Tuesday, July 25, 2006

Gettelfinger: GM must stay focused

Tuesday, July 18, 2006
Gettelfinger: GM must stay focused
UAW leader fears talks with rivals could stall turnaround
Brett Clanton / The Detroit News

DEARBORN -- United Auto Workers President Ron Gettelfinger said Monday he is "very concerned" that General Motors Corp.'s talk of a potential alliance with Japan's Nissan Motor Co. and France's Renault SA could distract GM from its turnaround.

"If the focus is taken away from where (GM is) headed right now ... and becomes more focused on this alliance, then I think that becomes a big issue," Gettelfinger said in his first public comments on the proposal since GM Chairman and CEO Rick Wagoner and Carlos Ghosn, CEO of Nissan and Renault, agreed Friday to explore the idea further.

His remarks came the same day Wagoner briefed GM board members about an internal review the three companies are launching to study the proposal. In a conference call, Wagoner told the board the 90-day review, headed by small executive teams at each company, will kick off immediately, said people familiar with the call.

Gettelfinger spoke to reporters after his testimony at a federal hearing in Dearborn exploring the impact of China on the U.S. auto industry. The UAW has been in the background in recent weeks as the automotive world digested the stunning news of a potential GM-Nissan-Renault alliance. But Gettelfinger emerged Monday to voice doubts about the tie-up, and emphasize the sacrifices the UAW has made in recent months to aid GM's recovery.

His comments signaled that the UAW, which represents more than 100,000 GM workers, does not intend to be sidelined for long in the discussions.

It will be critical for GM to win the UAW's blessing if the world's largest automaker decides to pursue a partnership with Nissan and Renault, said Harley Shaiken, a labor professor at University of California at Berkeley.

"If the UAW was vocal in its opposition, that would be a deciding, if not decisive, factor in possibly derailing this," Shaiken said.

GM is committed to seeing through its restructuring plan during talks with the foreign automakers, said GM spokeswoman Toni Simonetti.

"We fully intend to keep our eye on the ball with respect to the turnaround," she said.

On July 7, GM's board authorized a review of a potential tie-up with Nissan and Renault. Last Friday in Detroit, Wagoner and Ghosn hatched plans to launch a 90-day internal review of the companies to determine the potential benefits of a partnership.

Wagoner feels the heat

The idea of an alliance first came to light in a June 30 letter to the companies from billionaire investor Kirk Kerkorian, whose Tracinda Corp. owns 9.9 percent of GM shares. Kerkorian made the proposal after a secret meeting with Ghosn, an industry superstar whose openness to exploring an alliance has buoyed GM's stock in recent weeks.

But the proposal has also put pressure on Wagoner to either sell a significant stake of GM to a foreign automaker or prove that his turnaround plan is sufficient to revive the company after a $10.6 billion loss last year.

That determination will likely hang on the outcome of the internal company reviews taking place in the next three months.

Bob Lutz, GM's vice chairman and product development chief, said Monday he expected the companies to hold talks among teams of senior-level managers looking for potential savings in logistics, products, sales, production and purchasing.

"We need to measure the synergies of a re-regionalization with Renault in Europe and Nissan in Asia with the gains from the globalization at GM," Lutz said in an interview with Bloomberg News at the London Auto Show.

Deal offers range of results

Analysts are divided about the potential gains from a GM-Nissan-Renault partnership. GM already has a presence in most major international markets. As the world's largest automaker, it also benefits from economies of scale that may not be greatly improved with the addition of two smaller partners. And potential savings from shared components or vehicle underpinnings could be years away.

For the UAW, the benefits are murkier still. At worst, the alliance could mean further job losses. At best it means joining with an automaker whose U.S. operations are not unionized.

"It's unclear what the alliance adds," professor Shaiken said. "And the pitfalls are fairly apparent."

That's why Gettelfinger said he is encouraged that Wagoner is moving slowly on the proposal.

"I think Rick Wagoner is taking the right approach by being very cautious, and pacing it to his standards as opposed to somebody else's."

Gettelfinger said the UAW had not been asked to join talks on the proposed GM-Nissan-Renault alliance. But he said he is in regular contact with Wagoner, who he believes will include the union at the appropriate time.

"I'm sure before he did anything, he would invite us in as being a part of it. But I do not believe that at this juncture that's even within the realm of the reasonable before they make that decision themselves."

Stabenow hopeful, wary

U.S. Sen. Debbie Stabenow, D-Lansing, said it was hard to evaluate the merits of a GM-Nissan-Renault alliance because it is still in the early stages. But with Michigan losing thousands of auto jobs each year, she did not dismiss the idea of an alliance altogether.

"If some partnership allows us to strengthen our domestic auto industry, fine," said Stabenow, who also testified Monday at the federal hearing on China. "But if it means we're going to lose jobs, then I'm not for it."

Delphi, UAW apart on talks

Separately Monday, Gettelfinger said the UAW and bankrupt auto supplier Delphi Corp. are making little progress in negotiations over wage cuts and other concessions the parts maker is seeking as part of its reorganization. He did not eliminate the chance of a strike if the sides cannot come to terms.

"We have not ruled out any our options," Gettelfinger said.

Delphi spokesman Lindsey Williams disagreed with Gettelfinger's characterization of the negotiations.

"We have continued to meet in earnest with all of our unions in hopes of obtaining a consensual agreement," he said. "We remain hopeful that we will reach an agreement prior to Aug. 11."

Gettelfinger said the UAW had set aside the last two weeks for discussions, but that Delphi has not budged "one iota" from demands for steep wage and benefit cuts, despite the union's recent approval of a plan allowing the company to slash thousands of jobs with early retirement and buyout offers.

Gettelfinger suggested Delphi is dragging out the process so it can demand concessions in the final hours before an Aug. 11 deadline. A federal bankruptcy court hearing, resuming that day, will determine whether the supplier can reject labor contracts covering its 33,000 U.S. workers.

You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.

© Copyright 2006 The Detroit News. All rights reserved.

At a glance

On Friday, General Motors Chairman and CEO Rick Wagoner and Carlos Ghosn, CEO of Nissan Motor Co. and Renault SA, agreed to launch an internal study of a potential alliance.

Wagoner told GM's board Monday that a 90-day review will begin immediately.

UAW President Ron Gettelfinger worries that the process could be a distraction from GM's turnaround plan.


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