal loans.

Automakers must submit plans to Congress today to show how they will use the loans. Ford Motor Co. planned to give Congress a clear picture of future, more-efficient models and General Motors Corp. readied a blueprint for cuts across the board.

UAW officials from Ford, GM and Chrysler LLC will meet Wednesday and later break off into meetings of representatives of the individual automakers.

One UAW local official who plans to attend expects the issues considered to include eliminating the jobs bank and further concessions in the way automakers fund the retiree health care trust.

The jobs bank, which pays workers for up to two years after a plant closes, has drawn criticism from lawmakers, even as the UAW contends it has been scaled back. A UAW spokesman was not available for comment Monday.

Along with the plans, automakers were crafting their last-ditch sales pitch for $25 billion in loans after a miserable reception from lawmakers last month.

Following the uproar over executives using corporate jets to ask for taxpayer money, Ford Chief Executive Officer Alan Mulally will make the 500-mile trip to hearings in Washington later this week in a Ford hybrid and may offer to take a pay cut.

Spokespeople for GM and Chrysler declined to say how their executives will arrive in Washington, except to rule out a corporate jet.

Meanwhile, the UAW told Congress that it's prepared to make major alterations in its deals with the automakers to help get loans approved, but only as part of broad restructurings that will require oversight by the Obama administration.

The UAW "will make it clear we could be facing the collapse of GM by the end of the year, and Chrysler soon after," said UAW Legislative Director Alan Reuther. "We continue to believe bankruptcy is not a viable option."

A Senate committee will review the automakers' plans Thursday, and a House committee will do so Friday, with the same lineup of the three chief executives and UAW President Ron Gettelfinger expected to testify. A spokesman for the office of House Speaker Nancy Pelosi, D-Calif., said it would be up to the committees to judge the automakers' plans, and that their decision would drive whether Congress returns next Monday.

The automakers' plans will arrive the same day the industry expects to report another month of depressed sales, nearing the 25-year lows touched in October, because of worries over job cuts and the recession.

Such a rate could spur even deeper discounts in December or additional cuts in production, weakening the automakers' finances even further.

Russ Shelton, owner of Shelton Pontiac Buick GMC Inc. in Rochester Hills, said he's anxious for the automakers to present their plans to Congress because he doesn't think anything will improve until Congress makes a decision. He called November sales "horrible."

"It's just not good," he said. "It was worse than October. The phones aren't ringing, people aren't walking into the showroom. I don't think we're going to see any change until this all shakes out."

Since the automakers appeared before Congress to request aid and the news emerged that GM is considering eliminating Pontiac -- along with Saturn, Saab and Hummer -- Shelton said sales have dropped off even more.

"It's hurting our business," Shelton said. "For so many years, Pontiac has been our No. 1 selling brand."

GM's plan for how it will use $12 billion of the $25-billion pool could run close to 100 pages for lawmakers, with a shorter summary for public viewing.

That plan will likely include several steps, such as lower executive pay, renegotiated debt, shedding up to four brands and new concessions from the UAW, according to people familiar with the plan. While GM could make many such cuts on its own, renegotiating contracts with the UAW, bondholders and dealers could take months.

GM has already pledged to make $20 billion in cost cuts through next year, although $5 billion of those rely on selling assets such as the Hummer brand or borrowing money, neither of which GM can count on in the near future.

Ford is expected to craft a plan that looks less like a loan application and more like a request for a credit card, with new details on future models. It has more cash on hand than GM or Chrysler, and has made more progress toward revamping its vehicles to more fuel-efficient models. Ford said Monday that it was considering selling its Volvo brand.

The company expects that much of its U.S. lineup will qualify for retooling loans under the $25-billion program Congress approved in September, lessening its need for immediate aid even further. By driving to Washington in one of those models, Mulally hopes to emphasize the company's plans in a tangible way.

One stumbling block could be whether Mulally, who was paid $22 million in salary and stock options last year, and Ford agree to cuts in executive pay, one of the considerations Pelosi and Senate Majority Leader Harry Reid, D-Nev., asked the automakers to make last month. GM and Chrysler are expected to agree to them, and several lawmakers have said executives must share in the sacrifices necessary to receive the loans.

Lawmakers may put off a thorny debate over how to pay for aid by offering a temporary fix, giving Detroit automakers just enough cash to get through February and prove they can negotiate the cuts they've promised. Democrats want the $25 billion to come from the $700-billion financial industry bailout; Republicans and Michigan lawmakers would use $25 billion from the retooling loans.

The temporary solution also would allow the Obama administration to take a larger hand in crafting the aid plan, reshuffling the priorities automakers will present this week. Reuther said part of the reason for Congress to request so much data from the automakers is to arrive at a lower figure for aid.

"It's not feasible for Congress to hammer out a total restructuring plan in the next week," he said. "What's needed is emergency assistance so the companies don't collapse, and that's a bridge to a further process. ... No one should be fooled into thinking someone's going to wave a magic wand and create a complete blueprint in the next three days."

BY JUSTIN HYDE, KATIE MERX and SARAH A. WEBSTER, FREE PRESS BUSINESS WRITERS

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