UAW grants concessions, Chrysler exec warns of depression as bailout
lobbying intensifies

Tom Krisher and Kimberly S. Johnson, AP Auto Writers
Wednesday December 3, 2008, 8:58 pm EST

DETROIT (AP) -- Worried about their jobs and warned that the cost of
failure could be a depression, hundreds of leaders of the United Auto
Workers voted overwhelmingly Wednesday to make concessions to the
struggling Detroit Three, including all but ending a much-derided
program that let laid-off workers collect up to 95 percent of their
salaries.

"Everybody has to give a little bit," said Rich Bennett, an official
for Local 122 in Twinsburg, Ohio, representing Chrysler
workers. "We've made concessions. We really feel we're doing our
part."

Union leaders also agreed to let the cash-starved automakers delay
billions of dollars in payments to a union-administered trust set to
take over health care for blue-collar retirees starting in 2010.

In addition, they decided to let the Detroit leadership begin
renegotiating elements of landmark contracts signed with the
automakers last year, a move that could lead to wage concessions.

The vote came on the eve of congressional hearings on as much as $34
billion in loans that General Motors and Chrysler say are critical to
their survival. Ford has said it may be able to hang on through 2009
without additional credit.

Democratic congressional leaders say they want to act to prevent one
or more of the automakers from collapsing, but they have made no
commitments to approve an unpopular bailout at a time of economic
peril.

Senate Majority Leader Harry Reid said a Democratic plan to tap the
Wall Street rescue fund to save U.S. automakers does not have the
votes to pass.

UAW President Ron Gettelfinger said the union must help persuade
Congress to offer the loans or risk destroying what he said is the
country's economic spine.

"Let's look at the backbone and the millions of jobs lost if we lost
this industry," he said.

Earlier in the day, Chrysler Vice Chairman Jim Press went a step
further, warning of a depression if even one automaker runs out of
cash.

"We're on the brink with the U.S. auto manufacturing industry," Press
told The Associated Press in an interview. "If we have a catastrophic
failure of one of these car companies, in this tender environment for
the economy, it's a huge blow. It could trigger a depression."

Both Chrysler LLC and General Motors Corp. are so perilously low on
cash that the companies may not be able to pay all their bills by the
end of the year. GM wants a total of $18 billion in loans. Chrysler
is seeking $7 billion, and both manufacturers say they need cash this
month.

Ford Motor Co., which borrowed billions before credit markets
tightened, says it can survive through 2009 and may not need to tap
the $9 billion credit line it requested.

As a further sign of the companies' dire straits, Moody's Investors
Service on Wednesday downgraded its ratings for GM and Chrysler,
sending them further into non-investment, or "junk," status. Moody's
affirmed its ratings for Ford, but said the outlook for the three
automakers is "negative," implying further downgrades are possible.

Sent home empty-handed last month, executives from all three
companies knocked on doors on Capitol Hill and made television
appearances Wednesday, hoping the detailed plans they submitted
Tuesday would convince hostile lawmakers to help. CEOs from all
three, plus Gettelfinger, will appear before Senate and House
committees Thursday and Friday.

Fritz Henderson, GM's president and chief operating officer, stressed
on NBC's "Today" show that bankruptcy isn't a viable option.

Choosing bankruptcy, he said, would further erode consumer confidence
in the automaker and "we want them to be confident in their ability
to buy our cars and trucks."

All three executives took hybrid cars from Detroit to Washington
after enduring harsh criticism last month for using corporate jets
for the trip.

The automakers' plans were being scrutinized by legislators, the
White House and the Treasury and Commerce departments.

"It sounds to me like the companies have given this a lot of thought
and are willing to make some tough decisions," White House press
secretary Dana Perino said. "We just need a little more time to pore
through the documents."

President-elect Barack Obama said it appeared that the CEOs were
returning to Congress with a "more serious set of plans" for how
their companies are going to survive.

The plans painted the most dire portrait yet of the industry's woes --
including the prospect of shuttered factories and massive job losses
if Congress does not act quickly.

The much-derided "jobs bank" that permits laid-off workers to receive
most of their pay was created in the mid-1980s as a trade-off to the
UAW for increased factory automation. But the system became a symbol
for the union's largess when workers were paid for years after their
factories closed.

Gettelfinger said the union will suspend the bank, but he did not
give specifics or a timetable.

"We're going to sit down and work out the mechanics," Gettelfinger
said. "We're a little unclear on some of the issues."

Members of Congress criticized the automakers last month for paying
laid-off workers, saying it's one reason why their labor costs are
higher than competitors. About 3,500 workers from all three companies
are now in the jobs bank.

Until the 2007 contract, workers could stay in the jobs bank
indefinitely, but the new pact imposes time limits. Workers in the
bank must report to local union halls. Sometimes they do charity
work, but other times they do nothing.

Gettelfinger stopped short of saying the union would reopen its
contracts but said it would return to the bargaining table to change
some terms. Modifications would have to be ratified by members.

Delaying the health care trust payments will help the companies
survive their cash shortages, which they say were brought on by the
severe economic downturn and the worst U.S. sales in more than a
quarter century.

The delay will have to be approved by federal courts, which already
have blessed the trusts' formation.

Democratic House Speaker Nancy Pelosi has said she hopes Congress
acts to help the automakers. Reid said he would advance a bill Monday
in preparation for a possible auto bailout vote later in the week.

The automakers, humbled by criticism from their last visit, gave
lengthy plans with minute details about how they plan to repay the
government money.

Ford CEO Alan Mulally and GM CEO Rick Wagoner both said they would
work for $1 a year if their firms took any government loan money.
Chrysler chief Robert Nardelli already works for $1 a year.

Per the UAW's constitution, Gettelfinger receives an annual salary of
about $145,000 per year, plus insurance, retirement and other
benefits.

Ford offered to cancel management bonuses and salaried employees'
merit raises next year, and GM said it would slash top executives'
pay. Ford and GM both said they would sell their corporate aircraft.

Nevertheless, Sen. Arlen Specter, a Pennsylvania Republican, said the
mood in Congress "is not supportive" of the automakers, although he
called the consequences of just one of them failing "cataclysmic."

Associated Press writers Ken Thomas, Julie Hirschfeld Davis and
Jennifer Loven in Washington, and AP Business Writer Deborah Yao in
Philadelphia contributed to this report.

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