General Motors joined Ford and Chrysler to extend contract talks beyond a midnight deadline Friday.
The current contract between the United Auto Workers union and Detroit's three automakers expired at midnight Friday. Talks continued on an hour-by-hour basis after the deadline passed.
GM is the lead company in negotiation with the UAW. It's the healthiest of the three firms, but it also has the greatest health care funding problems.
(Typically, the union negotiates an agreement with the lead company it chooses and then reaches similar agreements with the other two.)
Negotiations with all three automakers could stretch through the weekend or longer.
Both sides want a deal that protects their interests. The union may be pressing for job guarantees.
The car companies, however, say this agreement could mean their future.
David Cole, chairman of the Center for Automotive Research, a think tank based in Ann Arbor, Mich., confirms the high stakes.
"Historically, labor and management could negotiate, but there was never a question about the viability of the companies," Cole said. "Well, today that's not true. These companies are really in play."
Health Care Becomes Crux of Negotiations
Specifically, the companies are looking to rid themselves of about $100 billion in health care obligations — a crippling cost that foreign competitors such as Toyota and Honda don't have.
U.S. companies across the board are desperate to escape the escalating cost of employee health care.
The auto industry believes one way to do that is to put billions of dollars in a health care trust fund and make the union responsible for managing it.
The fund would protect the auto firms from rising costs and protect union members if a company collapsed.
Neither the union nor the companies will discuss contract talks.
Workers at Ford and General Motors have already given up some health care benefits and are worried about more reductions.
But to win over workers, Cole said, union leaders could press the companies to guarantee jobs.
"New products, built here in the United States, would be an extremely important aspect," said Cole, referring to a commitment from the automakers to keep jobs on U.S. shores.
Still, it isn't certain whether a health care trust fund will win the backing of the union.
Funding a Health Care Trust
Among the sticking points is the amount of money the companies would be willing to contribute.
Cole suggested they might pay 60 cents to 70 cents on the dollar, but given rising health care costs, the union wants more.
Earlier this year, the United Steelworkers cut a similar deal with Goodyear Tire & Rubber Co. that is viewed as a possible model for Detroit.
Steelworkers Vice President Thomas Conway ran the union's negotiations. He said after Goodyear initially offered 40 cents, then 50 cents on the dollar, the union went on strike.
Without enough money, the Steelworkers worried the trust fund might run dry.
Eventually, the company agreed to pay more than 80 cents on the dollar.
Another sticking point in the talks was how to pay for a trust fund.
Goodyear wanted to use company stock. But given that Goodyear had threatened bankruptcy a few years back, the Steelworkers insisted on cash.
"This isn't really something we think we had the stomach for," Conway said. "I don't want to have to watch Goodyear's stock every day."
The car companies have also talked of using stock and auto workers are equally skeptical.
The autoworkers are sensitive to the fact that their employers need help. Charles Yates retired in June after 31 years at an Illinois plant that makes the Ford Taurus. He's worried about the future of his health care, but he's willing to consider a trust fund.
"It sounds like it could be a good idea," he said. "Part of it is getting some of the financial burden off the company so they can get some liquid cash."
And so, the thinking goes, companies could use that savings to develop new products and become more competitive.
Although the nature and timing of an agreement remains uncertain no one expects a strike.
From NPR reports and The Associated Press.
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