By Tom Brown
DETROIT, May 15 (Reuters) - A four-year-old ban on plant closings to protect tens of thousands of factory jobs will hang in the balance when Detroit's Big Three automakers enter a new round of contract talks with the United Auto Workers union this summer.
The UAW is hoping to repeat its success of 1999, when it negotiated one of the richest agreements in the history of organized labor and clamped a moratorium on Big Three plant shutdowns.
But times have changed dramatically since the gilded days of the late 1990s and the union -- weakened by the loss of more than half its membership since 1979 amid a wholesale cut in U.S. manufacturing jobs and a sluggish economy -- may have to make some important trade-offs.
General Motors Corp. , Ford Motor Co. and DaimlerChrysler's Chrysler arm -- whose market shares are falling to foreign competitors -- are hoping for economic relief from the union so they can become more competitive and make money in a sluggish economy.
UAW President Ron Gettelfinger has signaled that the union will make no major concessions.
"There's a perception that the union has been put in a particularly tough position by the changing nature of the industry," Steve Babson, a labor specialist at Detroit's Wayne State University, told Reuters. "I'm apprehensive," he added. "This is going to be a particularly difficult round of bargaining."
All three Detroit automakers face billions of dollars in underfunded pension liabilities as well as billions more in health care costs for current and retired union members.
GM, which has nearly three retirees for every active hourly employee, is in the worst shape on the benefits front and sorely in need of an agreement that would increase the amount workers pay for health care. The world's largest automaker spent a staggering $4.5 billion on health care last year alone, up nearly 9 percent from 2001.
The labor talks, which begin in mid-July, come against the backdrop of recent concessions by unions at American Airlines and National Steel Corp., aimed largely at keeping the companies out of bankruptcy. And as part of the National Steel agreement, the United Steelworkers of America became one of the first industrial trade unions in the United States to make concessions on health care.
GM JOB CUTS?
But Gettelfinger has said the real problem facing U.S. corporations is the lack of a national health care system, and warned repeatedly that he would fight any attempt to shift costs onto the backs of workers.
Given his tough public stance, few if any analysts expect the UAW to give up any serious ground on health care. But as a tradeoff, at least some analysts and labor experts believe the union will endorse a major cost-cutting effort at GM by allowing it to close plants and cut thousands of jobs through attrition to bolster its bottom line.
To do so, the union would have to lift the moratorium on plant closings it agreed with the automakers in 1999, opening the door to production capacity cuts across the Big Three.
"I believe they will be allowed to restructure General Motors in a large way. And I believe GM is already working on the plans for that," said Sean McAlinden, a labor specialist and economics director at the Center for Automotive Research in Ann Arbor, Michigan.
A source close to GM said it was to early to jump to any conclusions about the outcome of the labor talks.
But McAlinden said the UAW might allow it to cut 25,000 hourly job cuts, or about 20 percent of its blue-collar work force, and close up to 10 U.S. plants over the next three years. In exchange, he said GM would agree to assist in a major UAW organizing drive among automotive supplier companies, and ensure that at least 25,000 union jobs were added there.
Chrysler and Ford have already gone through painful restructurings to get back to profitability. But Ford will need to win the UAW's approval, in the upcoming round of talks, for the plant closings it announced as part of its turnaround plan last year. And analysts say Chrysler may seek additional cost cuts by spinning off some of its company-owned parts plants.
Though talks formally begin in July the UAW will wait until late August or Labor Day before it names a so-called "tareget" company to lead the negotiations. The current labor contract expires in mid-September.
The union represents nearly all the hourly workers at the Big Three. Its new contract will set the pattern for the entire U.S. auto industry, however, since foreign automakers largely base their U.S. wages and some benefits on UAW standards.