Tentative Contract Reached in Auto Talks

The United Auto Workers union said early today that it reached a tentative, four-year contract with auto maker DaimlerChrysler AG and will continue to negotiate with General Motors Corp. and Ford Motor Co.

Details of the tentative deal weren’t immediately released.

The UAW had hoped to reach simultaneous pacts with the Big Three auto makers, but General Motors and Ford haven’t reached an agreement. Worker contracts expired at midnight Sunday.

The union typically chooses one car maker as the lead negotiator and uses that pact as a model for the other two. The union bargained with all three auto makers at once this year and did not publicly name a lead company, although one was chosen soon after Labor Day.

Representatives of the UAW and the Big Three, along with suppliers Delphi Corp. and Visteon Corp., have met since mid-July. They negotiated on issues such as wages, jobs, health care and pensions that affect 300,000 workers and nearly half a million retirees and their spouses.

At a time when the U.S. market share for GM, Ford and DaimlerChrysler is at an all-time low, and foreign auto makers continue to expand domestic lineups and capacity, most observers said the probability of a strike was low.

Some analysts and labor experts have said the new contracts likely will reflect the difficult predicaments of the auto makers, whose combined U.S. market share fell to an all-time monthly low of 57.9% in August.

In addition, Ford is trying to rebound financially from a loss of $6.4 billion in 2001 and 2002. Chrysler lost $1.1 billion in the second quarter of this year, and last month was outsold in the domestic market for the first time by Toyota Motor Corp.

Ford and GM employees will continue to report to work while negotiations continue, UAW President Ron Gettelfinger said.

Analysts said both sides understood the others’ situations and that compromise in areas such as wage and pension increases was likely.

Gettelfinger had insisted the union would not retreat on health-care benefits, so some analysts said negotiators were likely to reach agreements that would give auto makers more flexibility in plant closings in exchange for continued low-cost medical coverage.

One analyst has said the Big Three likely needs to close between seven and 10 plants in North America to move supply and demand into better balance.