Chrysler won a round of concessions from its Canadian union on Friday, while General Motors Corp (GM) soaked up US$2 billion more in US government aid and Ford Motor Co posted a narrower-than-expected loss that sent its shares soaring.
The developments underscored the diverging fortunes of Ford and Chrysler and GM, both of which are operating under US government oversight and increasing pressure to win cost-saving agreements to avoid bankruptcy.
Chrysler and the Canadian Auto Workers’ (CAW) tentative agreement on a new labor contract is intended to cut costs and keep the automaker from bankruptcy.
Under the agreement, the No. 3 US automaker would leave hourly base pay intact but cut a range of benefits, including an annual Christmas bonus, and add flexibility to work rules that would make it easier for Chrysler to hire temporary workers.
Chrysler would also cut the third production shift at its Windsor, Ontario minivan plant.
Taken together, the contract changes would save Chrysler an estimated C$240 million (US$198 million) in annual labor costs, CAW president Ken Lewenza said.
The leadership of the Canadian union also agreed to work with Chrysler to create a trust fund to pay for retiree health care modeled on a similar fund that the United Auto Workers union approved for Chrysler’s US workers in 2007.
The tentative deal, which will be put to CAW-represented workers for ratification this weekend, is one of several agreements that Chrysler needs to reach by next week to win new US government aid and avoid liquidation.
The Thursday deadline for Chrysler partly eclipsed GM’s struggle. The administration of US President Barack Obama has rejected a GM restructuring plan, ousted its chief executive and told the automaker to cut deeper and move faster if it wanted to continue to receive government support.
GM has been operating under US$13.4 billion of emergency loans from the US government. The US$2 billion draw adds working capital for the automaker. The US Treasury could lend another US$3 billion to GM.
The struggles of Chrysler and GM overshadowed Ford’s results on Friday. Ford, which has not sought emergency government loans, posted a US$1.4 billion loss that was less than analysts had expected and said it was on track to at least break even in 2011.
Chief financial officer Lewis Booth called the results encouraging and said the automaker expected the first quarter to have the worst cash burn of the year.
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