AUTO INDUSTRY Pacts will help Big 3 survive

New contracts will help the Big Three, but analysts question whether it's enough.
DETROIT (AP) -- When leaders of the Big Three automakers and the United Auto Workers announced new labor contracts, they touted the four-year deals as closing the competitive gap with foreign automakers.
Now details of the agreements are emerging, with disclosures of job cuts and plant selloffs or shutdowns providing a clearer blueprint of the companies' plans for streamlining.
In last month's pacts, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group won the right to close or sell at least 10 mostly aging and underutilized U.S. plants -- something that was banned in the previous agreements. Those moves could allow the Big Three and two top suppliers to trim up to 50,000 jobs in the next four years.
Better streamlining
The closings and sales also give GM, Ford and Chrysler the chance to better streamline their operations by removing unneeded manufacturing capacity.
The lingering question among many industry analysts is whether the pacts go far enough to combat the increasing success of the Toyotas and Nissans and Hondas, who generally have more efficient and flexible U.S. plants, lower labor costs and few retirees to support.
The early answer seems to be "no."
"When you start talking about trying to keep up with the Joneses, or in this case keeping up with the Asian automakers, there still seems to be a ways to go," said Mike Wall, an analyst and industry forecaster with the firm CSM Worldwide.
"They made some progress -- anything is better than nothing -- but it doesn't seem to be enough," Wall said.
Chris Ceraso, who tracks the industry for Credit Suisse First Boston, was even more straightforward in a research report on the pacts: "There does not appear to be any fundamental game-changers that will dramatically improve the competitiveness or profitability of the Big Three."
Ford struggling
Ford, the world's No. 2 automaker behind GM, is trying to rebound from $6.4 billion in losses in 2001 and 2002.
Seeking to trim its North American manufacturing capacity by 1 million vehicles, it said this week it will close an aluminum casting plant near Cleveland and a plant in Michigan by year's end and another in New Jersey next year. A fourth factory in Ohio, a van plant in Lorain, will end production during the next four years.
The Dearborn-based automaker also announced more than 7,700 job cuts worldwide.
Chrysler selling plants
DaimlerChrysler, which lost $1.1 billion in the second quarter, won the right to close or sell four U.S. parts plants. GM, where workers are still voting on whether to ratify the new agreement, plans to close one major factory, a 68-year-old assembly plant in Baltimore.
Wall said he expected even more cuts.
"They just have too many plants that are running duplicate vehicles that don't need to be," he said.
The foreign companies are operating U.S. plants with the capability of producing a variety of models, Wall noted. Nissan North America, for example, eventually will build five products at its new plant in Canton, Miss. -- a car, minivan, full-size pickup and two full-size sport utility vehicles.
"When you can do that, it's much easier to match your production to demand," Wall said.
No incentives
The foreign automakers have not had to offer the profit-dwindling consumers incentives to the extent that the Big Three have.
Still, executives at the Big Three have said they're confident the new labor agreements will help level the playing field between themselves and the foreign companies.
Dennis Cirbes, Ford's vice president for labor affairs, said this week that both Ford and the UAW approached the bargaining table during the summer "with a clear understanding of our business problems."