Auto union negotiations stall as deadline nears

GM’s plan increases the likelihood of additional government loans.

DETROIT (AP) — Concession talks between the United Auto Workers and the Detroit Three shifted into an odd phase Saturday as negotiations broke off with General Motors Corp., slowed at Chrysler LLC and picked up speed at Ford Motor Co., financially the healthiest of the three, according to people briefed on the bargaining.

The developments come as GM and Chrysler race toward a Tuesday deadline to submit plans to show the government how they will become viable and repay billions 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 2009 without government help.

The Treasury Department has committed to giving GM a total of $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, according to a person briefed on the plan.

That means GM may seek an additional $5 billion, raising the loan amount to about $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 $9.4 billion in government loans, and the Treasury Department must approve its viability plan for it to get an additional $4 billion. Chrysler has received $4 billion in government loans and wants an additional $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 Saturday.

UAW negotiators walked away because GM made demands that were “detrimental to retirees and the ability to provide health care,” according to the person briefed on those talks.

GM spokesman Tony Sapienza would say only that GM is working on its viability plan.

“We’re committing to meeting the goal of providing a plan as required by terms of the restructuring plan,” he said Saturday.

A spokesman for the UAW did not immediately respond to a request to comment.

Under terms of their loans, GM and Chrysler must aim to make at least half of the contributions to their health care trust funds.