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Detroit Three show interest in UAW healthcare overhaul idea

09/03/2015 | 06:40pm US/Eastern

The Detroit Three automakers are showing increased interest in the United Auto Workers union's proposal that they pool their healthcare systems, a sign that contract talks between the union and manufacturers are down to the big money issues.

The UAW and bargainers for General Motors Co (>> General Motors Company), Ford Motor Co (>> Ford Motor Company) and Fiat Chrysler Automobiles <FCHA.MI> (>> Fiat Chrysler Automobiles NV) face a Sept. 14 deadline to negotiate new labor agreements for 142,000 U.S. workers. Rising healthcare costs have emerged as a stumbling block in the way of raises for blue collar workers.

UAW President Dennis Williams has for months advocated replacing company-run plans with a cooperative that would cover U.S. workers at all three companies and have a more powerful bargaining position with healthcare providers.

"We are talking to them about a co-op and it is an idea we support,” FCA said in a statement Thursday that was the clearest signal yet that automakers are giving serious consideration to Williams' proposal.

GM said, "The pressures of rising health care costs require collaboration to find creative solutions," but didn't explicitly endorse the cooperative idea. On Wednesday, Ford Chairman Bill Ford said his company was discussing the idea with the union.

Williams and officials at the Detroit Three have said rising health care costs, a wage system in which new hires are paid significantly less than veterans, pension liabilities and future investment in UAW-represented plants are the key issues they want to address in this round of contract bargaining.

The Detroit Three shifted health care costs for about 900,000 UAW retirees to union-managed trusts as part of a 2007 agreement. The automakers say their combined spending on healthcare is $2.25 billion a year for active UAW workers, up 55 percent from 2011.

A deal to curb healthcare costs would give the automakers and the UAW more flexibility to give pay raises or narrow the wage gap between newly hired UAW workers, who make about $16 an hour, and veterans hired before 2011, who make about $28 an hour.

Workers at the three U.S. automakers have made bonus checks based on their employer's North American profits as the companies have rebounded from the recession. But veteran UAW workers have not had a base wage increase in nearly a decade.

The UAW wants automakers to commit to investments to secure U.S. jobs. The July disclosure that Ford plans to shift some small car production to Mexico jarred UAW leaders.

(Reporting by Bernie Woodall; Editing by Cynthia Osterman)

By Bernie Woodall

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