Concession talks between the United Auto Workers and the Detroit Three shifted into an odd phase on Saturday as negotiations broke off with General Motors Corp (GM), slowed at Chrysler LLC and picked up speed at Ford Motor Co, financially the healthiest of the three, people briefed on the bargaining said.
The developments come as GM and Chrysler race toward tomorrow’s deadline to submit plans to show the government how they will become viable and repay billions of dollars in loans that are keeping them alive during the worst auto sales slump in 26 years.
Ford, which borrowed billions from private sources before credit markets tightened, has said it can make it through this year without government help.
The US Treasury Department has committed to giving GM a total of US$13.4 billion if the automaker’s plan is approved. GM’s plan, however, will raise the possibility that more government loans may be needed, as sales in overseas markets have deteriorated worse than expected, a person briefed on the plan said.
That means GM may seek another US$5 billion, raising the loan amount to about US$18 billion, the amount that GM sought when it made a presentation to Congress in December. The company will discuss bankruptcy in its plan but will emphasize using loans to get through the sales slump, said the person, who spoke on condition of anonymity because the preparations are private.
Top executives of Chrysler and GM have said bankruptcy is not an option for automakers because people will not make big-ticket purchases from a company that may not be around. Bankruptcy may also lead straight to liquidation unless the government provides debtor-in-possession financing.
Detroit-based GM is living on US$9.4 billion in government loans, and the Treasury Department must approve its viability plan for it to get US$4 billion more. Chrysler has received US$4 billion in government loans and wants an additional US$3 billion.
The conditions of the loans require the automakers to get concessions from their unions, debtholders, dealers and others, to help the companies become viable.
On Friday night, union negotiators walked out of talks with GM in a dispute over funding of a union-administered trust that will take over retiree health care expenses next year, a person briefed on the talks said on Saturday.
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