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Going last may help Ford

Carmaker lost $12.6B last year, seeks terms to compete with Toyota, Honda.

Bryce G. Hoffman / The Detroit News

Ford Motor Co. hopes the United Auto Workers is saving the best for last.

Traditionally, the UAW negotiates a contract with one company, then extends those terms to the other domestic automakers with little modification. But that seems unlikely this time around, given the different challenges facing each of Detroit's automakers.

With Ford said to be asking for different terms than those of rivals General Motors Corp. and Chrysler LLC, experts say Ford is better off going last.

That is also the feeling in Dearborn, according to sources familiar with the situation. They told The Detroit News that Ford executives initially wanted to be chosen as the lead company and craft the master contract itself. However, once the union picked GM, they preferred to let the UAW duke it out with Chrysler second before resuming negotiations with the union.

"It certainly helps that they're last," said analyst Rebecca Lindland of Global Insight Inc. Union members "need to give Ford, potentially, some significant concessions. Pattern bargaining only really helps you in a position of strength. They really are the weakest link."

Ford lost $12.6 billion last year and has mortgaged all its U.S. assets in the struggle to meet what is seen as an optimistic goal of returning its automotive operations to profitability no later than 2009.

Ford executives say they have opened the company's books to the UAW and are confident the union's leaders appreciate the severity of Ford's position. They also are counting on their stronger relationship with the union to help them win better terms than GM.

"Relations between the UAW and Ford tend to be a little more cordial," said analyst Aaron Bragman, also of Global Insight.

While Ford executives say they can work within the broad framework of the UAW-GM agreement, they also are looking for terms that do more to close the cost gap between Ford and its Asian competitors. And that could test Ford's relationship with the union.

Ford CEO Alan Mulally has said he is unwilling to sign any agreement that does not make Ford competitive with companies such as Toyota Motor Corp. and Honda Motor Co. Sources say Ford would like a deeper discount on paying for retiree health care and wants to structure the retiree health care trust that was a centerpiece of the GM and Chrysler deals in a fashion that works better with Ford's financial situation. The company also is looking for more blue-collar buyouts to further prune its U.S. factory work force.

"If Mulally's going to get what he needs, he's going to need to make it contentious," said Bradley Rubin of BNP Paribas.

The details of Wednesday's UAW-Chrysler agreement were not immediately available, but the Auburn Hills company was known to be asking for different terms, too. If Chrysler secured any, that should make it even easier for Ford. Lindland said it would be in a position to "pick and choose" between the two contracts.

David Cole, chairman of the Center for Automotive Research, believes Gettelfinger deliberately left Ford for last because he knew the automaker needed more generous terms.

"If Ford had gone first, the GM guys would have been there the next day saying, 'Me too!' " Cole said. "You're going to see that this was a real skillful negotiation on the part of Ron Gettelfinger and his team."

Detroit News Staff Writer Christine Tierney contributed to this report. You can reach Bryce Hoffman at (313) 222-2443 or bhoffman@detnews.com.

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