Up next: Ford and Chrysler

Similar deals likely but newly private carmaker is 'something else.'

Josee Valcourt / The Detroit News

DETROIT -- Ford Motor Co. and Chrysler LLC are likely to hammer out almost identical deals to the momentous contract General Motors Corp. and the United Auto Workers struck on Wednesday, but some stumbling blocks may lie ahead, analysts say.

GM's landmark deal includes a voluntary employees' benefits association or VEBA, which shifts responsibility of retiree health care to the UAW. The automaker has agreed to fund the VEBA at an estimated 70 cents on the dollar.

For Ford, which is the weakest U.S. automaker financially and the likely next target, raising cash to fund a VEBA may be a challenge.

"You look at Ford or Chrysler, and they all have the means to do it," said Brett Hoselton, analyst with KeyBanc Capital Markets. "But I think that it puts Ford more at a disadvantageous position from a financial leverage standpoint because their balance sheet is weaker than General Motors."

Ultimately, Ford may have to accept a VEBA plan based on the patterns of past bargaining, said Gerald Meyers, adjunct professor at the University of Michigan business school and former chairman of American Motors Corp.

"Chrysler is something else," Meyers said. "I'd expect things to be real different with Cerberus. They are bloody guys that are interested in only one thing, and that is cash. I would not be surprised if they were willing to take a strike to get it -- they have the money to do it."

Gary Chaison, a labor professor at Clark University in Worcester, Mass., agreed.

"The problem with Chrysler is it will depend on what Cerberus wants," Chaison said. "I don't know if Cerberus wants to invest long term in a VEBA. They're really a wild card."

Ford, Chaison said, will bargain for a smaller work force.

"Ford under (CEO Alan) Mulally have a specific program to get smaller," he said. "The UAW is going to argue to protect jobs."

Ford and Chrysler could know as early as today if the UAW plans to bargain simultaneously with them or target one specifically, said a source familiar with talks.

Gregg Lemos Stein, an analyst with Standards & Poor's credit rating, said he expects Chrysler and Ford's bargaining to address their active work force compared with GM, which has a higher ratio of retirees.

"Something that was more direct toward savings on retiree costs, relatively speaking, may be more beneficial to GM where as something more on active wages may help Chrysler and Ford more," Lemos Stein said.

UAW President Ron Gettelfinger said in an interview with Paul W. Smith Wednesday on WJR-AM radio that he expects a similar agreement with Ford and Chrysler to match GM's.

"We expect that this will basically be the same agreement that we'll get at the other companies.

"There's some modification at the others but for the most part it will be a pattern agreement," he said.

Industry watchers are betting that if the UAW chooses to target one of the automakers, it'll be Ford because it is a public company.

"They have a little bit more leverage (with Ford)," said Michael Whitty, a labor expert at the University of Detroit Mercy. "And in a way, this private equity company (Cerberus) is still a little bit of a mystery package."

While rank-and-file union members are expected to ratify the agreement, the UAW chief expected to meet with top negotiators at Ford and Chrysler to gauge bargaining progress at those companies before determining the next step.

The union could restart talks with both Ford and Chrysler simultaneously, Gettelfinger said in the radio interview.

"If we run into difficulty at one or the other, then we'll make a decision," to concentrate on one company, Gettelfinger said.

Detroit News Staff Writer Eric Morath contributed to this story. You can reach Josee Valcourt at (313) 222-2575 or jmvalcourt@detnews.com.