GM Generali

DETROIT (AFP)--U.S. auto makers General Motors Corp. (GM) and Chrysler LLC struggled Monday to win key concessions from their main union a day ahead of a deadline to present restructuring plans to the federal government.

GM spokeswoman Sherryl Childers-Arb said GM remains hopeful of reaching a deal with the United Auto Workers by the time GM turns the viability plan in to the U.S. Treasury Department at the end of the business day Tuesday.

"We're negotiating and we're hopeful," she told AFP. "I am not going to speculate on whether we'll have an agreement."

Officials at Chrysler and the UAW declined to comment on the status of negotiations.

It was also unclear whether the automakers had managed to reach a deal with their creditors as required under the terms of a $13.4 billion bailout package provided by the federal government.

Union sources familiar the talks, however, said the automakers were making substantial demands and that something had to give before an agreement could be reached.

The package would eliminate previously negotiated productivity bonuses and cost-of living adjustments to wages, halve the amount of time the company would supplement unemployment pay following a layoff and require workers to use their vacation time during temporary plant closures.

GM spokesman Tom Wilkinson said he couldn't comment on the discussions with unsecured creditors.

"We'll comment on that after we turn in our submission to the Treasury Department," he said.

Standard & Poor's analyst Efraim Levy said he didn't think GM will have completed negotiation with either the union or creditors by the time it submits the viability plan to the Treasury.

"We think there is a good chance it will not meet deadlines on negotiating concessions with unions and creditors in order to secure proof it can repay loans," Levy wrote.

"Still, we expect the Obama administration to give GM the benefit of the doubt, and either extend the deadline or show flexibility toward the demonstration of progress to viability."

The administration will analyze the restructuring plans over the next few weeks and work through them with the car giants.

The final plan will serve as a basis for the Treasury's decision due by March 31 to call in or extend the loans.

The two companies were brought to the brink of bankruptcy last year as auto sales collapsed amid a credit crunch and widening recession.

Analysts forecast total auto sales will come in at between 10 million and 11 million units this year, which would be the industry's worst performance since World War II after adjusting for population growth.

Ford insists it has sufficient cash reserves to survive the downturn without federal aid despite a $5.9 billion loss in the fourth quarter.

Chrysler says it needs an additional $3 billion in loans beyond the $4 billion approved in December, as well as concessions from creditors and the UAW.

GM is also expect to ask for billions more in additional aid.